Located in the heart of the Middle East and with access to the Red Sea, Jordan is well positioned to serve as a regional logistics centre – a role the country’s leaders are working to expand. In the 1990s the trans-port sector, along with communications, accounted for 0.47% of total real economic growth, according to International Monetary Fund (IMF) estimates. That was around the same as government services (0.46%), but lower than areas like insurance and finance (0.93%) and manufacturing (0.68%). By 2010, transport and communication’s contribution grew to 0.74%, second only to the “other services” category (1.43%) that year. The sector currently accounts for around 10% of GDP, according to Jordan Investment Board.
STRENGTHS & CHALLENGES: Transport’s expand-ing role in the economy is boosted by several advan-tages that Jordan offers operators. Foremost among these is the kingdom’s stable political environment, which is even more valuable given its central location, bordering the countries of the Levant and Saudi Ara-bia, and a short boat ride from Egypt. The southern port of Aqaba, for example, was crucial to reconstruc-tion efforts in Iraq. As the war-torn nation rebuilt, a significant portion of Iraqi imports passed through Aqa-ba and were then trucked to Baghdad, as Iraq’s Um Qasr port was unable to handle all of the country’s reconstruction trade activities. Furthermore, labour costs in Jordan are relatively low.
However, the sector also faces challenges, the most pronounced of which is the price of fuel. As Jordan does not have its own oil and gas reserves, it must import these resources from its neighbours. Energy subsidies amounted to 6% of the kingdom’s GDP in 2011, according to IMF estimates. In the face of ris-ing fuel costs and Egyptian gas supply disruptions, the state’s energy bill doubled in 2011. Electricity subsi-dies alone grew from JD161m ($226m) to JD1.1bn ($1.55bn), according to the IMF. In response, the gov-ernment halted energy subsidies in November 2012. The decision sparked protests, but officials said the change was necessary to secure a $2bn loan from the IMF and ease spending in the face of a rising budget deficit. For transport operators, higher prices could cut into margins, too, as fuel represents one of the largest costs in the industry.
The instability of neighbouring countries can also present challenges, as it requires operators to be more flexible. The ongoing strife in Syria demonstrates such uncertainty. “The Syrian situation has dulled activity in land transit as other, longer routes must now be taken to fulfil delivery,” Ziad Nassoura, the CEO of Agility Global Integrated Logistics, told OBG. “Despite this, the majority of break bulk cargo is still travelling safely through Syria, although inland transport to Turkey has become inaccessible.”
GOVERNMENT ROLE: The Ministry of Transport is the government’s key sector actor, responsible for overseeing its development and building a regulato-ry framework for operators. In addition, a handful of institutions are active in more specific areas. The Jor-dan Maritime Authority, the Civil Aviation Regulatory Authority and the Land Transport Regulatory Com-mission (LTRC) work with sea, air and land transport, respectively. As for railways, the government created two state-owned companies, Aqaba Railway Corpo-ration (ARC) and Jordan Hejaz Railway Corporation.
Although still a work in progress, regulatory reforms have helped make trade in the country easier over time. In the World Bank and International Finance Corpo-ration’s 2012 “Ease of Doing Business” index, Jordan ranked 96 out of 118 countries measured. In the trad-ing across borders sub-category, the country ranked a good deal higher, at 58. The publication praised the kingdom’s introduction of x-ray scanners, which it says has improved border risk-management systems and facilitated faster trade.
Changes are also afoot for government-run public transport. Jordan’s intra-city transport network con-sisted of 2630 vehicles in 2011, according to the lat-est data available from the LTRC. Of those, 586 were small vehicles, 1277 medium-sized buses and 767 large buses. The number of private transport vehicles dwarfed that of public vehicles. Private cab operators accounted for 16,086 vehicles in operation. Compa-nies, universities and schools also had 10,141 private transport vehicles operating in the same year.
Although the majority of mass transport options are currently run by private operators, the government is making moves to increase public transit. In Amman, a bus rapid transit system similar to those operating in Tehran, Istanbul and Jakarta is in the works. After facing some delays, the system seems on track to con-tinue making progress (see analysis).
