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Port operators in the GCC region are redefining their operations, adopting port-centric logistics concepts. However, a rapid increase in port capacities across the GCC region has led to a drop in utilisation, as supply growth has outpaced demand. These are among the key findings of a new report by KPMG Lower Gulf, anchored in the new reality – Ports perspectives, which looks at the evolving dynamics of the region’s maritime sector and assesses the future for port operators.
Shahnawaz Nakhoda, Partner, Ports and Logistics, KPMG Lower Gulf said: “The GCC’s strategic geographic location and state-of-the-art infrastructure has enabled port operators to play a vital role in global maritime trade. As the world battles geopolitical trade tensions and the coronavirus pandemic, ports are playing a vital role in keeping the flow of goods moving. Port operators are building a presence across the supply chain to enhance their value proposition.”
Container penetration in GCC countries is more than six times that of the world average and significantly higher than that of major developed nations in the west, the report states, while the development of port-linked free trade zones has contributed to the success of the sector in the region. GCC port operators have continued to invest in infrastructure, expansion and technology, increasing throughput capacity, the KPMG report adds. Currently, the region’s annual average capacity growth is estimated to be 4.2%, double the global average capacity growth of 2.1%. However excess capacity has resulted in a port utilisation rate of 55% compared to the global average of 62%.
Increased concentration in the shipping industry and the adoption of larger vessels has resulted in demand for higher port productivity and better infrastructure from shipping Ines. To address these requirements, port operators are increasingly investing in technology the report states.
GCC ports handle higher-than-average vessel sizes, as they tend to be transshipment hubs. However, in the UAE and Saudi Arabia the average duration of stay for a vessel in the port is higher than any of the other major maritime geographies, including hubs such as Singapore and Hong Kong.
According to the KPMG report, operators are in response implementing technology-led solutions to increase trade efficiency and establishing initiatives designed to overcome trade barriers, as well as increasing investment in smart port technologies and the integration of the value chain with digital platforms.
Another strategy being adopted is vertical integration between port operators and logistics service providers, either through alliances, or mergers and acquisitions. The report finds these initiatives are picking up pace as port operators seek to increase their overall presence across the trade supply chain. For more information about the KPMG report, please visit https://home.kpmg/ae/en/home/insights/2021/03/anchored-in-the-new-reality.html
