Global shipping continues to suffer from overcapacity caused by ships ordered during the pre-downturn boom years coming online. With demand still depressed, the three shipping sectors - container and dry and liquid bulk - are all struggling to maintain rates in the face of overcapacity. Indexes are falling and ships are increasingly being forced to operate below break-even rates. Huge geopolitical events, such as the Arab Spring and the Japanese earthquake, have further complicated market dynamics in the shipping sector.
As an Arab state in the Gulf Bahrain has been close to the epicentre of one of these events, and has not escaped unscathed. Protests in Bahrain have been ongoing for months now, with a resultant effect on the country's economic outlook. The shipping sector is also affected as demonstrations have led to staff shortages in ports. It remains to be seen how this will be resolved, but there is considerable risk to all BMI's forecasts for the state, including our port throughputs.
Headline Industry Data
?? 2011 KBSP total tonnage throughput growth forecast at 10.2%, and to average 7.39% from 2011 to 2015.
?? 2011 KBSP container throughput growth forecast at 7.26%, and to average 6.2% over our forecast period.
?? 2011 total trade real forecast at -4.17%, and to average 3.04% over the medium term.
Key Industry Trends
MENA Unrest Hits Gulf Port: In March the political upheaval that has swept the Middle East and North Africa struck Bahrain's port. The unrest in the country, which acquired an increasingly sectarian flavour as the Sunni rulers violently quell mostly Shi'a demonstrations, led to delays at the tiny country's only container port, Khalifa bin Salman (KBSP). BMI noted that the longer the violence continues the more likely it becomes that throughput will suffer.
ASRY Diversifies Business To Combat Economic Meltdown: Bahrain's Arab Shipbuilding and Repairyard Company (ASRY) is diversifying its business areas with an aim to offset the effects of the global financial downturn, according to the company's chairman, Shai'kh Daij bin Salman Al Khalifa, speaking in April. The company has added new operations in its business portfolio including offshore services for the oil and gas industry and repairs of naval vessels. The company is optimistic that the shipping and ship repair industries will register significant recovery in 2011. ASRY has business plans in place that would strengthen the company's position on the regional and international level.
UASC Starts New Service From Sohar Port's OICT: UASC launched its IMC2 service from Sohar Port's Oman International Container Terminal (OICT) on March 17 2011. The IMC2 service allows the deepsea container terminal to connect with UASC's hub ports across the globe and deliver goods at a rapid rate. The new service also offers comprehensive and cost-effective logistics solutions to Omani importers and exporters to ship their cargoes.
Key Risks To Outlook
With the tense political situation in Bahrain ongoing, with the Shi'ite majority continuing to protest against elements of the Sunni rule, there is considerable risk to BMI's throughput forecasts for Bahrain. Staff shortages have already occurred at the KBSP, though APM Terminals asserted that throughputs were unaffected. We have not heard of any delays as yet, but as demonstrations continue there is every possibility that handling figures in Bahrain could tick down in 2011.
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