Ports and trade dynamics of the Middle East

Since ancient times, ports have catalyzed a country's economic growth. They facilitate trade, support the supply chain, and are the epicenter of economic activity. With their strategic perspective, ports connect nations to global markets, fuel economic growth, and support industrial development.

They are crucial for consumption and revenue generation through imports and exports. Ports provide direct and indirect employment, attract FDI, and generate revenue through taxes and customs duties. They also act as multimodal logistics and distribution centers. But their role goes beyond national economies. Ports, especially those in the Middle East, play a significant role in the global economy.

The Middle Eastern ports are strategically located at the junction of the global trading routes that connect Asia, Europe, and Africa. Many Middle Eastern ports are situated along critical maritime chokepoints and shipping lanes, including the Suez Canal, Strait of Hormuz, and Bab-el-Mandeb Strait.

These ports control access to significant bodies of water, such as the Mediterranean Sea, Red Sea, Persian Gulf, Arabian Sea, and Indian Ocean. They are critical hubs for international trade and logistics. State-of-the-art facilities like deep water berths, advanced cargo handling equipment, and integrated logistic zones are available in the Jebel Ali ports in Dubai, Khalifa in Abu Dhabi, and King Abdulla Port in Saudi Arabia.

These ports have adopted advanced technologies like artificial intelligence (AI) and automation. This has improved operational efficiency, reduced turnaround times, and minimized costs. These ports have supported economic diversification strategies, promoting manufacturing, tourism, and logistics sectors. Middle Eastern ports like King Abdulla Port, Port of Salalah, and Jebel Ali Port have secured high global rankings, demonstrating their operational effectiveness.

The UAE, SA, and Oman ports are close to vital maritime passages like the Strait of Hormuz and the Suez Canal, essential for energy supplies and trade. Ports like Jebel Ali (UAE) and Jeddah (Saudi Arabia) are key transshipment hubs on the Asia-Europe trade route. The King Abdullah Port is part of Saudi Arabia’s 2030 vision to diversify the economy. It is equipped with advanced facilities to handle increased trade volumes.

The Port of Sohar in Oman and Khalifa in Abu Dhabi integrate with Special Economic Zones to support more industrial growth. Duqm Port is strategically positioned in the Arabian Sea and is an alternative route to the Strait of Hormuz. The Port of Duqm can serve the main Eastern and Western trade corridors. Port Said in Egypt is one of the busiest ports in the Mediterranean. It is located at the northern entrance of the Suez Canal.

The Suez Canal, accessible via Egyptian ports, provides a crucial shortcut between Europe and Asia, avoiding the longer route around Africa. Haifa Port in Israel is the largest port in Israel, handling both cargo and passenger ships. Despite the 2020 Lebanon explosion, Beirut Port remains significant in the Eastern Mediterranean.

Jordan's only seaport, Port of Aqaba, is crucial to the country's economy. Iran's largest port, Bandar Abbas, is on the Hormuz Strait. Mina Salman Port is Bahrain's primary cargo port. Kuwait's main commercial port is Shuwaikh Port. An important port in Qatar is the Port of Doha, though now supplemented by the newer Hamad Port. The Port of Latakia is Syria's main port, although its operations have been affected by the ongoing conflict. Port of Hodeida (Yemen) is Yemen's principal port, though the current conflict has impacted its operations.

While playing a crucial role in global trade, Middle Eastern ports are also characteristic of geopolitical instability. Clouds of conflict and tension hover over these port waters, disrupting trade routes and operations. The risk of piracy, terrorism, and regional conflict is a constant threat that demands continuous monitoring and robust security measures to mitigate the risks.

Many Middle Eastern ports experience congestion during peak periods, resulting in higher operational costs and reduced competitiveness. These ports also have inconsistent customs procedures, red tape, and regulatory challenges. There is also the challenge of hinterland connectivity between the ports, slowing cargo movement. International environmental and sustainability compliance standards are complex and costly, putting additional pressure on the Middle Eastern ports. Despite these challenges, the resilience and adaptability of these ports are commendable, as they continue to play a crucial role in global trade.

The Middle Eastern ports are significantly impacted by conflict in the Red Sea and Strait of Hormuz. Houthi attacks on vessels in the Red Sea have reduced traffic in the Suez Canal. The trade movement in the Suez Canal has dropped by 50%. The recent Houthi attacks have rerouted the vessels from the Red Sea to the Cape of Good Hope. Some ports in the conflict zone suffer directly from military action, which reduces operational capacity and increases reconstruction costs. The Ukraine war has also disrupted the traditional routes in the Black Sea, shifting to alternative routes. This has further increased the strategic importance of the Middle Eastern ports as transshipment hubs.

Regional conflict, global issues, technological developments, and economic disruption shape the dynamics of Middle Eastern ports. Wars of the Gulf and European conflicts have all recharted trade routes, increasing the importance of Middle Eastern ports. Despite the strain on their capacities, the ports adapt and expand to meet global trade and geopolitical shifts, reinforcing their pivotal role in international maritime trade and logistics. Middle Eastern ports are strategically important in regional and global power dynamics.

Dr Mythli Kolluru

The author is a National-Level Award-Winning Outstanding Women Educator and Scholar in Strategic Management. She is an assistant professor at the marketing and management department of the College of Banking and Financial Studies in Muscat and a member of Knowledge Oman.