Visitors to the waterfront of Bahrain’s capital of Manama are likely to glimpse traditional wooden sailing vessels known as dhows. The ships are often seen sailing out to sea or docked in the Gulf’s calm waters. Though most are now used for fishing and small trade, rather than as commercial vessels, Bahrain’s ports still receive hundreds of commercial callers each year heading for South Asia. The dhows’ presence is testament to the fact that the nation has long been an important centre for international trade. A host of infrastructure projects will allow Bahrain to continue that tradition into a new era. From new road interchanges to plans for a major airport upgrade, developments in the sector are designed to position the country as an important regional centre for transport and logistics.

On The Rise

Between 2000 and 2012 the transport and communications sector was one of the three fastest-growing sectors in Bahrain, along with the service sector and construction sector. The transportation industry is seen as vital to the kingdom’s goal to both double oil production and develop a more diversified economy. The transport sector is projected to grow from 4% to 7% of GDP in the next few years, according to the Bahrain Economic Development Board (EDB). Part of this growth is driven by the rise in the kingdom’s population, which between 2001 and 2010 grew from 660,000 to 1.2m inhabitants. The majority of this growth was as a result of rising number of guest workers. Still, Bahrain’s transport industry is mostly run by locals as part of the country’s Bahrainisation process, which seeks to raise the number of Bahrainis in the local workforce.


The Ministry of Transportation and Telecommunications (MTT), which supervises all aspects of the transportation, telecommunications and the postal service, is increasingly moving toward a regulatory role in all segments. While the Civil Aviation Affairs has long been under the remit of the MTT, the Ports and Maritime Affairs Directorate was brought under the control of the ministry in 2012 in Royal Decree No. 70. However, the Roads and Projects and Maintenance Directorate (which falls under the Ministry of Works, Municipalities and Urban Planning) has primary responsibility for maintaining and developing the road network.


In late 2013 the Ministry of Works completed the Mina Salman Interchange. This important project has helped relieve one of the main sources of congestion in the kingdom, making use of both a three-lane underpass and a three-lane overpass, improving access from the Salman Industrial City and the Khalifa Bin Salman Port (KBSP) to the King Fahd Causeway. Facilitating a non-stop traffic flow toward the causeway via Dry Dock Avenue, the project has reduced the average drive time from KBSP to the King Fahd Causeway from 38 to 18 minutes. The new interchange also relieves congestion on the way to Bahrain International Airport (BIA).

According to figures from the Central Informatics Organisation, Bahrain had 563 km of highways and a total of 4274 km of roads in 2013. This gives it one of the most dense road networks in the region in terms of the ratio of paved roads per sq km of land. In part this is because the government has a clear vision of the country’s transport needs and has put in place bureaucratic procedures that allow construction projects to move quickly. It takes just 12 days to secure a permit, according to a 2013 report from the International Finance Corporation, in which Bahrain ranked 4th out of 185 economies measured in terms of dealing with construction permits.

Laying The Foundation

To meet the needs of a growing economy and population, the MTT aims to develop the transport infrastructure. A 2011 feasibility study conducted by the ministry found that less than 1% of all daily personal journeys involved public transport. The MTT’s plan is to transfer a minimum of 15% of all personal journeys from automobiles to public transport by 2030, exclusive of taxis.

Since 2003 public bus routes have been overseen by the MTT’s Land Transport Affairs Directorate and operated by CARS Transport Corporation under a concession. The firm has provided regular bus services along 13 main routes chosen by the government, mostly in Manama. However, a new operator will take over in February 2015 under a 10-year concession agreement between the MTT and the Bahrain Public Transport Company. The existing fleet will increase from 35 to 141 high-tech buses with better facilities, catering to riders with special needs. Ridership is expected to increase from 16,000 to 51,000 passengers per day, covering 77% of the total population served by operational services. The MTT will also upgrade all required supporting infrastructure, such as bus shelters and the main bus stations.

As part of Bahrain’s Economic Vision 2030, the government hopes to develop an integrated transport network covering a total distance of 184.2 km. Different modes of transport such as light rail transit, monorail, bus rapid transit and tram lines had been recommended by the initial studies. The first phase of the integrated transport project is complete, and a bus network with new routes and a new operator will commence operations in April 2015. The studies for the second phase of the project, which will include a rail-based transport system, are also set to be completed in 2015. The full system will be in operation by 2030 and when complete, will be linked to the existing public bus network, as well as the proposed GCC rail network and BIA.

Regional Integration

The feasibility study to connect Bahrain and Saudi Arabia by rail was scheduled for completion by the end of January 2015. The work is part of the larger Pan-GCC railway network that is set to be finished in 2018. It will connect all of the GCC states along some 2000 km of track. The rail line will allow for the shipment of goods from Kuwait City to the Indian Ocean port of Salalah in Oman, as well as handling passenger traffic.

