Since the mid-2000s the authorities have invested heavily in upgrading and expanding the emirate’s road, rail and sea links, both within Abu Dhabi City and throughout the emirate as a whole. Developing Abu Dhabi’s domestic transport infrastructure and broader transport industry has been one of the government’s priorities over the past decade. At the same time, the rapid expansion of the local aviation and maritime shipping industries has contributed to the emirate’s growing reputation as a transit and logistics hub.
These developments are in line with both the Abu Dhabi Economic Vision 2030, the emirate’s long-term economic development strategy, and the Abu Dhabi Urban Planning Council’s (UPC) structural framework blueprint for Abu Dhabi City; Al Ain, the emirate’s eastern area; and Al Gharbia, the western region. Together these documents lay out a vision of sustainable development that is expected to meet Abu Dhabi’s transport needs through at least 2030.
Perhaps the key challenge currently facing transport planners in the emirate is population growth. By 2030, according to estimates by the UPC, metropolitan Abu Dhabi is expected to be home to 2.6m people, up from just 0.9m in 2008. According to Department of Transport (DoT) forecasts, given this influx of people, by 2030 the average morning commute in the city of Abu Dhabi will take two to three times longer than it did in 2008. The emirate’s rapidly expanding population has already put considerable strain on the highway and road network, which has resulted in rising levels of traffic congestion in urban areas, in particular.
Addressing the transport sector’s current and future capacity constraints in light of population growth is considered to be a core objective of the Surface Transport Master Plan (STMP), the DoT’s blueprint for the development of transport infrastructure in the emirate through to 2030. In an effort to ensure that the emirate’s rapidly expanding population is able to easily and quickly move around the capital city and the municipalities, the DoT and other agencies have spent the past five years developing and implementing a number of major transport-related initiatives.
Ongoing developments in the hydrocarbons sector are also pushing up demand. “With much of the emirate’s exploration and production activities within the oil and gas sector having gone offshore, demand for heavy transport has also gone that way,” Cameron Waugh, the general manger of transport firm ALE, told OBG. Major projects currently under way or in planning include the provision of a new integrated public transit system for the capital with metro, light rapid transit and buses; a number of key road improvements; a range of new measures to improve road safety and traffic management; the development of a new industrial zone that has the potential to turn the emirate into a global centre for aerospace manufacturing and related services; and a rail project that is expected to transform the cargo and logistics industry and could have a major impact on passenger traffic.
According to preliminary data released by Statistics Centre - Abu Dhabi (SCAD), in 2012 the transport and storage sectors combined accounted for around 8.4% of non-oil GDP at current prices, up from 8.1% in 2011, 6.6% in 2010 and 5.2% in 2009. At the federal level the National Transport Authority, which was established in 2006, is responsible for regulating and overseeing the road, rail and sea transport sector, while the UAE General Civil Aviation Authority, which was created in 1996, has responsibility for the aviation sector. Although these national entities provide top-level policies, regulations and in some cases enforcement, in practice much of the development of transport systems takes place at the emirate level.
The DoT, which was established in 2006, has a mandate to “cover the entire value chain and ensure fully coordinated planning in all aspects of transport policy and development” in the emirate, “in cooperation with all relevant local, regional and international stakeholders and partners”. The DoT works with the UPC, which is responsible for designing and overseeing upgrades to infrastructure in line with Economic Vision 2030. The UPC oversees strategic urban development plans such as Plan Abu Dhabi 2030: Urban Structure Framework Plan; the Capital District Plan; Plan Al Gharbia 2030; and Plan Al Ain 2030.
The DoT and the UPC work closely with a handful of major state-owned enterprises, including Abu Dhabi Airports (ADAC), Etihad Airways, the Abu Dhabi Ports Company (ADPC) and Etihad Rail. While these firms are technically controlled by the government, they operate on a commercial basis.
Broadly, as of mid-2013, the DoT was focused on five key objectives: reducing congestion; improving safety and security; providing high-quality services to all areas; boosting economic efficiency throughout the various transport systems; and improving collaboration, planning and implementation among the various sector players. Additionally, the DoT aims to implement all transport projects in line with the government’s overarching goals of supporting privatisation, achieving international standards, boosting Emiratisation, and improving transparency and accountability.
These goals are central to the DoT’s STMP, under which the department plans to establish a variety of new public transport systems in Abu Dhabi City, including a metro system; a light rail transport (LRT) system; new and expanded bus services; the Midfield Terminal Building (MTB) at Abu Dhabi International Airport (AUH); and ferry and water-taxi services. Additionally, under the plan the DoT supports the creation of a regional train network and the expansion and upgrade of a considerable percentage of the emirate’s roads and highways. Since the STMP was established, the DoT has made progress on a number of these initiatives – an expanded bus system has been up and running in the capital since 2009, for example – while others are in the early stages of development or implementation. Provided everything goes according to plan, by 2030 up to 33% of trips in the emirate will take place on public transit of one sort or another, from just 1% in 2009.
