How international partnerships will boost Abu Dhabi’s ports

Abu Dhabi’s maritime transport segment is making significant advances, with the volume and value of trade passing through its terminals expanding significantly in early 2019. While previous forecasts for near-term growth will likely be slowed by the drop in trade flow triggered by the Covid-19 pandemic – indeed, the World Health Organisation forecast in April 2020 that global merchandise trade for the year could be down 13-32% – seaports will continue to play an important geostrategic role.

Key Partnerships

Abu Dhabi Ports owns and operates 11 ports and terminals, including nine terminals in Abu Dhabi, Port of Fujairah in the eponymous neighbouring emirate, Kamsar Container Terminal in the Republic of Guinea and Khalifa Industrial Zone Abu Dhabi (KIZAD). The company reported that its growth in the first half of 2019 was partly the result of concession agreements signed with international firms, including Mediterranean Shipping Company and China’s COSCO Shipping Ports (CSP).

In a September 2019 statement, Abu Dhabi Ports said that the 82.4% increase in the volume of container traffic at Khalifa Port was led by the agreement with Mediterranean Shipping Company, while also anticipating greater growth as the CSP Abu Dhabi Container Terminal – with a capacity of 2.5m twenty-foot equivalent units (TEUs) – became fully operational in the final quarter of 2019. Two of CSP’s 21,000-TEU mega-vessels called at the CSP Abu Dhabi Container Terminal in 2019. The two agreements were signed as part of a five-year plan to boost investment flows to the UAE as a whole and Abu Dhabi in particular. It is anticipated that capacity at Khalifa Port will reach 9.1m TEUs by 2024.

Khalifa Port’s deep waters and 8-km-long breakwater offer access and shelter for some of the world’s largest ships, while its semi-automated container terminal is the first of its kind in the GCC region. The port serves 25 shipping lines, connecting it to 70 international destinations. In 2015 Abu Dhabi Ports shifted its roll-on/roll-off (ro-ro) cargo from Port Zayed to Khalifa Port, and in 2018 it signed a joint-venture agreement with Spanish terminal operator Autoterminal to expand this area of its operations. The company will operate Autoterminal Khalifa Port under a 15-year concession. As highlighted by these developments, international partnerships have played a key role in the success of Abu Dhabi Ports, as they offer both market exposure and technological know-how.

Ro-ro vessels have access to 550 metres of dedicated quay, allowing two deepsea vessels to dock simultaneously. While the site is already fully functional and can accommodate around 15,000 vehicles, it is due to be expanded to 300,000 sq metres with the capacity to store 17,000 vehicles. The terminal offers connections to the US, Europe, Southeast Asia and Africa, and is a centre for automobile re-export for the GCC, East Africa and western India.

The movement of imported cars will also be expedited by the construction of the Etihad Railway that will link Khalifa Port to Jebel Ali, Fujairah and the wider GCC network through Saudi Arabia and Oman (see overview).The improved connectivity and logistics will also enable products such as auto parts to be shipped from KIZAD to markets throughout the region. The first half of 2019 saw a relatively small decline in ro-ro numbers year-on-year, with total units falling from 78,163 to 73,590, which Abu Dhabi Ports attributed to a decrease in new car sales.

Cargo Increase

In value terms, the emirate’s seaports handled 32.8% of its non-oil exports, 16.5% of re-exports and 55.2% of imports in 2019. There was a significant 10% boost in the volume of general cargo managed by Abu Dhabi Ports in the first half of 2019: total cargo handled by Port Zayed, Mussafah Port and the Port of Fujairah amounted to 9.7m tonnes. The company also handles bulk cargo, including aluminium and steel, with break-bulk services offered through Khalifa Port and Port Zayed.

According to the most recent breakdown from the “Statistical Yearbook of Abu Dhabi 2019” from Statistics Centre - Abu Dhabi, Abu Dhabi Ports handles 6m tonnes of iron ore each year for Emirates Steel, as well as 4m tonnes of alumina for Emirates Global Aluminium and more than 6m tonnes of bauxite. The value of base metals exported from the emirate grew by 9.3% in 2019 to Dh17.1bn ($4.7bn).

