Oman’s biggest port and main shipment centre the Port of Salalah is all set to take forward its expansion plan, aimed at boosting the hub’s container capacity and facilitating the flow of bulk commodities and liquids through the port.

Infrastructure at Salalah will receive another boost, when a project involving the construction of new container berths at the terminal gains speed. An action plan for the expansion and modernisation of the Salalah Port has recently been firmed up by Tanfeedh – the National Programme for Enhancing Economic Diversification in the Sultanate, said a report.

The port is currently expanding capacity at its general cargo terminal (GCT) to cater for expected future increases in demand.

Tanfeedh’s proposal moots the expansion of Salalah Port’s Container Terminal  (CT) through investments in new berths designed to ultimately lift the port’s container handling capacity from the present 5 million twenty-feet equivalent units (TEU) to 7.5 million TEU, entailing a 50 per cent increase.

The goal is to “consolidate Salalah’s position as one of the most important transshipment ports in the region,” according to Tanfeedh.

Authorities are looking at developing Salalah as a multi-modal logistics hub

The proposal is part of a raft of initiatives presented by Tanfeedh to help leverage the sultanate’s multimodal transportation infrastructure to fuel the growth of logistics-based economic activities in the country, it said.

The Logistics Strategy 2040 rolled out by the Omani government last year aims to position the sultanate as a logistics hub with the potential to attract additional investment of around RO4.2 billion ($10.9 billion) by 2020, as well as enhance the contribution of logistics activities to the national gross domestic product.

Other reports suggest that Oman is preparing to award the engineering and design contract for the expansion of the Port of Salalah. The contract is for berths 7, 8 and 9 at the port, which is operated and managed by Salalah Port Services Company, which is a joint venture between the Omani government and the Netherlands’ APM Terminals.

“We are at the final stage of review and undertaking clarifications of offers with bidders,” a high-ranking government executive who is involved in the scheme was quoted in a report. No timeline has been specified for the release of the main contract for the construction of the berths.

REGIONAL GATEWAY

Situated in the Dhofar Governorate on the Arabian Sea, the Port of Salalah is a major trans-shipment hub and gateway to the Middle East, Indian subcontinent and East Africa. The APM Terminals-managed Port of Salalah began operations in 1998 and is currently expanding capacity at its GCT to cater for expected future increases in demand.

The Port of Salalah comprises a container terminal (CT) with seven berths of up to 18-metre draft and the GCT with 14 berths of up to 18m draft. The CT division involves in leasing, equipping, operating and managing a CT. The GCT division provides stevedoring and other cargo related services to vessel and cargo operators.

Port of Salalah: a major gateway to the Middle East, Indian-subcontinent and East Africa

The majority of the port’s business currently comes from the port’s state-of-the-art CT. Today the capacity of the CT is 5 million TEUs. In 2016, the port handled 3.3 million TEUs as well as 13.3 million tonnes of bulk cargo.

The port is operated by Salalah Port Services Company which is listed on the Muscat stock exchange. The AP Moller – Maersk Group is a 30 per cent shareholder, and APM Terminals has been granted the management contract for the port through 2028.

Over 3,200 vessels call at the port annually, taking advantage of the port’s strategic location on the Indian Ocean. The port lies almost equidistant to the markets of East Africa, the Indian subcontinent and the Arabian Gulf.

TANFEEDH’S PLAN

According to a report, the Implementation Support & Follow-up Unit (ISFU) of Tanfeedh met recently to discuss the initiative, along with other proposals designed to strengthen the Sultanate’s capabilities as a regional logistics hub.

Officials representing a number of maritime and logistics stakeholders deliberated on the ongoing expansion and development of the GCT at Salalah Port, as well as initiatives to boost the cargo handling capabilities of the hub.

“Options were examined to enable the implementation agency to submit an integrated plan of action to increase the volume of goods,” said Tanfeedh in a tweet in reference to the expansion and development of the GCT.

As for the Salalah Port expansion initiative, the agency added: “It was agreed that the private sector would increase (cargo handling capabilities) by replacing the cranes with larger ones to cope with (the requirements of international ships calling at the port)”.

Tanfeedh has proposed a significant expansion of capacity at Salalah Port’s CT via the construction of three new berths – 7, 8 and 9. This would add 2.5 million TEUs of additional capacity to the terminal.

The expansion, said Tanfeedh, is necessary to exploit Salalah’s strategic location abutting international shipping lanes traversing the Indian Ocean, as well as to prepare for an anticipated uptick in container shipping in the wider region.

Tanfeedh has also mooted the rehabilitation of government berths, redevelopment of the old general cargo docks, and the establishment of a dedicated corridor for the movement of dry and liquid cargoes through the port. These initiatives are key to easing pitfalls and bottlenecks in the speedy and efficient handling of cargoes at the hub, according to the agency.

Additionally, Tanfeedh has recommended the establishment of a Central Service Station that will oversee the efficient movement of dry cargoes from the port to warehouses and distribution clusters operating within the adjoining Salalah Free Zone. A similar facility is also mooted for the development of a pipeline corridor between liquid storage hub envisioned in the future, and a new liquid jetty under construction at the maritime gateway, the report said.

Around $143 million is currently being invested in the development of a state-of-the-art GCT designed to cater to surging limestone, gypsum, cement, grain and other general cargo volumes being handled at Salalah Port.

Work on the new 1,266 metre-long quay – the centrepiece of the new GCT project – kicked off in December 2015. With an 18-metre-draft, the new terminal will be able to receive large commercial carriers, cruise liners and bulk tankers, among other types of cargo vessels.

