Oman Freight Transport Report 2012
Oman continues to develop itself into a regional powerhouse for the shipping and transhipment of dry bulk goods such as iron ore. The latest development is the announcement that a new port is to be constructed at Duqm. Further port developments include the announcement that all cargo operations are to be moved from the Muscat port of Sultan Qaboos to Sohar by the end of 2012. All of this is aided by Oman's position on the Arabian Sea, outside the Persian Gulf, enabling it to offer shorter shipping lines than ports within the congested body of water.
The country is also looking to develop its air and rail freight sectors. A sea-air corridor developed by Oman Air Cargo and the port of Salalah will boost airfreight levels, while development continues in Oman's first railway network. This will eventually link in to the wider Gulf Co-operation Council (GCC) rail network, being developed in tandem in the other countries of the bloc, enabling goods to be transported by rail in future.
Headline Industry Data
Development Of Arabian Rail Presents Opportunities For International Companies
Development of the Arabian Peninsula's rail network continues apace, with two new developments announced in September. The region has traditionally been bereft of railways, with even the Hejaz railway, which was established to carry pilgrims from Damascus and beyond to Medina, having fallen out of use following the fall of the Ottoman Empire, leaving only small local lines still in service. The inhospitable terrain and arduous climate have conspired against its development. BMI notes, however, that in the past few years a number of projects have been launched across the region, offering considerable upside potential to the rail freight sector.
Sohar Cements Iron Ore Hub Role
Oman's port of Sohar has claimed a place in mining giant Vale's global supply chain, with the arrival of the first Valemax (also known as Chinamax) vessel at the port in September. The port is developing into an iron ore hub for the Middle East, and the docking of Valemax vessels, coupled with the expansion of the pelletising plant, offers upside risk to our throughput projections.
New Omani Sea-Air Corridor Provides Upside Risk To BMI Forecasts
Oman Air Cargo, the freight wing of the Omani national flag carrier, struck a deal in October 2011 with the premier Omani container port of Salalah to create a sea-air cargo corridor between Asia and Europe. BMI believes that the agreement provides upside risk to our freight forecasts for Oman. The corridor will see cargo brought to Salalah from Asia by ship before being freighted on by Oman Air Cargo's air services. The total air-sea route from Hong Kong to Salalah and on to European destinations served by the air freighter (Frankfurt, Munich, Milan and Paris) will take 16 days. BMI notes that this will reduce shippers' transport costs and enable quicker connectivity for cargos of fast moving consumer goods (FMCG) in need of timely delivery.
The two parties claim that the deal takes 48 hours off standard transit times and saves 20% in handling costs. According to Oman Air's chief commercial officer, Abdulrazaq al-Raisi, the agreement is already generating a great deal of interest.
Key Risks To Outlook
On the downside we stress that for the foreseeable future, Oman's economy will remain highly reliant on oil revenues, and caution that should prices record a more pronounced drop before the economy has been well-enough diversified away from the energy sector, our positive outlook might prove overly-optimistic. Additionally, the autocratic nature of the political regime in Oman (and elsewhere in the Gulf) will ensure that risks of an uptick in protest activity by pro-democracy demonstrators will remain elevated, which would generate uncertainty and in turn deter investors away from the market. Should political violence spread in the Gulf region it could also provide upside risk to Oman, so long as it does not affect the country itself, as it sits outside the Straits of Hormuz and could provide an attractive option for companies unwilling to pass through the Bab al-Mandab.
The country is also looking to develop its air and rail freight sectors. A sea-air corridor developed by Oman Air Cargo and the port of Salalah will boost airfreight levels, while development continues in Oman's first railway network. This will eventually link in to the wider Gulf Co-operation Council (GCC) rail network, being developed in tandem in the other countries of the bloc, enabling goods to be transported by rail in future.
Headline Industry Data
- 2012 tonnage throughput at Salalah is forecast to reach 7.17mn tonnes on growth of 6.8%, and to average 5.0% to 2016.