Bahrain is also involved in a number of efforts to improve logistics within the region, such as the new GCC Integrated Logistics Company authorised in November 2013 by the GCC Transport Committee. The firm, which will be established on a public-private partnership (PPP) model and focus on road freight shipping, Customs clearance, freight forwarding and insurance, was due to begin operations in third-quarter 2014. When the inter-GCC railway is completed, the GCC Integrated Logistics Company will also expand to include rail freight operations.

All GCC members have agreed to support the company and it builds on the legacy of similar initiatives. For example, both Gulf Air and the United Arab Shipping Company (UASC) were initially launched under a similar model as inter-GCC ventures.

With the global container shipping market characterised by over-supply, UASC has taken advantage of falling ship construction prices to expand its container fleet. The new vessels will use liquefied natural gas (LNG) as bunker fuel so as to be able to call at ports with increasingly restrictive emissions standards for commercial shipping, particularly in Europe. To offset the ship purchases, UASC plans to reduce its services to Pakistan and India, where it faces stiff competition, in the near future.


The year 2013 brought about changes in the local aviation market in the form of the closure of local airline Bahrain Air. At the time it operated just four aircraft, and the closure allowed the government to focus on improving the competitiveness of the flag carrier, Gulf Air, both regionally and globally. Gulf Air is owned by Mumtalakat, the state holding company, though at one time it operated as a joint venture and included stakes from the governments of Oman, Qatar and Abu Dhabi.

Stiff competition from within the GCC has led Gulf Air to report losses in recent years. While it is not yet profitable, its losses are steadily shrinking. The airline was BD89.5m ($237.18m) in the red in 2013, down from BD200m ($530m) in 2012. The carrier hopes to trim losses even further to BD70m ($185.5m) in 2014, and it announced net losses were down 30% year-on-year in first-half 2014.

It has sought to make further gains by expanding shifts from eight to 10 hours, reducing its workforce from 3800 to 2800 and training staff to perform maintenance tasks that were previously subcontracted. Gulf Air says it has achieved a Bahrainisation rate of 65% as opposed to the 20% national employment rate among other GCC carriers.

At the same time, the company continues to make strategic investments as necessary. During the Bahrain International Airshow held in January 2014, Gulf Air signed a $100m maintenance, repair and overhaul agreement with Rolls-Royce TotalCare for its six A330 planes in an extension of a previous service support deal inked in 2009. The deal focuses on technical maintenance services for jet engines within the Bahraini carrier’s fleet.

Airport Upgrade

Key to Gulf Air’s strategy is a focus on profitable short-haul flights within the GCC. A short flight from all of the region’s capitals, Bahrain is seeking to capitalise on its geography by upgrading its airport handling capacity. BIA is currently undergoing a major upgrade, and by 2030 the country hopes to begin work on a brand new airport on reclaimed land to the north of the present facility. Since the airport sits on 5.6 sq km of land, much of it undeveloped, there is significant flexibility as to how the project will proceed, either by upgrading the main terminal while expansion is ongoing or building a temporary facility while the main airport is upgraded.

Currently, BIA sees on average 580 flights a week and its air traffic control manages 3500 flights that cross into Bahrain’s airspace weekly. The upgraded airport will also expand Bahrain’s capacity to handle air freight. Tonnage handling at BIA is forecast to grow by 2% in 2014, with an average annual growth of 1.7% expected until 2018 (see analysis). According to figures from the EDB, taken by itself the airport is expected to contribute 4% of Bahrain’s GDP in 2014.

Port Facilities

The primary centre for maritime trade in the kingdom is KBSP, though the older Mina Salman still receives some callers and there is also commercial dhow traffic between Bahrain and South Asia. The 110-ha KBSP was completed in 2009 when APM Terminals assumed control of the facility under a 25-year management contract. APM took over from the Ports and Maritime Affairs Directorate, which now monitors protocol and safety regulations. Since winning the concession, APM Terminals has invested $62m into the development of the facility.

Bahrain, which completed its first modern port in 1954, was also the first country in the GCC to have a port with a crane terminal. Today, KBSP boasts four 61-metre post-Panamax cranes, each of which has an 18-stack reach. KBSP provides 1800 metres of total quay space, including a 900-sq-metre container terminal. While the facility has a capacity of 1m twenty-foot-equivalent units (TEUs), the port will likely handle 500,000 TEUs in 2014. Market researcher Business Monitor International projects the port’s total tonnage handled is likely to rise by 6% in 2014, slightly higher than the annual growth forecast of 5.5% over the next four years to 2018. In September 2014 KBSP received its largest-ever ship when a vessel carrying 6000 TEUs from South Korean freight services provider Hanjin called at the port.

Expanding Port Access

Bahrain’s maritime geography gives the port a natural approach channel with a depth of 12 metres, and the harbour’s location also means there are no speed restrictions. To navigate the final stretch into the port, two pilot boats are available around the clock to guide vessels into harbour. If needed, three Azimuth stern drive tugs are also available.

To further expand access to the port for larger freighters, a 65-km channel will be dredged to a depth of 15 metres. The project, which is the second phase of a wider set of works commissioned by the MTT’s Ports and Maritime Affairs Directorate acting in conjunction with the Ministry of Works Municipalities and Urban Planning, includes both the dredging and disposal of dredging materials. The dredging will also aid plans to open an LNG terminal in the next few years by allowing the largest LNG tankers to safely visit Bahrain. The dredging programme is set for completion in August 2015.

