Bahrain is an archipelagic nation, with most of its economic activity taking place across its four main interconnected islands: Bahrain Island, Al Muharraq Island, Sitra Island and Umm Al Nasan Island. In the planning stages as of mid-2022, a number of big-ticket transport infrastructure projects are set to facilitate a better flow of people, goods and services between – and across – the country’s borders.
The Covid-19 pandemic had a detrimental effect on economies worldwide and caused an estimated 5.4% contraction in Bahrain’s GDP in 2020, as aircraft were grounded, supply chains were disrupted and public transport was restricted. Looking ahead, the transport sector features prominently in the government’s post-pandemic economic recovery and development strategies, which aim to bolster transport infrastructure and transport-related revenue and increase the kingdom’s traversable landmass.
Structure & Oversight
The Ministry of Transportation and Telecommunications (MTT) is responsible for formulating policies and developing and maintaining national infrastructure relevant to its jurisdiction. In terms of transport, the MTT manages, regulates and streamlines civil aviation affairs, ports and maritime affairs, land transport affairs and Bahrain Post operations. It is also responsible for licensing. The MTT, therefore, has a key role in facilitating the achievement of the core goals of Bahrain Economic Vision 2030, the long-term development plan launched in 2008, which prioritises diversification and the development of globally competitive logistics and tourism infrastructure. In June 2022 the Ministry of Works, Municipalities Affairs and Urban Planning was divided into the Ministry of Works, with a remit to develop infrastructure and act as the construction arm of the government; the Ministry of Housing and Urban Planning; and the Ministry of Municipalities Affairs and Agriculture.
In December 2021, in an effort to guide post-pandemic progress towards Vision 2030, the government unveiled its Economic Recovery Plan, through which it aims to stimulate post-pandemic growth and reduce the country’s fiscal deficit via job creation, reforms to investment regulations and infrastructure development. Multiple sector-specific strategies, some of which are transport related, have also been launched under the umbrella of the Economic Recovery Plan.
New Logistics Strategy
Bahrain’s Logistics Services Sector Strategy 2022-26 was unveiled in November 2021. The strategy’s near-term goals focus on reviving the sector’s various segments, building on the mitigation strategies implemented during the worst periods of the pandemic. “What these two years have shown us is that we can adapt when faced with crisis – and it has also illustrated the importance of planning for the unforeseen,” Richard Smith, chief commercial officer of APM Terminals Bahrain, told OBG.
Ultimately, the new strategy aims to stimulate investment into road, maritime, aviation and storage infrastructure, driving the logistics sector’s contribution to GDP to 10% by 2030. To achieve this, the government is seeking to raise annual airfreight capacity to 1m tonnes, annual shipping capacity to 1m twenty-foot equivalent units and broaden the reach of Bahrain’s aviation networks to over 70 destinations.
The MTT plans to review relevant laws and regulations and enhance its policies and procedures to incentivise investment, promote investment opportunities, and strengthen regional and international engagement throughout the sector. Global logistics specialist FedEx Express has confirmed the expansion of its operations in the kingdom, while a similar development with DHL is anticipated. Furthermore, it is expected that technology will be harnessed to boost output and operational efficiency at major logistics centres, and to improve Customs and vehicle management procedures.
Revamped Maritime law
A new maritime law was ratified by King Hamad bin Isa Al Khalifa in April 2022. The 392-article law is the second-largest piece of legislation in the country’s history and will update the regulations enforced by the Maritime Law of 1982 and the Registration of Ships and Determination of Safety Conditions Law of 1978. By aligning shipping regulations with international best practices, the government hopes to harness Bahrain’s strategically advantageous location to drive trans-shipment revenue.
Improved accountability and workers’ rights are an important focus of the draft law, with vessel owners given ultimate responsibility for the fulfilment of all employment contracts. Captains will be dealt fines for neglecting to report incidents of pollution at sea caused by their vessel and for not allowing authorised personnel to board their ship, while sailors will be granted defined rights in relation to work, injury and death. Numerous articles of the law address ship registration regulations, with fines and prison sentences the potential consequences of non-compliance.
Size & Performance
The transport and communications sector was among the areas of Bahrain’s economy worst affected by the Covid-19 pandemic. According to the Ministry of Finance and National Economy, the disruption of passenger transport and the movement of goods and services contributed to a sector contraction of 24.1% in 2020. However, strong performance from Bahraini transport companies, driven by the reactivation of internal and cross-border travel and supply chains, saw the sector rebound in 2021, registering 25.8% year-on-year (y-o-y) growth in the third quarter of that year. The government’s regulatory amendments and medium-term strategies should facilitate continued expansion, albeit likely at a slower rate than the above-displayed figure, given the exceptional circumstances it reflects.
Another of those strategies, the Tourism Sector Strategy 2022-26, sets out the goal of boosting international visitor numbers from its 2019 level of 11m to 14.1m by 2026. Such an influx of tourists would drive demand for Bahrain’s aviation and public transport services, further contributing to transport sector growth.
