Under its overarching economic development plan, New Kuwait 2035, Kuwait’s government is working to strategically harness the country’s location on the Gulf to transform its transport and logistics industries into key contributors to GDP. Several significant upgrades to existing transport infrastructure are at an advanced stage, while a new logistics belt is a key component of the Madinat Al Hareer, or Silk City, development – New Kuwait 2035’s flagship project. However, progress on a raft of other proposed developments that could, if completed, unlock latent economic potential for the country has stalled in recent years due to both internal and external factors including political disagreements, complex business procedures and fluctuating international oil prices.
Within the context of the Covid-19 pandemic, the importance of strong infrastructure and logistics became more evident then ever. It brought a renewed determination from Kuwait’s authorities to modernise the country’s transport infrastructure to the level required to fully realise the economic diversification plans, and facilitate the movement of people and goods within and across borders.
Structure & Oversight
The Ministry of Public Works (MPW) is in charge of the construction and maintenance of public buildings and key infrastructure. It is integral to national infrastructure development as it coordinates with all transport-related authorities over projects relevant to their jurisdiction.
The Directorate General of Civil Aviation (DGCA) works under the purview of the MPW and is responsible for the management and operation of Kuwait International Airport (KIA). It both governs and provides day-to-day aviation industry services, such as navigation facilities and meteorology information, while implementing and coordinating international aviation conventions and agreements. Executing maintenance and construction works of the aviation infrastructure is also key among the DGCA’s duties.
Kuwait has commercial ports in Shuwaikh, Shuaiba and Doha, all run by Kuwait Ports Authority (KPA). The entity is government-owned and runs as a commercial arm under the authority of the Ministry of Commerce and Industry. Kuwait’s road networks and related activities are overseen primarily by the Public Authority for Roads and Transportation (PART). The entity issues driving licences, vehicle licence plates and registrations. It also oversees the design, construction, and maintenance of roads and affiliated infrastructure. PART is also developing plans to diversify the country’s land transport networks. Moreover, in 2020 the authority offered details of revitalised plans to build the Kuwait Metropolitan Rapid Transit (KMRT) rail system.
Size & Performance
According to figures provided by the Central Statistical Bureau, the transport sector underwent steady quarter-on-quarter growth between the first and third quarters of 2019, expanding from KD312.1m ($1.03bn) to KD351.5m ($1.16bn). By the close of the year, the value had dipped to KD348.3m ($1.15bn) and that rate of decline continued into the first quarter of 2020 when the sector was valued at KD335.3m ($1.1bn). The travel restrictions that were put in place to minimise the spread of Covid-19 hindered the ability of the sector to move people and goods. As a result, the decline became more pronounced, with the sector contracting to KD273.8m ($901m) in the third quarter.
The final quarter of 2020 brought a resurgence in activity as pandemic-related restrictions eased, with the sector recording 13.3% growth, ending the year with a value of KD310.2m ($1bn). Despite this rebound, between the fourth quarters of 2019 and 2020 the sector contracted by 10.9%. However, the proportion of overall GDP accounted for by transport rose from 3.3% in 2019 to 3.6% in 2020, despite Covid-19 pandemic-related difficulties. In 2021 KPA announced that its total revenue expanded by 400% over the six years up to 2022, reaching a value of $186m due to improved planning by the authorities.
Kuwait’s maritime shipping trade peaked in 2015 with 984,815 twenty-foot equivalent units (TEUs) handled across its three commercial ports. Kuwait’s ports processed 954,528 and 959,576 TEUs in 2018 and 2019, respectively, before a significant decline in activity saw them process a combined 863,618 TEUs in 2020, according to World Bank data, in line with pandemic-related supply chain disruptions. That decline reflected the disruption to the global supply chain and transportation activity caused by the health crisis. A decline in shipping activity between 2019 and 2020 was a common trend internationally. During this period Kuwait’s port traffic fell by 10%.
In February 2022 Australian consultancy SMEC was awarded the contract to carry out upgrades on Shuwaikh Port – the largest of Kuwait’s three commercial ports, which lies just west of Kuwait City – and its surrounding infrastructure. The project, valued at KD1.4m ($4.6m), will see the navigation channel deepened and a new container terminal built. This would enable the facility to host ships with a draught of 16 metres, an increase from the current low-tide limit of 8.5 metres and one that will allow Kuwait to better compete with its regional neighbours.
As of October 2022 the port handled over 500,000 containers per year, with an open-air storage area of 450,000 sq metres. Those capacities will be enhanced and a semi-automated container terminal will be constructed. The port’s warehousing capacity will also be upgraded from 170,000 sq metres. A new passenger terminal will be built, enabling Kuwait to strengthen its standing as a cruise liner destination. Doha Port is situated on the north coast and operates as Kuwait’s regional merchant port, catering to small vessels from GCC countries as well as Iraq, Iran and Pakistan. Its facilities include nine piers and a storage space of around 50,000 sq metres, which is used for agricultural and commercial goods.