ON THE ROAD: Jordan’s highways are the country’s main medium for land-based transport, both domes-tic and international. The network includes 2878 km of primary roads and 4325 km of secondary roads, according to 2011 data from the Ministry of Trans-port, the latest data available at time of press. These highways connect the kingdom to its seven land bor-ders at Karama (Iraq), Prince Mohammad Bridge (Israel), King Hussein Bridge (Israel), Al Omari (Saudi Arabia), Al Mudawara (Saudi Arabia) Jaber (Syria) and the Jordan Valley Crossing (West Bank).
The highway connecting Aqaba to Iraq is particu-larly important, given the high volume of transit trade headed to Jordan’s easterly neighbour. “Iraq repre-sents over 50% of our activity,” Ramy Naber, the man-aging director at transport and logistics firm Kuehne & Nagel Jordan, told OBG. An uncertain political situ-ation has prevented this trade from growing to its full potential, however. “Iraq’s political instability damp-ens the potential for the increase in traffic that would greatly benefit both countries,” said Naber. Political instability in Syria has also affected north-south trade links, causing some Turkey-bound traffic to reroute through Iraq. As conflicts cool, stakeholders are opti-mistic about the potential for more transit activity.
UPGRADES: In the meantime, the authorities are working on improving Jordan’s own highways. To over-see the network’s long-term development, the Min-istry of Public Works and Housing began rolling out a 25-year plan for the country’s roads in 2002. The strategy includes major works within and between cities including Amman, Salt and Irbid. To fund these projects, it calls for more than $1.8bn in investment. Thanks to Jordan’s strong political ties in both the region and the world, it has been able to secure assis-tance from allies to expedite infrastructure projects. Indeed, in September 2012 the Ministry of Planning announced that it had reached an agreement with its Saudi counterparts to allocate $54m for road construc-tion. The funds came out of Saudi Arabia’s $1.25bn contribution to the $5bn Gulf Development Fund, a grant extended to Jordan by the Gulf Cooperation Council (GCC). The fund’s other three contributors are Qatar, Kuwait and the UAE. During preliminary talks about Qatar’s contribution in September 2012, Jor-danian and Qatari officials said that as much as 10% of the funds, or around $125m, could go toward trans-port projects, according to state news agency Petra.
FREIGHT: Moving cargo along this highway network is Jordan’s trucking fleet – one of the largest in the region. The country had a total of 15,161 operational heavy vehicles in 2011, according to the Ministry of Transport. Although large, the fleet is ageing. Around 60% of the trucks were manufactured before 2000, with half of these made in 1995-99. The fleet’s own-ership is also widespread. Almost two-thirds of the trucks are owned by individuals, with the remaining third owned by companies and corporations.
The fragmented nature of the fleet’s ownership likely contributed to the industrial action that affect-ed the segment throughout 2011 and early 2012. One of the key demands of participants was approval to establish a private company that could organise the business and spread work among independent oper-ators. In March 2012 the LTRC agreed to the request, which consequently helped diffuse tensions among striking drivers. Underlying issues also included a com-bination of intense competition and falling rates for individual operators. “The core problem is finding work for truckers,” Naber told OBG. “The lack of business has led to depreciated fares for shipping. This has led to continued strikes by the trucking unions, which can be fatal to the transport sector.” The creation of a shareholding company, strike leaders say, could secure work and fair wages for drivers.
RAIL: Jordan’s current rail infrastructure functions largely as an auxiliary to the highway network. The country has 620 km of track divided into the south-ern phosphate transport lines and the northern Hejaz railway from Amman into Syria. The government cre-ated two state-owned entities to operate the two sections: ARC and Jordan Hejaz Railway Corporation. ARC handles the southern portion. The minister of transport heads the company’s board, although it still maintains a degree of financial and administrative independence from the ministry. After ARC’s creation in 1972, the state-owned entity constructed lines to transport phosphate from mines located in the coun-try’s southern regions to Aqaba port. ARC currently operates 293 km of narrow-gauge track, part of which was rehabilitated from the Ottoman-era Hejaz railway. Between 2m and 3m tonnes of phosphate make their way to Aqaba along these lines each year.
