Increased GCC transport connections enhance Ras Al Khaimah's value proposition

Geographical location, well-developed infrastructure and free trade within the GCC are among the top logistical advantages offered to businesses locating in Ras Al Khaimah. The emirate benefits from the high standard of road networks in the broader UAE and from close proximity to some of the world’s busiest airports and ports, but it also has its own distinct strengths and value propositions.

National Plan

In its UAE Vision 2021 national development plan, the country has given itself less than a decade to create transport infrastructure that will rank as the best in the world by some measures and in the top 10 by others. It is already making great strides towards these national performance indicators for the categories of both sustainable environment and infrastructure, according to international comparisons published by the World Bank and the World Economic Forum (WEF).

Results from WEF’s “Global Competitiveness Report 2014-15” rank the quality of the UAE’s airport infrastructure as the second highest in the world, behind Singapore but ahead of Hong Kong and the Netherlands. The UAE was ranked third by this measure in the 2013/14 report and is aiming for first place by 2021. The quality of its port infrastructure is ranked third, behind the Netherlands and Singapore, also an improvement of one place on the previous report – and here again the UAE is aiming to become number one by 2021. In terms of overall transport infrastructure, the UAE is ranked third, behind only Switzerland and Hong Kong, which is a rise of two places on the previous report and just two places short of its first-place target. The country is already ranked first in the world in the WEF report for the quality of its road infrastructure, ahead of Portugal, Austria and France. However, it still has some way to go to reach its target of being in the top 10 of the World Bank’s logistics performance index, which measures competence in countries’ Customs processes, timeliness and tracking of goods: the UAE currently ranks 27th.

GCC Mega-Projects

RAK is also set to benefit from a clutch of transport mega-projects that are due for completion by 2020 across GCC countries. A variety of new roads and railways currently under construction or in the pipeline will offer faster journey times throughout the region, connecting to two new Arabian Seaports in RAK’s neighbour Oman that offer enhanced access to markets in East Africa and the Indian subcontinent. Almost $200bn will be invested in the GCC railway project alone, with the first cargo trains scheduled to reach RAK by 2018 as part of the Etihad Rail project, according to MEED, a business weekly that covers the MENA region. In the UAE alone, some $3.4bn worth of transport infrastructure projects were signed in 2013, MEED calculated.

RAK Investment

RAK is not merely relying on the expansionary policies of the federal government, however, nor on the megaprojects being undertaken by its neighbours: it is also making improvements to its own roads, seaports and airports to enhance the speed, efficiency and safety of its transport networks and facilities. While it may not be attempting to match the spending levels of Dubai or Abu Dhabi, it is able to benefit from its proximity to the big cities without suffering from the problems of congestion – both on the roads and in the air – that the larger centres face. When travel is measured in journey time rather than kilometres, the people and businesses in RAK, as well as visitors to the emirate, enjoy easier access to parts of Dubai, including its main international airport, than those who live in some parts of the city itself. From a UAE-wide perspective, RAK also serves as a gateway to Oman’s northern Musandam Governorate. And, to the extent that trade sanctions are eventually lifted on Iran – negotiations for which took place in early 2015, with a framework agreement reached in April and a formal deal concluded in July – more opportunities should open up for businesses based in RAK. According to the World Bank, Iran’s population of 80.8m is second only to Egypt in the region. The IMF estimates that Iran’s GDP is $393.5bn at 2015 current prices, larger than the UAE’s $363.7bn.

RAK is served by transport networks on land, at sea and in the air, which complement elements of the national infrastructure and which must also been seen in a broader regional context.

