With Bahrain’s 780-sq-km landmass stretching across 33 islands, efficient transport connectivity between the country’s four main islands – Bahrain Island, Al Muharraq Island, Sitra Island and Umm Al Nasan Island – is integral to economic development. National strategy has focused on establishing Bahrain as an international tourism destination and logistics centre. That drive has resulted in significant government investment in general and commercial transport infrastructure, with a new port, a high-capacity causeway connecting Bahrain with Saudi Arabia and a new airport all launched over the last 15 years. The positive socio-economic impact of those projects has encouraged additional enhancements, with stronger multi-modal linkages with the broader Gulf region a central goal of the next wave of strategic developments.
Since the return to normal economic activity following the Covid-19 pandemic, government authorities have launched new strategies to both harness pent up demand, create new linkages and address inefficiencies exposed by supply chain constraints. The transport sector is a key contributor to GDP and job creation, and plans to expand the kingdom’s landmass by around 60% mean its contribution to both of those metrics is likely to increase significantly over the medium and long term.
Structure & Oversight
The Ministry of Transportation and Telecommunications (MoTT) is responsible for the regulation and oversight of both the transport and ICT sector. The ministry’s transport-related duties are carried out by segment-specific departments, including Civil Aviation Affairs, Land Transport Affairs, and Ports and Maritime Affairs. Logistics and tourism are among the high-potential activities being harnessed to drive economic diversification under the banner of Bahrain Economic Vision 2030, the government’s overarching socio-economic development blueprint, while enhancing public transport offerings and facilities is a core component of efforts to tackle challenges such as traffic congestion. In addition to transport-specific authorities, the Ministry of Works (MoW) is an important entity in infrastructure planning and development, with a remit to act as the construction arm of the government.
Key Priorities
Meanwhile, global maritime terminal operator APM Terminals manages activity at Khalifa Bin Salman Port (KBSP), Bahrain’s only commercial port, which is situated in the Al Hidd industrial area around 13 km south-east of Bahrain International Airport (BIA) and 17.5 km east of the capital, Manama. APM Terminals is in the process of formulating its multi-year strategy in collaboration with the Bahrain Economic Development Board – which works with the public and private sectors to promote investment – and the Bahrain Chamber of Commerce and Industry. In line with the goals of Bahrain Economic Vision 2030, APM Terminals is working to promote employment opportunities within the logistics sector. The company is also undertaking initiatives with Bahrain Polytechnic to provide training programmes and internships.
Aviation activities are being prioritised in the kingdom’s development strategies. Bahrain Airport Company, a wholly owned subsidiary of Gulf Air Group Holding, oversees BIA, which has undergone significant infrastructure upgrades in recent years. Bahrain Airport Services, for its part, is responsible for oversight and implementation of aviation services. The kingdom’s aviation authorities received a raft of awards in 2021 and 2022 relating to service provision and quality of facilities (see analysis).
Bolstering regional linkages is another key aspect of transport development. In August 2022 the ministers of transport of Bahrain and Saudi Arabia met to discuss strengthening economic ties through deeper integration of the two nations’ transport and logistics activities. Currently, the two countries are connected by the King Fahd Causeway. Plans for a new road linkage, the King Hamad Causeway, were under way as of early 2023.
Strategy & Development
Logistics and tourism activities are central to government plans to propel economic expansion and diversification. In October 2021 the government released its Economic Recovery Plan (ERP) in a bid to guide the kingdom’s economy towards achieving Bahrain Economic Vision 2030 goals following the unprecedented economic stresses brought about by the pandemic and resulting shocks. The Logistics Services Sector Strategy 2022-26 and the Tourism Sector Strategy 2022-26 were released shortly after the ERP to provide focused roadmaps and milestones for the development of sectors deemed to be of high potential and strategic importance (see Tourism chapter).
Under the guidance of the Logistics Services Sector Strategy 2022-26, the MoTT aims to raise logistics activities’ contribution to GDP from 6.4% in 2021 to 10%; increase annual airfreight to 1m tonnes; boost maritime-container handling volumes to 1m twenty-foot equivalent units (TEUs) per year; and expand the kingdom’s aviation network to more than 70 international destinations by 2030. Ongoing review of laws and regulations and modernisation of logistics infrastructure are other key strategic priorities as the MoTT works to improve its range of services and attract increased investment.
The Bahrain Sea-to-Air Logistics Hub opened in December 2021 and is a core component of the Logistics Services Sector Strategy 2022-26, providing a modern, multi-modal logistics park that connects KBSP with BIA. The increased efficiency offered by digitalised internal procedures and integrated Customs processes has enabled two-hour bonded lead times and a 40% cost reduction for containers travelling between KBSP and BIA.
Meanwhile, the Bahrain Real Estate Investment Company (Edamah) – the real estate arm of Mumtalakat, the kingdom’s sovereign wealth fund – broke ground on its 87,382-sq-metre Sitra Logistics Park in October 2022. Trident Warehouse has signed a 10-year lease worth approximately $7m on a 8000-sq-metre facility in the park, which is designed to precipitate the growth of the logistics sector and attract international investment. Multiple other logistics parks were in operation throughout Bahrain as of April 2023 (see Industry chapter).
