Transport

The Port Of Call

Transport

While Lebanon's international land options for transport are somewhat constricted for the time being, trade is moving to the sea, where numbers are up and the ports are expanding.

According to the latest figures released by the Port of Beirut, republished by a Bank Med report, the total income of Beirut Port reached $68.1 million in the first four months of 2014, remaining almost stable from the same period the year before. Freight activity went up by 6.1% YoY to reach 2.84 million tons in January-April 2014 in comparison to 2.68 million tons in 2013. Over the same period, the number of imported cars via the port of Beirut rose by 8.2% YoY to reach 31,387, while the number of containers (excluding transshipment) was up by an annual 3.7% to reach 240,897. As for the number of transshipments, it increased by 13.4% annually to reach 139,025 containers at end-April 2014.

In a recent Byblos Bank report, figures showed that overall receipts generated through the port reached $809.3 million in the first four months of 2014, constituting a decrease of 6.4% from the same period in 2013. Customs receipts through the port totaled $376.3 million in the first four months of 2014, down 12.7% from the $431.2 million in the same period of 2013; while receipts from value-added tax (VAT) reached $362.5 million, almost unchanged in the first four months of 2014. Of the increase in tonnage, import freight accounted for 90.1% of the total, while the remaining 9.9% was export cargo. Thus, the balance of imports to exports is continuing to tilt even further to the import side.

Lebanon’s second port in Tripoli has been quite a different story. Overall, revenues generated through the Port of Tripoli reached $35 million in the first four months of 2014. While customs receipts reached $13.3 million down 13.1% from $15.3 million in the first four months of the previous year, VAT receipts reached $17.6 million and dropped by 7.7% from $19.1 million in the first four months of 2014. The port’s revenues rose by 3.1% YoY to $4.1 million in the first four months of 2014. Further, the Port of Tripoli handled an aggregate weight of 378,036 tons of freight in the first four months of the year, constituting a decrease of 20.7% from 476,727 tons in the same period of 2013. A total of 174 vessels docked at the port in the first four months of 2014, representing a 3.3% decreased from the 180 ships in the same period the preceding year.

Figures released by the Port of Beirut authority show that activity is still bustling at the ports and stood at a grand total of 113,130 TEUs in the first four months of 2014, constituting a rise of 4.4% from 108.386 TEUs in the same period in 2013.

They also accounted for 60.5% of the total freight importing market during that period. Mediterranean Shipping Company (MSC) handled 38,437 TEUs in imports for the local market in the first four months of the year, equivalent to a 20.6% share of the total freight forwarding import market. This was followed by Sealine Group with 23,838 TEUs, or 6.4%. Gezairi Transport registered the highest growth in import shipping among the top five freight forwarders at 59.8%, while Sealine suffered the steepest drop of 23.1% YoY.

Exports through the Port of Beirut are significantly down over 2014. The top five freight forwarders reached 20,262 TEUs in the first four months of 2014, representing a decrease of 6.2% from 21,593 TEUs in the same period of 2013. Although Lebanon’s freight forwarding market has low barriers to entry and is becoming increasingly saturated, the top five aforementioned freight forwarding companies still hold 98.3% of the total export freight forwarding market. Sealine Group handled 7,559 TEUs of freight, equivalent to a 36.7% share of total freight forwarding in the Lebanese cargo market. It was followed by Merit Shipping with 6,635 TEUs (32.2%), Metz Group with 3,339 TEUs (16.2%), MSC with 1,767 TEUs (8.6%), and Gezairi Transport with 962 TEUs (4.7%). Metz Group registered the highest growth in export shipping among the top five freight forwarders at 246.7% YoY, while Sealine group equally posted the steepest drop in exports, of 31.7% YoY.

Samir Noaime, Managing Director of Sealine Group, gives no concrete reason for the steep decline in the company’s export and import forwarding, “From April 2013, the market has slowed down considerably, we can feel it. Nobody knows why, unfortunately… there is no specific reason because the Syrians are still here, the Lebanese are still here, but this decrease happened suddenly.”

On the contrary, Metz Group’s exponential growth is a clear indication that the Lebanese freight market remains extremely competitive and opportunistic during times of market stress and external shocks. The cumulative positive affect in boosting sales that the Syrian crisis has had on Lebanon’s ports is undeniable. The country enhanced its position as an intermediary port of call, as many Western and Eastern states alike imposed trade sanctions on Syria and Iran over the last three to five years. Lebanon’s proximity to Syria and sophisticated banking sector enabled agents to bring goods into the free zone temporarily.

The substantial impact this has had on TEU volumes, activity at the free zones, and incentives for the ongoing expansion of the Port of Beirut is only strengthened by companies’ optimism looking forward. “When the war in Syria ends, we will benefit, for sure. We have a well-equipped airport and port. The Beirut Airport has two terminals now, while the ports can handle big vessels of 10,000 or 15,000 TEUs that Lattakia cannot handle, even before the war,” says Noaime. Comparative advantage of location and relative ease of doing business is one thing, but the scale of goods and services in the efforts to reconstruct Syria are set to be enormous. A World Bank report has estimate the rebuilding costs of Syria to stand at almost $350 billion, not taking into consideration the infrastructure needs in the country, which are expected to cost another $600 billion or $700 billion. The likelihood that a large share of these inflows will be managed by Lebanese contractors and entrepreneurs means that Lebanon’s maritime trading capacity, and its transport sector as a whole, is likely to contribute as much to the long-term creation of employment and sustained growth over the next decade.

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