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United Arab Emirates Shipping Report Q2 2011
Business Monitor International, Feb 2011, Pages: 105
Business Monitor International's United Arab Emirates Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on United Arab Emirates's shipping industry.
On a global level we continue to see risks to all three core shipping sectors (container and dry and liquid bulk), with overcapacity and a drop in demand continually threatening to push down rates and impinge on lines' profits. As austerity measures take hold in Europe and the US continues to have high unemployment and recover from the downturn sluggishly, shipping levels may slow their growth considerably. After an estimated return to growth for the UAE's primary ports in 2010 we forecast growth to continue over the medium term (2011-2015), though at a slower rate than previous to the economic crisis.
Headline Industry Data
2011 Jebel Ali and Port Rashid total tonnage throughput forecast to be 148.34mn tonnes, following an estimated 139.46mn tonnes in 2010.
2011 Jebel Ali container throughput expected to reach 13.28mn 20-foot equivalent units (TEUs), following an estimated 11.96mn TEUs in 2010.
2015 Jebel Ali container throughput projected to reach 18.94mn TEUs.
UAE total trade real growth in 2011 forecast to be 8.55%.
Key Industry Trends Alumina Delivery Key Milestone For Abu Dhabi Diversification: Abu Dhabi Ports Company (ADPC) and Emirates Aluminium (Emal) received, at the start of November 2010, the first shipment of alumina to the purpose-built wharf at the new port facility of Khalifa Port in Taweelah. This is part of an important process of diversification for Abu Dhabi, moving away from a reliance solely on oil.
DP World Consolidation Continues, And This Time It's Closer To Home: In a further indication that all may not be well at DP World, the UAE-based ports operator announced, in December 2010, that it will not be extending its management of Abu Dhabi's port of Mina Zayed now that its five-year concession has come to an end. BMI notes that this follows the announcement, earlier in December, that the company is to sell 75% of its Australian operations to Citi Infrastructure Investors, leading us to believe that the company is not immune from contagion by debt-troubled parent company Dubai World. However, these consolidation moves, and the upturn in global container shipping this year, should see the company flourish in the years to come.
ADNOC's Fleet Expansion Raises Risk Of Overcapacity: The Abu Dhabi National Oil Company (ADNOC) received, in October 2010, the first of 15 new builds due for delivery over the next year. ADNOC operates two tanker divisions shipping chemicals, oil and natural gas, and the vessels -- a mixture of tankers and chemical carriers -- will significantly enlarge the company's current fleet of 14 vessels. BMI notes that companies pursuing aggressive expansion strategies, such as ADNOC's, raise the risk of overcapacity in the liquid-bulk shipping sector. The fact that ADNOC is primarily an oil and gas company mitigates this, however, as the vessels will be used mainly to service their own needs and will not therefore be solely subject to the vagaries of the spot market.
Key Risks To Outlook The UAE appears to be over the worst of the economic crisis, and Dubai World's debt restructuring is almost finalised. Nevertheless, the private sector must still go through a deleveraging process in the coming years and growth will be slower than previously. As a major oil exporter, the UAE is at risk of an over-reliance on one commodity for its prosperity, though with oil prices currently high that should not be a problem in the short term.
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