Oman Freight Transportation Report 2008: Industry Research Report

Oman Freight Transportation Report 2008

Published Date: April 2008

Published By: Business Monitor International

Page Count: 34

Order Code: R302-2971

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Arguably the single most important development in the Omani freight transport sector has been the work to complete the port of Sohar. This year saw the opening of a US$1.3bn refinery at the port, as well as Terminal B, Phase 1 of the Oman International Container Terminal (OICT). This is currently one of the largest single port developments in the world. It is capable of taking ships of 18m draught. It covers an area 20sqkm and has sucked in investments of over US$12bn. Sohar differs from most ports in the region in that it is a port and manufacturing hub built as one integrated unit. Other port development work is also in progress. In May the government said that despite reports of rising costs, the planned port and dry dock project at al-Duqm in the south east of the country was likely to go ahead. The port is designed to act as an infrastructure development hub, including commercial and industrial activities, power generation, water desalination, and petrochemical facilities. Later, in July, it was reported that as many as 15 international companies had expressed interest in a contract to develop the repair yard and dry-dock complex. They included Hanjin Heavy Industries, Daewoo Engineering and Construction (both from South Korea), China Harbour Engineering and Larsen & Toubro. The repair facility was to include two dry docks, 2.8km of quays and other infrastructure. The port is expected to be completed by 2009. In our latest Oman Freight Transport Report, BMI concludes that maritime cargo will grow in tonnage terms at an annual average rate of 5.1% over the next five years.

Various factors support this prediction. In the short-term, damage caused by Hurricane Gonu this year was a temporary setback. According to our forecasts, based on oil and, increasingly, gas exports, Oman’s GDP will grow by an average annual rate of 3.9% over the 2007-2011 forecast period, a little faster than the 3.2% average registered across the preceding five years. While this will provide support for shipping demand, the development of Sohar will be a clear boost. Strategically situated along the world’s major shipping lanes, the busy and rapidly growing markets of Dubai, Iran and the Indian sub-continent, Sohar has the twin advantage of being outside the Strait of Hormuz and inside the Gulf Co-operation Council (GCC) customs union. The port is within 300km of one of the world’s largest gas reserves, in Qatar. Its position outside the Gulf also guarantees lower insurance premiums.

The overall outlook for the freight business in Oman is encouraging. By transport mode, we expect the fastest growing to be air cargo, which will expand by an annual average of 9.2%, supported by a strong showing from Oman Air, now that the government has decided to withdraw from Gulf Air. We estimate that road haulage should continue to grow a little faster than GDP at 4.3% per annum. In total, freight will grow by 4.5% per annum across all transport modes during the 2006-2010 forecast period. For the 2006-2010 forecast period, we expect the transport and communications sector to continue outpacing the economy as a whole. It will achieve average annual growth of 4.3%, versus 3.9% for overall GDP. The total value of transport and communications GDP will rise to US$4.26bn in nominal terms by 2010, representing 9.5% of Oman’s GDP.

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