Transport Intelligence (Ti) has claimed that the Middle East Gulf region could suffer from substantial overcapacity of container terminal infrastructure if all planned projects go ahead.
The warning was made in a recent report published by the transport research and analysis company.
The report, entitled ‘Middle East Logistics Investment Opportunities 2018’ highlights the various upgrades that nearly all major ports have in the pipeline and warns that if these major airport and port development projects occurred, particular facilities risked being significantly underutilised.
This is already occurring in a number of terminals, Ti says.
In 2016, Bahrain’s throughput was about 300,000 TEU, while its Khalifa Bin Salman Port had a capacity of 1m TEU a year.
Qatar handled just under 500,000 TEU but has capacity to take four times that, while the Omani container ports of Duqm, Sohar and Salalah have total throughput of 4m TEU but capacity is 10.5m TEU.
However, the report also highlighted that Dubai remains the dominant hub for regional container traffic, with its port facilities proving most resilient to instability in the container market.
During 2017, for example, the Saudi Arabian ports of Dammam and Jeddah and the UAE’s Khorfakkann Port were last year among the ten biggest losers of container volumes.
This is according to figures from the Alphaliner database. Yet, container traffic for DP World’s UAE portfolio grew by more than 4%, according to figures released by the port operator at the beginning of the year.
This has not deterred executives from further port building. Qatar’s capacity is set to increase to 6m TEU by 2020, while Saudi Arabia’s King Abdullah Port will, in 2020, see the current 4m TEU capacity boosted to 20m TEU.
“Overall, it is abundantly clear that if these planned investments go ahead, there will be vast under-utilisation of terminal capacity across the region, as there simply will not be the demand for the available capacity,” Ti said.
At Jebel Ali Port, meanwhile, DP World is set to see work commence late this year to bring the facility’s capacity to 22.1m TEU. According to an official at DP World, speaking off the record, Terminal 4 is “ready to go, we’re just waiting for the green light”.
In other words, the expansion is ready to commence, but DP World doesn’t see the demand necessary to make it worthwhile, which is why its investing heavily in automating Terminal 3, with plans to soon begin retrofitting Terminal 2 for automation.
Terminal 3 is already semi-automated, as will be the case for Terminal 2, while Terminal 4 will be fully automated, meaning that all loading and offloading of containers will be done by computer, rather than from a remote control room by hand, as is currently the case at T3.
With the region at risk of overcapacity, presenting shipping line with an abundance of choice for mainliner services, only the most efficient ports will be able to retain and grow throughput.