How is Qatar boosting transport capacity and connectivity

Qatar’s air and sea ports have long been central to the country’s economic expansion. The 2010 announcement that the country would host the 2022 FIFA World Cup accelerated the government’s drive to upgrade transport infrastructure, prompting significant increases in public financing. There is also a renewed emphasis on sustainability in the sector, as the development of environmentally friendly infrastructure and services is a key component of Qatar National Vision 2030 (QNV). Indeed, the more efficient movement of people and goods is at the heart of the country’s broader economic development plans. The 2022 FIFA World Cup will be held approximately halfway though the implementation period of QNV, and a number of major transport projects have come on-line in preparation for the tournament.

Qatar began to diversify its trade and transport routes in 2017 after political disagreements with some of its neighbours created temporary disruptions. These efforts stimulated robust growth for the transport sector in 2018 and 2019, before the Covid-19 pandemic temporarily stalled progress. Even so, the diversification of trade routes helped the sector and the wider economy better manage the disruptions caused by the pandemic. With the roll out of Covid-19 vaccines having facilitated a return to economic activity and travel worldwide in 2021, Qatar’s transport sector appears well placed to build on its role as an engine for broad-based economic growth.

Carbon-Neutral Goals

Eco-friendly transport is central to Qatar’s efforts to host the first carbon-neutral iteration of the World Cup. The fully electric Doha Metro and its green building-certified stations will play a large role in achieving this goal. The underground network connects five of the eight tournament venues directly with Hamad International Airport (HIA). The remaining three venues can be reached by a combination of metro and bus routes. More than 1100 electric buses will be provided for fans throughout the tournament. Although achieving a carbon-neutral World Cup is a challenging undertaking, the short distances between tournament venues help to facilitate sustainable connectivity. The longest distance between stadia is 75 km, eliminating the need for players and fans to take domestic flights.

The government’s vision of Qatar becoming a diversified and sustainable economy sees several other eco-friendly transport initiatives in the pipeline, such as the electric Lusail Tram, the extension of pedestrian and cycle lane networks, and the modernisation of dhows (traditional sailing boats) that will see them used as solar-powered leisure and tourism vessels. Notably, Qatar Airways Cargo became the first airline to join the carbon-offsetting platform CO2nnect, led by the International Air Transport Association (IATA), and carried out its first carbon-neutral cargo flights from Doha to Frankfurt, Liège, Paris and Zaragoza in November 2021. As such, while the 2022 FIFA World Cup will offer a global platform for Qatar to showcase its commitment to environmental initiatives, sustainability will remain integral to government strategies beyond the tournament’s end.

Structure & Oversight

The Ministry of Transport (MoT) is the government body responsible for providing oversight and policy direction for the sector. The executive structure of the MoT sees the minister, Jassim Saif Ahmed Al Sulaiti, his undersecretary and five assistant undersecretaries take responsibility for governance. The ministry was created in October 2021 when the Ministry of Transport and Communications (MTC) was separated into the MoT and the Ministry of Communications and IT.

Government-owned enterprises play an important role in the sector. In the aviation segment, Qatar Airways Group owns the country’s only international gateway, HIA, and the company’s various subsidiaries are key players in the cargo, executive jet, hospitality and duty-free market areas of the aviation industry. Qatar Airways and HIA were named the world’s best airline and best airport by UK-based aviation consultancy Skytrax in 2021. Responsibility for planning, policy development, licensing and safety standards in civil aviation is the remit of the Civil Aviation Authority, which reports to the MoT.

For rail transport, Qatar Rail was established by Amiri decree in 2011 with the responsibility to design and implement efficient rail networks throughout the country. Its duties include establishing and updating regulatory frameworks, and ensuring connectivity between railways and other modes of public transport. At its inception Qatar Rail’s prime directive was to oversee the installation of a metro network in Doha to be ready for the 2022 FIFA World Cup. Phase 1 of the Doha Metro project – featuring 37 stations across three lines – opened in 2019; phase 2 is set to be completed by 2026. Doha Metro is planned to link with the Lusail Tram, a 25-station network in Lusail City. Phase 1 of the tram commenced commercial operations in January 2022 (see analysis).

