The sector has suffered in recent years, but expansion projects are under way

Hopes are high for the transport sector in Jordan, as a range of initiatives will soon come to fruition. The prime minister announced that 2015 would be “the year of the transport sector”, and signs point to greater prioritisation of the industry.

Indeed, the port of Aqaba has completed much of its expansion work and is now engaged in new phases of redevelopment and growth. The road network, too, is being upgraded, and the country’s railways are heading towards a new era of greater prominence. In the aviation segment, the new Queen Alia International Airport has opened, with the transport infrastructure around the facility also coming on-stream. However, some challenges lay ahead, with instability in neighbouring countries having a substantial impact on local trade routes. To counter those and other factors, the sector is receiving greater attention from the government to attract investors.

Facts & Figures

In recent years Jordan’s domestic economy, population and transportation needs have grown considerably. The total number of people living in Jordan is estimated to be 10m in 2015, and the population is heavily concentrated in the north, near the capital city of Amman – some 38.7% of the total inhabitants live in Amman governorate, followed by Irbid (17.8%) and Zarqa (14.9%). According to the most recently available data from the Department of Statistics (DoS), in 2012, some 22,997 people were employed in the transport and storage sector in the kingdom.

Land transport agencies accounted for approximately a third of all employers in the sector, with 396 of 1233 establishments of all kinds. The water transport segment added 10 establishments, air transport seven and the remainder in a variety of supporting and auxiliary services.

The transport sector was responsible for 49% of Jordan’s entire final energy consumption in 2012, or 25.2m tonnes of oil equivalent (toe) – up from 38%, or 14.3m toe, 10 years earlier.

DoS figures for 2013 show that the country’s transport system carried 9.1m gross weight tonnes (gwt) that year in exports, with road transport taking some 4.01m gwt and the marine segment handling around 5.04m gwt. The rest were shipped by air (22,000 gwt).

Busy Points

This data shows that Aqaba was responsible for all of the 5.04m gwt that was shipped by water that year. Meanwhile, the busiest points for land transport were the border crossings. The Omari crossing with Saudi Arabia accounted for 1.07m gwt of the total land transport tonnage in 2013, while the Ruwieshed crossing with Iraq accounted for 860,600 gwt.

Other important transit points were Al Modawara, also on the Saudi border, which saw 756,700 gwt, and the King Hussein Bridge, which connects Jordan to the West Bank, accounting for 264,400 gwt. Amman itself also sees a great deal of land cargo traffic, not only as a destination in itself, but also due to the presence of the Customs Depot at Al Juwaidah, in the eastern suburbs of the city. Most exports and imports have historically had to pass through this facility. The land transport featured here is entirely road-based, with Jordan’s railways principally carrying phosphates from interior mines to Aqaba.

Tonnage In Transit

The road network in Jordan is well developed consisting of 7299 km of roads (highways and secondary roads), according to DoS estimates in 2013, 2754 km of which are highways. Ministry of Public Works and Housing (MPWH) figures for 2013 show the provinces with the highest concentration of roads as Mafraq (1080 km), Amman (1044 km) and Irbid (868 km).

A registered fleet of some 15,647 truck-tractors and 16,087 semi-trailers traversed the kingdom’s roads in 2013, 33.4% of which were individually owned, according to data from the Land Transport Regulatory Commission. In 2014 there were 274 licensed transport companies in the kingdom. Much of the tonnage entering Jordan simply passes through the country, destined to neighbouring countries. DoS statistics show 4.77m gwt transiting the country in 2013. When this is compared with previous years, the effect of the instability in the region since 2011 becomes all too apparent: in 2010 total transit tonnage was 7.8m gwt.

The effects of the regional instability have also affected trade at Aqaba. In 2009 around 9% of all transit goods landed at the port was headed for Syria. In 2013 the figure was 4.4%. Instability in Iraq has taken a heavy toll on cross-border transits. In 2007 37% of all transit goods landed at Aqaba was heading for Iraq, while in 2013, it fell to 27% and has been falling since. Goods imported via the Aqaba port totalled 636,843 tonnes in 2014.

