Gulf ports to keep facing challenges due to Red Sea crisis

A gloomy picture looms on the horizon for the Gulf ports’ performance, as the disruptions in the Red Sea continue unabated.

 

Saudi ports experienced a notable increase in container handling in the 2023 fiscal year, with over 5 million TEUs processed.

This growth was mirrored by an improvement in Saudi Arabia’s ranking on the World Bank’s Logistics Performance Index (LPI), moving up 17 positions to 38th globally.

 

King Abdulaziz Port saw significant activity, with 2,516 ships arriving in 2023 and a 9.11% rise in total tonnage.

 

Contrastingly, Jeddah Islamic Port faced challenges, witnessing a 14.4% drop in container volumes in 2023, with inconsistent performance throughout the year due to global supply chain disruptions. Despite managing 4,411 ships in 2023, the port struggled with maintaining steady throughput.

 

Overall maritime traffic in the two Saudi ports decreased by 11.24% in 2023.

 

This volatility at Jeddah Islamic Port underscores the need for enhanced resilience and diversification.

 

This was being reflected in the port connectivity trends that showed a strong 2023 performance but a significant decline in 2024, likely due to operational disruptions and global supply chain issues.

 

On the other hand, Jebel Ali Port in the UAE maintained robust operations, handling 19.3 million TEUs in 2023 and ranking 7th globally in the LPI, indicating strong logistical capabilities and ongoing efforts to bolster global trade connections. Connectivity trends from 2023 into 2024 remained stable and strong, underscoring Jebel Ali’s pivotal role as a global transshipment hub.

 

Furthermore, Oman’s Port of Salalah processed 3.8 million TEUs in 2023, translating to a decline from the previous year. This aligns with the observed decline in the connectivity index, highlighting the need for strategic adjustments to regain its previous operational levels. Salalah port saw a 22% decline in container volumes, mainly due to vessel diversions from the Red Sea region, exacerbated by geopolitical conflicts and rising insurance costs.

 

 

 

 

In summary, while 2023 was a mixed year for Middle Eastern ports, with notable growth at King Abdulaziz and steady performance at Jebel Ali, Jeddah Islamic Port and Salalah faced significant challenges.

 

The analysis of the port connectivity index from 2023 to 2024 revealed varied performance among Gulf ports.

 

The strong performance of Jebel Ali highlights that the important geographic location may have allowed a more stable port performance, as it lays far from the Red Sea region.

 

It could be also noted that the UAE tries to differentiate the overall performance of their trade, by signing new deals. On 26 September, UAE reached a trade deal with New Zealand, which could would unlock economic opportunities for exporters and boost supply chains.

 

On the other hand, Saudi ports seem to have been heavily affected by the disruptions in the Red Sea. The geography of the region does not favor the country, despite the big investments in port facilities as Saudi Arabia struggles to shift the mixture of its economy.

 

Oman appears to have been impacted by the incidents in the Red Sea, likely due to its reliance on certain trading sources. To enhance its performance, Oman should consider adopting a more outward-focused trade strategy and increasing investments.

 

Overall, the Gulf region seems to face significant challenges in terms of maritime trade, and as long as the disruptions in the Red Sea continue, it is highly unlikely that the situation will show signs of improvement.

 

Shenzhen Xunlaitong specializes in shipping export from Shenzhen to Australia & New Zealand, Germany, Netherlands and more business

 

www.xunlaitong.com