Khalifa Bin Salman Port (KBSP), Bahrain’s only commercial port, is embarking on the next stage of its journey as it completed remarkably successful ten years in the Kingdom, last month.

The port, operated by APM Terminals Bahrain, has grown phenomenally over the last decade, experiencing impressive and sustained growth of 6 to 10 per cent year on year (YoY), according to Susan Hunter, chief executive and managing director, APM Terminals Bahrain.

Building on the foundation laid in the last one decade, APM Terminals Bahrain is looking to maintain momentum by focusing on building domestic volumes and hinterland connections, strengthening customer relationships, adopting digital solutions, and fostering a robust business environment.

To achieve this, Hunter, just eight months into her new role, believes the key is to be actively customer centric, listen to what their customers need and work on offering a range of solutions or value-added services to companies operating in Bahrain.

“We have to evolve the port to whatever the needs of the customers or the industries that we are trying to attract to Bahrain, are,” said Hunter in an exclusive interview with Gulf Industry.

As the operator of the port, Hunter envisages three crucial roles for APM Terminals Bahrain in the development of the port, which is designed to handle 1 million twenty feet equivalent (TEU) per annum and is presently running at almost 45 per cent of its capacity.

First is to make sure the infrastructure investments are in line with the market needs; second is to play an active part in creating an effective supply chain; and lastly develop the company’s vast pool of talent. 

“As Bahrain’s highly valued national and regional infrastructure asset, we have a huge role to play. That’s the responsibility for APM Terminals in any community and especially in Bahrain where we are closely connected,” she said.

LOGISTICS HUB

KBSP has been pumping in an average $2-$3 million every year to develop the port’s infrastructure

A world-class, multi-purpose facility, KBSP is strategically located in the heart of the Gulf and well-equipped to meet the ever-increasing demands for port infrastructure to facilitate trade.

Over the last 10 years, APM Terminals Bahrain has contributed towards positioning KBSP as a hub with its world-class operations and logistical solutions, serving both the country and the wider region, in line with the Kingdom’s Economic Vision 2030.

“Being the only commercial port, KBSP plays a vital role in the economic development of Bahrain by facilitating smooth trade flows, which has been possible with APM Terminals bringing in the required expertise, competitiveness and operational excellence as per international standards,” she added.

According to Hunter, KBSP has been pumping in an average $2-$3 million every year to develop the port’s infrastructure, which is impressive for both its scale and the technology deployed. Whether it is new terminal operating systems; new weighbridges, or forklifts or automated gate passes or enabling Wi-Fi across the board, KBSP is one step ahead as a world-class port.

The company works very closely with the various government agencies including the regulator for the sector Ports and Maritime Affairs (PMA), which falls under the Ministry of Transportation and Telecommunications (MTT), the Bahrain Economic Development Board and Department of Customs Affairs to attract more investments into the country by offering attractive supply chain solutions.

“We believe that the government of Bahrain is moving ahead in the right direction with its policies and initiatives to keep Bahrain on track for sustainable and diversified economic growth,” Hunter said.

“Bahrain’s willingness to evolve the legislation to support businesses in the sector, and the vision to adopt technology to offer value-added services to manufacturing companies gives us hope in the terminal to participate in the development of the port,” she added.

It also actively invests in hiring, training and developing the best talent with a special focus on Bahrainisation. As of December 2018, the level of Bahrainisation stands at 64 per cent.

“We have a significant number of people here. We have to make sure that we not only focus on improving the efficiency of port but create a deeper bench of talent, with greater or different expertise to meet the new challenges our customers have,” she added.

CHALLENGING TIMES

The port has come a long way from being a transport and logistics company way back in 2009 to being a public joint stock company, following a successful listing on Bahrain Bourse on December 9, 2018. This was a historic moment as APM Terminals Bahrain became the first transport and logistics company in the Kingdom to be listed on the Bahrain Bourse.

 “In the first year as a public joint stock company, we needed to send a positive signal to the market.  So in the last seven months, we have been facing headwinds, making sure we secure and protect our business; adapting to the challenging market conditions and delivering strong results,” said Hunter.

Despite getting a ‘tremendously strong share price’, Hunter admitted that it has been a ‘challenging year’ for the company, with the global economic slowdown affecting its business, particularly container volumes, which saw a decline of 6 to 7 per cent in the first half of this year.