The two major players in the operation of Qatar’s ports, meanwhile, are Mwani Qatar, the body that is responsible for the managing country’s seaports and shipping terminals, and has overseen significant developments at Hamad Port at Umm Alhoul; and publicly listed maritime logistics entity Qatar Navigation (Milaha). Individuals hold a 38.3% share of the latter, while Qatar Energy – formerly Qatar Petroleum – is the largest single shareholder, with 8.6%. Other government-related entities hold 2.9% of shares.

Terminal operating company QT erminals, which is jointly owned by Mwani (51%) and Milaha (49%), operates Hamad Port. It handles containers and non-containerised shipments including livestock, roll-on/roll-off (ro-ro), offshore supply and general cargo. In this capacity, QT erminals moves the majority of Qatar’s maritime imports and exports. The company also operates Akdeniz Port in Antalya, Turkey, and has stated its intention to increase its share of global shipping trade by acquiring additional international ports. In the first quarter of 2022 the firm’s 223 vessels handled 229,000 twenty-foot equivalent units (TEUs) of container traffic, nearly 259,000 tonnes of break bulk and 61,300 tonnes of bulk shipments.

The national bus, taxi and limousine fleet is operated by government-owned Mowasalat, which was awarded exclusive operating rights for 20 years upon its foundation in 2004 – although competition has since been allowed in the taxi and limousine segments following the introduction of ride-hailing services and private taxis in the past decade. As of March 2021, 20% of Mowasalat’s buses were electric, and the company aims to operate an entirely electric fleet by 2030.

Size & Performance

Initial estimates from the Planning and Statistics Authority for 2020 show that Qatar’s transport and storage activities contributed QR18.7bn ($5.1bn) to GDP at constant prices, or 2.9% of the total, down from the QR25.7bn ($7.1bn) seen in 2019, when it accounted for 4.2% of the total. This decline is due in large part to the outbreak of Covid-19 and the resulting curtailment of local and global transport-dependent activities.

The political disagreements between Qatar and some of its neighbours in 2017 brought temporary disruption to many of the country’s established transport routes and trade agreements, yet the sector recorded only a slight contraction of 0.7% that year. The agility demonstrated by the relevant authorities in strengthening transport and trade relationships with Turkey, Iran, India, Pakistan and several EU countries, among others, enabled sector growth of 7.7% in 2018, which was followed by expansion of 9.2% in 2019. As such, while the Covid-19 pandemic upended normal transport activities, the fact that sector stakeholders were already in the process of adaptation and strengthening self-sufficiency when the virus emerged helped to boost resilience against the business stresses of the health crisis.

The 2021 national budget contained an allocation of QR11.5bn ($3.2bn) for transport and communications activities under the former MTC. This equated to 5.9% of total expenditure. The budget’s provision for municipality and environment, meanwhile, was QR25.4bn ($7bn), or 13% of total spending. A significant portion of this was earmarked for the maintenance and expansion of road networks as the government seeks to ease congestion, reduce journey times, improve road safety, and strengthen multi-modal connectivity and logistics capabilities.

Roads

The Public Works Authority (Ashgal) oversees construction contracts, including those in the transport sector. In this capacity, it is responsible for the development and maintenance of road systems. Several major road projects have been completed in recent years, improving connectivity between ports and centres of commerce and industry.

Ashghal’s ongoing Expressways Programme will see around 800 km of new motorways installed across the country and is designed to provide the backbone for broader road connectivity. One major component of the programme, the 33-km Al Khor Road, opened in May 2019. It comprises five-lane carriageways, 10 multi-level interchanges, a central train track and connections with the Lusail Expressway. It also offers access to Al Khor Airport and various leisure facilities, including two stadia for the 2022 FIFA World Cup. The road has boosted capacity from 8000 to 20,000 vehicles per hour in both directions, facilitating the efficient movement of people and goods between the cities of Doha, Lusail, Al Khor, and the towns and residential areas in between.

