Bahrain: Trans-shipment services earmarked for growth

Text size +-
Share

The Kingdom strengthened its role as a hub for trans-shipment services in the Northern Gulf markets last year, buoyed by Saudi Arabia’s growing market. However, while the expansion of these services spells good news, rising demand has also produced challenges.

Trans-shipment is increasing as a share of the Kingdom’s maritime logistics infrastructure, with total trade volume rising significantly at Khalifa Bin Salman Port (KBSP) in 2012. APM Terminals, which operates the port, said the trans-shipment market witnessed annual overall growth of 11% in 2012. It added that revenues at the terminals rose 12.5% year-on-year (y-o-y) in the third quarter of 2012.

Saudi Arabia’s expanding economy is expected to act as a key driver in the development of Bahrain’s trans-shipment services. The CEO of APM Terminals, Marco Neelsen, told OBG, “The future of Bahrain’s trans-shipment success lies in the Upper Gulf, including the Eastern Province of Saudi Arabia. Saudi Arabia and Bahrain have strong economic and political ties, and the Saudi market provides a tremendous opportunity for us to expand.” He added that APM Terminals Bahrain supported the development of a feeder network from Bahrain to Saudi Arabia and the Upper Gulf markets, which would be used as a reliable platform to trade out of the region.

The setting up of a fully-fledged feeder network, in particular, should lay the groundwork for greater volumes of trans-shipment which in turn have the potential to lead to value-added benefits.

Joint initiatives with Saudi Arabia could also provide Bahrain with an opportunity to tap into the growing global demand for petrochemicals. Saudi’s Jubail port could offer Bahrain considerable potential to increase its capacity for production and export, Neelsen told OBG.

Jubail port is already moving increasing volumes of cargo, establishing itself as an alternative to Saudi Arabia’s Damman facility, which is operating above capacity. Industry players are upbeat about the growing number of opportunities becoming available to Bahrain’s shipping lines from the move to feed more traffic into Jubail. “The sheer volume of Saudi trade is enormous,” Agility Logistics’ CEO, Vivek Nambiar, told OBG, “so even if a new Damman port arises, Bahrain will always continue to have a role in serving the Saudi market.”

Bahrain’s maritime regulatory environment also gives the country a competitive edge, particularly its port-clearing time, which, at 24 hours, is two days’ faster than clearance at Damman, according to Nambiar.

While rising trans-shipment activity in Bahrain is proving to be a key growth area, its expansion has created a backlog across the King Fahd Causeway (KFCW) to Saudi Arabia. Reports claim that the KFCW’s holding areas have struggled to cope with rising volumes of cargo trucks, leading to delays of up to 10 days. Testing is currently taking place on new programmes designed to address the problem, including a causeway-clearing initiative that allocates timeslots for trucks to enter the area directly from warehouses rather than via the holding areas.

More sustainable solutions, however, will require an increase in departure lanes and overall road capacity across the causeway, together with the easing of Customs controls on the Saudi side.

Key funding initiatives, which are set to increase the number of departure lanes from 10 to 17 and arrival lanes from 13 to 18, should play a key part in supporting expansion. The highly anticipated $25bn GCC railway is also expected to significantly ease congestion along the KFCW. The network, which is scheduled to begin operating by 2017, includes a 90-km section running along the causeway, linking Bahrain and Damman.

Additional infrastructure spending from Bahrain’s government and wider GCC programmes should also pave the way for further growth in both the trans-shipment and general cargo segments.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart

Read Next:

In The Middle East

Jordan: A new investment landscape

With efforts to accelerate the pace of economic growth and boost domestic employment taking centre stage under the new government of Prime Minister Marouf Bakhit, a new law is under discussion...

In Transport

Perú: Preparándose para el despegue

El sólido crecimiento económico del Perú en la última década se vio acompañado por un incremento igualmente considerable del tráfico aéreo, que aumentó a más del doble en los pasados cinco años,...

Latest

Turkey's Prime Minister Ecevit in the US

The Turkish Prime Minister Bulent Ecevit has spent the last week in the US hoping to garner support for economic reforms at home and trade concessions for Turkish exports to the US.