Aden To Expand, But Is It Enough?

A deal between Yemen Gulf of Aden Ports Corporation (YGAPC) and China Harbour Engineering Company (CHEC) to develop and expand the port of Aden offers upside risk to the Yemeni port's container throughput. BMI notes, however, that although China's interest in the port of Aden is welcome the port still faces major competition from the DP World-run port of Djibouti, and that the port of Aden remains without an international port operator since DP World exited the facility in 2008.

YGAPC has awarded a contract worth US$507mn for the expansion and deepening of Aden Container Terminal to CHEC. The expansion project at Aden will see the construction of a new 1,000m-long berth that will be 18m deep - the depth required to handle the newest 18,000TEU capacity mega vessels currently at sea. Aden port's outer navigational channel will also be dredged to 18m and will be expanded to measure 7,400m in length and 250m wide. The deal will see giant container cranes mounted at the port, as well as rubber-tyre gantry cranes and tractors for the first stage of the berth development. The Aden port project will increase the annual container handling capacity of the terminal by 0.5mn TEUs, taking the total capacity to 1.5mn boxes. The contract awarded to CHEC also includes the construction of a container storage yard, service facilities, administrative buildings and a central workshop for general maintenance.

The deal is good news for the port of Aden, which has had a tough year since DP World exited its operations at the port in September 2012. DP World's exit followed claims by the Yemeni transport ministry over whether the Middle Eastern port operator had fulfilled its contractual obligations at the port, a claim that DP World has refuted.

Aden Left Behind
Ports Of Aden And Djibouti Container Throughput, 2009-2011 (TEUs)

Latest container throughput data at the port for October 2013 show a 6% decline in box throughput year-on-year. Further problems for the facility stem from competition from the port of Djibouti, which is being run by Aden's former operator DP World. Between 2009 and 2011, Aden's container throughput has contracted from 2009 levels of 0.37mn TEUs by 29.1% to reach 0.26mn TEUs in 2011. In contrast Djibouti has experienced strong growth in its container throughput, expanding from 2009 levels of 0.52mn TEUs by 35.4% to reach 0.70mn TEUs in 2011.

BMI views the CHEC expansion at the port to be a positive development for Aden, which has the potential to further boost the port's capacity and so its growth throughput over the medium term. The interest of a Chinese firm in this project also opens up the possibility of interest from China in the actual operation of the port. Although no firms have yet stepped forward to fill the void left by DP World's exit, BMI believes that the port of Aden might be of interest to Chinese port operators considering its strategic position to the Suez Canal.

Until a new global port operator comes forward, BMI asserts that the port of Aden will continue to lose out to its DP World-run rival Djibouti.

This article is tagged to:
Sector: Freight Transport, Shipping
Geography: Yemen, China, Djibouti

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