Salalah Port explores multimodal transport options to offset Red Sea impacts
Conrad Prabhu
Business Correspondent - Oman Daily Observer; Magazine Editor - ENERGY OMAN
OMAN DAILY OBSERVER / 29 FEB 2024
CONRAD PRABHU
MUSCAT: Port of Salalah, the leading transshipment hub of the Sultanate of Oman, has warned that ongoing disruptions to commercial shipping in the Red Sea is anticipated to negatively impact container volumes at the maritime gateway during Q1 2024 as well.
The port, along with impacted customers and shipping lines, are now exploring “alternative solutions”, including multimodal options to transport containers by road from Salalah to destinations further into the Gulf and the Middle East, a top official said.
Since November, the Yemeni Houthi movement has been targeting merchant ships in the Red Sea and the Gulf of Aden that are owned or operated by Israeli companies or transporting cargo to and from Israel in solidarity with Palestinians in Gaza currently under brutal assault by Israeli forces. The months-long disruptions have forced many carriers to skip the Suez Canal and Red Sea in favour of longer, alternative shipping routes.
Port of Salalah, coincidentally the first major port of call for ships emerging from the Gulf of Aden and sailing into the Indian Ocean and Arabian Gulf, has witnessed its share of impacts as well, according to Braik Musallam al Amri, Chairman of the Board of Directors, Salalah Port Services Co SAOG.
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“In the fourth quarter, geopolitical tensions exerted a considerable influence on global and regional trade, resulting in disruptions to liner networks, service rerouting, and escalating insurance and freight expenses,” said al Amri.
“Notably, in December '23, the situation in the Red Sea prompted vessel diversions and network disturbances, profoundly impacting business performance and operational efficiency. Despite ongoing uncertainties surrounding liner services, both carriers and customers are actively seeking alternative solutions,” he stated in the company’s financial report for fiscal 2023.
According to the Chairman, a notable 22% decline in container volume was recorded in December 2023 as vessels diverted away from the Red Sea region. “This trend is projected to persist into the first quarter of 2024, signalling a pessimistic outlook for the year ahead unless there are positive developments in the political landscape. Such developments could potentially lead to reduced container volumes, exacerbating space shortages for exporters and importers and driving up freight costs due to surcharges,” he warned.
On the other hand, these challenges can be converted into opportunities for Salalah Port, Al Amri pointed out. “Cargo can now be offloaded in Salalah and transported via road to final destinations within the GCC. Customers in Jordan are also exploring these alternative options, indicating a shift towards more flexible and adaptable transportation solutions,” he stated.
Reflecting some of the challenges faced by the port during 2023, container volumes dipped to 3.794 million TEUs, down from 4.504 million TEUs in 2022. General cargo volumes, however, climbed 12% to 20.5 million tons, up from 18.400 million tonnes a year earlier, boosted by growing exports of gypsum and limestone.
Consolidated revenue from operations totalled RO 68.578 million in 2023, a decrease of 3.30% over 2022. Consolidated Net Profit for the year also declined to RO 2.804 million, as compared to RO 3.222 million in 2022.