Meanwhile, a QR71.9bn ($19.7bn) road and infrastructure project in Al Ebb and Leabaib, which are located in the Al Daayen municipality, began in 2019. Slated for completion in the third quarter of 2024, the project includes 39 km of roads, 87 km of illuminated pedestrian and cycle lanes, and 6720 parking spaces, as well as landscaping, beautification and utilities upgrades. Al Daayen stretches along much of the route covered by the Al Khor Road, underscoring Ashgal’s approach to ensuring that the country derives maximum benefit from development projects.

Ports

Qatar’s ports have been crucial for economic development, and they will be of even greater importance as the government works to build on the country’s status as a regional shipping centre. Hamad Port, the country’s primary maritime facility, officially opened in September 2017 and is operated by QT erminals. It is undergoing significant upgrades, which, once complete, will make it among the largest ports in the Middle East, with its three container terminals set to offer a combined capacity of 7.5m TEUs per year.

Container Terminal 1 has a capacity of 2m TEUs per year. Container Terminal 2 began operations in December 2020 and is being developed in four phases, the second of which is expected to be completed by the end of 2022. Once fully operational, Container Terminal 2 will add 2m TEUs to the country’s annual handling capacity. “Qatar has developed a strong supply chain, including Hamad Port, motorways and warehousing capacity,” Abdulrahman Essa Al Mannai, president and CEO of shipping and logistics provider Milaha, told OBG. “This has helped to boost shipment volumes, despite the challenges caused by disruptions to supply chains around the world.”

Qatar’s secondary commercial port, Al Ruwais Port, is managed by Mwani Qatar and is located on the northern coast. The port is positioned to facilitate economic activity in the surrounding area. In 2020 the port saw a 37% increase in container volume, with vehicle handing rising by 30%. The port is joined by the nearby Al Mina Market, a traditional trading facility that serves merchants from Qatar and neighbouring countries. Al Ruwais Port is being upgraded as well, with its navigation channel and docks set to be dredged to a depth of 10 metres.

Doha Port, for its part, primarily handles cruise ships and is being redeveloped to cater for rising demand for marine tourism offerings. A number of coastal industrial zones also have their own ports. In 2020 Hamad Port, Al Ruwais Port and Doha Port handled a combined 1.55m tonnes of general cargo, 1.45m TEUs, 453,000 heads of livestock, 357,000 tonnes of building materials, 127,000 cruise passengers and 61,200 ro-ro cargo. The first half of 2021 saw those ports handle 819,000 TEUs, a 22% year-on-year increase, and Hamad Port registered growth of 86% in trans-shipment activity for the same period.

Players in the segment are working to incorporate environmental, social and governance (ESG) criteria into their daily operations. “Greater adherence to ESG principles allows companies in the maritime segment to improve their financial resilience and sustainability by taking a holistic view of the well-being of employees, customers and stakeholders,” Al Mannai told OBG.

Aviation

The closure of borders and grounding of aircraft around the world due to the pandemic dampened passenger activity, but Qatar Airways proved agile in adapting its services by shifting from larger aircraft to smaller, more efficient planes to fulfil its passenger obligations. During the pandemic the company diversified its range of passenger routes and boosted cargo handling. Indeed, Qatar Airways Cargo transported more than 500,000 tonnes of medical equipment and aid throughout the 2020/21 financial year, which included the delivery of 20m doses of Covid-19 vaccines to more than 25 countries. The company was ranked as the world’s third-largest airfreight carrier for the year in the IATA’s 2020 “World Air Transport Statistics Report”.

HIA aims to boost its capacity to 58m passengers per year by the start of the 2022 FIFA World Cup, and to 60m passengers thereafter. In an effort to ensure that capacity expansion is matched by experiential improvements, in June 2021 the airport entered into a three-year research partnership with Hamad bin Khalifa University’s College of Science and Engineering to harness advanced visual analytics to personalise passengers’ airport experience.

