The premier Bahraini maritime facility, the Khalifa bin Salman Port (KBSP), had a remarkable year in 2012, as the port finally managed to attract the transhipment volumes it had originally been developed with an eye towards. While we forecast growth to continue in 2013, we do not believe it will be at the same impressive rate, and there remains risk that volumes could even fall once more.
Short Term: Growth To Continue, Though Risks Abound
In 2013 BMI forecasts that the KBSP will handle 549,046 twenty-foot equivalent units (TEUs), which if realised would represent growth of 6.6% on top of the 515,000 or so boxes handled at the facility in 2012. In terms of total tonnage volumes we forecast growth of 7.4% to 523,874 tonnes.
This impressive growth (up 40% on 2011) in the box handling figure in 2012 was driven primarily by transhipment volumes, which were up by 149%. We believe that the sharp rise in transhipment volumes will have been informed by what has been happening in the Saudi Arabian ports sector; the effect of the Saudi government's stimulus package, issued in a bid to stave off any serious Arab Spring-style protests in the Kingdom, has seen a sharp rise in consumer spending, and massive year-on-year hikes in box throughput at the Port of Dammam, Saudi Arabia's largest Gulf facility. This has come with an attendant problem with congestion, which has played in KBSP's favour; Simon Brebner, chief commercial officer at APM Terminals Bahrain, has said that shipping lines have been using KBSP on a 'tactical' basis.
|KBSP TEU Throughput, 2008-2017|
In a bid to take further advantage of this, APMT Bahrain, responsible for the development and operation of the KBSP, is working to set up a seabridge with the Saudi Port of Jubail, and is in talks with a number of partners. It is hoped that the feeder service will be operational by the close of the first quarter of 2013. The concept would see exports out of Jubail (a key petrochemicals industrial hub), and imports into Saudi Arabia pass through the Bahraini port.
This would help support continued growth in KBSP's box throughput in 2013, and is partly behind our forecast of 6.6% growth, though we note that there is a risk that, should Saudi demand upon the port fall once more, volumes could actually slip this year. This would not be the first time in recent years that volumes at the Bahraini port have fallen; the political protests of 2011 caused box volumes to fall by 1.0%, while total tonnage dropped by 20.45% that year, and should violence flare up to that degree once more this year then further risk to our outlook would be presented.
However, should political protests be minimised this year we see scope for strong growth in domestic demand for boxes, in addition to the increased transhipment volumes. Throughput of domestic containers in 2012 rose by 11%, and there is potential for continued strong growth in domestic demand given the macroeconomic outlook for the country. We forecast GDP growth of 3.5% in 2013, compared to an estimated 3.0% in 2012, and with improvements expected in tourist volumes, and growth in private consumption expected to remain high at 4.5%, the demand outlook for containerised goods remains sanguine.
In terms of total tonnage, domestic demand will also help support our growth forecast of 7.4%; we believe that plans to build 50,000 new homes in Bahrain could boost throughput as raw materials are imported for their construction. However, the reopening of Mina Salman, the port which was superseded by the KBSP, as a building materials port, poses risk to the downside.
Medium Term: Strong Growth Over Forecast Period
Over our forecast period, from 2013 to 2017, we project that annual growth in container throughput will average 6.0% per annum. In terms of total tonnage we project growth to average 6.4% per annum over the same period. If borne out these projections will see KBSP handle 690,283 TEUs and 664,231 tonnes in 2017.
|Not Set To Match 2009 Spike|
|KBSP Throughput, Tonnes, ('000), 2009-2017|
Risks to these projections come from a potential escalation of political risk in Bahrain (though for the present these worries appear to have been averted) and from Iranian and US/Israeli conflict. Upside risk to our total tonnage forecast comes from any further housing initiative or infrastructure spending stimuli.
Long Term: Competition For Gulf Transhipment Business To Heighten
The long-term future of KBSP is uncertain. BMI notes that the port was built with a view of serving not only the small population of Bahrain (1.2mn in 2010, roughly half of which was non-Bahraini), but also serving as a transhipment hub for the Gulf region. The port is operated by APM Terminals. On its website, the company says that the BHD131mn port will have a capacity of 1.1mn TEUs in its first phase. Given the size of Bahrain's populace this is aimed largely at transhipment: 'A big part of this capacity will be taken up by trans-shipment, where KBSP will accommodate the region's need for a major trans-shipment centre in the northern Gulf.' Hassan Almajed, director of the country's General Organisation of Sea Ports has said that capacity could be extended to 4mn boxes per annum in two or three years.
However, until the boost from Saudi Arabian volumes in 2012, the facility had not managed to secure the lucrative transhipment trade, with APL still the only major shipping line using KBSP in such a way on a regular basis. Should the Saudi demand diminish once more, which is likely as the effect of the stimulus package drops off, and the country's port expansions come online, this would impact upon KBSP's volumes. Further, as time goes on we believe that it will have less chance of developing this trade. In addition to the established hub of the region, Dubai's Jebel Ali, there are a number of other facilities being developed in the Gulf with an eye to becoming transhipment hubs, including the New Doha port in Qatar and an expanded Port of Dammam in Saudi Arabia.