OBG talks to Hassan Ali Al Majed, Director-General, General Organisation of Sea Ports (GOP)

Interview: Hassan Ali Al Majed

How can Khalifa Bin Salman Port (KBSP) become a transportation hub in the northern Gulf?

HASSAN AL MAJED: Since fluctuations in the global economy and world trade are cyclical, I am confident that the market will turn around and that exports from major exporting countries will regain their momentum. Furthermore, I believe their business with the Middle East will increase significantly in the near future. When this happens, shipping lines will be drawn to the modern and well-developed port infrastructure of Bahrain, and will be able to use KBSP as a trans-shipment hub to efficiently and cost-effectively access not only the northern Gulf, but also the rest of the Middle East.

In the meantime, our strategy is to re-galvanise and continue to modernise and improve our port and logistics infrastructure, facilities and regulatory framework. Operational efficiencies at the port, managed by APM Terminals Group, have been continuously increasing and match the highest international standards and best practices. KBSP is enhanced and supported by the Bahrain Logistics Zone (BLZ), and by a well-integrated infrastructure. By focusing on export and re-export-oriented logistics activities, BLZ is expected to contribute to a significant increase in cargo throughput at KBSP.

Considering the downturn in the shipping industry following the economic crisis, what is the outlook for general and container cargo volumes at KBSP?

AL MAJED: I have no doubt that the Middle East will play an important role in leading the recovery in the global economy. This optimism is supported by the fact that oil prices are high and that most countries in the region continue to spend huge sums on building infrastructure and economic diversification. The GCC project market is expected to reach $150bn in 2012 and reach a new peak by the middle of the decade.

Saudi Arabia is the largest project market in the region and KBSP is the ideal trans-shipment connection for accessing Saudi and other northern Gulf markets. The development and reconstruction of Iraq will also lead to greater activity at KBSP in terms of transshipment and re-export from Bahrain to the Iraqi market. Bahrain has a free trade agreement (FTA) with the US, which means that overseas companies with a manufacturing facility in Bahrain can benefit from preferential access to the vast American market.

Furthermore, products manufactured or value-added in Bahrain by prescribed percentages can be exported to other GCC countries and will be eligible for preferential treatment, including duty exemption. Though the US FTA has already proved to be enormously beneficial to both sides, I feel that only a fraction of the huge potential that exists for bilateral trade and investment between the two countries has been realised. I have no doubt that all these and other expected developments in the coming years will give a tremendous boost to general and container cargo volumes at KBSP.

With regard to land transportation, what improvements will be essential to ease the movement of goods into Saudi Arabia?

AL MAJED: Bahrain has one of the most modern road networks in the region. This is enhanced by its connectivity to the 25-km King Fahd Causeway that links Bahrain with the Eastern Province of Saudi Arabia. In recent times, there has been tremendous pressure on this important land route as a result of heavy and increasing traffic flows. As a result of steps taken by both countries to ensure the smooth and speedy flow of goods and passengers across the causeway, the situation has been improving continuously.

This pressure can also be reduced if shipping lines operate more feeders between the two countries, making use of the excellent port and logistic facilities offered in Bahrain. Bahrain’s land transportation to its GCC neighbours will receive a further boost once the ongoing Qatar-Bahrain Causeway project is completed. In the long term, the proposed GCC rail network, once accomplished, will lead to a significant reduction in congestion on the roads and also boost intraregional trade.