Passengers Passing

In addition to the transport of goods, the sector also has a strong focus on passengers transport. Jordan is a major destination for travellers, either visiting the country, or transiting to other destinations.

The regional situation has affected arrival numbers of tourists and travellers, which fell about 38% between 2010 and 2013, dropping from 11.4m travellers to 7m. In 2013, 3.9m people arrived by land, 2.8m by air and 281,000 by sea. In 2014 the number of buses crossing Jordan’s borders totalled 22,644, down from 97,319 in 2010, according to Jordan Customs.

Plans & Projects

A 2014 report by the Ministry of Transport forecast sector demand growth of 5-6% per year until 2030. Private car ownership was also rising by around 7% a year, according to the ministry, with 1.2m cars on the increasingly congested roads by 2013. The amount of goods carried by land transport is set to rise to 80m tonnes by 2030, up from 45m in 2013.

To aid the transition and the projected increase, in 2012 the government embarked on the development of a long-term, national strategy for the transport sector in the lead to 2030.

A number of government bodies are involved in the strategy including the Land Transport Regulatory Commission, set up in 2010 to regulate land transport services, the Ministry of Transport, MPWH, Ministry of Planning and International Cooperation, and private sector participants such as the Jordanian Exporters Association and the Syndicate of Jordanian Truck Owners.

The long-term strategy has several phases for development beginning with a general transport plan document having been drafted to cover the 2013/14 period, along with a series of forecasting and appraisal tools. The overarching strategy will then be based on these, with several five-year, short-to-medium term plans built into its rollout. For the time being, the government is focused on a number of projects in aviation, public transport, rail and road networks. The port in Aqaba in the meantime continues to see major upgrade and expansion works (see analysis).

Increased Burden

Current investment is also being targeted to alleviate the pressure caused by an influx of refugees from the surrounding region. The Jordan Response Plan 2015 (JRP) seeks to reinforce and restore infrastructure that has experienced increased demand pressure in key sectors, including transport. Extra infrastructure depreciation was estimated to total up to $244m in 2014 and the transport sector needs a budgeted investment of $42.2m in 2015. The JRP strategy for transport aims to accommodate increased traffic flows and improve transport systems in governorates with high concentrations of refugees. Its major focus is on expanding the capacity of road networks in the north of the country.

Taking Off

In addition to four military air bases, Jordan has three international civil airports the Queen Alia International Airport (QAIA) near Amman; the King Hussein International Airport (KHIA) in Aqaba; and the Amman Civil Airport (ACA) just outside of Amman.

Figures from the Civil Aviation Regulatory Commission (CARC) show that in 2014 some 7.29m passengers and 98,788 tonnes of cargo passed through these three international gateways, via 83,703 aircraft movements. These figures showed passenger numbers almost doubling over 10 years – the 2005 figure was 3.47m. On the other hand, total cargo carried has fallen from 105,965 tonnes in 2004. Aircraft movements have gone up around 71%, however, from 48,888 in 2005. Since March 2013, the bulk of passengers have arrived at the new QAIA terminal. About 30 km south of Amman, the new facility replaced the two-passenger and single-cargo terminal at the same location. This development has been recognised at an international level, with QAIA winning the 2014 Airport Council International awards for best airport in the Middle East and for most improved in the region.

Rising Numbers

According to the Airport International Group – QAIA’s developers and operators – the new facility received 7.09m passengers in 2014, up 9% year-on-year (y-o-y). Given the CARC total, this would mean QAIA took 97% of the country’s overall passenger arrivals in 2014.

Aircraft movements at QAIA rose 7.6%, y-o-y, to reach 73,125. In terms of cargo, QAIA has begun reversing the long-term decline in this, too, with CARC figures showing 4.08% growth between 2010 and 2014, from 93,216 tonnes to 93,883 tonnes. The latter marked the third straight year of growth, giving QAIA 95% of Jordan’s total air cargo tonnage in 2014.