Seaports

There are five ports in the emirate, each with a clearly defined role or niche. Branded as RAK Ports, all are managed by the Saqr Port Authority. Saqr Port was the UAE’s first major port and is now the largest port for bulk dry commodities in the Middle East and North Africa, according to the emirate’s Investment and Development Office. RAK Maritime City (RAKMC), created by emiri decree in 2009 and opened in May 2011, has been designated a special investment zone for companies needing direct access to the sea, providing private jetties, common user berths, 5 km of quay wall and plots of 20,000-1m sq metres for lease. This allows them to make products near their own wharf and ship directly, without the added cost of transporting them to a separate port. RAK Khor Port, which is the marine base for several offshore oil and gas operators and provides lay-by facilities for barge and workboat operators, has a passenger cruise terminal and also provides cargo-handling services, warehousing and marine maintenance. Al Jeer Port, opened in 2009, handles livestock and general cargo, as well as caters to leisure craft. Last, Al Jazeera Port provides 12 dry docks, with repair and lifting facilities covering an area of 50,000 sq metres. It can handle vessels up to 55 metres in length and 18 metres wide.

Special Investment Zone

RAKMC has been built over 8m sq metres and offers free zone terms to a variety of commercial, industrial, trading and manufacturing companies wishing to take advantage of the emirate’s proximity to markets in the Gulf and further afield. Air Liquide Middle East Manufacturing, for example, produces air separation units at a 33,000-sq-metre plant on its waterfront site of 181,000 sq metres. Operating since 2014, the plant has a private jetty 452 metres long that allows direct loading onto heavy lift vessels for shipment to Middle East customers. Similarly, Eversendai Offshore, which fabricates steel, is using its 180,000-sq-metre plot and 505-metre private jetty to enter the market for jack-up rigs for the Middle East oil and gas industry. Archirodon, a multinational with extensive maritime construction contracts in the Gulf, has its regional base on a RAKMC plot of 152,000 sq metres with a 666-metre jetty. In April 2015 Panol Industries, a subsidiary of India’s Panama Petrochem, opened a plant that makes rubber processing oil after 18 months of construction. Other companies with private waterfront operations in RAKMC include Boskalis Westminster, a global dredging firm, and two onshore and offshore construction companies, Van Oord and BAM International.

Al Jazeera Port

Focused on dry-docking and ship repair for small and medium-sized vessels, Al Jazeera Port covers a range of marine services, with a 50,000-sq-metre dry dock area and 12 dry berths. Global Shipyard, headquartered in India and a subsidiary of Mumbai’s Prince Marine Transportation Services, began building ships at a new base in Al Jazeera Port in 2015 (it also has a base in Singapore). The company’s first project at this new facility, a 48-metre, multi-purpose supply vessel, has been launched and was nearing completion for delivery as of mid-2015. Another order for a second vessel is awaiting confirmation. Global Shipyard has signed a 10-year lease on a dry berth at the port, and has requested additional space for planned expansions.

Al Jazeera Port is also playing a key role in various marine construction projects. For up to two years from January 2015, Hyundai Engineering and Construction, which was awarded the $1.89bn contract to build a series of man-made islands off the coast of Abu Dhabi, will store and sort sections of concrete quay walls at Al Jazeera Port. These sections will then be shipped to Satah Al Razboot Island Number Four. The concrete units are being manufactured at RAK Precast at their Al Hamra facility and then transported to the port by road prior to shipment.

Commodity Cargo

Saqr Port is the emirate’s main conduit for raw materials and bulk cargo, catering to a range of goods including aggregate, limestone, bauxite, clinker, coal, calcium carbonate, gypsum, iron ore, red shale, laterite, silica sand, animal feedstuffs and soda ash. Because it handles the rock, aggregate and cement produced by RAK’s heavy industries and quarries – many of which serve the region’s construction industry – the volume of cargo it handles can fluctuate with the level of construction work taking place in GCC countries and beyond. However, the regular shipment of limestone to the Indian iron and steel industry has given the port significant additional volumes.

Saqr Seaport Authority volume throughput figures show the port handled about 49.6m tonnes of cargo in 2014, an increase of nearly 100% on the 25.9m tonnes handled in 2010. Of this total, 44.1m tonnes were for export. During 2014, the port handled 1626 vessels loading or discharging bulk cargo, using 10 berths: seven port authority berths, another berth with a rail-mounted ship loader that is operated solely for RAK Rock and Stevin Rock vessels, and two common-user berths at RAKMC.

