Khalifa Port forecasts its container volumes will double next year

Khalifa Port expects to double the number of containers it handles next year with the help of China’s Cosco Shipping Ports, which opened a $430 million terminal and container freight station at the Abu Dhabi facility yesterday, officials said.

CSP, the Hong Kong-listed unit of the world’s No 3 container shipping line China Cosco Shipping Corporation, has a 35-year concession agreement to run the new terminal, its first overseas greenfield unit.

Khalifa Port handled 1.4 million twenty-foot equivalent units – a measure of container volume – last year, This figure is forecast to reach 1.6 million TEU this year and more than 3 million TEU next year, said Mohamed Al Shamisi, chief executive of Abu Dhabi Ports, which operates Khalifa Port.

“We are operating at more than 90 per cent capacity,” said Mr Al Shamisi. “Bringing Cosco will give us more capacity, and more breathing space.”

The new terminal is part of ambitious plans for Khalifa Port, which replaced Abu Dhabi’s 1960s-built Port Zayed as the emirate’s main container port in 2012.

Khalifa Port currently has a capacity of 5 million TEU with the CSP terminal and could expand the facility’s total capacity to 9.1 million TEU over the next five years.

The CSP terminal has a capacity of 2.5 million TEU and CSP could spend another $200m to add an additional 1 million TEU in the next three to five years, said Zhang Wei, vice-chairman and managing director of CSP.

With the help of CSP, Khalifa Port aims to be a hub for the entire Arabian Gulf region rather than just a gateway to the UAE. With CSP’s entry, freight costs will be reduced as mother ships call directly at the port and feeder vessels from Khalifa head to other ports in the region.

“Because we are considering Khalifa Port as a hub port, all of these vessels will call on Khalifa port directly rather than transiting through other ports, and that means direct connectivity, quicker time and lower freight cost,” said Mr Al Shamisi.

The new terminal will also allow Khalifa Port to receive very large vessels, including a 20,000 TEU ship expected to dock at the facility next year.

“We are going to introduce a 20,000 TEU ship, which is the biggest container ship right now in the world, into Gulf services,” said Mr Zhang. “It will be the first of its kind calling on Arabian Gulf ports and that will reduce the logistics costs for customers around the Gulf.”

Abu Dhabi Ports, which also operates the adjacent Khalifa Industrial Zone Abu Dhabi, expects more companies to flock to the free zone with CSP’s arrival.

“Khalifa Port and the adjacent investment in Cosco terminal and container freight station opened the door for more industries to reside in Kizad and the free zone because it gives proper connectivity and services not only to China but to the world,” said Mr Al Shamisi.

The $7 billion Khalifa Port, which opened in 2012, has teamed up with Cosco Shipping Ports, the Hong Kong-listed unit of the world’s No 3 container shipping company China Cosco Shipping Corporation, to invest and operate a terminal at the facility. The terminal, CSP’s first overseas greenfield unit, has a capacity to 2.5 million twenty-foot equivalent unit or TEU, the measure for container volume, and will help to boost the port’s overall capacity to more than 5 million TEU. CSP has invested $300 million in the terminal and $130m in the container freight station under a 35-year concession agreement. Here is why the Chinese investment in Abu Dhabi matters.

What is Cosco Shipping Ports?

CSP has five main ports globally, with a total annual designed capacity of 81.2 million TEU in China and 38 million TEU in its overseas portfolio. CSP’s third-quarter net profit rose 11.8 per cent to $75.1 million. Container volumes handled at its overseas terminals rose 36.6 per cent to more tham 6 million TEU in the third quarter from a year earlier, accounting for 20.7 per cent of the company’s total volume.

Why is Cosco expanding into Abu Dhabi?

China is the UAE’s secondbiggest trading partner after India and the UAE is the gateway to about 60 per cent of Chinese exports to regional markets. China is expanding its reach in Abu Dhabi as part of its Belt and Road initiative, which seeks to emulate the riches of the old silk route. Cosco’s terminal investment is the first in the Middle East as it seeks to leverage its expertise in shipping. China is a big investor in the Khalifa Industrial Zone Abu Dhabi and Kizad, the free zone adjacent to Khalifa Port. Last year, Abu Dhabi Ports, the Khalifa Port operator, signed a 50year agreement with the Chinese Jiangsu Provincial Overseas Co-operation and Investment Company that will attract investments of Dh1.1 billion to Kizad.

Why is the expansion of Khalifa Port important? CSP has an option to expand its terminal at Khalifa Port by another 1 million TEU at an estimated cost of $200m in the next three to five years. Meanwhile, Khalifa Port is targeting boosting its capacity from about 5 million TEU, including the current CSP terminal capacity, to 9.1 million TEU over the next five years. These plans are part of Abu Dhabi’s strategy for the growth of its non-oil gross domestic product.