Jordan Hejaz Railway, meanwhile, operates the north-ern rails, which include a 217-km line between Amman and Damascus and another 111 km of abandoned lines. Services include a scheduled twice-weekly Dam-ascus route and freight trains on request. The civil strife in Syria, however, has disrupted passenger operations. To capitalise on the line’s potential, Jordan Hejaz Rail-way is considering a renovation project in coopera-tion with Turkish State Railways. The idea is to use the line’s history and scenic routes to build a tourist attrac-tion. “The rehabilitation of the Hejaz Railway would boost Jordan’s tourism revenues,” Salah Muflih Al Louzi, the railway’s director-general, told OBG.
GAINING GROUND: To build beyond the two exist-ing sections of Jordan’s railways, the government has drawn up plans for an 897-km network that will pro-vide links between the capital, the kingdom’s main industrial cities and the port of Aqaba, as well as a number of international connections. Named the Jor-dan National Railway, the strategy calls for a 509-km north-south line between Aqaba and Syria as the cen-trepiece of the network. The line, with construction costs estimated at $2.43bn, would also link up with the phosphate mine at Eshidiya, Amman and the indus-trial city of Zarqa. The section would further connect Jordan to Turkey and Europe, opening an invaluable freight route, given that the EU was Jordan’s second-largest trading partner in 2011.
The network’s second section, a 290-km east-west line between Zarqa and Iraq, would link Jordan’s industrial areas with one of the kingdom’s largest trading partners. The third segment, a 91-km link to Saudi Arabia, could eventually connect to the forthcoming GCC railway. Indeed, as progress continues on the GCC project, a connection to Saudi Arabia would be high-ly valuable. Officials there say that the 2750-km line running from Riyadh to Jordan’s border is nearing completion, and that passengers and freight could begin travelling on it by 2014.
SETTING THE FRAMEWORK: To put the three-part National Railway plan into action, the government has divided the project into two components: infra-structure and operation. To spearhead infrastructure construction, the plan calls for the creation of a state-owned company – Jordan Railway Corporation – which would finance, build, own and maintain the network. As for operation, the government plans to enlist a pri-vate company or consortium of companies through a bidding process. The winners would operate rail services on the new infrastructure, buying and main-taining their own rolling stock.
The potential value of a national railway cannot be understated. Its creation could cut costs and trans-port times for virtually all goods transported by land. The government’s rail study anticipates that contain-ers, oil and phosphates would create the largest traf-fic flows by tonnes. By 2020 the network’s capacity is set to reach 28m tonnes per annum (tpa), and 55m tpa by 2040, according to the government’s esti-mates. Although the potential gains are high, rail proj-ects have thus far been unable to stick to projected timelines due to financial challenges. External factors like the political struggle in Syria have dampened investors’ interest, at least for a time. Still, the author-ities remain optimistic that capital could be more forthcoming as tensions ease. “We are waiting for political stability to return in the countries around us so that private companies will be ready to invest,” Naim Hassan, the director of planning and studies at the Ministry of Transport, told OBG.
Development and progress on the National Railway’s first phase is already under way in the south of the kingdom. With feasibility studies already completed, land acquisition has commenced for the 22.5-km sin-gle-track line connecting the phosphate mine at Eshidiya to the existing ARC line, the then minister of transport, Alaa Batayneh, told delegates at the Inter-national Union of Railways Regional Assembly of the Middle East High Level Conference in November 2012.
The financial situation is looking increasingly bright too, thanks to assistance from Jordan’s regional allies. In December 2012 the minister of planning and international cooperation, Jafar Hassan, met with the Kuwait Fund for Arab Economic Development’s director-gen-eral, Abdul Wahab Al Bader, and concluded four agree-ments to finance projects in health, education, water resources and energy, according to English-language daily The Jordan Times. One section of the agreement also provides $237m for transport development, including roads, bridges and a public transit link between Amman and Zarqa, according to the Ministry of Planning. The deal is part of Kuwait’s $1.25bn con-tribution to the $5bn GCC grant extended to Jordan. With the kingdom acting as a link to Syria, Turkey and Europe for the planned GCC rail network, both pub-lic and private lenders may begin to look more intent-ly at investing in Jordan’s rail development.
