SERVICES

“Middle East ports must explore innovative approaches”

Dubai - According to a new report by The Boston Consulting Group (BCG), entitled “Will Middle Eastern Ports Continue to Succeed?”, ports across the region have enjoyed success by building high-quality infrastructure to serve the large cargo volumes flowing through the region

Dubai - According to a new report by The Boston Consulting Group (BCG), entitled “Will Middle Eastern Ports Continue to Succeed?”, ports across the region have enjoyed success by building high-quality infrastructure to serve the large cargo volumes flowing through the region. From 2011 through 2016, the compound annual growth rate (CAGR) of container throughput was measured at 4%, which exceeded the global average. Moreover, the throughput growth rates of other types of seaborne cargo have also been impressive. But as is often the case, following a period of strong growth, there are causes for concern. Overcapacity, exposure to transshipment, and lagging port productivity threaten to slow or even reverse the upward trajectory of the region’s ports. Hence, ports in the region have to explore alternative routes to mitigate these challenges: “Middle East ports accounts for less than 3% of global GDP, while its ports handle approximately 20% of global seaborne trade. This disproportionate share is the result of both geographic advantages and well-executed investments,” said Giovanni Moscatelli, Partner & Managing Director at The Boston Consulting Group Middle East.

RISING OVERCAPACITY
Middle Eastern ports have aggressively added capacity. From 2011 through 2016, container capacity increased by 16 million 20-foot equivalent units (TEU). This represented an annual growth rate of approximately 7%, versus 4% for container throughput. The additional capacity caused utilization at ports to fall by 9 percentage points, from 75 percent to 66%. This utilization rate is generally considered low and puts downward pressure on handling rates, and in some locations overcapacity is severe.

Despite already low utilization, Middle Eastern ports have announced plans to add capacity totaling approximately 57 million TEU by 2030, thereby doubling the current level.

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