Middle East transhipment business set to change after Abu Dhabi signs MSC deal

The future shape of transhipment hub patterns in the Middle East Gulf looks set to undergo significant change after Abu Dhabi Ports Company today signed a 30-year concession agreement with MSC to establish a new container terminal in the UAE located at Khalifa Port, in a move that will pose an unprecedented long-term challenge to Dubai’s status as the established transhipment hub in the region.

MSC’s port operating subsidiary Terminal Investments Ltd (TIL) will invest some AED4bn (US1.1bn) in expanding the container capacity of Abu Dhabi from its current 2.5m teu to 8m teu over the next five years, according to Captain Mohamed Juma Al Shamisi, chief executive of Abu Dhabi Ports.

“The agreement with MSC is yet another remarkable milestone in Abu Dhabi Ports journey and the region as a whole. This agreement comes with multiple strategic benefits to customers and companies working shipping and logistics, including faster and more efficient services, easier access to more markets in the region and the world. In addition to, attracting more foreign direct investment to Abu Dhabi and the region, especially in the Khalifa Industrial City and KPFTZ, the largest of its kind in the Middle East.”

“Abu Dhabi Ports has successfully attracted two of the world largest companies in the field of shipping and container handling to develop a regional hub at Khalifa Port. Over the next five years, the capacity of two container terminals at Khalifa Port will increase to more than 8.5m teu annually,” he said.

Developments include an increase in the current 12 ship-to-shore cranes to make a total of 25 of some of the most technologically advanced cranes in the world, over the next two years. Additionally, a berth deepening project will make Khalifa the first port in the region capable of receiving the largest bulk shipping vessels in the world.

However, it was also clear that the real driver for the project is to provide capacity for MSC and, by implication, its 2M partner Maersk Line at a key junction point in the world’s shipping lanes.

Ammar Kanaan, chief executive of TiL, said: “TiL welcomes the opportunity to co-invest with Abu Dhabi Ports in further developing Khalifa Port, in order to provide MSC and its shipping alliance partners with efficient terminal capacity in this strategic location. We look forward to collaborating on the project in the coming years.”

Sultan Ahmed Al Jaber, UAE minister of state and chairman of Abu Dhabi Ports, added: “These agreements cement the UAE and Abu Dhabi’s position as a global trading, shipping and logistics hub. This agreement will also promote economic growth and increased investment through the rise in container traffic. The UAE has been successful in implementing large infrastructure projects, and this has been due, to a large extent, to the presence of the world’s most technologically advanced ports, modern and integrated transportation networks, as well as its strategic location as a central hub between Asia, Europe and Africa.”

The upshot could well be the development of regional hub rival to Dubai and Salalah in Oman, and according to a statement from Abu Dhabi Ports, “MSC plans to gradually shift some of its container handling in the region to Khalifa Port, starting July 2018”.

Diego Aponte, president and chief executive of MSC, added: “The UAE has a rich history in international trade and after two decades of operating in the country, MSC is pleased to continue to support the growth of the local maritime economy.

“We are confident that with this investment we will continue to ensure a high level of service for our customers and have the capacity to grow the scale of our operations in the UAE.”