Abu Dhabi: Trade winds

Following the significant increase in non-oil merchandise trade in 2011, market participants in the local transport and logistics sector appear to be preparing for a continued rise in activity in 2012, with one Abu Dhabi-based shipping firm recently investing $44m in a new vessel.

The total value of the emirate’s non-oil merchandise trade was up by 27.8% in 2011, reaching Dh139.42bn ($37.95bn), according to data released by the Statistics Centre – Abu Dhabi in August. The vast majority of this – 83.5% – was accounted for by imports. Exports made up 8.2% of the total, while re-exports accounted for the balance (8.3%). Growth was strongest in imports, which grew by Dh29.8bn ($8.11bn), or 34%. The value of re-exports increased by 5.3%, but exports fell by 1.1%.

The largest category in imports was machinery and transport equipment, including motor vehicles and mechanical appliances, which grew by 25.6% in 2011. A significant increase was also noted in the second-largest group, manufactured goods classified by material, which includes products made of iron, steel, copper and plastic, as well as textiles. These two categories alone accounted for 74.4% of the value of imports in 2011.

For exports the largest categories were machinery and transport equipment, manufactured goods, and chemicals and related products, with these three groups combining to make up 92.8% of non-oil exports in 2011. The key components of the machinery and transport equipment category were floating or submersible drilling platforms, while manufactured goods were mainly articles made of iron or steel. The primary good in the chemicals category was plastics.

In volume terms, imports increased by 27.7% to reach 16.24m tonnes. Most goods entered the country by sea, accounting for 69.8% of import volume in 2011. Imports by sea also exhibited the greatest growth, with volumes rising by 38.3% compared to 2010. Imports by land, which made up 29.8% of the total, were by up 7.5%, while imports by air declined by 12.2% from the previous year.

Exports were also up in volume terms, amounting to 1.53m tonnes, an increase of 9% from 2010. Some 60% of export volume was accounted for by land transport, with this category rising by 20.1% in 2011. The second-largest category, exports by sea, fell by 5.1% and accounted for 39.3% of volume last year. Shipments by air were the smallest group, accounting for 0.7% of non-oil export volume in 2011, although this does represent a doubling of growth over the previous year.

Trade volumes – both imports and exports – could see significant growth in the coming years thanks to the opening of the Khalifa Port (KP), a new facility that commenced operations in early September and will replace Mina Zayed as the emirate’s primary cargo port. KP is located adjacent to the Khalifa Industrial Zone Abu Dhabi (KIZAD), the emirate’s newest and largest manufacturing centre.

Eships, an Abu Dhabi-based ship owner and operator, is currently discharging about 1m tonnes of alumina from Australia per annum at KP. Established in 1996 by the Abu Dhabi Investment Company and Mubadala Development Company, both of which are owned by the emirate’s government, Eships provides marine transportation globally, with a focus on the Gulf, the Middle East and North Africa region, Europe and south-east Asia. The company has a fleet of tankers and bulk carriers, with the latter transporting goods such as iron ore, alumina, grain and aggregate.

In August the company announced that it had ordered an 180,000-deadweight-tonnage (DWT) capesize bulk carrier with an option for a second, at an estimated cost of $44m. The vessel is being manufactured by China-based Qingdao Beihai Shipbuilding Heavy Industry, with delivery projected for the first half of 2014. According to Claus Breitenbauch, the CEO of Eships, ship-building prices have come down in recent months, making this a good time to invest in new vessels. “The current market conditions present good opportunities for shipping companies to build capacity, provided they can gain access to cash. Companies must evaluate if they have the means to take advantage of such opportunities,” he told OBG.

While banks’ appetite for lending may be down in light of a prolonged global economic slowdown, this may be a profitable time to invest in Abu Dhabi’s transport and logistics sector, as not only are equipment prices down, but shipping companies may soon witness an increase in demand for their services, thanks to the opening of KP and continued development of KIZAD.

Read Next:

In The Middle East

Ayman Tamer, Chairman and Managing Partner, Tamer Group

To what extent is the pharmaceuticals industry adapting to the needs of Saudi Arabia’s population?

In Transport

How is Covid-19 impacting supply chains in Mexico?

While the Covid-19 pandemic has broken 720,000 cases and led to almost 34,000 deaths globally as of 29 March, Mexico – which has the world’s 10th-largest population, at 127m – has reported 993 ...

Latest

The impact of Covid-19 on Peru's insurance sector

Peru has responded quickly and effectively to Covid-19. It was the first country in the region to impose a quarantine, on March 15, followed by a curfew on March 18.