The dredging of the facility and the development of improved Customs clearing with Saudi Arabia, located just a few hours away by boat, could greatly improve Bahrain’s standing as a regional centre for maritime logistics. Jubail, the largest industrial city in the Middle East, is only an eight-hour journey for most freighters when loading times are included, meaning it is possible to have two shipments a week. “There is no waiting for berth at KBSP,” Gerry Sharkey, project director of the Bahrain International Investment Park, told OBG. “Bahrain really has the capacity to meet the needs of both importers and exporters looking to target customers here or in neighbouring countries like Saudi Arabia.”

Indeed, for ships docking at Dubai’s Jebel Ali Port, sending cargo destined for Saudi Arabia to Bahrain via feeder boats can reduce total transportation costs for Saudi imports by as much as 15% to 20%. Boats can also be sent from Bahrain to Umm Qasr in Iraq, which, given tide conditions, can have a draught as shallow as 11 metres.

Causeway Access

During a 10-day Saudi Arabian school vacation in March 2014, some 770,000 people crossed the King Fahd Causeway. Though designed primarily for smaller vehicles, the causeway receives 30 transport trucks travelling from Saudi Arabia into Bahrain daily, while over 100 trucks move from Bahrain into Saudi Arabia. Of the 35 entry points into Saudi Arabia, the King Fahd Causeway has one of the lowest average entry times. It is not uncommon for goods whose ultimate destination is Saudi Arabia to be first unloaded at ports in the UAE and then be shipped to Bahrain via smaller vessels to clear Customs for Saudi Arabia via the King Fahd Causeway.

The King Fahd Causeway is jointly administered by both countries. While logistics companies told OBG that congestion on the causeway lessened in 2014, Bahrain is keen to increase efficiency. For example, there is the possibility of a flexible ticket system, in which tickets that are not used by a company on a given day could be allocated to a different operator. Another idea to reduce congestion would be to begin charging vehicles based on the number of passengers they are carrying. Drivers who use the causeway pay a BD2 ($5.30) fee, but no charges are imposed on passengers. Changes to this system could reduce congestion, but also risk deterring weekend tourism and carpooling. Expatriates who live in Bahrain often carpool to work in Saudi Arabia.

Facilitating Movement

Another policy option would be to introduce a joint border control system between the two countries. A similar system already operates elsewhere in the GCC between Omani enclaves and the UAE. Currently, Saudi passport control officers often handle 2000 entry transactions in a single shift. This high work volume has been linked to congestion. In January 2014 Saudi Arabia’s government pledged to open 18 new tollbooths in order to reduce congestion on the causeway.

The root of the problem may not be bureaucratic at all, but rather due to the fact that the 25-km causeway, which opened in 1986, has simply been outpaced by the economic growth in Bahrain and Saudi Arabia. Both sides are eager to expand the causeway, with one plan suggesting infrastructure be increased to as many as 45 entry booths.

Alongside options to expand the existing causeway, in September 2014 the rulers of the two nations together endorsed plans to build a second causeway. The new development, to be called King Hamad Causeway, is expected to facilitate further integration among GCC countries and support real estate, retail and industrial growth in Bahrain.


Local logistics operators are hard to miss, with the bright pink vehicles operated by Al Wardi Group a distinctive sight in the kingdom. There will soon be more of them transporting goods about the country, with Al Wardi announcing plans in 2014 to start producing trucks and trailers in Bahrain to keep up with increased business. The firm hopes to more than double its current fleet of 80 trucks in the coming years. The expansion is just one sign that the local transport sector is growing.

The rise of Bahrain’s industrial sector should provide further opportunities for transport operators. For example, Mondelez International, a founding member of Bahrain International Investment Park, produces 110,000 tonnes of Kraft cheese and Tang powdered beverage per year. This single facility produces enough food product to fill 7500 shipping containers annually. The company is investing $90m in a new biscuit plant, which should further boost demand for distribution logistics.


With its main port less than five years old and the opening of the new Mina Salman Interchange, the kingdom has adequate infrastructure for its current needs. KBSP and BIA are well connected and roughly equidistant between the two is the Bahrain Logistics Zone, a licensed and bonded area designed to attract logistics companies (see analysis). As well as strong internal connections, Bahrain’s transport infrastructure facilitates access to the much larger market of its neighbour: the distance from KBSP to Saudi Arabia via the King Fahd Causeway is a mere 30-km drive, and the new interchange has reduced the average driving time from the port to the causeway to just 18 minutes.

Outside of the port and road network, Bahrain is still in the initial stages of a comprehensive plan to develop its public transportation and rail systems. Roads are also being expanded, while in the aviation sector an upgrade of the country’s main airport is now under way. The major work being carried out at BIA is designed to ensure its relevance until a new airport can be built by the end of the next decade. A far less expensive, but no less important, improvement is the upgrade to the King Fahd Causeway.