Broader Picture

Although RAK’s five ports on the Gulf have distinctive offerings that are particularly useful for certain industries, the emirate’s road network gives access to other opportunities at all points of the compass. Many companies use Jebel Ali, to the south in Dubai, the ninth-largest container port in the world. Expansions taking place at Jebel Ali Port, which is operated by DP World, mean it will have a capacity of 19m twenty-foot equivalent units (TEUs) by the second half of 2015. The port is located 122 km from businesses in the RAK Industrial Authority area, with an estimated journey time of one hour and 20 minutes, though the route can become busy during peak traffic hours.

Significant developments have also been taking place in ports operated by RAK’s eastern neighbour, Oman. Khasab Port, in that country’s northern Musandam Governorate, is on the Straits of Hormuz and just 90 minutes’ sailing time from the ports of Iran. It is already being used by cruise ships, and there are plans to develop it as a commercial port. In 2014 the Omani government signed a memorandum of understanding (MoU) with Iran’s Kaveh Port and Marine Services to develop facilities at Khasab. The significance for the emirate is that the only road serving the port starts at the RAK-Oman border crossing. The journey time from the emirate’s industrial zone to Khasab is one hour and 40 minutes, and companies in RAK City are able to reach the Omani port in just over an hour. Those wishing to trade with Iran, should sanctions be lifted, could opt to use the emirate’s ports as well. Bandar Lengeh port in Iran is less than 100 nautical miles from RAK Port, half a day’s sail for a vessel travelling at 10 knots.

Businesses in RAK would also have an advantage if shipping through the Straits of Hormuz is ever compromised, thereby disrupting Jebel Ali or RAK’s ports, because Oman is also investing in its ports on the Arabian Sea and on infrastructure to link these with the Arabian interior. The port of Sohar, which is the result of a $15bn investment, is just 186 km from the emirate’s industrial area and can be reached in two hours and 20 minutes. For businesses in RAK’s southern Al Ghail Industrial special investment zone, the journey time is just over an hour. Sohar is closer to RAK than it is to either Jebel Ali or Abu Dhabi. Goods from the UAE can be exported from Sohar to East Africa, Europe or the Indian subcontinent without having to pass through the choke-point of the Straits of Hormuz. Oman International Container Terminal, which is within the port of Sohar, has a capacity of 1.5m TEUs, with current expansion plans set to raise this to 2.5m by 2018.

Roade Networks

RAK is served by three multi-lane federal highways, two of which run southwards to Sharjah, Dubai and Abu Dhabi. The E11 Al Etihad Road hugs the coastline and takes traffic through Umm Al Quwain, Ajman and Sharjah on the way to Dubai. The E311 road, known as the Emirates Road until it was renamed the Sheikh Mohammed Bin Zayed Road in 2013, is a 140-km arterial route linking Abu Dhabi to Dubai and RAK. The 73-km section running through Dubai was expanded to six lanes in 2006 and is capable of handling 12,000 vehicles an hour. From RAK, the E311 is the preferred route for traffic heading to Dubai, Jebel Ali or Abu Dhabi. Traffic joining the road in RAK can bypass Sharjah, Ajman and Umm Al Quwain and so potentially reach the centre of Dubai more quickly than vehicles making the journey from those emirates. For traffic heading more directly to Abu Dhabi, the E611, or Emirates Road, runs south-west and links up with that emirate without passing through Dubai. The third federal highway is the E18, which takes traffic from the centre of RAK City, out past RAK International Airport, on towards Al Ghail Industrial Park and thence towards the emirate of Fujairah, Dibba in Oman, Al Manama in Ajman, or further south to Sohar in Oman. For traffic heading north to Oman’s Musandam Governorate, there is a multi-lane highway to Sham, just short of the border check-point, and from there a single-lane road runs through Oman to Khasab, at the far tip of the Musandam Peninsula.

Commuter Times

The ease of access afforded by the Sheikh Mohammed Bin Zayed Road, combined with the difference in housing costs between Dubai and RAK, creates a strong value proposition for commuters. It is possible, for example, to drive from Al Hamra to Dubai International Airport in less than an hour. Moreover, in that same part of Dubai, free park-and-ride schemes for metro users mean commuters are able to take the green line from Etisalat, which has 3000 parking spaces, or the red line from Rashidiya, which has 2714. “RAK has a compelling proposition, and we are seeing reverse migration, with people from Dubai or Sharjah moving to RAK because it has a lovely feel to it,” Timothy Lefebvre, president of Mabani Steel, told OBG. “This is the closest I have ever lived to work, and if I want to go to Dubai it is only an hour away.”