Cruise Visitors

Since its inauguration in December 2015 Abu Dhabi Cruise Terminal at Port Zayed has played an increasingly important role inaccommodating the rising number of tourists visiting the UAE. In 2018 the facility was used by 13 cruise lines, with more than 160,000 passengers arriving in Abu Dhabi during the first half of that year. Cruise liners also call at Fujairah Terminals, located in the Port of Fujairah, and at Sir Bani Yas Island.

In the first half of 2018 cruise terminals operated by Abu Dhabi Ports were visited by 237,169 passengers, a number that increased by 35% to 321,277 in the first half of 2019. While the travel disruptions engendered by the Covid-19 pandemic will depress these figures in 2020, it is hoped cruise volume will recover as travel normalises.

Business Centre

Situated midway between Abu Dhabi and Dubai, KIZAD is a rapidly growing business and logistics zone that thrives due to its proximity to Khalifa Port, while also relying on the port’s facilities to export the products made by its factories. As of early 2020 more than 600 companies had set up operations in KIZAD since its opening in 2010, representing Dh70bn ($19.1bn) in investment across a number of industrial sectors, from automotive parts to food, metals and polymers.

New agreements were signed with DHL Global Forwarding and polymer company Gulf Compound Blending in the first half of 2019, just as work started on the Dh2.2bn ($598.8m) Roadbot tyre factory, which will be able to produce 10m car tyres and 1m truck tyres annually by 2022. “Abu Dhabi is home to an important local shipbuilding industry, which is a positive factor in terms of providing parts and human capital for maintenance and repair services,” Ali El Ali, managing director at Zakher Marine International, told OBG. “However, the industry is now seeing a global trend towards greater overall cost efficiencies, an area that Abu Dhabi may need to place a greater emphasis on if it is to become more competitive internationally. Generally speaking, the opportunity for Abu Dhabi to become a seafaring centre in the region is significant.”

Ghadan 21

In August 2019 KIZAD stated it was waiving fees for more than 75% of its services thanks to the Abu Dhabi government’s Dh50bn ($13.6bn) Ghadan 21, or Tomorrow 21, stimulus package. The Ghadan 21 programme, which runs to 2021, aims to stimulate investment and development by focusing on improving socio-economic, knowledge and liveability outcomes, and supporting both smaller firms and larger companies. “The cost of setting up and maintaining a successful business at KIZAD is now more achievable,” Mohamed Juma Al Shamisi, CEO of Abu Dhabi Ports, said in a press release.

Chinese Investment

Abu Dhabi is seeing considerable Chinese investment across its transport sector. Construction on stage two of the Etihad Rail network, which will link Khalifa Port to Jebel Ali, Fujairah and the Saudi border, is being led by China State Construction Engineering Corporation in partnership with South Korea’s SK Engineering & Construction, while CSP signed a 35-year concession agreement with Abu Dhabi Container Port. Chinese companies have also made significant investments in KIZAD. Jiangsu Provincial Overseas Cooperation and Investment Company has brought Dh6.2bn ($1.7bn) in investment to KIZAD. The company is developing a 2.2-sq-km manufacturing zone within KIZAD, with plans to increase this more than 12 sq km as part of a 50-year agreement with Abu Dhabi Ports. In September 2019 work began on a project to house 5000 management and staff at KIZAD. The accommodation is being built on a 75,000-sq-metre plot within the China-UAE Industrial Capacity Cooperation Demonstration Zone. This area will have four staff housing blocks as well as community facilities, with the first due for completion in 2020.

Elsewhere, the Industrial and Commercial Bank of China is helping Chinese firms establish businesses at KIZAD. “More than a quarter of the UAE’s Asian imports come from China. With such a stable and sustainable relationship with our Chinese partner, an investment in workforce is one of the most valuable decisions one can make, and this ... project reinforces the ... mutual benefits we are gaining through our strategic partnership,” Samir Chaturvedi, CEO of KIZAD, said in a press release. These investments in ports, rail lines and industrial zones should help diversify the economy by boosting non-oil exports.