Yet, in an environment fraught with challenges, the port has braved headwinds and locked in positive numbers in the second half of 2019 and also has a positive outlook for 2020. 

According to Hunter, the port’s year to date (YTD) October container throughput stood at around 350,000 TEUs. Its average container throughput in the second half of 2019 grew by 7 per cent compared to the first half of the year, and expectations are to achieve 420,000 TEUs and grow by 3 per cent in 2020.

As per APM Terminal Bahrain’s Q3 2019 results, the company’s total income in Q3 2019 increased by 2.5 per cent as compared to Q3 of last year predominately driven by higher revenues.

Revenue increased 7.1 per cent due to the improvement in both general cargo (GC) which saw 21.3 per cent increase and marine business, which grew by 12.5 per cent, over the same period last year. GC volume is around 830,000 freight tonnes and of that 84 per cent is exported while 16 per cent is imported.

Profitability improved with operating profit increasing 10.4 per cent to BD3 million reflecting a margin of 29 per cent.  Net income was boosted by 2.5 per cent to BD 2.6 million reflecting strengthened revenue, effective cost management and higher interest income compared with 2018.

The impressive performance achieved was contributed significantly by project cargo imports, mainly for the ongoing projects in the Kingdom such as Alba Line 6, AlDur independent water and power project (IWPP), and Bapco modernisation project amongst many other ongoing projects.

“Growth in imported project cargo has been largely due to the Al Dur and Bapco modernisation projects. Overall containerised exports saw growth of 12 per cent mainly driven by Alba which has grown its exports through the port by 60 per cent YOY,” Hunter reiterated.

DOMESTIC VOLUMES

Project cargo imports like Alba Line 6 contributed significantly to APMT’s performance in 2019

Further, making the right moves forward, the port plans to focus on developing domestic volumes and expanding hinterland connections rather than build more capacity. It also seeks to capture more business from existing and potential customers and pursue productivity improvements and digitisation.

“For a sustained strong performance, focusing on building domestic volumes is important,” said Hunter. Towards this, APM is contemplating a collaboration with the adjoining Bahrain Freezone as is the trend in other ports.

“We are considering to use Bahrain Freezone as an extension of the port. We can take space with them or we can become one entity,” she said and quickly added: “These are very early talks but all I’m asking is that let’s base our strategy on customers’ views and needs.”

In addition, APM Terminals Bahrain is ideally positioned to serve as an alternative gateway for the upper Gulf. “We have a positive outlook on Saudi-bound cargo transiting via Bahrain making the country an alternative gateway for Saudi Arabia’s Eastern Province by creating a fast-track channel thereby reducing lead times for high value / transit sensitive,” Hunter explained.

The company is also expecting an influx of goods due to the rise of E-Commerce trade in the region and is looking to capitalise on the highly lucrative market. 

Additionally, close proximity to the new upcoming projects like the $1.1-billion terminal at Bahrain International Airport and Saudi Causeway can contribute positively to the port’s steady growth, she said.

On the potential of KBSP to become a significant Gulf and Middle East hub, Hunter said: “Bahrain has the potential to become an important hub in the region. However, transshipment volumes have been insignificant thus far as shipping lines continue to resist a move to shift their Upper Gulf volumes over KBSP, due to the lack of a feeder connectivity and cost focus. Promising opportunities are arising, and efforts are exerted to attract transshipments through potential feeder operators in establishing connectivity with the upper Gulf markets of Kuwait and Iraq.”

FLOURISHING CRUISE TRAFFIC

The port also operates a passenger terminal thereby directly contributing to developing the tourism sector in the kingdom.

Together with the tourism authorities, APM Terminals Bahrain is playing a key role in facilitating, maintaining and attracting international cruise lines to call at the port and including Bahrain as a destination on their itineraries.

Working closely with the Ministry of Industry, Commerce and Tourism, MTT and APM Terminals Bahrain have been successful in attracting cruise tourism traffic to Bahrain, witnessing a 3% growth in cruise vessel calls and a 23 per cent  increase in passenger flows last year, further substantiating its role in uplifting Bahrain trade and tourism sectors.

Last month, it announced that a total of 406,513 cruise passengers had visited Bahrain over the past five years, travelling here on 230 cruise ships.

Over the next five months, 124,425 cruise passengers aboard 61 luxury liners are due to visit the country during the annual cruise season, which started October and continues until April 2020.