Wednesday, September 19, 2012

With Shipping Container Agreement Scrapped is the Future of Freight in Aden Terminal?

What Will Become of the Once Vital Bunkerage Point in Troubled Yemen?
Shipping News Feature

YEMEN – DUBAI – MIDDLE EAST – As tensions in the region rise in the light of the recent hue and cry over a film said to slight the Prophet other aspects of the political changes are causing concern and nowhere more than in Yemen where last month the National Unity Government tore up an agreement which profoundly affects container shipping to the region and throws transporting import and export freight to the ports’ terminals into question.

In 2008 the agreement to manage Yemen’s principal port, Aden, was made between the government of former President Ali Abdullah Saleh and DP World with a term of management quoted as between 30 and 100 years dependent on who you talk to. Enquiries in Dubai have met with a flat refusal to comment but what is certain that with the agreement to run the two major container handling terminals in Aden and Ma’alla in shreds there will be further concerns for any company which agreed terms with a previous administration in the region.

Bearing in mind that DP World already operate in Jebel Ali, where this week the Dubai based port group announced a deal to purchase a reported sixty nine cranes for its new container terminal, due to open in 2014, the fear is that any improvements which might have been hoped for under new management will now not materialise. Whilst it is politically expedient for the current government to disassociate themselves with agreements made under Saleh’s thirty year regime it is worthwhile remembering the depths this once thriving and vital port had sunk to.

Saleh sold off the port services without any visible benefit to the local populace in an area which had little else in the way of assets and which, with the proper deal, could have possibly fuelled an improvement in the local economy. Such a contract was bound to be viewed as tainted by his successors anxious as they no doubt are to be popular in such an unstable political environment. Critics native to the region say that DP World did not bring the advances in equipment and infrastructure essential to breathing new life into Aden’s future ignoring that, with parent company Dubai World struggling to restructure its own finances, ports like Jebel Ali situated closer to home within the Emirates, were bound to attract more investment whilst Yemen’s woes continued.

When agreement was reached in July 2008 DP World established a joint venture with the Yemen Gulf of Aden Port Corporation leaving DP to operate both container terminals with both parties committing to invest ‘around’ US$220 million in further developing the port, including building a new 400 metre berth extension to Aden Container Terminal within five years from handover (end of 2008). Estimated capacity at the time was around 700,000 TEU and the parties anticipated an increase to about 1.5 million by this year.

Local critics say the promises have not been lived up to but unfortunately DP World has told us the group is not prepared to comment on the situation, somewhat understandable as truth and facts have a tendency to become more than a little skewed in the region at present and therefore any comment made may well be misinterpreted, deliberately or otherwise, but as yet that leaves no denial or defence regarding the accusations of a lack of investment. What is sure is that by transferring power in the Port of Aden back to the local Corporation the Government is hoping to consolidate regional security and win brownie points for itself.

Unfortunately for Aden however a port has little or no control over its own throughput if the forces that matter are ranged against it. What remains uncertain is whether the port can once again be made into an acceptable destination for international cargo in terms of ability, but also with such a lamentable security history, the fact that Aden is ideally placed, particularly as a bunkerage point will probably not count for much amongst the world’s insurance and shipping communities.

Sitting as it does opposite the pirate infested coast of Somalia, with Yemen controlled island Socotra an infamous danger zone, and far closer to vulnerable areas in the Gulf of Aden than countries like Oman where attacks have been commonplace is one thing, a CV which includes the deaths of seventeen US servicemen in 2000 when the USS Cole was attacked in Aden harbour whilst refuelling and the 2002 attack on the oil tanker Limburg which killed a crewman and resulted in a boycott of the port costing Yemen millions of dollars in revenue, is yet another.

Before Yemen can be accepted as a place to do business the country will need to demonstrate it is capable of working with the international community and offering safe haven to any ships that might consider it advantageous to call there, not least to distance itself from Al Qaeda inspired attacks such as those mentioned. The apparently casual disposal of the contract with DP World may be seen as a bold and proper move within the country but may appear very differently to those concerned with the safety of their vessels and it is difficult to see any immediate economic advantage at this point in time.