THE GREATEST

Dubai 2018 | MARITIME | FOCUS: JEBEL ALI EXPANSION

Volumes at Jebel Ali decreased during the recent economic slowdown, but the Middle East's largest port has been busy undergoing significant expansion projects to ensure it can meet demand when Expo 2020 brings increased economic activity.

Dubai does not do anything by halves, and Jebel Ali is no different. Jebel Ali Free Zone (Jafza), located at the Emirate's western end, has grown into the world's largest free zone and is the source of almost one-fifth of Dubai's GDP. With more than USD80 billion in trade volume in 2016, the zone is a model for how to create a large-scale economic hub.

Jebel Ali port, the shipping point for the free trade zone, has grown alongside it, becoming the largest port in the MENA region. Volumes were down slightly in recent years, but industry leaders know that more activity is on the horizon. In 2017, port operator DP World was in the midst of a significant expansion project at Terminal 3 to add 1.5 million TEUs, pushing the total capacity at Jebel Ali to 20.5 million TEUs, making it the world's largest semi-automated terminal. New cranes were already up and operational in November 2017, and when expansions are complete, the port will boast 37 new ship-to-shore cranes and 47 automated gentry cranes, giving Jebel Ali the capacity to handle multiple mega-container ships simultaneously.
Jebel Ali has remained the crown jewel of Dubai's logistics sector despite a softening of transport volumes in the past few years as falling oil prices have led to an economic slowdown in the GCC. 2016 saw the continued fall in oil prices, leading to a 5.3% fall in volumes; Jebel Ali saw only 14.7 TEUs, almost a million fewer than the previous year.

In the midst of this, however, DP World's long-term outlook remained strongly positive for a number of reasons. First and foremost is Jebel Ali's importance to Dubai and the larger Middle Eastern logistics sector; as the largest container port in the region, it serves as the centerpiece of the region's shipping system. Dubai's international reputation might have been built upon lavish luxury construction projects, but Jafza has given it a foundational economic base far more resistant to cyclical downturns than the real estate or oil sectors. Located on 750ac directly adjacent to the port, Jafza has seen steady growth in recent years and is now home to more than 7,000 companies, employing 135,000 people. With more than 100 Fortune 500 firms located on the premises, the free zone accounts for more than 32% of the UAE's total FDI.

For this reason, continued expansion of Jebel Ali port was never in question even as volumes dropped slightly during the downturn. In 2015, DP World announced its plans to expand Terminal 3 and construct a fourth terminal, raising the total capacity of the port to 22.1 million TEUs, but the project was delayed slightly in 2016 due to the shifting environment. Instead of going full speed ahead with both, DP World announced its intention to expand Terminal 3 in 2017 and slow construction of Terminal 4.

Terminal 3's expansion projects are on schedule, and Terminal 4's construction appears likely to continue in 2018 as market forces shift toward bringing more volume to Jebel Ali port. 2017 saw YoY volumes rise 4.3% in Q1 and 6.6% in Q2. Moreover, industry leaders expect growth to only continue to accelerate in 2017 due to increased economic activity from Expo 2020 preparations. Expo 2020 development projects are expected to total more than USD33 billion over the next three years, giving the Emirate a stimulus that will be seen across sectors. Consequently, real economic growth is expected to reach 3.6%, with the manufacturing and real estate sectors expected to benefit the most. Jebel Ali stands to benefit from all of this, of course, and with Terminal 4's approaching completion, the Middle East's largest and most important port will be well positioned to remain a foundational piece of the region's economic activity for years to come.