Region's hub in the making

The opening of the new Khalifa Bin Salman Port should cement Bahrain's traditional place at the centre of transport and trade in the region, particularly for destinations in the Upper Gulf.

The port is strategically positioned in the middle of the Arabian Gulf and offers capacity, efficient operations, fast turn-around times for vessels and short transit times.

Its location in the heart of the Gulf Co-operation Council (GCC) should make Bahrain an ideal choice for carriers transshipping containers to the important and rapidly expanding Upper Gulf region, particularly the markets of Kuwait, Iraq, Saudi Arabia, Qatar and northern Iran.

The port has been built with this Upper Gulf market specifically in mind, and should make Bahrain a cost effective location for carriers to transship containers in this growing market.

Stakeholders want the port, operated by APM Terminals, to be a hub for Middle East Gulf cargo.

Some forecasts expect container throughput at the smallest Arab state to more than treble within five years of the port's coming on-stream.

APM Terminals, which signed a 25-year concession for Khalifa bin Salman and the existing port of Mina Salman in November 2006, has already invested in modern equipment and systems.

According to APM Terminals Bahrain managing director Steen Davidsen, his company had started "reaping the benefits before the move."

"When we took over the port was managing six to 10 container movements per hour," says Davidson. "In the space of a year we have improved that to 30 an hour."

With approximately 900,000 sqm of land, Khalifa Bin Salman, otherwise known as the Bahrain Gateway, will have substantial room for growth over the current capacity at Mina Salman.

With a draft alongside of 15 metres, the port will be able to handle post-Panamax vessels or container ships with capacity of up to 8,000 TEUs compared to the current maximum capacity for 3,000 TEU ships.

The largest container ships that currently come into Gulf waters are 8,000 TEU ships.

"This increase in the size of ships we can bring into the port is the key to us expanding from a straight forward import export port to become a transshipment hub for the upper Gulf," explains Davidsen.

"At present transshipment is carried out at the Jebel Ali port in Dubai but the increased capacity we will have will make bringing the container ship to Bahrain, offloading and then transporting on feeder ships from here far more economic and quicker," he says.

"The Khalifa bin Salman port is the ideal hub for the Northern Gulf because it is within a day's steaming time of all the local ports."

He points out that a quick turn around for container ship calls could give them an extra few hours which would allow then to steam at a slower speed and save valuable fuel."

Davidsen also says that while the move to the new port has been specifically designed to upgrade and increase the capacity for container and bulk cargo, the deep-water facilities will also allow larger cruise ships to berth in a dedicated terminal.

But, all said and done, it may not be smooth going for the port at least in the initial years.

The International Monetary Fund predicts that world trade in goods and services would contract 11 per cent in 2009 and remain flat next year. The Baltic Dry index, an important measure of shipping costs for raw materials, recovered from last autumn's lows, but started to slip again in May due to still-depressed demand for shipping.

This spells trouble for the ports in the Gulf, many of which have aggressively expanded capacity in recent years to cope with demand.

The volume of goods passing through seaports in the six main Gulf states rose from 15 million TEUs in 2004 to 24 million TEUs in 2008.

This spurred total investments in regional ports of $38.2 billion up to 2008, and a further $38.6 billion of capacity expansion projects are planned over the next decade.

These include planned expansions in Saudi Arabia, Dubai and Oman, and new facilities, such as Qatar's planned $7 billion New Doha port, Kuwait's $1 billion Bubiyan Island port and Abu Dhabi's huge $24 billion Khalifa Port and Industrial Zone.

While the Gulf's shipping lines and ports are doing better than most, the economic slowdown has caused volumes to drop in the region. Shipping consultants say traffic at Middle East container ports will contract seven per cent in 2009, while global port traffic will fall 10.3 per cent. Surplus capacity for the next few years will see many ports review their expansions. Experts predict that many will be delayed or downscaled in the light of dropping trade volumes.

l Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa will inaugurate the new Khalifa bin Salman Port today.