Road Users

Ministry of Interior figures show that 23,667 driver’s licences were issued or renewed in RAK in 2013, of which 21,282 were for cars, 821 for trucks, 634 for motorcycles and 554 for buses or mini-buses. A well-regulated and metered taxi service operates in RAK, licensed by the emirate’s transport authority, and provides services between the different emirates. Some hotels offer shuttle services from the airport. The Al Hamra bus route runs from the south of the emirate to Sham in the north.

In 2009, the Indian company Ashok Leyland began operations at a factory in RAK that builds thousands of buses and mini-buses a year. The company supplies vehicles that can be used to transport workers or schoolchildren in the UAE and other GCC countries. “In 2014 we built 2750 buses, and by the end of 2015 we will have taken capacity up to 4500,” K M Mandanna, Ashok Leyland’s head of international assembly operations, told OBG. “A lot of the demand is coming from the growth in the construction sector.”

Rail Project

The 1200-km Etihad Rail project is being built across the UAE in three stages and will eventually transport both freight and passengers, providing rail links to the proposed GCC network. The first phase, which runs between Habshan and Ruwais, has already been completed and the second will connect the line to Mussafah, Khalifa Port and Jebel Ali, as well as reach the borders of Oman and Saudi Arabia. The connection to RAK is part of phase three and is due for completion by 2018. The British engineering firm Atkins won the Preliminary Engineering contract and its initial blueprint for phase three shows the line turning north at Al Ghail junction, with branch lines for a Stevin Rock Terminal and a Ghail Bulk terminal between that junction and RAK station to the north. At RAK station the railway forks, with one line heading north towards Saqr Port and the other turning towards the coast and passing through an Al Hamra Transfer Station and Depot before terminating at Al Hamra Bulk Container Terminal.

According to Etihad Rail, a number of businesses in RAK have already signed MoUs with the company. In June 2014 it reported Tarmac Middle East had signed an agreement to serve its Al Futtaim Tarmac Quarry Product Company at Shawkah. Meanwhile, Al Jaber Group has signed an MoU to transport aggregates from its facility at Shawkah to UAE ports and eventually across the GCC network. In all, Etihad Rail reports that some 54 companies across the UAE have signed MoUs to use the rail network as of mid-2015.

Air Services

RAK’s proximity to Dubai International Airport offers significant advantages to the emirate’s tourism and real estate industry. Its beaches and villas are within an hour of what is the world’s busiest airport by international passenger traffic, according to Airports Council International. Dubai International is also one of three UAE air hubs – the other two being Abu Dhabi International and Dubai’s Al Maktoum International – that are expanding to cater to a third of a billion passengers a year between them within a decade. RAK’s own international airport is used by budget airline Air Arabia and a number of charter carriers, but in a significant move, in May 2015 Qatar Airways announced it would begin running direct flights to RAK starting in February 2016, which could pave the way for other international airlines to do so as well. The challenge for RAK International Airport is to find ways to complement the multibillion-dollar investments being made in Abu Dhabi and Dubai by developing facilities that serve RAK’s businesses. “I think the UAE should be thinking about how to capitalise at UAE scale in aviation, rather than just focusing on individual emirates,” the airport’s CEO, Mohammed Qazi, told OBG. “The land area is very small, and as a consequence the airspace above is very small too, but you have the northern part of the country here in RAK where there is quieter airspace you can utilise.”

Outlook

The transport infrastructure that serves RAK has already helped the emirate to grow and has improved its value proposition for businesses, tourists and residents. The arrival of the railway in 2018 may not instantly boost the fortunes of the UAE’s most northerly emirate, but it will add a multi-modal element to its transport infrastructure that will help ensure that RAK is able to tap into the opportunities afforded by a GCC region that is increasingly interconnected.