Abu Dhabi’s extensive road network, like that of the greater UAE, is relatively new and well-maintained. Due to the low price of oil and a lack of many alternative transport options, automobiles are by far the most popular means of transport among the local population. The number of registered vehicles in the emirate as a whole reached 785,076 at the end of 2011, the most recent year for which SCAD figures were available at time of publication, up from 743,049 in 2010, 675,026 in 2009 and 561,748 in 2008. This figure is expected to continue to rise in the coming years. To cater to the growing number of registered automobiles, in recent years the government has worked to expand and upgrade the road network. By the end of 2012, major roads in Abu Dhabi totalled more than 2520 km in length, up from around 2370 km at the end of 2011, while minor roads covered 16,825 km in 2012, up from 15,830 km in 2011, according to SCAD data.
The great majority of the emirate’s population lives in Abu Dhabi City, which is centred on an island of the same name. With this in mind, the capital has limited capacity for continued road expansion projects in the coming years. Indeed, as population density has increased in the city of Abu Dhabi in recent years – from 74.3 people per sq km in 2005 to 130.2 people per sq km in 2012, according to SCAD – congestion has increased considerably, particularly during the morning and evening commutes. To help remedy this, the government is working to reduce the population’s reliance on automobiles by promoting walking, cycling and introducing other forms of public transport such as buses and rail-based options. At the same time it has acknowledged that road travel will continue to play a vital – if less dominant – role in the emirate’s overall transport framework for the foreseeable future.
A number of projects are in progress to improve road travel in Abu Dhabi. The UPC, for example, is currently in the midst of a series of projects to narrow lanes, break up the long distances between intersections with pedestrian walkways, add speed-reduction features, and improve signalling and signage, particularly at busy junctions in the capital. Under the STMP, the DoT and the Traffic and Controls Department at the General Directorate of Abu Dhabi Police have jointly invested in infrared cameras and digital sensors, which are expected to have a positive impact on traffic safety.
The creation of a number of new public transport systems is expected to transform transit in Abu Dhabi City in the coming years. The establishment of the DoT’s Public Bus Transportation System in 2008 has already had a major impact on public transit. The system, which is under the management of the DoT, served some 67m passengers in 2012, according to official data, up from 33m in its first full year of operation in 2009. To cater to rising demand the DoT has added new buses and routes on a regular basis. By the end of 2012, there were 423 buses in operation during peak travel times, up from 193 in 2009.
Construction work on the Abu Dhabi Metro and LRT/Tram is expected to begin in 2015. Upon approval of the Abu Dhabi Executive Council, the first phase of the Metro project – an 20-km line that will link Zayed Port in the north-west of Abu Dhabi City to Zayed Sports City in the south-east. The bidding process for this initial phase of the metro and LRT is scheduled to begin in mid-2014, with these two projects set to be completed by 2020/21. An initiative to extend this initial phase of the Metro to reach the airport – via Zayed City and Masdar City – is now being proposed, based on the need to serve the growing number of airline passengers and the airport’s workforce.
The emirate’s LRT and Metro are currently in the final stages of preliminary design. According to the DoT, the first phase of the LRT will comprise of three lines, which will operate in dedicated lanes at road level. As a whole, the updated and expanded urban transit system in the Abu Dhabi metropolitan area – including buses, the Metro, the LRT, and expanded marine services – is expected to receive heavy usage and save as much as 102m hours of travel time on an annual basis by 2030.
Etihad Rail, which was established by the government in 2009, has a mandate to oversee the development and operation of a national railway in the UAE. While the original blueprint for the network included both freight and passenger services, the project will initially focus solely on freight. The rail system, which will cost Dh40bn ($10.9bn) in total, is being developed in stages. Stage one, which is expected to be up and running in early 2014, will link the port at Ruwais, in Al Gharbia, with the Habshan oil and gas field, and, before the end of 2014, with the Shah oil and gas field, which is located near the Abu Dhabi-Saudi Arabia border. One of Etihad Rail’s first major clients is the Abu Dhabi National Oil Company, which plans to use the 264-km, stage-one line to transport granulated sulphur from Habshan and Shah for export at Ruwais.
Stage two of the project, which is expected to be complete by January 2017, will connect Ruwais to Al Ghweifat, on the UAE’s western border with Saudi Arabia, and will extend the existing railway to both the eastern city of Al Ain and to Dubai. Stage three, which is expected to be complete by the end of 2018, will expand the network from Dubai through Sharjah and on into both Fujairah and Ras Al Khaimah.
