Competition among ports in Gulf Cooperation Council (GCC) countries is expected to heat up as operators chase larger shares of the regions growing logistics sector.

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The current Gulf crisis could negatively impact the ports sector in the GCC, according to Dr. Naser Al-Tamimi, a UK-based Middle East researcher, political analyst and commentator and author of ‘China-Saudi Arabia Relations, 1990-2012: Marriage of Convenience or Strategic Alliance?’.

In a commentary for Arab News, Dr. Naser says that with 37 major and minor ports across the GCC, and just ten ports accounting for 95% of all cargo traffic, there is a real risk that investment in greenfield and port expansion projects could take traffic away from existing logistics strongholds.

“Competition among ports in Gulf Cooperation Council (GCC) countries is expected to heat up as operators chase larger shares of the region’s growing logistics sector. Some estimates project that total GCC port throughput will grow to 35-million twenty-foot equivalent unit (TEUs) by 2020, with more than $36 billion of investments committed for greenfield schemes and port expansions,” explains Dr Naser.

“If that outlook coincides with the continuation of the Gulf crisis, it is logical to expect the negative repercussions to spill over to the ports sector. Indeed, without cooperation among GCC states to reduce risks, several Gulf ports may be subject to overcapacity and considerable pressure in the medium to long term.”

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The region’s logistics sector will see throughput across the GCC’s ports grow to 35-million TEU, yet the total capacity of the 37 ports is 50-million. According to Dr Nasser, more than a third of that capacity is contributed by Jebel Ali Port alone.

 “Yet the dominant position of Jebel Ali Port may be challenged as competition between Gulf ports and beyond is expected to increase. Importantly, the political differences, if they persist, may also hamper economic integration in the ports sector,” he writes.

Dr Nasser points to the growth of Port Khalifa as one example. The port has witnessed rapid expansion since its launch at the end of 2012. China’s Cosco Shipping Ports, one of the largest container terminal operators in the world, will complete the port’s second terminal next year, doubling its capacity to about 5 million TEUs annually.

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Source Link | Arabian Supply Chain

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