AIR: Changes are afoot in the aviation sector as well. Jordan’s airports have seen passenger traffic rise steadily over the past decades, averaging 9.7% annu-al growth between 2006 and 2011, with passenger numbers increasing from 3.78m to 5.98m, according to the Civil Aviation Regulatory Commission. The coun-try is currently served by three airports: Queen Alia International Airport (QAIA), King Hussein Interna-tional Airport (KHIA) and Marka International.
QAIA, the country’s principal air gateway, process-es the majority of traffic. To run the airport, the Jor-danian government signed an operation concession agreement in 2007 with Airport International Group (AIG), a Jordan-based company whose shareholders include Abu Dhabi-based Invest AD (38%), Kuwait-based Noor Financial (24%), Jordan’s EDGO Group (9.5%), Cyprus-based J&P Limited (9.5%), Greece’s J&P Avax (9.5%) and France’s Aeroports de Paris Manage-ment (9.5%). QAIA has seen an encouraging upswing in traffic over recent years. In 2012 the year started strongly, building into July, when QAIA recorded some 654,466 total passengers, the highest single-month figure in the airport’s history. Total passengers served (arrivals and departures) rose 15.3% year-on-year ( yo-y) from 5m to 5.8m through November 2012, accord-ing to AIG. The volume of incoming and outgoing cargo also increased by 8.6% from 78,390 to 85,191 tonnes during the same period.
Two factors were likely important to the 2012 num-bers: seasonality and the political situation elsewhere in the region. The summer months have historically seen higher volumes, offering a natural boost to traf-fic. Lingering unrest in the Middle East, meanwhile, added a further bump to regular seasonal gains. Although the Arab Spring may have dampened long-haul tourist numbers for the moment, these events have at the same time helped increase traffic into Jor-dan. About 55,000 Libyans came to the country for medical treatment in the first half of 2012 alone, Fawzi Hammuri, the head of Jordan’s Private Hospi-tals Association, told local press in June 2012. This sit-uation highlights the importance of Jordan’s internal stability as an economic asset. Indeed, as refugees, foreign workers and those seeking medical treatment search for a nearby and stable country, Jordan is an attractive option. “The current political situation in the region has created an extraordinary situation” Kjeld Binger, the CEO of AIG, told OBG. “We’ve seen a fall in traffic from the US and Europe, but at the same time we have seen a significant increase in regional traf-fic to QAIA. Much of the growth in traffic as well as tourist numbers is derived from regional travellers.” In November 2012 passenger numbers eased by 3.5% compared to 2011, likely the result of the wearing off of the effects of the political boost.
QAIA’s ability to handle both long-term growth and temporary surges in traffic is set to improve. Work on the airport’s new terminal, designed by UK-based Fos-ter + Partners, was 92% complete in December 2012. Although originally slated to begin operations at year-end 2012, planners pushed back the opening due to a combination of factors, including unexpected traf-fic growth and changes to the original plans that called for an additional 25,000 sq metres of floor space. As of early March 2013 several airlines began using the terminal for select routes, and it was for-mally launched on March 21. AIG says it has spent $750m investing in the new terminal and $100m on renovations to existing facilities, part of its commit-ments in the build-operate-transfer agreement it signed with the government. It was under the terms of this 25-year concession that the company agreed to build the new terminal that would increase QAIA’s annual passenger capacity from 3.5m to 9m, with the potential to expand to 12m at a later date.
OTHER AIRPORTS: Jordan’s second-largest airport is KHIA in the southern port city of Aqaba. The state-owned Aqaba Development Corporation (ADC) owns the airport itself but signed a management agreement with Aqaba Airports Company in January 2008. KHIA has a single 3000-metre runway that in normal weath-er conditions can handle all types of passenger air-craft other than the exceptionally large Airbus A-380.
Stakeholders are looking into ways to tap into the potential of the airport, which is located near Jor-dan’s only port. In 2007 ADC signed an agreement with Singapore-based Changi Airport Consultants to cre-ate the airport’s master plan and help map out KHIA’s development through the next two decades. For pas-senger transport, stakeholders plan to enlarge the air-port so it can support the anticipated expansion of Aqaba’s tourism sector. As for freight, KHIA’s cargo ter-minal has been in service since 2006, and its admin-istrators aim for it to eventually become a MENA regional hub for intermodal transport.
