Various options are being explored by Qatar because of the ongoing conflict with its Arab neighbours.

On September 17, the Swiss-based Mediterranean Shipping Company (MSC) and Taiwan’s Yang Ming Transport Corporation both opened new weekly lines to Qatar’s Hamad Port, south of Doha.

Four ships, each with the capacity to accommodate 6000 containers, including 400 reefer containers, have begun operating on MSC’s new East Mediterranean Service, which runs between ports in Turkey, Greece, India, Oman and Qatar.

Yang Ming, meanwhile, launched its China Gulf Express Service with a single vessel that can also carry 6000 containers. The ship’s route covers Shanghai, Ningbo, Xiamen and Shekou ports in China, Kaohsiung (Taiwan), Port Klang (Malaysia) and Hamad Port.

Expansion under way at Hamad Port

The new services will support Qatar’s efforts to diversify its trading partners, a target underpinned by the country’s $7.4 billion Hamad Port, inaugurated by Sheikh Tamim bin Hamad Al Thani, the Emir of Qatar, at the beginning of September.

Spanning 26 sq km, the facility will have the capacity to process 7.5 million containers per year once fully operational. The port is scheduled to reach completion by 2020.

The port has been in partial operation since late 2015 when it began catering to vessels carrying roll-on/roll-off cargo, livestock and heavy equipment. However, the facility is now able to accommodate large container ships for the first time.

This additional facility is pivotal for Qatar as recent regional tensions have meant that Doha-bound cargo can no longer be transferred from larger ships to smaller vessels in the UAE and at some other ports in the region as was previously the case.

“The opening of the port will now bring further food security and economic diversification in line with Qatar National Vision 2030, a project that aims to boost the country’s economic diversity,” Jassim bin Saif Ahmed Al Sulaiti, the minister of transport and communications, told media after the inaugural ceremony.

The construction of separate terminals designed to handle general cargo, cereal, livestock and vehicles at Hamad Port is expected to support pursuit of these goals.

Speaking to the press in mid-September, Abdul Aziz Nasser Al Yafei, director of Hamad Port, said the government expects 1000 vessels and 1 million twenty-foot equivalent units (TEUs) to have entered the facility by the end of 2017.

Milaha rolls out new lines

The weeks leading up to Hamad Port’s opening saw maritime logistics player Milaha announce new services between Qatar and various international ports.

One such initiative, the Pakistan Qatar Express Service (PQX), was launched on August 27, with the first vessel arriving at Hamad Port from Karachi on September 11. The route has a relatively short transit time of four days and is served by two 1700 TEU vessels, dedicated largely to the transportation of perishable items and foodstuffs. A service connecting the Qatari ports of Mesaieed and Hamad with Karachi and the Indian port of Mundra is also expected to become operational in the near future.

Four days prior to the PQX announcement, Milaha also confirmed that an ad hoc service it had been running between Hamad Port and the Port of Izmir in Turkey would be regularised to once every 20-25 days. One vessel with a capacity of more than 5000 ton now services the 11-day route, bearing temperature-controlled cargo and break-bulk cargo.

The introduction of new shipping routes and supply chain solutions by Milaha follows the news of a drop in both revenue and profit in the first quarter of 2017. Operating revenues fell 21.4% year-on-year (y-o-y) to QR1.1 billion ($301.9 million), while profit decreased 55% y-o-y to QR170 million ($46.7 million).

The firm attributed the low figures to the global downturn in shipping, with Sheikh Ali bin Jassim Al Thani, chairman of Milaha’s Board of Directors, stating that it would “continue to invest prudently for the long term”, following the release of the data at the beginning of August.

The opening of new international routes suggests that Milaha is putting this strategy into action, while Hamad Port’s progress towards full operation could also help the company achieve a turnaround over the medium term.

In addition, Milaha stands to benefit in the near term from higher earnings across the shipping industry, a trend that should also support Qatar’s broader maritime trade ambitions.

On September 22, the Baltic Dry Index – the main sea freight index that tracks rates for ships carrying dry bulk – reached a near three-and-a-half-year high of 1502. Average daily earnings for Cape, Panamax and Supramax vessels stood at $22,392, $12,006 and $10,723, respectively, up from $15,202, $5,790 and $7,019 in the previous year.

This Qatar economic update was produced by Oxford Business Group.

By Oliver Cornock Managing Editor, Middle East Oxford Business Group