Cargo throughput at Khalifa Bin Salman Port (KBSP) in Hidd is showing signs of improvement after a weak recession-affected run with the worst of the period ending in the first quarter of 2010.

“We have seen there’s an overall pick up in volumes now and we believe that 2011 will build on the growth we’ve seen in the last few months in container and general cargo, said a senior APM Terminals official at the end of 2010.

The general cargo market throughput was half a million tonnes in 2010 excluding cars and livestock, against 990,000 tonnes in the previous year.  While the 2009 figure shows a higher level it must be noted that the year was marked by special circumstances such as imports of equipment for the Al Dur power plant in Q1. There were also arrivals of cement, steel and other building materials, most of which came in Q1 from orders booked in the good times of 2008, explained Iain Rawlinson, chief commercial officer, APM Terminals Bahrain, which manages the port on behalf of the Bahraini government.

Another reason for the big difference between the two years was that some 50,000 tonnes of wheat imported by flour mills went to Mina Salman.

“Other than the special equipment and goods arriving at port in the first few months of 2009, general cargo volumes went slack and continued in that manner for the remainder of the year and the first quarter of 2010, only to pick up in subsequent months,” said Rawlinson “We expect the local market to grow 5 to 7 per cent,” he added.

2010 also witnessed a growth in container volume, the port handling around 300,000 teu of local cargo compared with 280,000 teu in the previous year. With KBSP’s container handling capacity being 1 million tonnes, it currently has a surplus capacity of around 600,000 teu.

The port is expected to see stronger growth in 2011

“By 2034 when the concession to APM Terminals ends, we’re confident that port capacity will be fully utilised,” said Rawlinson, adding the government had plans for further expansion as and when needed.

Agreement with APL
Among highlights of 2010 was the securing by APM Terminals of an agreement with APL for a direct mainline call at the port. APL is now running the West Asia Express Service operating from China to Bahrain and from Bahrain to Singapore and onwards to China. Consignments from Iraq and Kuwait carried by feeder vessels are loaded on to the APL service in Bahrain.

With the start of the West Asia Express Service in early 2010, APL cancelled its Red Sea Service that had begun in 2009.

“We continue to be in dialogue with carriers in the region. We have seen further development in feeder services with Wan Hai and CSAV calling with their feeders in addition to the carriers that were already calling at Bahrain,” said Rawlinson. The other carriers in the feeder network are Maersk, MSC, UASC, CMA CGM, Evergreen, Hanjin, OEL and Simatech.

As the region starts recovering its pre-recession momentum, APM Terminals believes KBSP has the potential to capture some of the business thanks to its geographic position at the heart of the Northern Gulf, the savings in fuel and time available to feeders and the efficiency of APM Terminals’ operations in Bahrain’s port. Crane productivity in 2010 averaged above 35 gross crane moves per hour, making it the fastest port in the Gulf.

“With the developments in Iraq and exports out of Saudi Arabia we feel we’re well-positioned to serve these markets efficiently,” commented Rawlinson. “There’s a forecast of an additional 1 million teu of export cargo originating in eastern Saudi Arabia by the end of 2011 which will generate an imbalance in equipment (containers). There are surplus containers in Kuwait, Iraq and Bahrain. Bahrain is a natural place to act as a distribution hub to balance the surplus of containers in the three states with the deficit in Saudi Arabia.”

The hub logic
The official explained the logic of having Bahrain as a hub. “The mother vessels will see an efficient service, and the extra time taken to the Upper Gulf will be offset by the feeder savings. For mother vessels, Bahrain to Dammam is a small deviation. The heart of APM’s policy was that it will provide an alternative way of serving the Gulf. Lines are doing their own homework on how best to structure their own business to serve the market. Dammam Port’s capacity is 1.5 million teu and Bahrain’s is 1 million teu. We don’t see Dammam as a competitor because Dammam will have to grow to support its own market.”

An important characteristic of Saudi mercantile shipping is that what comes into the kingdom is Saudi cargo. With growing populations and growing cargoes, port expansions there will occur in order to keep pace with the domestic market.

“Transshipment is a pure cost to a shipping line,” Rawlinson observed. “It’s not a service that adds value to its customers. The reason they transship is so they can run the most efficient network. As long as Dammam has capacity to handle its domestic market and is running efficiently it doesn’t make commercial sense to transship over Bahrain. Where Bahrain makes sense is when we’re being used strategically to manage container fleets efficiently in order to maximise container utilistion for the region’s growing exports.”