PORTS AND LOGISTICS

Ports and logistics have immense potential to contribute to Oman’s economic diversification initiatives. Sohar, Duqm and Salalah ports have attracted global attention and are witnessing remarkable growth in the number of shipping lines.

During 2017, the ports handled about 4.8 million containers, an increase of 21 per cent compared to 2016. The volume of handling of general cargo in the Omani ports during the year 2017 rose to 18 million tons of cargo, an increase of 25 per cent over the year 2016. All these ports are designed to be full-fledged economic zones complemented by free zones, industrial estates, airports, road connectivity and a link to the GCC railway network in the future.

The deep-sea Sohar Port and adjacent free zone lie at the centre of global trade routes between Europe and Asia, approximately 200 km from Muscat and 160 km from Dubai. The location of Sohar provides an advantage for handling break bulk and project cargoes, and positions the port as a strong option for trans-shipments across the Arabian Peninsula. Since operations began at Sohar Port and Freezone in 2004, cargo volumes across all categories have grown by double digits to an average of almost 1m tonnes of cargo per week in 2015. The port is also emerging as a significant regional automotive hub for the Middle East, handling over 200,000 vehicles per year. Capacity at the

port’s container terminal – operated by Oman International Container Terminal (OICT) – has more than doubled since the relocation of commercial traffic from Muscat to Sohar in 2014, and cargo volumes have risen from 329,000 twenty-foot equivalent units (TEUs) in 2014 to around 540,000 TEUs in 2015. In the second quarter of 2016 OICT added four new post-Panamax quay cranes, capable of handling 20,000 TEU mega-container ships, as well as an automated truck appointment system, to reduce turnaround times at the terminal. Current capacity at the terminal is around 2m TEUs per year, and plans are under way to develop another container terminal, with the capacity to handle 5m TEUs per year. The growth in size and efficiency at the current container terminal has helped to develop new lines and connections, including more direct links to Asia.

Global container shippers Evergreen and Hanjin included Sohar as a regular port of call in 2015, and Mediterranean Shipping Services (MSC), the world’s secondlargest container shipper, began calling at Sohar in 2016.

SOHAR Port and Freezone recently signed an agreement with Dredging International NV – Earth Moving Worldwide LTD (DINV-EMW JV) for the development of Phase 1 of the SOHAR Port South Construction Package I. Totalling an investment of $24 Million, the agreement will see the development of the first 50 hectares of useable land within the new port expansion; which is expected to be fully completed by Q4 2018. The SOHAR Port South Development will support increased trade flows in the Sultanate and will allow shipping lines to launch more direct calls to the port, opening the doors to a greater variety of customers coming to SOHAR in the future. The added land area at the port will significantly boost our abilities to handle larger volumes of cargo traffic as well as create new and sustainable jobs in Sohar.

Investors are lining up to take advantage of the additional 200 hectares being offered as part of the SOHAR Port South Development. One of the first investors on-board is Trescorp, a Singapore-based oil and petroleum products trading firm.

In September 2017, the company signed a pact with SOHAR to develop a 45-hectare terminal for handling, storage and blending of crude oil, fuel oil and diesel at the port. Trescorp’s Sohar venture requires deep water berths of 25m drafts to handle supertankers of up to 320,000 DWT capacity. The total investment in the project, which will include facilities for other petroleum products in the next phase, is estimated at $600 million and will generate significant employment opportunities within SOHAR Port and Freezone.

The SOHAR Port South Development involves extensive land reclamation, which will ultimately add 200 hectares in total to the present capacity of SOHAR Port, which currently stands at around 2,000 hectares. Under the terms of the development agreement, the First Phase includes the engineering, land reclamation and stabilisation, and construction of approximately 50 hectares of usable land within the port area, together with soil improvement, 1,310m of shoreline protection, storm water drainage, and navigation aids. The contractor will also be responsible for managing interfaces between neighbouring facilities and infrastructures. The vital reclamation project will facilitate the ever-increasing demand for space at SOHAR and will involve over 750,000m3 of earthworks in order to reclaim the area from the sea. Another major task of the construction process is the 1,310m shoreline protection, which will require in excess of 450,000 tonnes of rock. SOHAR Port is currently one of major ports in the Middle East, a focal harbourthat links the Far East with the Arab Region. The expansion of the port’s planned infrastructure is a key factor that will continue to support SOHAR and Oman’s rapidly growing logistics sector over the coming years. With rapid developments taking place, coupled with the optimal location of the ports, and the Sultanate’s reputation as a reliable and stable business environment, ports of Oman have bright days ahead, not only as a beacon of growth and prosperity for the region but as a key player in achieving the economic diversification goals of the Government.

The Sultanate has been keen to focus on its logistics sector as part of the ninth five-year plan, given the potential that it has to contribute to economic diversification. The logistics sector is considered to be of great value to Oman as a means of alternative economic development, due to its strategic location linking the East and the West, as well as availing a route for economic centres in the Asia-Pacific region.

The logistics sector is being positioned as a big contributor to the Gross Domestic Product (GDP) after hydrocarbons. There has been renewed focus on diversifying the economy, and logistics is a sector that Oman will be banking on to achieve this goal. The logistics sector’s GDP contribution is targeted at RO 3billion in 2020, up from RO 1.1 billion presently. Further, it is projected to rise to RO 14 billion by 2040. Oman’s strategic geographical location makes it unique to become one of the top 10 global logistics destinations by the year 2040.

The Sultanate aims to produce 80,000 jobs in the logistics sector by 2020. By 2040, this is set to increase to 300,000, along with a position for Oman among the World Bank’s Top 10 Logistics Index.