Digitisation is a core component of the government’s development plans. APM Terminals has announced its intention to digitise its services to improve efficiency for customers. Meanwhile, the MoTT is moving more of its own operations online. As of early 2023 a number of services, such as digital aeronautical information, weather bulletins, permit applications, flight schedules, overflying and landing permission services, vessel registration, route planning, and delivery and order status services, among others, were available online to stakeholders.
Performance & Size
The Ministry of Finance and National Economy (MFNE) provides key metrics tracking transport sector development alongside that of the communications segment. The effects of the pandemic on transport activities were clearly visible in the quarterly GDP breakdowns provided in the MFNE’s economic reports. In the first quarter of 2021 the transport and communications sector underwent a year-on-year (y-o-y) contraction of 26.8%, reflecting the fact that pandemic-related restrictions on transport activities were not imposed until March 2020. In the second, third and fourth quarters of 2021 transport and communications activities grew by 36%, 25.8% and 11%, respectively.
Expansion continued into 2022, averaging 15.5% in the first two quarters before moderating to 8% for the third quarter. In times of normal economic activity, the transport and communications sector traditionally contributes between 6.5% and 7% to GDP. The aforementioned logistics strategy has clear synergies with the government’s drive to boost the export of locally manufactured goods, and for the first three quarters of 2022 the manufacturing segment averaged approximately 6% y-o-y expansion.
As of the first quarter of 2021 there were 3668 companies active in the transport and logistics space, according to Tamkeen, a semi-autonomous public agency focused on strengthening the private sector. Of these, 3613, or 98%, were classified as micro- or small enterprises. The total transport and logistics workforce numbered 30,564, equal to approximately 6% of the national labour market. In addition, Bahraini nationals accounted for 25% of the sector’s workforce, making transport and logistics the ninth-largest employer of local workers from a total of 18 sectors.
Investment & Major Projects
One of the five pillars of the ERP is the Strategic Projects Plan (SPP), through which the government plans to commit around $30bn to upgrading Bahrain’s general infrastructure. In order to generate the significant private investment required to bring the SPP to fruition, most of the initiative’s constituent projects are being offered as public-private partnerships (PPPs). Indeed, a new PPP guide was launched in 2022 in order to better regulate their implementation and offer increased protection to potential private partners (see Economy chapter). Transport facilities are a core focus of the SPP, with a number of major developments in the pipeline.
Opened in 1986, the King Fahd Causeway has stimulated trade and tourism between Bahrain and Saudi Arabia, with its traffic volumes expanding by around 6% annually between 2012 and 2022. Operating at capacity as of early 2023, the causeway sees roughly 11.5m vehicles cross per year, which has created impetus for the construction of a second such link. The 25-km King Hamad Causeway, set to cost an estimated $3.5bn, will be carried out as a PPP and will feature four lanes and a central railway line intended to serve as the Bahrain-Saudi Arabia linkage of the long-awaited GCC Railway network. Financial studies for the causeway were completed in 2021, and in late January 2023 it was announced that selected contractors had submitted feedback forms to the causeway authority.
The SPP also includes multiple large-scale integrated developments such as the South City and Bilaj Al Jazayer tourist cities, which will require multi-modal transport facilities and extensive road networks. The most ambitious SPP development is a plan to build five new cities via land-reclamation projects. Once executed, the plan will expand Bahrain’s landmass by up to 60%, which will in turn necessitate comprehensive passenger transport and logistics infrastructure to cater to the residential and industrial developments that the new island cities are designed to house. These areas are integral to the government’s aim to establish the kingdom as a regional tourism and logistics centre, with a proposed new airport also a feature of its plans.
Aviation
Currently, BIA is the kingdom’s only commercial aviation centre. It has undergone significant upgrades in recent years, with a new terminal opening in 2021 to assume all operations previously carried out by the old one. It has a handling capacity of 14m passengers per year and boasts modern security and passenger-processing systems. BIA’s total passenger throughput in 2019 reached 9.7m passengers, meaning that the old terminal was operating well beyond its official annual capacity of 4m. The pandemic saw global passenger numbers drop dramatically in 2020, but in 2021 BIA received a total throughput of around 3m, with that figure increasing by 127% to 6.9m by the end of 2022. Of that number, 978,659 were tourists visiting Bahrain – marking an increase of 149% from 2021 – while the balance were transit passengers.
In spite of the curtailment of movement brought about by the pandemic, total air freight handled by BIA in 2020 rose by 3.2% to 300,205 tonnes. As of April 2023, the MoTT had yet to publish the relevant statistics for 2021, but in January 2022 total air cargo processed at BIA was 28,213 tonnes, and January 2023 brought a y-o-y increase of 2% for a total of 28,840 tonnes, including 10,323 tonnes for import, 5460 tonnes for export and 13,057 tonnes for trans-shipment. The aforementioned growth was driven by trans-shipment volumes, which increased by 9% between January 2022 and January 2023. Export and import volumes, meanwhile, declined by 6% and 1%, respectively.
