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Kuwait Freight Transport Report Q4 2011
Business Monitor International, Sep 2011, Pages: 45
The major story for the Kuwait freight sector this quarter is the start of work on the Mubarak al-Kabir port, and the tensions it has stirred up with Iraq. In addition to the new facility, Kuwait continues to invest in its existing ports, and the development of the country's rail network, in tandem with the wider rail investment in the Gulf Co-operation Council (GCC), has moved on, with completion expected 2017. Kuwait's ports are still struggling to recover the volumes they enjoyed prior to the global economic downturn, and BMI does not expect them to recover these volumes this year. Middle Eastern unrest could add further woes to the freight sector, but the high oil prices they have caused could also provide an upside risk as the Kuwaiti consumer becomes richer on the back of them.
Headline Industry Data
- 2011 port of Shuaiba tonnage throughput growth forecast at 2.3% and to average 4.2% to 2015.
- 2011 air freight tonnage growth forecast 1.3% and to average 1.1% a year to 2015.
- 2011 total trade real growth forecast is 1.7%.
Key Industry Trends Old Tensions Flare Up As Port Developments Press Ahead
Tensions between Kuwait and Iraq continue to escalate as the two countries develop their respective new ports. Twenty-one years since Iraq occupied Kuwait and declared the small country the 19th Iraqi province, it is Iraq that is now concerned by what it sees as Kuwaiti impingement on its territorial rights. With armed forces being deployed on Bubiyan Island, the location of the new Kuwaiti port, and Iraqi militants threatening to strike, BMI notes that the glut of new Gulf port developments is beginning to rock the region's sometimes fragile balance.
APL Logistics Expands Business Operations APL Logistics, a 100%-owned subsidiary of Neptune Orient Lines (NOL), has expanded its business operations in the Middle East by appointing two agencies - Iraq Transcontinental Shipping and Kuwait Transcontinental Shipping. The agencies operate through their offices in Basrah in Bagdad, Umm Qasr in Iraq and Ardiya in Kuwait. They will both expand APL Logistics' existing business network in Bahrain, the UAE, Saudi Arabia, Egypt and Pakistan, as well as other locations across Africa, according to the company's managing director for the Middle East, Joseph Lee.
Kuwaiti Port Unveils New Equipment To Boost Box Throughput The Kuwait Ports Authority (KPA) unveiled a range of new landside equipment at the country's premier container port of Shuwaikh on July 6, which should improve efficiency and turnaround times at the facility. Although these new amenities provide upside risk to our forecast, given the macroeconomic and political situation in Kuwait we have decided to leave our throughput forecasts for Shuwaikh unchanged for the time being.
Risks To Outlook From a macro perspective, should any more disruptions in oil production across the region occur in the coming quarters, as OPEC's fourth biggest oil producer Kuwait could be required to ramp up production, which in turn would pose upside risks to our growth forecasts. Lingering tensions in Kuwait's parliament, combined with the regional political crisis, could significantly distract the government from pushing through much-needed reforms to the business environment.
Given its geographic location and political nature, Kuwait is at risk of suffering from the disruption that has swept the Arab world in 2011. Further political risk comes from a possible escalation of the dispute with Iraq over the construction of the countries' respective ports.
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