A natural hub
As a hub of trade in the ancient times, Bahrain´s natural strategic geographical location has benefited enormously the island. An artificial bridge to connect the island to the continent through Saudi Arabia in the 80s transformed the island of 1,3 million habitants in a market of around 27 million people as it added the Saudi population almost automatically. Plans to build a new bridge, the “Friendship Bridge” to Qatar before 2020 and the GCC inter-railway project suggest that Bahrain future as a logistic hub is bright.
A planned expansion of Bahrain International Airport is underway and the brand new port of Khalifa bin Salman Port (KBSP) operated by APM Terminals opened in 2009. “Our competitive edge definitely is our geographic location and the trade friendliness of the country. Bahrain has a history of traders that goes well back in centuries. So it is not the size, it is not the oil, it is the trading mindset,” Marco Neelsen, CEO of APM Terminal told GCC.
A new port to create a hub
Khalifa bin Salman Port (KBSP) is the only container and general cargo terminal in Bahrain. The total investment of the harbour was BD131M ($361 millions). The first phase, built in a surface of 110 hectares of reclaimed land, has a capacity of 1.0 TEUs (Twenty-Foot Equivalent Unit). “We are working at almost 50 percent utilisation of the port so there still is room to improve. However, we can relatively simply add additional equipment/superstructure within 6 to 18 months because the yard space and infrastructure can support an expansion up to 2.5 million TEUs”, Neelsen said. The capacity of the port could increase according to plan until 5 million TEUs. KBSP has a 1,800 metres quay, which includes a 900m2 container terminal served by four 61m post-Panamax cranes, as well as general cargo, and passenger facilities, cruise facilities and warehouses. It has a depth of 15 metres to accommodate Post-Panamax vessels. The port has a passenger terminal, its own duty free shop and a dedicated berth for cruise liners. For the upcoming cruise season, the port will receive a minimum of two cruises per week attracting more than 100,000 cruise tourists to Bahrain. The port main focus is the upper Gulf region, Saudi Arabia, Iraq, Kuwait, etc. “We want to promote Bahrain especially towards transhipment cargo into Saudi Arabia, Iraq and Kuwait and we want to ink our name on this” Neelsen said. Current improvements of the port include a platform for customers to track cargo, make reservations and payments online, e sourcing and e-commerce.
Traffic of goods through the kingdom of Bahrain also remitted during 2011 uprisings but started to show signs of recovery in the third quarter of 2012. “We see a strong recovery in containerised and general cargo which is growing at volumes of 10 to 12 percent. In fact, we are a very strong indicator of the economic performance of the country in general and especially with regards to trade. More consumables are coming to the country, more money is floating and new projects by various governmental stakeholders and private investors are coming on line. We see a very positive trend through the network of organisations in the country such Bahrain Logistics Zone and Bahrain International Investment Some companies have already set up factories here or are in the process of establishing to produce for the Gulf market but also for the US market thanks to the Free Trade Agreement (FTA) of Bahrain with the United States that positions the country as a more attractive place than other Gulf States,” Neelsen told GCC.
The expansion of the airport
Traffic at Bahrain International Airport (BIA), the aerial door to the Kingdom, is also a sign of economic recovery. It reported an 8.8% jump to 8,5 million passengers during 2012 in comparison with 2011. Bahrain Airport Company (BAC) is in charge to manage and operate the airport and supervise the expansion Project. Wholly owned by Bahrain Mumtalakat Holding Company, BAC was established in 2008. Bahrain has an expansive project to revive its position as an aviation hub and preferred transit point.
“As far as the regional macro aviation environment is concerned, we are situated within a one-hour radius from three major hubs: Dubai, Abu-Dhabi and Doha and three aggressively expanding airlines with well established international networks. These "airline-airport" systems generate an extremely competitive environment for our national carrier and consequently for BAS as inter-connected partner. Furthermore, BAS is a fully privately owned business entity with no direct or indirect state subsidies, unlike other ground handling companies across the region, and has to earn its living based on its own merit. It is essential that a vision and a long-term strategy for the aviation community of Bahrain be defined in order to set a course and adopt the appropriate model. Then, all major aviation stakeholders should work closely together and support each other in order to develop competitive advantages and safeguard the aviation business continuity in the Kingdom”, George Saounatsos, CEO of Bahrain Airport Services and of BAS Aircraft Engineering Training Center told GGC. The development of BIA is part of Bahrain’s strategic economic development plan for its Economic Vision 2030. The project focuses on providing proper infrastructure and better financial performance to position the airport as a key contributor in GDP and uplift aviation as a one of the major economic sectors in the Kingdom.