Investment & Metro
The government’s Strategic Projects Plan (SPP) comprises 22 major infrastructure construction projects aimed at driving growth in the economy across strategically targeted sectors. An estimated $30bn in private investment is required for the SPP, but that figure could rise to $40bn in the coming years. A number of SPP projects are transport related.
Implementation of a 109-km electric metro network intended to improve connectivity across the island, broaden public transport options, reduce traffic congestion and travel times, and contribute to the government’s bid to achieve net-zero carbon emissions by 2060 was under tender as of mid-2022. The initial presentation of the project was well received by private sector players, leading to the government’s October 2021 announcement that procurement and tendering was set to begin. The 29-km, 20-station initial phase of the project is designed to connect Bahrain International Airport (BIA) to the capital, Manama, and its surrounding districts. The project is being offered as an integrated public-private partnership (PPP) on a design, build, finance, operate, maintain and transfer basis on a 35-year contract – a model the government has enjoyed success with before.
Under the scheme, the government will bear the demand risk, while the private partner will receive availability-based payments and performance-based incentives. Titles for the land required to complete the project have already been acquired and will be transferred to the selected private partner in due course.
King Hamad Causeway
The 25-km, four-lane King Hamad Causeway will enhance connectivity between Bahrain and Saudi Arabia, strengthening bilateral trade and relations. The project, which will provide a second road linkage between the two nations, has passed through the feasibility stages and is moving towards the tendering process. It, too, is being offered as a PPP and will follow the same toll road model that was successfully implemented for the existing King Fahd Causeway, meaning it can be entirely privately funded. The new causeway will provide a necessary boost to Bahrain-Saudi connectivity, given that the King Fahd Causeway is currently operating close to capacity, with 11.5m vehicles using the crossing annually. The new causeway is also set to feature 57 km of railway track that will connect with Bahrain’s portion of the longmooted GCC rail network (see analysis).
The primary aim of the SPP, to stimulate broad-based economic growth, is best exemplified by the announcement that five new cities – Fasht Al Jarim, Fasht Al Adhm and the Suhaila Island, Gulf of Bahrain and Hawar Island – will be built on reclaimed land, increasing Bahrain’s total land mass by up to 60% (see Construction & Real Estate chapter).
The developments will directly and positively impact the transport sector due to their required integrated road networks and multi-modal public and commercial transport infrastructure across the 387 sq km they are set to comprise. Other transport-related sectors, such as tourism and industry, are also slated to benefit.
At 183 sq km, Fasht Al Jarim is the largest of the planned cities and will house a dedicated logistics zone, a tourism centre, residential areas and a new airport, and will be serviced by sustainable transport solutions. The government has stated its belief that the new cities could enable Bahrain to achieve its targeted increase in visitor numbers, announcing that it plans to extend the number of countries to which it offers visa-free entry options to facilitate such growth.
Each of the new islands is strategically designed to boast specialist capacities, with a new industrial city and a dedicated US Trade Zone planned. The latter is already under construction, and both will require integrated logistics capacities (see Industry chapter).
The announcement of the Logistics Services Sector Strategy 2022-26 closely followed the September 2021 unveiling of the Bahrain Sea-to-Air Logistics Hub, which is said to be the most efficient facility of its type in the region. Through its fully digitised operations, the MTT claims the centre affords estimated cost savings of 40% over pure air freight, as well as 50% faster lead times compared to pure sea freight. It also enables two-hour end-to-end processing times of containers travelling between BIA and Khalifa Bin Salman Port. Kamal bin Ahmed, then the minister of transport and telecommunications, told international media that the new centre offers unique advantages to global shipping companies and customers, given Bahrain’s proximity to Asian and European markets.
Khalifa Bin Salman Port is Bahrain’s primary maritime centre and is managed by global terminal operator APM Terminals. The port is situated on 110 ha of reclaimed land off the south coast of Muharraq Island. Its 1800-metre quay; 900-sq-metre container terminal; four 61-metre cranes; and proximity to BIA, the King Fahd Causeway and the Bahrain Logistics Zone – a 1-sq-km logistics bonded and non-bonded area that allows for 100% foreign ownership – have made it an established regional trade and logistics gateway.
In October 2021 the port saw a total container throughput of 28,872, down from 37,168 in the corresponding month of 2020, while for the entire year to date it had handled 333,445 containers – 15.4% fewer y-o-y. General cargo reflected the same downward trend, with the 1.1m tonnes processed by October 2021, representing a 21.4% y-o-y decrease. Roll-on/roll-off for the same period, however, increased by 8.4% y-o-y from 22,964 units to 24,890 units.
“As a result of the dynamics imposed by the pandemic, smaller, trans-shipment-oriented markets such as Bahrain have been deprioritised by the shipping lines due to a crunch in available container space,” Smith told OBG. “But shipping lines are short-term thinkers, and supply and demand and freight rates should normalise during 2022-23,” he added. Khalifa Bin Salman Port also handles cruiseliners, while elsewhere the kingdom’s coast is dotted with a number of specialist industrial seaports, such as Bahrain Steal Iron Ore Port, LNG Terminal Bahrain and Sitra Fisherman Port.
