With the ongoing expansion of the port and container terminal at Aqaba and the new terminal at the Queen Alia International Airport, there is a sense of cautious optimism in the kingdom’s transport and logistics sector.
While ongoing volatility in Syria has continued to cause some expensive and vexatious re-routing of shipments, the lifting of fuel subsidies in November has not had the devastating impact on shipping costs that some had predicted. “The market oil prices have calmed and we are operating in a more stable atmosphere after the initial concerns following the fuel price hikes,” Wael Khoury, the national sea freight manager at Kuehne+Nagel, told OBG. “Containers are moving steadily again.”
Meanwhile, Jordan is hoping to make the best of the situation, as the regional unrest has forced many shipping agents to look for alternative cargo routes. While speaking with OBG, Søren Hansen, CEO of the Aqaba Container Terminal (ACT), said, “The tragic unrest in Syria has closed down its port, and as a consequence of this more consignments are now rerouted through Aqaba. This has resulted in increased activity for the ports in Aqaba in general and for Aqaba Ports Corporation in particular.”
Jordan’s reputation for stability has put it in a position to become a key player in regional transport infrastructure. ACT is particularly set to become a leading logistics player in the region. The firm recorded 16% year-on-year growth in 2011 and 2012, and the volume of containers coming into the terminal is expected to reach 900,000 by the end of 2013, up from 817,000 in 2012. Expansion efforts at the port include a 460-metre extension of the quay, which will increase the annual container capacity to 2m twenty-foot equivalent units (TEUs).
According to Hansen “ACT's expansion, which includes the procurement of several larger cranes, will almost double the terminal's capability and enable it to service much larger cargo ships. In the transport business, the larger the ship is, the more cost-effective the operation. This improvement will benefit the end-users in Jordan."
Meanwhile, within the Jordanian transport sector, Iraq remains a priority in terms of cargo volume. According to a report released by the Amman Chamber of Industry, Jordanian exports to Iraq reached JD813m ($1.14bn) at the end of November 2012, accounting for 22% of the country’s exports.
Ibrahim Naouri, chairman of Naouri Group, a local transportation firm, is hopeful about gaining greater access to the Iraqi market. “Businesses have gained interest in using Jordan as a transit partner, as they appreciate the organisation and sophistication of our transport abilities,” Naouri told OBG. “The growth of Iraqi cargo in Aqaba is increasing and overall comprises 60% of our activity.”
There are some issues that remain, however. Iraq’s ongoing political instability is an uncertainty factor and protests forced Iraqi troops to briefly close the border in January. There is also a growing sentiment among companies OBG has talked to in Jordan that the shipping process, particularly in terms of Customs procedures, requires modernisation.
Meanwhile, Jordan is also expected to see an uptick in activity at its main airport. To keep up with expected growth rates, an expansion of the Queen Alia International Airport has been in the works since 2007. Airport International Group has been implementing the project, as well as running the airport under a 25-year build-operate-transfer contract. The total investment into the expansion is expected to reach $800m and will include a new 100,000-sq-metre terminal, which is expected to open this month, as well as new runway and logistical upgrades.
Oxford Business Group