Improvements in container volumes and calls by new shipping lines have brightened Salalah Port Services (SPS) prospects for greater profitability and a bigger share of the region’s port business.

The port is also in the process of expanding facilities to receive larger vessels and handle more cargo volumes at its terminals.

The company reported a net profit of RO2.125 million for the first half of this year, a 96 per cent surge compared with the same period in 2002, thanks to significant increases in volumes at the container terminal. The port handled 867,954teu against 658,446teu in the first-half periods of this year and last year respectively, registering a 53 per cent increase in the volume.

A major development for the first half of 2003 was the decision by China Shipping Container Lines (CSCL) to use the port as its Indian Ocean transshipment hub.
“This is likely to use all available capacity at the port,” said SPS chairman Abdul Aziz Ali Al Shanfari. “To handle these higher volumes and maintain world-class service levels SPS is making required additional investments of around RO2 million in yard-handling equipment during the year.”

CSCL owns a fleet of 103 container vessels with a total capacity of more than 120,000teu and is recognised as one of the leading and fastest-growing shipping companies in the world today.

Other lines making regular calls at the port are Maersk-Sealand, APL, Safmarine, CMA-CGM, Norasia, Mol and ICFS.
The throughput at the container terminal for 2003 is expected to cross 1.8 milion teu and barring unforeseen circumstances the existing trend of profitability is likely to be maintained, said Al Shanfari. 

Commenting on the 53 per cent increase in container volumes, Al Shanfari said existing customers and new customers in Safmarine and APL contributed to the growth.
“Inspite of the 53 per cent increase in volume, the company has been able to maintain its productivity levels at over 30 moves an hour. The gross productivity for the period ended June 2003 stood at 31.8 moves per hour against 32.5 moves achieved during the corresponding period last year,” said Al Shanfari.  In June of this year, the port registered an aggregate volume of 5 million teu since it began operations under SPS in November 1998.

The port handled 758,071 tonnes of general and bulk cargo during first-half 2003 against 810,121 tonnes in the same period of 2002. The chairman attributed the drop in the volume mainly to a lack of one-time cargo, which was witnessed last year on account of various projects in and around Salalah.

“No change in this particular trend of volumes is expected during the second half of the year and hence the volume forecast for this year is likely to fall short of 1.5 million tonnes as against 1.678 million tonnes of year 2002,” said Al Shanfari.

Salalah port commenced operations under SPS in November 1998.  AP Moller Terminals has 30 per cent of SPS equity, the Omani government 19 per cent and Pension Funds 11 per cent with the balance remaining with public subscribers.
 “Currently the port is one of the very few ports in the world capable of handling the largest container vessels and is already equipped to handle the next generation of vessels yet to be built,” said SPS’s chief executive officer Jack Helton.

 Four berths are now fully operational along 1,236m of quay, where vessels of up to 16m draft can be accommodated. The port has invested in state of the art equipment including 12 (post- and super-post Panamax) gantry cranes, 26 rubber tyred gantry cranes, 2 x 4.850hp tugs, 4 reach stackers, 80 yard tractors, 95 yard chassis and Navis-based terminal operating system and vessel tracking systems. For multi cargo consolidation the port offers container freight station facilities.

“Development of the container terminal continues and a $238m expansion plan to construct a fifth and sixth berth to enlarge capacity to approximately 3 million teu per year is under way. The first phase of the plan which is to extend the breakwater by 2.5km received government consent in January 2003,” said Helton.

In addition to the container terminal the port has facilities to handle most other types of cargo including general cargo, bulk oil, roll-on roll-off cargo and also caters to cruise vessels. There are facilities for over 900 refrigerated containers. The General Cargo Terminal has 11 berths ranging in length from 115m to 600m with drafts up to 16m and has a dedicated oil pier. Other comprehensive services rendered are bunkering by BP Marine as well as vessel and cargo inspections by certified surveyors.

The Salalah Port Services management cites Salalah’s advantages over other regional ports stemming from its location in the middle of a growing market of 1.7 billion consumers comprising the Middle East, Indian Subcontinent, East Africa and the Indian Ocean Islands

“Its strategic location on the direct shipping lane and the world’s fastest-growing and second-largest container trade, between Europe and the Far East, provides easy access to the Arabian Gulf, Red Sea, Indian Ocean and East African Coast,” says Kutaiba.
“From the perspective of a container ship operator network from Salalah, the Gulf is the largest market, followed by the subcontinent, then East/South Africa and finally the Red Sea. For vessels serving the Gulf region and Europe/Asia shipping lane, using the port of Salalah as a relay hub affords significant time saving over many other ports.”

The port’s sales pitch underlines the cost benefits.  Says Kutaiba: “It is estimated that a carrier operating on the Europe to Asia route, calling on Salalah rather than the Gulf, represents a 3.5-day reduction in sailing times. If served in both directions, East and West bound, the saving amounts to one full week, which translates into a saving of one mainline vessel per line haul service, also called string. The same concept applies to serving the Indian Subcontinent. With multiple strings using the port of Salalah today, it brings a wide range of new markets within competitive transit times to the exporters and importers of this region, not to forget the intra-Indian Ocean rim market.

“When shipping line’s look at their vessel networks they will take many things into consideration when planning vessel routes and ports of call.  One of the major factors is cost and maximising investment in mammoth container vessels by covering more markets with fewer but larger vessels.

“To achieve this there has to be safe, strategically located hubs that have to be on the major trade routes and have access to sizeable markets. Low freight rates have driven lines to seek maximum utilisation from every port they call at and the port of Salalah’s development plans take this into consideration. For the exporters and importers in this region, including India, this means multiple connections at their doorstep and the addition of new markets to allow expansion.”

SPS also seeks to derive leverage from Salalah’s location outside the Arabian Gulf, saying that in the event of political unrest that might threaten shipping activities, “the port is an ideal facility from which neutral carriers can perform feeder relays into the politically sensitive Gulf. This coupled with effective yet simple customs procedures make the port one of the safest and least bureaucratic in the region to do business.”

The port’s operations have improved opportunities for local businesses in Salalah.  Since operations began, the container volumes imported solely by local business through the port have increased by 250 per cent and exports have increased by more than 400 per cent, whilst the general cargo tonnage imported as well exported has increased by 40 per cent, an SPS statement said.

It is anticipated that Salalah Port will be the fulcrum of industrial growth in the southern region, once the free trade zone takes shape.
“SPS has been actively pursuing a free zone initiative for three years and is committed to the development and success of the Salalah Free Zone, as it believes it is in the best interest of the company, the regional economy and the national strategy,” comments Helton.

“Since pioneering initiatives of this nature require significant change in the legal and procedural framework the approval process has taken longer than the company would have liked but it is confident that the government will be ready with these changes shortly and the eagerly anticipated free zone will be a reality in coming months.”

Reflecting on what the port has achieved, Helton says: “In only four full years of operation, it can boast of having broken the world record twice for the number of container moves achieved per hour. Its impressive productivity records, which are well above, and in some cases more than twice as high as other regional ports, coupled with its state-of-the-art equipment shows the commitment of the port to be a regional powerhouse in transhipment and the port of the future.”