Road & Bridges
Bahrain’s road network spans more than 4100 km, over 3300 km of which is paved. In light of government plans to enhance the kingdom’s logistics capacities, further development of its road network is a continual focus. A number of the SPP projects are road developments, the most significant being the King Hamad Causeway. Another SPP development is the 22.5-km Northern Link Road. The new road will feature a railway line, providing multi-modal linkages between strategic projects and residential areas along the country’s northern coast.
The construction pipeline for government-led road and sewerage projects is valued at $900m. February 2021 brought the announcement that construction and redevelopment of the Al Fateh Highway – designed to ease traffic congestion in Manama – would commence in April of that year. The project involves expanding the existing road to comprise four lanes in both directions, and the construction of a three-lane tunnel. At least two bridges and an overpass will also be built as part of the project. Improving traffic flow in and around Manama is a key focus. Providing a boost to that initiative, the $4.5m Sheikh Isa bin Salman Highway development was completed in 2019, raising the road’s capacity from 6000 to 8000 vehicles per hour.
BIA, located on Muharraq Island, is Bahrain’s sole international airport and was recently upgraded. BIA has been operated by Bahrain Airport Company, a wholly owned subsidiary of Gulf Air Group Holding, since 2010. The airport’s new passenger terminal opened in January 2021 and has assumed the bulk of BIA passenger operations.
With the upgrades now completed, BIA has the capacity to handle approximately 14m passengers per year, enabling the country to build on its position as a regional centre for aviation transit. In 2019 – the most recent year for which the MTT had published data as of mid-2022 – BIA saw a total passenger throughput of 9.6m, up 5% from around 9.1m in 2018. Of the total seen in 2019, 4.2m were flight transfers, up 7% on the previous year. In terms of freight activity, BIA handled 291,017 tonnes of cargo in 2019, a 1% increase over 2018. Trans-shipments at BIA underwent 23% growth in 2019, while exports rose by 2% and imports fell by 9%.
The airport plays a key role in the execution of the Logistics Services Sector Strategy 2022-26 and provides an operational base for cargo companies such as DHL and FedEx Express. In a bid to strengthen aviation capacity and preparedness, the MTT collaborated with DFS Aviation Services and Tamkeen – a labour fund focused on strengthening Bahrain’s private sector and human capital – and launched Ajwaa, an air traffic services training programme. Meanwhile, the MTT announced in November 2021 the launch of a new air traffic control centre. The developments will align with International Civil Aviation Organisation standards and best practices, and help cope with growing air traffic.
Bahrain currently has no operational railways, but the development of integrated rail networks features in the government’s economic expansion strategies. As previously detailed, an extensive metro service is planned, and a 75-km railway line is a core component of the King Hamad Causeway project. The latter will connect with the Bahraini and Saudi portions of the long-awaited 2117-km GCC rail network, and will service key transport centres in both countries. It is estimated that the GCC Railway could carry 8m passengers yearly by 2050, markedly increasing regional trade potential and reducing transport costs. Although the project has been stalled for a number of years, it gained fresh momentum with the establishment of the Gulf Railways Authority at the end of 2021, and as of June 2022 the project was in the evaluation stage in Bahrain.
Bahrain’s portion of the network would bolster linkages between BIA and Khalifa Bin Salman Port. The project’s constituent passenger stations are designed to connect with bus and metro services, further boosting multi-modal passenger capacities. In addition, a new freight terminal will be built, with the railway’s cargo arm expected to carry up to 600,000 containers and 13m tonnes of bulk cargo per year.
The need for sustainable mobility solutions across the GCC is pressing. Traffic congestion and road safety are serious issues in the region, with detrimental economic and environmental ramifications. GCC nations are designing economic development strategies to incorporate the UN Sustainable Development Goals, with green transport solutions forming a central pillar. Electric, emissions-free metro, tram and bus services are now operational in Qatar, Saudi Arabia and the UAE.
According to a 2020 PwC report, wider adoption of sustainable mobility solutions could unlock up to $400bn of latent economic potential across the GCC by 2040. The aforementioned electric metro project is the most significant sustainable transport development in the pipeline. The MTT is strategising the near-term implementation of micro-mobility solutions, and in 2021 it partnered with TIER, Europe’s leading micro-mobility company, to install emissions-free electric scooters and bikes across Manama. “As current trends in the electrification of vehicles accelerate, we need to consider future infrastructure needs and the creation of jobs in this segment. Therefore, we must find the right pace of change to avoid negative disruption,” Sheikh Salman bin Isa Al Khalifa, CEO of Bahrain International Circuit, told OBG. The government of Bahrain has also teamed with FENIX to provide emissions-free scooters.
The transport sector is of strategic importance to the national development agenda. This should see its segments attract significant levels of investment in the coming years and contribute to Bahrain’s recovery from the pandemic as transport and travel restrictions are eased. In the longer term, the government’s comprehensive infrastructure development plans, and the notable expansion of the passenger transport and logistics services they entail, could see the sector become an engine for diversification and growth. The kingdom’s strong reputation as an international investment destination and continued focus on reforms present significant advantages amid fierce regional competition in the tourism and logistics spaces.
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