Congestion zone

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JEBEL ALI: Dubai's largest facility has been paying the price for the exceptional success of the UAE in the last few years, and has introduced congestion charges.

KCT's own volumes have been much higher in the first half of the year, which the company partly attributes to lines increasingly choosing to route cargo through its gateway to the UAE due to the congestion and slow working conditions affecting other ports in the region.

It is evident that some ports in the region need to rise up to the challenge of congestion and ensure that the most up-to-date facilities and infrastructure are in place to prevent the loss of business in their respective regions.

"Certainly tackling or avoiding congestion very much depends on matching port and inland infrastructure with the volume and ship size demands made on them," points out Nuttall.

Indeed, not all countries within the Middle East have experienced the same levels of port congestion. APM Terminals Bahrain, for example, has found itself relatively unscathed by the problem.

"There have been congestion challenges in very few ports around the upper Gulf, but we are certainly not faced with congestion in Bahrain," asserts Steen Davidsen, CEO at the terminal. Like Nuttall, Davidsen agrees that congestion tends to take place when a terminal or port accepts a volume which it may not be geared up to handle, whether due to equipment or staff shortages. "It is all about planning," he emphasises.

"The shipping lines and the ports need to be able to forecast volumes for the foreseeable future. Otherwise time constraints will make the port miss the investment windows needed to get the equipment operational on time for the volume increases."

With its strategic geographical location, Bahrain promises to be the major shipping hub for the northern Gulf, particularly with the opening of its new Khalifa bin Salman port, otherwise known as the Bahrain Gateway.

Due to be completed by the end of 2008 or early 2009, the new port is set to give the country's maritime industry a major boost, with container throughput predicted to more than treble within five years. Davidsen also believes that the new Bahrain gateway will help ease port congestion for the upper Gulf region. "Ports need to have the equipment and their facilities ready to meet the demand of our customers," he says.

"In the case of Bahrain, we have invested in state-of-the-art cranes and the new port will be operated as an RTG terminal equipped with brand new RTGs."

Although congestion is clearly a huge problem for the ports themselves, shipping lines also bear a major cost as a result. "If vessels are at port longer than planned, shipping lines might miss their window at the next port," Davidsen points out.

"They may also have to spend more on additional bunker costs to get to the next point in time. Missing port calls add to the complexity of all this with containers missing their connection."

In this way, port congestion can present a major challenge in ensuring a smooth and delay-free shipping schedule. "In the Middle East, congestion is severe owing to demand outstripping supply," complains Robert Uggla, managing director of Maersk UAE. "Congestion results in reduced service delivery and higher cost - a cost that ultimately has to be passed on to the shippers."

Where port congestion and other infrastructure problems have meant long delays for the shipping lines, they have had to resort to action such as introducing a congestion surcharge to counteract the effects.

"Berthing on arrival is always a problem which disrupts carefully planned schedules," he explains further. "Productivity whilst working in the port also suffers, resulting in longer port stay and hence further delays in the schedule. There are also a possibility of not completing operations and having to roll cargo - leading to higher costs."

For a busy shipping line such as Maersk Line, such a scenario is clearly not good for business. However, it is not just the ports that need to take action to avoid this.

Uggla's own recommendations for involving other interested parties in the solution include improving coordination between customs and port authorities, for example, when it comes to auctioning off abandoned containers in the terminals.

"It is critical that we work closely with the port to constantly address the small issues before they become a major concern which will affect both parties," he states.

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