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Wed 25 Nov 2009 01:29 PM

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Shipping slump stops Bahrain's new port signing main liner

The $344.9m port has only done ad-hoc business due to fall in shipping traffic - CEO.

Bahrain's new port, a major investment under the Gulf Arab country's oil diversification efforts, is yet to sign its first trans-shipment deal due a slump in shipping traffic, its chief executive has said.

"We have not signed up any fixed trans-shipment business," Steen Davidsen of APM Terminals that is managing the Khalifa Bin Salman Port (KBSP) told Reuters this week on the sidelines of a conference.

"We've done some ad-hoc business, but we've not signed up a regular main liner call here," he said.

KBSP started its operations in April with the aim of becoming a shipping hub for the northern Gulf region with connections to Saudi Arabia, Kuwait, Iran, Iraq and Qatar.

The port, costing about BD130m ($344.9m), has a capacity of some 1 million twenty-foot equivalent units (TEU) per year but the local market only brings in some 300,000 TEUs.

Bahrain is a small oil producer that needs to make careful investment decisions in its efforts to steer its economy away from oil revenues. It has chosen transport and logistics as one of the industries it is promoting.

Dubai's Jebel Ali port so far is the only shipping hub in the Gulf and like other ports in the region saw significant congestion during the five-year oil and construction boom in the region that ended last year.

"The whole area was congested, but that congestion is not there any more," Davidsen said.

International shipping volumes fell sharply after the global economy slowed down dramatically in the wake of the financial crisis.

KBSP seeks to attract hub traffic as shipping lines save money on shorter feeding routes between Bahrain and the upper Gulf ports, more than compensating for the higher fuel costs that mother vessels rack up on their longer trips into the Gulf to reach Bahrain.

Davidsen said feeder routes between Bahrain and ports in the northern Gulf were on average some 40 percent shorter.

He said he hoped to sign the first trans-shipment agreements for KBSP next year.

"There's a lot of big shipping lines that are looking at their networks right now", he said. (Reuters)

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