BMI View: The UAE's s hipping sector, one of the best developed and most important in the world, will con tinue to expand rapidly in 2015 and over the medium term. The Dubai port of Jebel Ali is the ninth largest in the world in terms of container throughput, while the Abu Dhabi facility of Port Khalifa, only launched in late 2012, is expanding rapidly thanks to the KIZAD industrial zone being developed alongside it. We expect that an economic recovery in developed markets will ensure continued growth in transhipment demand at the UAE's ports, while domestic consumer demand will also remain a key driver of throughput. The gradual rapprochement of Iran with the West will also encourage growth given the considerable re-export trade the UAE has traditionally had with the Islamic Republic.
Headline Industry Data
Sharjah Terminals container throughput (KCT and SCT) is forecast to grow by 5.9% in 2015, averaging 4.5% over the medium term.
Jebel Ali container throughput is forecast to grow by 7.8% in 2015. Through to 2019, we expect growth to average 4.8% annually.
Port Khalifa's box throughput will expand by 18.6% to 1.35mn TEUs. Growth will remain strong, averaging 15.5% to 2019.
Total trade real growth is forecast at 6.4% in 2015 and to average 4.8% through to 2019.
Key Industry Trends
Will Port Canaveral Be A Success?: Gultainer had planned to mark its entry to the US market through operating a terminal at major port Jacksonville, but this move was ultimately blocked by the port, for 'purely commercial reasons.' As a result, Gulftainer US's first port in North America is the much smaller facility of Port Canaveral, further down the Florida coastline. This makes the company the first Middle East-based port operator to enter the US market, following DP World's failed attempt to do so in 2006.
The US entry is an important component of Gulftainer's global expansion strategy. In December 2013, Gulftainer announced its plans to triple its port terminal operations by 2020 from 11 to 35, expanding total throughput at Gulftainer ports from the 6.5mn TEUs at the time to 18mn TEUs, with the intention of becoming among the top six port operators in the world. Gulftainer aims to boost revenue by 500% by the end of the decade.
Whether Port Canaveral helps Gulftainer realise this dream to any significant degree remains to be seen, but it is certain that it will be more of a challenge than it would have been with Jacksonville. The operator aims to bring through 750,000 container annually to start, but this aim is built around plans to install a railway connecting the port, and this is being challenged by environmental campaigners, who worry about the effect it would have on the Indian River Lagoon. There also remain worries in the US among some, concerned about security given Gulftainer's providence and the fact it operates ports in hot spots including Lebanon and Iraq.
Ongoing Investment Will Keep Port Khalifa Efficient: The Abu Dhabi-situated Port Khalifa, which was launched in the final months of 2012, benefits from state-of-the art equipment given its youth. However, Abu Dhabi Ports Company (ADPC) has not rested on its laurels and continues to invest heavily in ensuring that the facility remains as efficient as it can be. ADPC is installing a new terminal operating system (TOS) at the port in order to improve the general cargo operations. The new port management software named 'Master Terminal' will improve processing times and complete a range of customer service offerings, according to a company press release. The new software will also replace ADPC's existing systems and support the management of general cargo operations, which includes bulk, break bulk, project and roll-on/roll-off cargo.
Key Risks To Outlook
Risks are predominantly to the upside for the UAE shipping sector. The main upside risk is that of the growing rapprochement between Iran and the rest of the world which could lead to a greater loosening of current sanctions. As the UAE has traditionally had massive re-export trade with Iran, this could boost volumes at Emirati ports.
Equally, given the UAE and its ports' exposure to global trade patterns, any significant stall in the economic recovery in the US or the eurozone could also derail our projections.