Maritime
KBSP, which launched operations in 2009, is the engine of Bahrain’s logistics activities. The port has the capacity to hold 54,000 TEUs and a total annual throughput capacity of 1m TEUs. The number of TEUs processed at KBSP rose from 379,817 in 2016 to 464,010 in 2020. General cargo volumes, meanwhile, increased from 778,874 tonnes in 2016 to 1.6m tonnes in 2020.
In spite of the gradual easing of pandemic-related transport restrictions and supply chain disruptions, total TEUs and general cargo handled at KBSP declined to 404,904 and 1.2m tonnes, respectively, in 2021. That trend continued into 2022, with the number of TEUs processed by the port dipping by 5.3% to 383,435 and general cargo tonnage falling to 787,514 tonnes – a contraction of 34.4%. However, in 2022 roll-on/roll-off cargo increased by 14.5% from 28,710 to 32,862. “We are expanding beyond Bahraini imports and exports, and initial feedback from the market is encouraging,” Richard Smith, chief commercial officer at APM Terminals Bahrain, told OBG. “Given that we operate the kingdom’s only commercial port, activity at KBSP accurately reflects the container market as a whole, and the range of non-oil exports is still rather limited.”
Maritime tourism is receiving additional focus from Bahrain’s tourism authorities as the government attempts to maximise revenue streams facilitated by its transport infrastructure. In 2021 a total of 7279 international visitors arrived by sea. An increase of 348% saw that figure reach 32,617 in 2022. While the gradual post-pandemic return to normalcy was influential in that respect, such a pronounced increase suggests maritime tourism initiatives are having a positive effect.
Roads & Bridges
As of April 2021 Bahrain had 4242 km of paved roads, 700 km of which were added over the prior five years. Road construction activity was relatively subdued in 2022, with awarded contracts amounting to around $26m – a significant drop from $131m in 2021. However, due to the comprehensive nature of the government’s individual development projects, activity is expected to increase in the coming years. Indeed, advanced road infrastructure is essential to the success of the government’s drive to establish Bahrain as an international logistics centre.
In addition to the King Hamad Causeway project, other big-ticket road developments have seen significant movement. One of those is the Northern Link Road, an SPP development that will stretch 22.5 km along the northern coast of Bahrain Island. The Northern Link Road was designed to stimulate investment in the north of the country and provide high-capacity transport connectivity between strategic projects and housing developments – illustrating how the government’s approach to integrated development maximises the impact of its infrastructure projects. In August 2022 the MoW announced that five local and international consultancy firms had submitted proposals ranging from BD1.5m ($3.9m) to BD3.4m ($9m) to carry out the feasibility study for the project.
In addition, following the March 2022 completion of the second phase of the Busaiteen Link Road project, tendering for the third phase was opened to selected Bahraini and Saudi contractors in March 2023. Once complete, the road will connect with the Northern Link Road. The MoW is responsible for project oversight, and the third phase includes the development of 10.7 km of carriageway and upgrades to surrounding infrastructure.
In March 2021 the government announced that it was considering plans for a causeway to connect the Hawar Islands development with the mainland, and in March 2022 government officials called for plans for a $4bn causeway connecting Bahrain and Qatar to be revisited after they were shelved in 2010. Given the kingdom’s limited landmass and growing population, traffic congestion is a key concern, particularly in the capital, Manama. Many of the major road projects under way or in the pipeline are intended to tackle the problem.
Rail
The development of a metro project aligns with the government’s bid to address traffic congestion. In February 2023 it was announced that Delhi Metro Rail Corporation (DMRC) had been awarded the tender for the first phase of the project’s construction. The DMRC will carry out project development, budgeting and contractual procedures, and has signed a memorandum of understanding with India’s state-owned manufacturer BEML – formerly Bharat Earth Movers – for the supply of rolling stock. The fully automated metro system will incorporate 109 km of track in its entirety. The first phase will stretch approximately 29 km between Seef and BIA, which are situated on Bahrain Island and Al Muharraq Island, respectively.
Work is also progressing on the long-awaited $250bn GCC Railway network, with the UAE having built track up to its border with Saudi Arabia as of late 2022, while initial studies for the Saudi-Qatar connection began earlier that year. The track is set to run from Dammam in Saudi Arabia into Bahrain via the King Hamad Causeway. The railway will then connect with KBSP, BIA, Amwaj Islands and Qatar via the aforementioned Bahrain-Qatar causeway. In December 2021 the GCC Supreme Council approved the establishment of the GCC Railways Authority to oversee the implementation of the project. The new authority began operations in June 2022.
Outlook
Transport-related activities and infrastructure developments have been significant factors in economic progress in recent decades. The increased focus on attracting private investment and the new PPP guide should see that trend continue as the government presses ahead with its economic diversification plans and the SPP.
With the success of transport-related strategies dependent on progress across other sectors, logistics operators in particular will hope to see significant advances in the government’s drive to boost production of goods for export. At the same time, efforts to expand the country’s tourism offerings should yield positive cross-sector impacts, while the knock-on effects from the increasing ability of GCC countries to attract major international sporting events should result in broader recognition of the bloc’s cultural heritage, as well as its advanced tourism, transport, logistics and aviation infrastructure.
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