When completed, the Etihad Rail project will include more than 1200 km of track, and will link all of the UAE’s major economic and population centres. The project is expected to have a major impact on freight transport costs in the country. As of early 2013, Etihad Rail had signed memorandums of understanding with a wide variety of local industrial firms, including Sharjah Cement, Emirates Steel and Abu Dhabi’s Centre of Waste Management, for example.
“We will be able to provide competitive freight transport costs to a wide variety of companies that currently rely on trucks to get their products to ports, from which they can be exported. This will help their products be more cost-competitive in the world markets,” John Lesniewski, the director for sales and commercial agreements at Etihad Rail, told OBG. In addition to the economic advantages, the use of rail transport will also enable the elimination of around 8000 long-haul truck journeys per day from the roads, which will lessen congestion, improve safety and significantly reduce the total carbon impact on the environment.
It has not yet been determined when passenger transport will be added. “Etihad Rail’s network is designed for both freight and passenger rail service. Although the rail network is being initially built to haul freight, the passenger strategy is in the early stages of the planning process and will be able to leverage the network investment after implementation,” said Lesniewski. The plan is to eventually link up the network with the greater GCC Railway Project, which will connect all six GCC member states by rail before 2020.
Since ADAC was established in 2006, all aviation traffic targets outlined in Economic Vision 2030 have been exceeded. Key factors driving traffic have included the robust economic growth in Abu Dhabi and in the Gulf region, the emirate’s expanding tourism sector and Etihad Airway’s success at increasing its share of the transcontinental travel market. Since it was established in 2003, the emirate’s flag carrier has grown into one of the largest airlines in the Middle East. In 2013, Etihad Airways carried about 12m passengers, up nearly 12.1% from the 10.7m recorded the previous year. Since the mid-2000s, the airline has expanded rapidly, driven largely by international demand for flights that link Europe and the US with Asia.
Indeed, one of Etihad Airways’ major strengths is its location in Abu Dhabi, which is well-positioned to serve major markets in both the West and the East. In 2008 Etihad announced a deal to purchase more than 200 new aircraft from Boeing and Airbus, which at the time was the single largest airplane order ever.
As of December 2013, the carrier’s fleet was comprised of 89 passenger and cargo aircraft in total, a figure that is expected to rise substantially in the coming years. Etihad Airways has more than 220 narrow-body and wide-body aircraft on order, plus other options and purchase rights. This includes orders for 117 Airbus and 82 Boeing aircraft with a combined list price value of $67bn, according to a company announcement at the Dubai Air Show in November 2013.
With new aircraft scheduled to be delivered on a regular basis over the course of the next decade, Etihad’s destination map is expected to expand considerably. The airline’s most popular destinations in 2013 included Bangkok, Manila, London, Jeddah, Paris, Manchester, Sydney, Frankfurt, Kuala Lumpur and Jakarta. In recent years Etihad has also pursued a targeted acquisition programme, purchasing minority stakes in a number of foreign airlines, including airberlin, Air Seychelles, Aer Lingus, Virgin Australia, Jet Airways, Darwin Airline and Air Serbia, among others (see analysis).
The rapid growth of both Etihad Airways and Abu Dhabi’s air passenger traffic is likely to be sustained for years to come thanks to the emirate’s strategic location. In a recent report, travel technology provider Amadeus estimated that around 2bn people live within a two-and-a-half-hour flight of the Middle East.
In 2013 AUH, which accounts for 99% of total air passenger traffic, served 16.5m passengers, up from 14.7m in 2012, 12.4m in 2011, 10.9m in 2010 and 5.5m in 2005. This rapid expansion – passenger traffic rose by 12.4% in 2013 alone – has made AUH one of the fastest-growing airports in the world over the past decade. With this in mind, and taking into account Etihad Airways’ continued expansion, ADAC, which owns and operates five airports in Abu Dhabi, is in the midst of a major expansion project at AUH.
The Dh10.8bn ($2.9bn) MTB, which is expected to be completed in 2017, is designed to handle up to 30m passengers annually, more than doubling AUH’s current capacity and making the airport one of the largest in the world by overall passenger capacity. The terminal is being built by an international consortium made up of the Turkish firm TAV Construction, the Athens-based Consolidated Contractors Company (CCC) and the UAE-based Arabtec Construction.
In addition to the MTB, ADAC is also involved in a number of other major development projects in Abu Dhabi. In conjunction with Mubadala Development Company, a government-owned investment firm, it is developing the Nibras Al Ain Aerospace Park, an industrial zone in Al Ain, Abu Dhabi’s second-largest city, which aims to serve as a centre for the emirate’s burgeoning aerospace manufacturing industry (see analysis). Additionally, ADAC’s long-term plans include the establishment of other industrial zones at AUH and other airports in the emirate, which is expected to contribute to the expansion of the logistics sector in the coming years.