SPREADING WINGS: In recent years, the airport has seen growth in passenger traffic, which increased 6.5% from 192,202 to 205,402 passengers between 2008 and 2011. Numbers have eased in the past year in 2012, falling from their peak of 220,590 in 2010, according to the Ministry of Transport. During the same four-year period, however, total cargo aircraft movements grew by over 50% from 917 to 1434.
To accommodate future growth, the ADC has out-lined expansion plans to double KHIA’s annual passen-ger capacity to 2m. The company put forward the invitation to tender for the first phase of construc-tion in November 2011. The project, which is worth an estimated $100m, calls for the rehabilitation and expansion of the terminal. In addition to the expan-sion of the terminal itself, other construction projects are planned for the immediate vicinity of KHIA. ADC has also outlined several areas to which it intends to attract investment, including an aerospace industri-al park, logistics park, airport business park and avi-ation training establishments.
The country’s third airport, Marka International (also known as Amman Civil Airport) is located in east-ern Amman. Although once the hub of the flag car-rier and the kingdom’s main international gateway, the airport now primarily serves government and charter flights. Airlines operating out of the airport include Jordan Aviation, Royal Wings and Royal Falcon.
FLAGSHIP CARRIER: As Jordan’s airports continue to undergo expansion, Royal Jordanian (RJ), the coun-try’s national flag carrier, has also set its sights on a larger role in the region. Founded in 1963 by the late King Hussein, the company operated for over 40 years as a state-owned company. In a 2007 move to privati-sation, it floated nearly 60m shares, 71% of the com-pany, on the market. Shareholders with 5% or more of the company at year-end 2012 included the gov-ernment of Jordan (26%), Mint Trading Middle East (19%) and Social Security Corporation of Jordan (10.1%), according to the Amman Securities Exchange.
The national carrier sustained losses in 2011 of JD57.9m ($81.5m), compared to a net profit of JD9.7m ($13.6m) in 2010. Bringing cash in was not a prob-lem: the company reached its highest-ever annual revenues of JD736m ($1.04bn) in that year. Negative cash flows were more the result of higher fuel costs and additional losses from political unrest, the airline said in its financial reports. In 2012, however, the company’s fortunes took a turn for the better. Dur-ing the first half of the year it still reported a loss, albeit a smaller one, at JD39.2m ($55.1m). During the third quarter, RJ moved back into the black with a profit of JD15m ($21.1m). These results could signal shifting fortunes for the company’s balance sheets.
In addition to bringing changes to the airline’s finan-cials, 2012 also brought changes in leadership and strategy. In July 2012 the company’s board of direc-tors appointed Amer Haddidi, an advisor to the Roy-al Hashemite Court, as the new chief executive. The company has also been reviewing its route map, trim-ming more stagnant areas and focusing on those with higher profitability. RJ’s route restructuring has includ-ed closer cooperation with other airlines. In 2007 RJ was the first Arab airline to join an international alliance with its membership in Oneworld. So far the hook-up has been a favourable one. The company says it can attribute JD68m ($95.6m) of revenue to its member-ship, a return on investments that amounted to only JD19m ($26.7m). Bilateral agreements are also in the works to extend the airline’s regional reach. In Novem-ber 2012 RJ and state-owned Oman Air said they were working on a code-share agreement. RJ also has a sep-arate agreement with Gulf Air, by which the latter operates flights but both carriers market them. Remov-ing less-frequented routes and creating regional part-nerships could help RJ focus more on profitability without shouldering as much risk. As for the future, the company’s leadership says it is looking west toward rapidly developing Africa. “Africa is very promising with heavy demand from both pilgrims and business-people. The Lebanese are also huge investors in Africa,” the firm’s CEO, Amer Haddidi, told local magazine Jor-dan Business in December 2012.
