Bahrain carves out niche

Bahrain carves out niche Island nation in the Persian Gulf competes in a crowded field of ports stretching from Dubai to Kuwait.

By Eric Johnson

      Within 300 miles along the southern rim of the Persian Gulf, there are a clutch of vibrant, internationally focused cities.
      There's Dubai in the East, then Abu Dhabi, Doha and then the island chain nation of Bahrain, all with growing populations an expanding scope for imports and exports. All four cities either have well-established container ports or have such ports on the drawing board.
      Is there room for them all? American Shipper spoke in June to Shaikh Daij bin Salman Al Khalifa, chairman of the General Organization of Sea Ports in the Kingdom of Bahrain, about where his port fits in the Persian Gulf jigsaw.

Al Khalifa

      Bahrain, a nation of roughly 1 million people, is an archipelago of 33 islands connected to the mainland by a causeway to Saudi Arabia, and is soon to be connected in the other direction to Qatar.
      But the nation has been at the forefront of economic progressiveness ' even more so than Dubai, in some respects. The country permits 100 percent foreign ownership and is planning to leverage its reputation with a 1.1 million-TEU capacity port, the Khalifa bin Salman Port (KBSP), with a connected free trade zone.
      The port's capacity can be increased to 2.5 million TEUs, if demand increases, and the model is clearly based on the synergy created by the Jebel Ali port and free trade zone in Dubai. The port lies 13 miles from Bahrain's international airport and less than 30 minutes from Saudi Arabia by road. A multimodal logistics center, designed to attract cargo from Saudi Arabia, is due to open by the end of 2010.
      For North American shippers, the United States and Bahrain cemented a free trade agreement in 2006 and U.S.-Bahrain trade reached $1.3 billion in 2008, a 66 percent increase from before the FTA was signed.
      'All of these contributing factors have positioned the KBSP as the gateway of choice for investors starting their operations in the Middle East, especially those who want to access the vast market of Saudi Arabia,' Al Khalifa said. 'This is further enhanced by the cost competitiveness and educated skilled workforce. KBSP also offers the lowest operating costs in the region, thereby providing true value for money.'
      The port, privatized in 2006, is managed by APM Terminals, which operates several key hubs in the Middle East and North Africa (including in the Maersk Line-supported transshipment hub Salalah and in Egypt's growing Mediterranean hub, Port Said) and appears engaged in a competitive battle with Dubai-based terminal operator DP World in the region. The new container terminal opened in April 2009.
      'We have just completed dredging the Bahrain approach channel to 13.6 meters, and will be launching the second phase of this project to reach a depth of 15 meters, which, when completed, will allow us to receive some of the largest vessels navigating in the Gulf to access Bahrain and use it as a transshipment hub for the northern Gulf region, including Saudi Arabia, Kuwait, Qatar, Iraq and northern Iran,' Al Khalifa said.
      The 16-mile causeway linking Bahrain to Saudi Arabia is particularly key, as it provides direct access to the massive Saudi Arabian market that other nations in the region can only reach via ocean feeder service or long-haul trucking. The planned causeway to Qatar would put Bahrain only 30 minutes from that nation, where a planned 2 million-TEU seaport in Doha is still in the planning stages.
      Current direct services connect Bahrain with Singapore and China, in addition to direct regional links with major Persian Gulf markets. Estimates indicate about 60 percent to 70 percent of containerized trade is primarily with Asia, Al Khalifa said.
      Maersk, APL, United Arab Shipping Co. (UASC), Mediterranean Shipping Co., CMA CGM and Hanjin Shipping all call at Bahrain weekly.
      'Bahrain has the shortest travel time between its seaport, airport and the logistics processing zone of anywhere in the Gulf, enabling more efficient and faster processing of trade goods,' Al Khalifa said. 'Put simply, because much of the inter-gulf shipping trade is conducted through feeder vessels, it is more cost-effective for shipping lines to use Bahrain as their hub, as the distance to neighboring countries makes it more efficient for feeder vessels to travel from Bahrain to the northern gulf.'
      He also pointed to plans for a six-nation rail network among the members of the Gulf Cooperation Council countries from Kuwait to Oman, though that project is unlikely to be complete until around 2030.
      At Bahrain's seaport organization 'our overarching responsibility lies in guiding the development of strategies to position Bahrain as a global leader in the maritime industry,' Al Khalifa said. 'In order to meet this goal, the (organization) works to ensure proper legislation is in place to regulate the industry, adheres to international maritime standards and conventions, provides necessary services to clients in the maritime industry, and ensures that Bahrain's maritime infrastructure is fully developed to serve the needs of the industry.'
      Bahrain will have to compete fiercely with the dominant port in the region, Jebel Ali, to lure mainline vessels. And it will also have to fend off competition from burgeoning ports in Abu Dhabi, as well as ports on the northern side of the Persian Gulf, if it is to succeed as a complementary container hub in the region.