GCC Set to Become New Global Shipping Hub

The GCC is set to become the new global shipping hub for the new trade routes between the east and the west, expert speakers at the sixth Seatrade Middle East Maritime said.

Mohammed Al Muallem, Senior Vice President and Managing Director, DP World, UAE region, led a positive session on the first day of the event, on the maritime industry’s economic and trading environment. He said: “GCC growth forecasts are much healthier than for the rest of the world, thanks to our oil-based economies. Increased shipping business from the east is compensating for the losses coming from the more developed western markets.”

“Cash reserves (government current account surpluses) are healthy across the GCC nations; so any financial shocks can be absorbed.”

The maritime expert said the GCC is pushing diversification, so there is less reliance on the petrodollar. “GCC governments are investing heavily to diversify their economic structures; which has a positive impact on trade and logistics,” he said.

He said the region is investing massively in mega infrastructure projects, which will have an immediate effect – and “Ports are part of the supply chain, so we must be able to handle this growth in the most effective way – in terms of capacity, infrastructure and efficiency. Many ports in the region are expanding to handle the increased cargo expected,” he said.

The influx of cargo supplying both regional and global needs will necessitate the use of ultra large container carriers, which the region’s ports are prepared for.

“At JAFZA and DP World we are confident we will have the capacity to meet demand. We are investing $850m in Jebel Ali Port, to add 5 million TEU by Q1 2014, raising capacity from the current level of 14 million to 19 million TEU.

“We need to cater to the changes in our industry. Bigger ships are coming to this region – and we are preparing JAFZA port to handle up to ten mega ships at the same time,” said Al Muallem.

MENA shipping analyst at investment bank EFG Hermes, Redwan Ahmed called for industry agreement on supply control, and said industry growth will remain sluggish until such agreements are made.

“While overcapacity is still an issue, 2013 will see greater stability, backed by the strong companies we have in the Gulf, and I expect to see more investment in the regional shipping industry.”

Capt Mohamed Al Shamisi, Chairman, Abu Dhabi Terminals and Executive Vice President, Abu Dhabi Ports Company, said: “We have an important role to play in future. We have seen dramatic changes in the world economy. The biggest change is the shift from the more developed world to the emerging economies, and a concurrent shift in focus of trade for shipping companies. “

“This region is the bridge between Asia and Africa, as we have the capacity and ability to handle the increasing trade volumes and deep water ports capable of managing larger vessels. While Africa’s ports will see increasing activity, they won’t be able to serve VLCs for a long time, unlike the GCC,” Al Shamisi said.

He sees a future where ‘motherships’ will arrive in the GCC, which will unload cargo onto smaller vessels destined for Africa.

Chris Hayman, Chairman of Seatrade, added: “Saudi Arabia is investing SAR800bn in new port infrastructure, Qatar is putting $150bn in preparation for the 2022 FIFA World Cup, and Iraq is very much a growing market. The UAE is also back on a rapid growth curve. It is clear that the GCC maritime sector is extremely well positioned to service the imminent boom years.”

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Seatrade Middle East, November 28, 2012; Image: DP World