LOW-COST CARRIER: A new player in the kingdom’s aviation market has also emerged. Having operated on a charter basis since 2005, Jordan-based Petra Air-lines received its air operator’s certificate at the end of 2012, allowing it to become the kingdom’s first lowcost carrier (LCC). The company’s CEO, Riad Khash-man, announced that the firm would aim to expand its fleet – currently two Airbus A-320s – to 55 by 2014. While establishing a route map in the Middle East, the carrier is also looking to enter into a work-ing relationship with a European LCC. The idea is to combine Petra’s presence in the MENA region with a future partner’s European destinations. LCCs in the Middle East have grown at an exceptionally fast pace in the past decade, accounting for around 20% of the region’s flights in 2012, according to a report by US-based consulting firm OAG Aviation.
CALLING THE SHOTS: Just as Jordan’s airports and airlines are undergoing changes, so too is the avia-tion sector’s regulatory framework. The country’s top aviation authority, the Civil Aviation Regulatory Com-mission (CARC), was created by the government in 2007 to replace the Civil Aviation Authority. The body has a mandate to oversee all affairs in the aviation sector, including regulations, flight licences, safety standards and traffic movements.
Harmonisation with EU legislation is a top priority for the CARC. The European authorities are working with their Jordanian counterparts to bring the king-dom’s aviation standards in line with Europe’s. The ulti-mate goal is to increase the freedom for carriers from both sides. Currently, Jordan and the EU have given each other’s airlines the right to operate flights to and from their respective territories, allowing their carri-ers to move passengers and freight to and from Jor-dan and Europe. As the harmonisation of the kingdom’s airports edges closer, the two parties are expected to extend the right to use each other’s airports as hubs for travel to additional locations. RJ, for example, could run flights from Amman to Paris, and then Paris to Lon-don, while European carriers would be able to use Jor-dan as a base to expand in the Middle East.
The country’s National Air Transport Strategy, draft-ed by the CARC in cooperation with its EU partners, lays out the major steps that the kingdom is taking in the near term to reach these long-term goals. The continuing harmonisation of legislation, changes to the country’s licensing procedures and improvements to its air navigation services are all on the docket.
Maintaining open skies has also been important, as it helps Jordanian carriers secure routes abroad and ensures competition in the local market. Jordan cur-rently has open skies agreements with 31 countries, in addition to its December 2010 comprehensive agreement with the EU. The country offers open skies on a reciprocal basis, meaning any other country will-ing to eliminate flight and capacity limits for Jordan-ian carriers could conclude an agreement to receive the same concessions from Jordan.
PORTSIDE PROGRESS: The centre of the kingdom’s shipping activities, Aqaba is divided into three areas: the main, middle and southern ports. The 12-berth main port, located near the city, processes general car-go, grain and phosphate exports. The seven-berth middle port handles containers, cement and livestock, while the four-berth southern port, closer to the bor-der with Saudi Arabia, handles oil, timber and indus-trial products, including chemicals and potash.
Aqaba port has come a long way since 2003, when shipments were at a virtual standstill and wait times were so long that some shipping companies were levying surcharges to compensate for delays. The authorities, acknowledging that the situation was wasting Aqaba’s potential, took action. Together with Aqaba Special Economic Zone Authority (ASEZA) the government created a private company, Aqaba Devel-opment Company (ADC), with ASEZA and the state each taking half of the shares. The aim was to distance the port’s business operations from the government in Amman, where slower decision-making and polit-ical calculations were thought to be hindering growth.
Following the ownership and operation transitions, the port has seen broad-based growth. It handled 210m tonnes of goods in 2011, a rate higher than any year in the past two decades, according to the Min-istry of Transport. Indeed, the average tonnage of goods handled between 2004 – the year of the own-ership changes – and 2011 is 190m tonnes per annum, a 47% increase on the 129m-tonne average for the decade before the handover. Other metrics have also risen significantly. The average number of vessels served annually during the eight years after the ADC handover grew to 2920, compared to the 2610 per annum average during the previous decade. Indica-tors were promising throughout 2012 as well. Imports over the year totalled 11.9m tonnes, according to Aqaba Ports Corporation, the port’s state-owned oper-ator. This number was about 17% higher than 10.2m tonnes during 2011. Exports recorded a decrease, however, shrinking just over 17% from 8.98m tonnes to 7.4m tonnes between 2011 and 2012. Overall traf-fic at the port was still slightly up on the year, at 19.4m tonnes compared to 19.2m tonnes in 2011.