- 2012 total tonnage throughput at Sohar is forecast to reach 13.81mn tonnes, year-on-year (y-o-y) growth of 13.6%. Growth is forecast to average 18.5% over the medium term, to 2016, boosted by the move of Sultan Qaboos' cargo operations to the facility.
- 2012 Oman total trade real forecast at 3.4%, and to average 2.4% a year in the medium term. Key Industry Trends A'Duqum Development To Bolster Oman's Dry-Bulk Hub Credentials
Development Of Arabian Rail Presents Opportunities For International Companies
Development of the Arabian Peninsula's rail network continues apace, with two new developments announced in September. The region has traditionally been bereft of railways, with even the Hejaz railway, which was established to carry pilgrims from Damascus and beyond to Medina, having fallen out of use following the fall of the Ottoman Empire, leaving only small local lines still in service. The inhospitable terrain and arduous climate have conspired against its development. BMI notes, however, that in the past few years a number of projects have been launched across the region, offering considerable upside potential to the rail freight sector.
Sohar Cements Iron Ore Hub Role
Oman's port of Sohar has claimed a place in mining giant Vale's global supply chain, with the arrival of the first Valemax (also known as Chinamax) vessel at the port in September. The port is developing into an iron ore hub for the Middle East, and the docking of Valemax vessels, coupled with the expansion of the pelletising plant, offers upside risk to our throughput projections.
New Omani Sea-Air Corridor Provides Upside Risk To BMI Forecasts
Oman Air Cargo, the freight wing of the Omani national flag carrier, struck a deal in October 2011 with the premier Omani container port of Salalah to create a sea-air cargo corridor between Asia and Europe. BMI believes that the agreement provides upside risk to our freight forecasts for Oman. The corridor will see cargo brought to Salalah from Asia by ship before being freighted on by Oman Air Cargo's air services. The total air-sea route from Hong Kong to Salalah and on to European destinations served by the air freighter (Frankfurt, Munich, Milan and Paris) will take 16 days. BMI notes that this will reduce shippers' transport costs and enable quicker connectivity for cargos of fast moving consumer goods (FMCG) in need of timely delivery.
The two parties claim that the deal takes 48 hours off standard transit times and saves 20% in handling costs. According to Oman Air's chief commercial officer, Abdulrazaq al-Raisi, the agreement is already generating a great deal of interest.
Key Risks To Outlook
On the downside we stress that for the foreseeable future, Oman's economy will remain highly reliant on oil revenues, and caution that should prices record a more pronounced drop before the economy has been well-enough diversified away from the energy sector, our positive outlook might prove overly-optimistic. Additionally, the autocratic nature of the political regime in Oman (and elsewhere in the Gulf) will ensure that risks of an uptick in protest activity by pro-democracy demonstrators will remain elevated, which would generate uncertainty and in turn deter investors away from the market. Should political violence spread in the Gulf region it could also provide upside risk to Oman, so long as it does not affect the country itself, as it sits outside the Straits of Hormuz and could provide an attractive option for companies unwilling to pass through the Bab al-Mandab.
Contents
Executive SummarySWOT Analysis
Oman Freight SWOT
Oman Political SWOT
Oman Economic SWOT
Oman Business Environment SWOT
Industry Trends And Developments
Air
Rail
Maritime
Logistics
Market Overview
Global Oil Products Price Outlook
Industry Forecast
Maritime Freight
Table: Maritime Freight - Throughput, 2009-2016 ('000 tonnes)
Air Freight
Table: Air Freight, 2009-2016
Trade
Table: Trade Overview, 2009-2016
Table: Key Trade Indicators, 2009-2016 (US$mn and % change y-o-y)
Table: Oman's Main Import Partners, 2004-2009 (US$mn)
Tsble: Oman's Main Export Partners, 2004-2009 (US$mn)
Political Outlook
Domestic Politics
Long-Term Political Outlook
Macroeconomic Outlook
Oman - Economic Activity
Company Profiles
Sohar Industrial Port Co (SIPC)
Oman Shipping Company (OSC)
BMI Methodology
How We Generate Our Industry Forecasts
Transport Industry
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