Airport International Group invested $850m into the new airport project, under a 25-year lease agreement signed in 2007.

The QAIA is an example of a successful public-private partnership (PPP), with the government acting to create a legal and administrative structure attractive to private investors, while also making major returns from the project – some 54.6% of the airport’s profits go to the government.

The airport will continue to grow in phases to ultimately reach a capacity of 12m passenger per year. Aircraft movements and passenger numbers have been at a decline at ACA as services have been moving to QAIA. Located closer to downtown Amman, in Marka, ACA was Jordan’s main international airport until QAIA opened in its first incarnation, back in 1983. Nowadays, ACA is used primarily for VIP flights, some domestic services as well as aviation training. CARC figures show 6276 aircraft movements in 2014, dropping from 8480 in 2013, while passenger numbers fell from 240,969 to 41,539. Cargo ceased operations in 2014, after recording just 7 tonnes in 2013.

KHIA, meanwhile, saw declines in traffic in 2014, according to the CARC. Aircraft movements went from 4925 in 2013 to 4302 a year later, while passenger numbers fell from 166,083 to 163,375 and cargo dropped from 9144 tonnes to 2357 tonnes.

Located near to the Aqaba International Industrial Estate to the north of the port city, the single-runway facility has an annual capacity of 1m passengers and is run by the Aqaba Airports Company. KHIA has been going through a two-phase development project, with the second phase starting in 2014 and running to 2025. This project entails new taxiways, terminals, aprons and support facilities which will be developed at a total cost of JD44m ($61.91m).

Airlines

Jordan’s national carrier, Royal Jordanian (RJ), has 27 planes, including Boeing 787s and Airbus A330s, A320s, A321s and A319s. It also operates Brazilian-built Embraer 195s and 175s on short-haul flights within the Levant. RJ owns a charter arm, Royal Wings. Financially, RJ’s 2013/14 financial year witnessed a shortfall of JD39.6m ($55.72m). Figures for the following year had not been released at the time of publishing, however, they were expected to be better especially with the restructuring plan in place.

In 2014 RJ closed 15 stations, including three in Libya, previously one of the carrier’s most profitable destinations. Mosul in Iraq was shut, while Syria had earlier been closed and in 2015 Lebanon and Yemen were also taken off the list of destinations, for security reasons. The closure of Syrian airspace has also affected airlines servicing Jordan negatively, as aircraft are obliged to make wider detours, adding to fuel costs. RJ also closed its Delhi, Mumbai and Lagos routes in 2014 as these were proving unprofitable.

Despite the challenges the airline was facing, in order to enhance its performance and competitiveness, RJ purchased a number of new Boeing 787s in 2014. The planes should improve fuel efficiency over some of the airline’s Airbuses.

The airline also announced the new president and CEO in April 2015, as the company endures a process of re-evaluating its long-term strategy, to take account of strong competition from GCC carriers. There has also been competition for RJ from low-cost carriers (LCC). While easyJet withdrew services to Amman following the Arab Spring, Air Arabia announced plans to make QAIA a new hub for its Air Arabia Jordan services in February 2015. This followed Air Arabia’s purchase of a 49% stake in Petra Airlines, a charter and leasing outfit which in 2012 also obtained a scheduled service licence. These moves signal the potential for growth in the low-cost segment, which is widely seen as increasingly significant for the sector.

“In regard to the LCC market, there is much room for growth. LCC flights make of 40% of the European market, while in the Middle East this number is only 12%,” Kjeld Binger, CEO of Airports International Group, told OBG.

All Aboard

Jordan is one of the few countries in the Middle East to possess a rail network. There are two systems, the 217-km network run by the Hejaz Railway Corporation (HRC – which also owns 111 km of disused track) and the 293-km Aqaba Railway Corporation (ARC) – both of which are government-owned entities. A total of 1.34m passengers travelled domestically via rail in 2014.