Investments in Aqaba port’s container terminal, meanwhile, are to increase traffic capacity. The gov-ernment chose a public-private partnership model to attract capital. In 2004 the ADC signed an agreement with Netherlands-based APM Terminals to operate, manage and market a new entity, Aqaba Container Ter-minal (ACT). Between 2006 and 2009 the terminal saw $100m in investment, according to APM.
Preliminary data from 2012 has been positive for ACT. Total container throughput for the first half of the year grew 19.5% y-o-y, and the terminal reached a monthly record of 75,065 containers in June. This occurred despite political unrest, which disrupted several supply lines, according to the port’s leader-ship. The year also saw growth in reefer, or refriger-ated traffic, posting increases of 15% compared to 2011. In anticipation of this rise, the port has expand-ed its reefer handling capacity from 700 to 950 plugs.
INVESTING IN LOGISTICS: ACT’s 2009-13 action plan calls for expenditures of $235m, including berth expansion and facilities upgrades. The idea is to become a logistics hub for the region. “Our plan is for ACT to be the sustainable gateway to Jordan and beyond,” Richard Davidsen, ACT’s chief commercial director, told Shipping & Marine magazine in July 2012. He added that the port would be “working closely with the entire supply chain for the Levant and Iraq markets.” Indeed, Iraq is a major contributor to the port’s business model, with Iraq-bound cargo often outnumbering cargo bound for Jordan, Ziad Nassoura, the CEO of Agility Logistics, told OBG.
Facilities expansion could help enlarge the port’s role as a regional logistics centre. Upgrades are set to add 200 metres of quay and two ship-to-shore cranes, along with other new equipment. Aqaba cur-rently handles ships with drafts up to 18 metres and lengths up to 540 metres. Once completed, expan-sion projects will raise the maximum berth length to 1000 metres, allowing three container vessels to sit next to each other. In total, the expansion’s capital val-ue will reach about JD500m ($703m), according to esti-mates from the project’s planners.
PASSENGER SERVICE: Much of Aqaba’s potential as a cruise and passenger terminal remains untapped. ASEZA’s master plan calls for more cruise tourism at the port. With nearby attractions like the 2000-year-old city of Petra and the vast landscapes of the Wadi Rum, the area has plenty to offer prospective tourists. Sea passenger arrivals have been down in recent years, however. After peaking at 625,000 arrivals in 2008, numbers steadily decreased to 364,000 in 2011, according to the Department of Statistics. The decline was likely hit by the one-two punch of the global financial crisis and the Arab Spring, which simultane-ously weakened tourists’ spending power and damp-ened overall tourist arrival numbers. Despite these challenges, there are positive signs emerging on oth-er fronts. After an 18-month closure, Jordan and Egypt concluded an agreement to reopen their erstwhile Taba-Aqaba ferry route in October 2012, according to the Petra news agency. The authorities estimate that around 250,000 passengers use the service each year, generating approximately $250m in annual rev-enue. Located near Egypt, Israel and Saudi Arabia, Aqaba has opportunities to increase cooperation and boost its sea visitor numbers.
OUTLOOK: With investment set to increase in pub-lic transit, roads, railways, aviation and marine trans-port, the sector is on track for expansion on all fronts. There are a few potential obstacles to this continued development. Difficulty raising capital for infrastruc-ture investment has been a persistent issue, causing delays in railways and public transport projects in the past. The government’s success in several public-pri-vate partnerships, as well as financial assistance extended by regional allies, however, could provide diverse sources of funding and keep progress on track. Delays due to political processes have also arisen in the past. Continued privatisation and the creation of different government agencies could help in this regard, further transferring the day-to-day operations of key projects to the private sector or state-owned enterprises, rather than leaving them under the direct purview of Amman. Indeed, changes over the past decade point to the growing capacity and operational efficiency of the kingdom’s transport sector, qualities that should serve it well as Jordan moves forward.
Read More from OBG