Between its 2014 opening and mid-2021, the airport handled over 200m passengers and more than 13m tonnes of cargo. HIA registered total passenger throughput of 38.8m in 2019, up 12.5% from 34.5m in 2018. While the pandemic led to a drop in arrivals to 7.3m in 2020, the following year the airport saw a 142.5% increase in the number of passengers, at around 17.7m. As of early 2022 HIA served 156 destinations, with eight new passenger destinations added in 2021. The most popular destinations that year were Dhaka, Malé, Dubai, Kathmandu and London.

Rail

Qatar’s plan for an integrated rail network is triple pronged, comprising the Doha Metro, the Lusail Tram, and a high-speed passenger and freight service designed to enable countrywide and cross-border movement of goods and people.

Phase one of the Doha Metro came on-line in 2019, and three of its four lines were operational as of early 2022. Phase two, which involves the construction of the final line, is scheduled for completion in 2026. There were 37 stations in operation in the first quarter of 2022, with another 60 set to be added in the second phase. The fully electric and automated metro is a central component of the government’s drive to establish eco-friendly travel networks across the country. Between the beginning of operations in May 2019 and January 2020 Doha Metro served 10m passengers, according to Qatar Rail, indicating the positive role it will play in reducing congestion around the capital in the years ahead – as well as its potential to facilitate travel during the 2022 FIFA World Cup.

The primarily underground metro network will eventually connect at two points with the Lusail Tram system, which began operations in January 2022. The tram’s first phase saw the opening of six of the planned 25 stations. Once fully functional, Lusail Tram will comprise four lines and 28 km of track. The trams feature complete electrical braking and LED lighting.

These local urban transit systems are envisioned to connect with the planned GCC rail network, a $250bn project that aims to boost cross-border trade and unlock economic potential across the region. Once complete, the 2180-km railway will connect all six GCC countries, with the cost distributed in accordance with the length of each country’s portion. In line with the original vision in 2009, Qatar plans to connect to the network at its land border with Saudi Arabia and via a bridge with Bahrain. Qatar also plans a $74bn cargo track to connect with Hamad Port. The regional project has experienced several delays, but in December 2021 an agreement between GCC members was reached to establish the centralised Gulf Railway Authority. In February 2022 the MoT announced that construction on the portion of the railway connecting Qatar to Saudi Arabia would begin.

Private Investment

Qatar is looking to increase foreign investment in its free zones, two of which – Umm Alhoul and Ras Bufontas – are designed to cater for export-oriented businesses. The enhancement of the country’s logistics activities is integral to these and other broader development plans. One deal signed in 2021 saw Sweden-headquartered GAC, a global shipping and logistics company, agree to establish operations in the Ras Bufontas free zone. In June of that year the firm broke ground on a 27,000-sq-metre contract logistics facility, which is set for completion in 2022. It is being built with sustainable materials and is partly fuelled by solar power.

The enactment of a law on public-private partnerships (PPPs) in 2020 is expected to boost private firms’ participation in the sector and save the government money in the longer term. The legislation outlines how partnerships are regulated in a bid to facilitate more engagements. Indeed, PPPs are expected to represent a viable means through which the government can divert some of its financial outlay by engaging the private sector in the operation and maintenance of transport nodes, especially as large-scale infrastructure projects have traditionally been publicly funded.

Under the new law ministries, authorities and government corporations are permitted to negotiate PPPs via a variety of models – such as build-operate-transfer, and operation and maintenance agreements – each with specific financial benefits for both parties. In March 2022 Ashgal began excavation work on the country’s first PPP project to create a 13-km drainage tunnel in Al Wakra and Al Wukair to a treatment centre with an initial capacity of 150m litres per day. The $236m project is to be completed in 2024.

Outlook

Qatar’s investment in transport infrastructure over the last decade – both in preparation for the 2022 FIFA World Cup, and to strengthen and diversify logistics capabilities – has been paying dividends. Sea and air ports are expanding their handling capacity, both in terms of passengers and cargo. An emphasis on sustainability and moves to improve urban transport connections have shifted focus to bus and rail transit – which is proving especially important as the country prepares to host upwards of 1.2m visitors during the 2022 FIFA World Cup. The popularity of the Doha Metro to date should provide a long-term solution to traffic congestion, with the Lusail Tram and the GCC railway set to bolster connectivity further.