Meanwhile, Shuaiba Port, located in the southern governorate of Al Ahmadi, is Kuwait’s key industrial port. One of its 20 piers is operated by Kuwait National Petroleum Company for hydrocarbons-related traffic. The others primarily handle the import and export of heavy equipment, raw materials, chemicals and commercial goods, among others.
Kuwait is also in the process of constructing a large-scale new port in the north of the country. The Mubarak Al Kabeer Port project is the largest of its type currently in progress in the GCC. It is a significant component of Kuwait’s Silk City and Boubyan Island mega-projects, China’s Belt and Road Initiative and the proposed GCC integrated rail network. The first phase of the four-berth project was completed in April 2021. The government first announced the development of the port in 2011 and it was part of wider efforts to better leverage the country’s geostrategic location and capture a wider proportion of regional maritime traffic.
KPA has announced plans to develop three logistics cities to serve its ports. The $400m project will be carried out on nearly 1.9m sq metres of land. The planned new complexes are designed to facilitate Kuwait’s drive to become an international re-export and shipping centre and to support e-commerce, which has become Kuwait’s primary retail platform. KPA stated that the investment will help diversify the country’s sources of income and goods, boost local trade, attract local and foreign investment and open employment opportunities for Kuwaitis – all core goals of New Kuwait 2035.
Each city will specialise in specific activities, and connectivity between the areas and Kuwait’s existing transport and logistics infrastructure will be established. Smaller ports will also be incorporated into the new network, while the development of a new smart port and a land port is in the planning stages. In addition to the construction of vital infrastructure – including solar-powered warehouses – leisure, retail and hospitality facilities will be incorporated into the developments. In July 2021 KPA announced that it would award the design and consulting study contract during the first quarter of 2022 and that seven entities had submitted bids. The project is expected to be completed in late 2025.
KIA is located 14.5 km south of Kuwait City and houses both the country’s flagship national carrier, Kuwait Airways, and its low-cost counterpart Jazeera Airways. The pandemic severely curtailed activity at KIA, with the cessation of commercial flights from March 2020 to January 2021. KIA expansion project was first announced in 2012 but has been delayed by a series of bureaucratic obstacles and macroeconomic headwinds.
In 2019 total passenger throughput at KIA rose by 4% to 15.4m, with arrivals accounting for 7.7m of the total. Due to the significantly altered post-pandemic aviation industry dynamics, the 3.6m passenger throughput KIA experienced in 2021 was 8% lower than the 3.9m it registered in the first two and a half months of 2020, with arrivals dipping from 1.8m to 1.5m. In terms of freight, KIA handled 208.7m kg in 2021, up from 193.9m kg in 2020. In 2019 the airport processed 196.4m kg of freight, indicating that the government’s efforts to boost logistics activity and transform Kuwait nto a regional logistics leader in line with New Kuwait 2035 appear to be bearing fruit.
Investment of $8.2bn into 14 projects vital to the KIA expansion works was announced in November 2021. Those projects include the construction of a new Terminal 2, which will cost around $5bn and have the capacity to handle 13m passengers per year, taking KIA’s annual capacity to 25m. In June 2022 the DGCA announced that KD300m ($987.3m) of funding for the next stages of Terminal 2 construction had received approval from the Ministry of Finance and that the necessary correspondence with the Central Agency for Public Tenders had taken place. The approval of an additional KD74m ($243.5m) is pending the resolution of disputes relating to a lack of progress on the hangar, passenger building and Kuwait Cargo City sub-projects. The primary contractor for the project is Limak Construction, a subsidiary of Turkish conglomerate Limak Group. As of June 2021 the development was 40% complete. A third runway at KIA is also planned to be constructed.
In another development, plans for a new international airport in the country’s north were approved in January 2022. The project is set to be part of the Silk City mega-project – another project to have experienced delays – forming a logistics belt with Mubarak Al Kabeer Port. The DGCA is coordinating with the Committee Council for the Jahra Governorate regarding site allocation. In addition, the DGCA has signed a memorandum of understanding (MoU) with the UK Civil Aviation Authority. Several details outlined in the cooperation agreement signed in 2018 were also updated in the MoU to align the terms in line with the strategies of both entities and the global trends shaping the international aviation industry.
The 2019 opening of the Sheikh Jaber Al Ahmad Al Sabah Causeway reduced transit time between Kuwait City and the northern city of Subiyah from 90 to 30 minutes, also helping to minimise overland congestion and improve road safety. PART is targeting similar improvements to road network efficiency through additional projects and initiatives. In July 2021 it announced that 19 large-scale projects with a total value of KD1.5bn ($4.9bn) were under way. January 2022 brought the announcement from the MPW and PART that road network expansion works in the Khaitan area – a key component of PART’s development plan – were close to completion. Khaitan lies to the south of Kuwait City.