CONTAINER THROUGHPUT

Salalah Port handled 2.57m TEUs in 2015, down 15 per cent from 3.03m TEUs a year earlier.

The decline in container terminal trans-shipment volumes – attributed to the rationalisation of services of its two largest customers and increased regional competition – was nevertheless partially offset by new volume records set at the port’s general cargo terminal, where throughput increased by 22 per cent from 10.31 million tonnes in 2014 to 12.54 million tonnes in 2015.

That followed an already robust 30 per cent growth in bulk throughput in 2014 over volumes for the previous year.

In 2016 the downwards trend in container throughput was reversed. According to reports, during the first six months of the year the port saw a 29 per cent increase in the volume of containers handled, at 1.58 million TEUs, compared to the same period in 2015, while general cargo saw growth of 12 per cent.

The handling of locally mined limestone and gypsum has been driving growth in the general cargo business at Salalah, and remains the largest commodity for the terminal followed by methanol, fuel and bagged material, mainly cement.

Annual handling capacity received a boost in 2015, with the completion of an expansion project that added 20 million tonnes of dry cargo and 6 million tonnes of liquid bulk cargo capacity in a new deepwater General Cargo and Liquid Bulk Terminal.

The Port of Salalah has enough capacity for liquids storage. During the first half of 2017, the port had witnessed marginal volume growth at the CT and marginal drop in GCT volumes compared to the corresponding period last year. But from mid-year, there had been a significant recovery.

Consolidation in the shipping industry and competition from the region had caused some decline in business.  Higher productivity, reliability, strategically located and global standards put the Port of Salalah in an advantageous position.

The Port of Salalah claims to offer the highest productivity of any container terminal in the region. It achieved a record Berth Move Per Hour (BMPH) of 286.5, exceeding the previous record by almost 30 moves per hour.

It has been consistently ranked as one of the most productive container ports and this new record sets a new benchmark for success.

Other recent developments at the port include a long-term land lease agreement signed between Oman Oil Company and Salalah Port Services Company in early 2016 to develop a new, mid-sized marine-bunkering and product-trading terminal, providing ships calling at the Port of Salalah with fuelling services by the end of the year.

Main line connectivity forms a critical backbone of the port’s supply chain solution, and Salalah has been successful in developing new feeder connections to other ports in the region, launching a new shipping line in April 2016 that connects Salalah and Jebel Ali in the UAE, along with the Omani ports of Duqm and Sohar. Intermodal connections servicing nearby oilfields, and overland cargo shipments to Saudi Arabia are less developed and are likely to require greater investment over time.

MULTI-MODAL LOGISTICS HUB

Meanwhile, the authorities are looking at developing Salalah as a multi-modal logistics hub. Oman has the infrastructure and capability to make it flourish on the synergy between the port, airport and free zone, said a report.

Quoting Ahmed Ali Akaak, deputy CEO, Port of Salalah, the report elaborated on the strategy the officials are working on to develop cargo business at Salalah airport. He added that they have the capability to do this at Salalah airport and the port.

The implementation of this strategy is critical, and once it gains momentum, there would be more freighters flying from Salalah to other parts of the region. It takes only a five-hour distance from Africa and the Far East and six hours to Europe and in the middle of emerging markets that can be served.

Once synergy could be achieved between the airport, free zone and port through a unified strategy, these assets could be utilised by the country to anchor more enterprises and look for more business opportunities. Within Asyad (Oman Global Logistics Group) they were working collectively to find ways in which the logistic sector could be utilised to attract investment into the country.

WELL-INTEGRATED FACILITY

The Port of Salalah is also a well-integrated facility, with seamless connections between the port, free zone and Salalah Airport. It can handle sea and air logistics through to Salalah Airport, which is 15 minutes away from the port, enabling good intermodal connections from its frequent liner calls.

Adjacent to the port, the Free Zone of Salalah offers facilities with 30-year tax exemption and 100 per cent ownership. Businesses can also benefit from the advantages that the US-Oman Free Trade Agreement offers, in the form of zero to minimum tariffs on trade between the two countries.

Among the companies operating at Salalah Port and its Free Zone are those specialising in bulk commodities such as cement, minerals, limestone, wheat, methanol, liquids, construction materials and other raw materials used in manufacturing plastics, car parts and clothes. Meanwhile other companies specialising in logistics and freight forwarding use Salalah Port as their port of choice due to its efficient supply chain and transportation links.

JETTY FOR LPG EXPORTS

As part of its infrastructure enhancements, Port of Salalah plans to add a dedicated jetty for liquefied petroleum gas (LPG) exports. The new jetty, designed to support the export of LPG from a new LPG extraction plant under development at the adjoining Salalah Free Zone, will underpin the port’s evolution into a global hub that will serve a diverse variety of product and cargo streams, Akaak was quoted as saying in a report.

Akaak added that the organisation are setting up another component to its liquid facilities which will provide significant returns, not only to the port, but to the country as well. The official made the comments at the recent sign-off ceremony at which agreements were signed with various stakeholders for the implementation of the sultanate’s first LPG extraction plant at Salalah Free Zone, with related storage and export facilities to be built at the nearby Port of Salalah.

The $826 million LPG extraction plant and support infrastructure is being implemented by Salalah LPG SFZCO, wholly owned by Oman Gas Company — part of Oman Oil Group.

The LPG export jetty will be an integral part of a liquid hub currently under development as part of the new GCT project being implemented at the port, added the report.