War Reveals Unexpected Opportunities

As the civil war in Syria continues, looking likelier by the day to result in foreign intervention of some degree or other, so trade routes in the Middle East remain disrupted. The Lebanese port of Beirut is the most obvious beneficiary, but a less-obvious one has been Israel, where increasing ro-ro shipments from Turkey are passing through en route to Jordan and the Gulf states.

The situation in Syria is looking ever graver. Western governments are now discussing plans for strikes against the Assad regime in the wake of chemical weapons attacks within the Middle Eastern country. Violence has steadily escalated in Syria since demonstrations began fairly peacefully in March 2011, part of the wave of Arab Spring protest movements that swept the region. As the conflict has intensified, so it has become less viable for freight transport operations; not only have its ports seen shipping companies shy away from them, but road haulage firms have looked for alternative routes for goods that otherwise would have been transited through the troubled state.

The two premier Syrian ports of Latakia and Tartous, located on the Mediterranean coast, have seen volumes drop off over the past two and a half years. This is in part the obvious result of the Syrian conflict impacting upon its economic output, with demand for both imports and exports seriously curtailed. Secondly, with fighting having taken place in the port cities themselves, shipping lines, and port operators, have pulled out of operating there. In December 2012 international ports operator International Container Terminal Services Inc (ICTSI) pulled out of Tartous, citing an 'unforeseen change of circumstances brought about by the civil unrest and violence which has gravely affected business and trade in Syria' in its decision to quit the country.

Time To Expand
Port Of Beirut January-To-July Container Throughput, 2009-2013 (TEUs)

The key beneficiaries of the fall in volumes in Syria have been Lebanese ports, namely Tripoli and Beirut. The boost in Tripoli has been modest, as the city has itself been troubled by sectarian violence spilling over from neighbouring Syria, though the entry of operator Gulftainer (after all other bidders for the tender pulled out) should see volumes grow. Beirut, on the other hand, has seen its volumes grow rapidly.

In 2011 Beirut handled 1mn twenty-foot equivalent units (TEUs) for the first time. This feat was repeated in 2012, and the port is well on course to handle well in excess of the former milestone figure in 2013. Over the first seven months of the year, from January to July, Beirut handled 661,935 TEUs, including transhipment volumes, marking year-on-year growth of 8.3%. If the January to July figure is annualised, it points towards a year-end handling figure of 1.13mn TEUs.

The port is looking to capitalise on these gains, and is ensuring that, even once the conflict in Syria subsides, Beirut remains the port of choice in the region for major shipping services. The chairman of the International Shipping Chamber in Beirut, Elie Zakhour, has pointed towards the future need for reconstruction materials in Syria, and how these will help Beirut's throughput continue to grow at an impressive rate. A new container terminal, which will boost the port's nominal annual handling capacity from the current 700,000 TEUs (Beirut is currently operating above this) to over 1mn is set to open next month. A second-phase expansion will eventually see Beirut's capacity raised to 2.1mn TEUs.

Bulking Up On Transit Trade
Port Of Haifa Throughput, 2008-2017 ('000 Tonnes)

Another beneficiary of the Syrian conflict, in terms of increased freight transport volumes, has been Israel. The Financial Times has reported how a new route opened in November 2012 sees ro-ro ships transport trucks from the Turkish port of Iskenderun, which disembark at Haifa and travel onwards, through Jordan, to destinations in the Arab world such as the GCC states and Iraq. While Israeli relations with many of these countries are frozen, the trade route is benefitting all at present.

Much of these volumes would ordinarily be trucked from Turkey (the goods aboard the ro-ro ships are predominately Turkish, though with some Greek, Bulgarian and Romanian volumes also) through Syria and onwards, though with the situation in Syria road hauliers are understandably reluctant to travel through the country as normal. Some 2,000 such trucks have disembarked at Haifa since the trade route opened, with a similar service to the Egypt's Port Said having served a similar purpose. Dry bulk goods, in particular softs such as corn and wheat, are also being shipped through these trade routes.

This service will in part be behind the strong growth being seen at the port of Haifa. In 2012 growth in total tonnage volumes were a healthy 6.2%, and the first quarter of 2013 saw y-o-y growth of 9.6%. At present our 2013 growth forecast projects an expansion in handling of 6.9%, though with risk to the upside.


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