A number of PART’s ongoing road projects, such as the Fourth Ring Road, the Fahaheel Expressway and the third phase of the First Ring Road, are designed to alleviate traffic congestion in Kuwait City, with several developments completed in recent years having proved effective. Others tie in with the government’s dual aim of unlocking the economic potential of the north and solving Kuwait’s housing shortage. For example, the 120-sq-km South Al Mutlaa City will incorporate the construction of 150 km of roads, and multiple similar initiatives are planned throughout the country. The execution of those developments would significantly bolster Kuwait’s road networks.
Another PART road project will create an entrance to the South Al Mutlaa City development in its first phase, with a large intersection connecting it with Abdali Road. The number of lanes on Abdali Road will be expanded from three to five in both directions, and connect with Boubyan Bridge, thereby facilitating access to the island and Silk City development in the north. According to the authority, the road project will cost over KD108m ($355.4m) and is 90% finished. The engineer overseeing the development, Ali Al Qazwiri, suggested in May 2022 in an interview with the local press that it was on course for a February 2023 completion, well within its scheduled completion date of September that year.
As is the case with its GCC neighbour Bahrain, Kuwait does not have a railway network. Two major infrastructure projects, the KMRT and the Kuwaiti portion of the proposed GCC integrated rail network, have seen a series of delays in recent years, although 2021 saw the resumption of activities related to the GCC rail network. Both, however, carry significant socio-economic potential. The metro project has undergone several revivals and reinventions since it was first announced in 2014, with construction initially planned to begin in 2017.
In 2020 PART released details of the proposed five-phase development, which is set to be offered as a public-private partnership and incorporates four lines, 68 stations and 160 km of track, enhancing connectivity between Kuwait City and its outlying areas. Phase one will link Kuwait City with the KIA along a 50-km line comprising 27 stations; 30% of that line and two stations are designed to be underground, and includes a maintenance depot. PART has stated that an operational high-capacity urban transit network could help to alleviate the adverse health, environmental and financial impacts of traffic congestion in Kuwait City. There are examples in the region that bode well for the authority’s expectations. Dubai’s metro system eliminated around 1bn car journeys between 2009 and 2020, while in 2021 it attracted a ridership in the region of 151m people.
Meanwhile, the potential benefits of the $250bn integrated rail network that plans to connect all GCC members are expected to be wide ranging, positively impacting trade, tourism and cohesion across the region. The formation of a centralised Gulf Railways Authority in late 2021 demonstrates GCC member states’ recognition of the importance of the network. The project, which is designed to stretch 2177 km from Kuwait City to Muscat, is central to plans to create a regional Customs union and common market, similar to the one recently established in Africa. However, progress across the GCC has been uneven, with the UAE and Saudi portions of the development at an advanced stage, but those of Bahrain, Kuwait, Oman and Qatar either not yet under construction or in the preliminary developmental stages.
A railway network is an effective solution to traffic congestion, and its negative environmental and economic impact. However, such infrastructure takes time to construct. Kuwait’s authorities are aware of this and are implementing other initiatives that they hope will aid the country’s drive to lower carbon emissions. For example, Kuwait’s bus services have traditionally not been well utilised. In January 2022 the Kuwait Foundation for the Advancement of Science (KFAS), a non-profit organisation that receives funding from private enterprises, launched the pilot for its Kuwait Commute initiative, which aims to boost ridership on Kuwait’s bus services. KFAS stated its intention to enter into an open dialogue with the community and the public and private sector stakeholders to create a more widely used, fit-for-purpose public transport network.
Electric vehicles, meanwhile, provide a long-term solution to the rise in traffic emissions associated with road transport. Electric vehicle uptake in Kuwait as of September 2022 was low, but the government’s environmental targets have led to the prediction that the industry will record a compound annual growth rate of around 6.5% between 2022 and 2028. As such, Kuwait’s transport authorities and other stakeholders are making moves in this space.
In August 2021 KPA approved plans for a complex to provide a logistics facility for global electric vehicle manufacturers. The development is intended to attract international investment and will be integrated into KPA’s extensive logistics infrastructure. Tendering for the design and construction contracts was set to commence in FY 2023/24. In addition, Kuwait-based logistics company Agility announced in October 2022 that it had invested $20m in US electric vehicle infrastructure manufacturer Loop Global.
Kuwait has a solid base of transport and logistics infrastructure and services upon which to build. With the primary restrictions of the pandemic now lifted, the sector should continue on the upward trajectory it saw in 2021, while the GCC’s broader tourism industry seems likely to benefit from Qatar hosting the 2022 FIFA World Cup during November and December of that year.
As with other sectors targeted for expansion, the transport and logistics sector will benefit from a clearly delineated government strategy. Competition is fierce across the GCC but continued structural reform and timely implementation of planned projects can help it become a logistics centre for the region. Reigniting the transport infrastructure development projects, particularly the logistics cities and developments in the northern regions, is key to realising the goals set by the New Kuwait 2035 vision.