GCC told to take a realistic view of shipping industry


A senior shipping, cargo and logistics specialist has advised the region's developers not to expand port capacities at this stage as the shipping industry is yet to recover from the global economic slowdown.
He also urged governments in the Middle East, especially those in the GCC, to do a realistic assessment of their requirements in the shipping sector when new projects are conceived and developed.
Shailesh Garg, director of Drewry Maritime Services, made the statements during a presentation on the Middle East container market at Qatar Transport 2013. The conference, organised by MEED Events, concluded yesterday. Drewry is a leading research and advisory organisation in the maritime sector.
According to Garg, marginal growth is possible in the region's container market over the next few years, but one needs to take a realistic look at the potential of ports in the Middle East while chalking out expansion and development plans.
"The last four years have been disappointing for the shipping industry and there has been a massive fall in the number of containers handled by every port in the region," said Garg, adding that the container market is "oversupplied" at this point.
The consultant stressed that the global market recorded slight improvement last year, as compared to the previous three years, primarily due to China and its exports to the US and Europe. "However, industry figures and relevant statistics showed that the Asian giant's exports have reached stagnation point, which is not encouraging news for the global industry," he said, appealing to the GCC countries, including Qatar, to look at their actual requirements before rushing in with major projects.
The first phase of Doha's new port is expected to be ready in 2016 with a handling capacity of 2mn TEUs (twenty-foot equivalent units); the country's three ports together handled less than 500,000 TEUs last year. The $8.7bn port project in Doha will have a capacity of close to 5mn TEUs when it becomes completely operational between 2025 and 2028.
The speaker reminded the gathering that the port in Jebel Ali (Dubai) took more than 30 years to reach its present levels. In the past few years, trans-shipment business in even the biggest GCC ports have suffered on account of capacity enhancement in ports in a south Asian country.
Garg said the Jebel Ali port handled 46% of the overall container business in the GCC and Iran region, with Dammam in Saudi Arabia coming a distant second with about 13%. Ports in Iran recorded similar figures while Qatar's total business volume was less than 0.75%. "The UAE's share in the business is expected to fall marginally to below 40% in the next five years due to the ongoing downturn at the global level, but there is nothing to suggest a major rise in businesses at other ports in the GCC even though the region's oil-based economy looks somewhat impressive," said Garg.
While recalling that the container market in the Middle East recorded 11% growth between 2002 and 2011, he, however, said the current scenario was far from encouraging.
Calling upon Qatar - which is developing a major port - to explore innovative methods such as developing special economic zones and free trade and warehousing zones to attract new businesses in a highly competitive market, the speaker said the issue of capacity enhancement is as crucial as that of under-utilisation.
Garg said a realistic assessment is required for the new Doha port as well due to severe competition in the neighbourhood.