Until recently Abu Dhabi’s primary sea gateway was Zayed Port, which dates back to the early 1970s and has faced capacity constraints since the mid-2000s given the rapid development of the economy. With this in mind, the launch of operations at Khalifa Port in September 2012 was a major development for maritime transport in the emirate. The new port facility, which has been in development since 2006, has an initial capacity of 2.5m twenty-foot equivalent units (TEUs) and 15m tonnes of general cargo, compared to less than 1m TEUs at Zayed Port, for example. Continued expansion at Khalifa Port means that capacity is expected to rise to match demand, estimated at 15m TEUs and 35m tonnes of general cargo by 2030. Built on a man-made island just off the coast of the emirate, around 60 km north of Abu Dhabi City, Khalifa Port boasts the first semi-automated container terminal in the Middle East, and was designed to be able to handle some of the world’s largest ships – those with drafts of up to 16 metres.
ADPC is a government entity that was formed in 2006 with a mandate to develop the emirate’s non-oil and gas maritime ports and industrial zones. “Zayed Port was a feeder port, serving mostly smaller ships,” said Martijn van de Linde, the CEO of Abu Dhabi Terminals. “Khalifa Port, meanwhile, is designed to eventually serve as a main line port, directly linking Abu Dhabi with the largest ports around the world.” According to Van de Linde, in its first year of operations Khalifa Port became one of the most productive container ports in the Middle East, with both ship and truck turnaround times dropping considerably over the course of the year. The move to transfer container traffic from Zayed Port to Khalifa Port was completed in 2012, enabling Zayed Port to focus on other business streams such as general cargo; roll-on/roll-off vehicles; and cruise ship operations.
Business growth at Khalifa Port in the coming decades will be driven in large part by activity at Khalifa Industrial Zone Abu Dhabi (Kizad), a new industrial area located adjacent to the port. With a potential development area of 418 sq km, Kizad aims to attract export-oriented firms in a wide variety of industries, including heavy manufacturing, food processing, pharmaceuticals and logistics. In addition to easy access to Khalifa Port, the zone will eventually be linked with the Etihad Rail network, and it is within an hour’s drive of both AUH and Dubai International Airport. One of Kizad’s anchor tenants is Emirates Aluminium, which operates the largest aluminium smelter in the world at the site. According to ADPC’s projections, once all development phases have been completed, Kizad and Khalifa Port’s combined economic contribution could be as high as 15% of Abu Dhabi’s non-oil GDP by 2030 (see Industry chapter).
As Abu Dhabi’s infrastructure has improved in recent years, the emirate has become an increasingly important logistics centre in the region. Most major international logistics players are currently active in the local market, including Agility, Aramex, Maersk, Hellmann, DHL and DK Schenker, among others. Major infrastructure projects either recently completed or currently under way – including Kizad and Etihad Rail – are expected to have a major knock-on effect on the logistics industry. In general, growth in the segment has been driven by a handful of key sectors, including energy, agriculture, defence, health care and education. The numerous large-scale projects in progress throughout the emirate have also supplied local logistics firms with plenty of work. “Much of our business in recent years has come from the large government-led projects currently being carried out under Economic Vision 2030,” Bassel El Dabbagh, CEO of Agility Abu Dhabi, told OBG.
Future growth in the logistics industry is expected to be centred in a handful of new industrial and logistics zones, including Kizad and ADAC’s Abu Dhabi Airport Business City, the latter of which is currently in the early stages of development. “Abu Dhabi provides a fertile market for the logistics and transportation industry,” Yasser Zahreddine, the senior station manager at Aramex in Abu Dhabi, told OBG. “Improvements in infrastructure have created a strong base from which logistics traffic can grow. This will only be strengthened by the synergies available at industrial zones such as Kizad.”
Khalifa Port and Kizad are expected to provide a major boost to Abu Dhabi’s competitiveness compared to similar logistics centres in the region, including Dubai’s Jebel Ali port, for example. “Khalifa Port was designed to complement Jebel Ali, not compete with it,” said Van de Linde. “Khalifa Port is a commercial port aimed primarily at export/import traffic, whereas Jebel Ali is primarily a trans-shipment hub. That said, Kizad will certainly boost Abu Dhabi’s competitiveness, both in terms of logistic and overall industrial production.”
With numerous major development plans currently in the works, and others set to kick off in the coming years, the transport sector in Abu Dhabi is expected to see steady improvements for the foreseeable future. The emirate’s ongoing transport projects represent a significant opportunity for local and international investment. While the government has taken on the task of developing overarching, long-term strategies and blueprints for the sector, most of the actual engineering and construction work is set to be carried out by private players. Abu Dhabi City and the greater capital urban area stand to be transformed by the development of the metro and LRT projects, both of which are expected to enter the procurement phase by 2014.
At the regional level the development of Khalifa Port, Kizad and the Etihad Rail network stand to push down freight transport costs considerably, while developments in the air transport segment are set to considerably boost Abu Dhabi’s international connections.
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