The expanded airport will increase the Airport footprint by an additional 40,000m², including more than 3,000m² of new retail facilities. It will also create 4 to 5 additional contact gates, 9 remote gates and 40 more check-in counters as well as an enlarged transfer facility. BIA’s $100 million terminal was inaugurated in 1994 with a capacity of nine million passengers a year. The new project plans to increase the airport's capacity to 13.5 million passengers per year. “The aviation industry plays a pivotal role in Bahrain's economy in terms of GDP and employment contribution. Yet, the scale of the local market, the prevailing dynamics as well as present timing can hardly justify an open competition environment. The recent closure of Bahrain Air, which had an approximate 8% market share, left only one domestic airline. Gulf Air became the crucial driver of the aviation sector and although they have scaled down their flight activity, they maintain a robust 55% market share. Currently they are undergoing an extensive restructuring program, rationalizing their network and fleet composition. Passenger volumes depend to a certain extent on the outcome of this restructuring and the capacity of Gulf Air to maintain a sizeable "hub & spoke" system at Bahrain airport, implying that the number of transfer passengers will not be affected further. Over the next couple of years traffic figures can be enhanced given a stable socio-economic environment, Gulf Air's potential code-sharing with other airlines and the desire of some air carriers to come to Bahrain or increase the frequency of their scheduled flights. There is also sizeable potential to exploit the strategic location of Bahrain as an intermodal freight transportation node due to the direct road network connection to Saudi Arabia, which is the biggest market in the region, the state-of-the-art port and the modern cargo facilities and services provided at the airport along with the warehousing capacity offered,” Saounatsos said.
Bahrain Airport Services (BAS) was founded in 1977 to provide fully integrated airport services at Bahrain International Airport. Supported by a human capital of approximately 3000 staff, BAS is an ISAGO accredited Airport Service Provider (ASP) that owns and operates five distinct business units.
Investment parks, logistic zones and warehouse facilities growth
Location attracts International companies to set up their regional offices in Bahrain. DHL for example has based its regional operations in Bahrain for over 35 years. A series of investment parks, logistic zones, Industrial cities and warehouse facilities have recently added value to the natural location of the island. Majaal is a SME focused grade A 12,000 sqm of warehousing facilities and an industrial workspace development. It is located at Bahrain Investment Warf (BIW), a mixed-use industrial, logistics and commercial development that covers 170 hectares in the newly designated Salman Industrial City. “The location was perfect to us as it has easy access to the Bahrain International Airport, to Khalifa bin Salman Port, to the Saudi King Fahd causeway and to the newly planned Friendship causeway between Bahrain & Qatar, in addition to its close proximity to the capital, Manama”, said Amin Al Arrayed, General Manager of First Bahrain, Majaal developers. Phase 1 cost around $20 million and a similar amount is planned to be invest for the expansion project of Majaal.
Our latest investment report on Kuwait was recently published in one of the leading Spanish dailies, ABC. FindMe in Kuwait explores the economic perspectives of Kuwait and the country´s future plans to compete with its fast developing neighbours. Once the leading country of the Gulf, Kuwait has remained silent for the past decade. And although many would like to see faster changes, Kuwait is moving, at its pace, to them. Inexorably. Learn about who is who in Kuwait and read what the leaders say about their own future in our upcoming release: FindMe in Kuwait Mobile app.
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Global Gulf Consulting has concluded its latest production on Bahrain, FindMe in Bahrain giving the country a fresh approach after a couple of difficult years of local demonstrations that matched the global recession. Bahrain is a small island in the Arabian Gulf with an incredible potential for logistics, industries and tourism. FindMe in Bahrain was supported by both the public and private sector of Bahrain. Banagas, Nass Corporation, BBK and DHL were GGC strategic partners in the development of the series among others.
FindMe in Bahrain is available at the local bookstores Jashamal and online as well as in the Apple Store. It is a full business leisure and business guide for any investor or visitor interested in traveling to Bahrain or for those that already live there.
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