What’s driving Abu Dhabi’s maritime logistics and trade growth?

Abu Dhabi has strengthened its position as a regional trade and logistics centre, with container traffic at the emirate’s Khalifa Port rising by 82.4% year-on-year in the first half of 2019.

The port processed 1.1m twenty-foot equivalent units (TEUs) between January and the end of June, according to manager and operator Abu Dhabi Ports, a significant increase on the 621,000 TEUs handled during the same period in 2018.

Abu Dhabi Ports manages and operates 10 ports and terminals in the UAE, including the Port of Fujairah, Zayed Port and Mussafah Port, and one port in the West African country of Guinea.  

Globally, Abu Dhabi Ports recorded a 10% rise in total cargo volumes across its facilities during the period, to reach 9.7m tonnes.

See also: The Report – Abu Dhabi 2019

Greater capacity and connectivity

The rapid increase in container volume was largely driven by a recent concession deal with Switzerland-based shipping and logistics firm Mediterranean Shipping Company (MSC), signed in May last year.

The 30-year, $1.1bn deal will see MSC develop and operate a new container terminal at Khalifa Port, which will add some 2.8m TEUs in capacity to the facility. While the completion date is set for next year, the port has already benefitted from MSC’s decision to shift part of its regional activity to the site.  

The expanded cargo-handling centre will allow Khalifa Port to accommodate heavier traffic flows while maintaining access to the emirate’s economic free zones.

Meanwhile, in December China’s COSCO Shipping Ports (CSP) and Abu Dhabi Ports inaugurated the CSP Abu Dhabi Container Terminal.

The terminal has an initial handling capacity of 1.5m TEUs, which can be extended to 2.5m TEUs, and includes the largest container freight station in the MENA region, covering 275,000 sq metres. Trial operations began in the second quarter of 2019, with full commercial operations expected to begin before the end of the year.

The development further positions Abu Dhabi Ports as the regional centre for CSP’s network of 36 ports, as well as major trade hubs along the Belt and Road Initiative. Such moves are central to plans to increase Khalifa Port’s container-handling capacity from 2.5m TEUs in 2017 to 8.5m TEUs by 2024.

Ports key to economic diversification

Efforts to expand maritime logistics services and capacity form part of wider strategies to diversify the economy of Abu Dhabi and the UAE.

Given Abu Dhabi’s strategic location on heavily trafficked trade routes between Asia, Africa and Europe, the emirate has identified logistics and trans-shipment services as areas with significant growth potential.

Improvements to trade links are also expected to create more investment and business activity.

In February last year Abu Dhabi Ports signed a 15-year concession with Spanish shipping services firm Autoterminal Barcelona to expand the existing car terminal at Khalifa Port.

Highlighting the segment’s importance to overall economic activity, the Abu Dhabi Ports reports that maritime trade accounts for a Dh19.6bn ($5.3bn) value-added contribution to Abu Dhabi’s non-oil GDP and supports some 60,000 jobs in the emirate.

Driving local industry

Improved maritime facilities are helping to stimulate growth in industry and manufacturing.

Located next to Khalifa Port, Khalifa Industrial Zone (KIZAD) benefits from low logistics costs, efficient operations, and a steady flow of materials and parts to the zone. In addition, goods produced in KIZAD have access to modern port facilities with strong freight connections.

In a sign of its appeal, and suggestive of growing Sino-Emirati ties, the site attracted around $1bn in Chinese investment across a series of industries between mid-2017 and mid-2018, while in May this year Chinese company East Hope Group signed a preliminary agreement to look into the feasibility of investing some $10bn.

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