SMALL PORTS

Kuwait 2017 | TRANSPORT & LOGISTICS | FOCUS: EXPANSION OF PORTS

With an ever-increasing number of imported goods, Kuwait's ports are currently expanding, becoming more integrated and less congested.

As an import-dependent economy, Kuwait's ports remain the country's most pivotal nodes to sustain high trade figures in light of stagnating oil prices. Despite a significant decrease in overall trade volumes in 2016, data from the Central Statistical Bureau's Annual Bulletin of Transport shed light on the sheer magnitude of goods that annually traverse Kuwait's major ports at Shuwaikh and Shuaiba. While the ports' export volumes fluctuated in the range of 4-5 million tons for the past 10 years, import volumes at the ports increased from 24.6 million tons in 2006 to 36.8 million in 2015. In light of an accounted 1Q2016 drop in the balance of trade by 76.2% compared to Q12015, the 2016 trade volumes at Kuwait's ports are likely to see a recess as well.

However, the Kuwait Ports Authority (KPA)—an independent agency established to oversee operations of the country's ports—does not see a reason for concern. In an interview with TBY, the KPA's Director General Sheikh Yousef Abdullah Al-Sabah highlighted: “We are working hand in hand with customs to expand the size of the plots because of the increase in incoming goods. The incoming goods increase YoY based on the natural increase of Kuwait's population. At the same time, however, it is also increasing because the current infrastructure projects require vast imports of different types of material, pipes, generators, and others for the different ministries and for the oil and gas sector." For this, the KPA laid out a comprehensive strategy to transform Kuwait's ports into regional trade hubs by rapidly improving the efficiency of operations. Especially the introduction of a smart port system is key to this endeavor, as the ports' operations are set to be managed through a single online platform. Among other aspects, exporters and importers can not only track their goods, but also get their goods passed through customs much quicker.

As a matter of prudence to the vast number of large-scale infrastructure projects, the KPA is looking to increase the storage space of its ports by more than 3 million sqm. Particularly Shuaiba port will be subject to expansion, as it not only serves as a main point of entry for industrial and infrastructure supplies, but also as a main port of petroleum export. With Shuwaikh port increasingly experiencing congestion, however, Ossama Nazir, the General Manager of Maersk Line Kuwait, told TBY: “From what I have seen from working in multiple countries, customers end up following the tradition to just work with one port like the Shuwaikh port in Kuwait. Over time, the port can become congested. Customers put pressure on the service provider, and it is very difficult for them to upgrade the port and infrastructure because everyone wants to be there. KPA is now trying to move some port storage into Shuaiba to encourage customers to have more cargo going there. Not to offset the congestion per se, but to remove some of the pressure. KPA's campaign to push more cargo into Shuaiba will present better services and better services for us."

In addition to this, Shuwaikh port is home to Kuwait's first-ever free trade zone (KFTZ), which, despite its vast potential for international investors, has posed a burden to the KPA. Similar to various warehousing companies having breached their tenancy agreements at the ports, the free trade zone's former private operator violated various laws, which eventually led the Public Authority for Industry to take over operations. With an underdeveloped infrastructure and storage facilities of up to 1.5 million sqm, the KFTZ's current profitability remains questionable, which finally led the KPA to call for a reintegration of the free trade zone into the port.