The Jordanian stretch of the famous Hejaz Railway – a narrow-gauge line originally built during Ottoman times to take hajj pilgrims from Istanbul via Damascus to Mecca – currently extends from Jaber on the Syrian border to the Al Modawara crossing on the Saudi border. On its way, it also passes through Zarqa, Amman and Ma’an. Prior to the Syrian conflict, two weekly passenger trains and one weekly goods train used the route from Amman to Damascus, but now, weekly trains run from Al Jeezah, near QAIA, to Al Qaser station in Amman and to Zarqa and Mafraq.

The ARC, meanwhile, transports phosphates from the mines at Batn Al Ghoul and Al Abiad to the port of Aqaba. In 2014, 1092 trainloads ran on the line, transporting 1.34m tonnes of phosphates, according to the ARC website. This was up considerably on the 2013 totals of 776 trainloads and 954,700 tonnes. The government is now looking to develop the rail network further, with the aim of connecting the port with the capital.

“The first phase of the railway network would be to connect Aqaba and Amman,” the former transport minister, Lina Shbeeb, told OBG recently. “This would include a connection to Ma’an, where we would like to have a dry port.” The rail link would speed up the process of getting goods from Aqaba to Amman, the minister said.

Dry Ports

In another move aimed at reducing delays, the planned dry port at Ma’an is set to be a designated hub for clearing goods, away from the main site. The minister also said the government was “eager to engage the private sector for projects regarding the railway network.”

The development of a Jordanian National Railway Network is one of the major projects under the national transport plan. This will consist of a 900-km system on completion, with a north-south line from Syria to Aqaba, and an east-west line from Irbid through Mafraq and Zarqa to the Iraqi border, with a branch line heading to the Saudi border through Al Azraq. The project also aims to upgrade the lines to standard gauge, with PPPs under build-operate-transfer contracts the preferred method of achieving project targets.

“An effective railway network would be a major boon to the transport industry. It would reduce many bottlenecks, lessen the reliance on truckers, and improve the overall efficiency of the sector,” Anne Gronbjerg, Maersk managing director for Jordan, Kuwait, and Iraq, told OBG. The project eventually aims to connect Jordan with the GCC rail network currently developing, and was also conceived with longer-term plans to connect through Syria and Iraq once the regional situation allows it.

In the meantime, a short-term project has been started – the Al Shidiya phosphate mine rail connection and Wadi Al Uotom Reloading Station. This is a spur on the ARC line between Ma’an and Batn Al Goul, tying the Al Shidiya mine and associated new industrial area with the port of Aqaba.

Other Transport Developments

Elsewhere too, a light rail is also planned connecting QAIA with central Amman. In January 2015, HRC used Al Jeezah station (1 km from the airport) as an emergency service during snow storms which resulted in road blocks. It is reportedly considering making these permanent as well, further expanding intermodal connectivity.

International investors are being actively courted for the national railway network project. In September 2014, for example, the Jordanian government approached the Development Bank of Turkey for support in financing the line between Amman and Zarqa. There are, however, several domestic considerations to take into account – including balancing the livelihoods of road haulage companies with the more efficient outcomes of a rail network, when transporting goods in bulk. With the rail project awaiting roll out, the road network will continue to be the main carrier for the meantime. The MPWH began a 25-year road improvement programme in 2002, with some $1.8bn expected to be invested in this during its lifetime. Road-based public transport is also getting a boost, with a tender for an Amman-Zarqa bus rapid-transit system expected by the end of 2015. This JD110m ($154.78m) project would have capacity to transport up to 120,000 passengers daily over the 22-km distance, and be completed within three years of contracts being awarded.

Outlook 

Recent years have seen the port of Aqaba undergo a major expansion in addition to substantial improvements on the aviation side of the sector with the new QAIA. These large-scale investments have brought increased levels of efficiency and revenue for government and the private sector, despite ongoing regional challenges. Land transport now appears to be the subsector of choice for investors with many new projects planned. Further leveraging these improvements in the years ahead will likely only continue to bring rewards, whether by sea, air, rail or road.

 

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The Report: Jordan 2015

Transport chapter from The Report: Jordan 2015

The Report: Jordan 2015

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