Quiet and wise: How Oman is transforming itself into a major logistics hub

Published March 22nd, 2015 - 04:57 GMT

Oman, like many other regional governments, is spending billions of dollars in diversifying its economy away from hydrocarbons.

If all goes to plan, Oman will transform into a major industrial and logistics centre with much of the country’s imports and exports passing through Sohar.

Last year, Sohar Port, in the country’s north, underwent a $130 million (Dh477.4 million) transformation that saw its capacity rise to 1.5 million twenty foot equivalent units, a shipping container measurement, up from 800 million.

The port, benefiting from Muscat Port, about 230km south, closing itself to container vessels last year, saw a 58 per cent rise in TEUs to 330,663 in 2014, according to its website.

“We’re still small,” Andre Toet, Sohar Port chief executive, said by phone in an interview on Wednesday.

The size of the port will soon rise again. In 2017, construction will begin on increasing capacity to 4 million TEU a reported cost of 60 to 70 million Omani riyals ($155-180 million).

Toet declined to confirm the investment figure but said construction would be complete by mid-2018.

Sohar Port also has a 4,500 hectare freezone, which opened in 2010. The freezone has been “fast expanding,” Toet said, with the first 500 hectare block “almost full.”

He said that designing of the second block is underway in hope of starting construction “early next year.”

“I’m quite optimistic about 2015,” Toet added.

So far, the port and free zone have focused on three business pillars; upstream steel metals, upstream hydrocarbons and logistics. It’s now adding a fourth, the food sector.

The construction of the sugar refinery is slated to start in the second quarter, Toet said.

Sohar Port is located on the fringes of a regional market flooded with container ports. Dubai, Abu Dhabi, Qatar and Kuwait are all heavily investing to expand their ports. Dubai’s Jebel Ali, which is just 200km from Sohar, is adding 4 million TEUs to increase its capacity to 19 million TEUs this year.

But Toet dismisses concerns of overcapacity.

“People sometimes forget that around this area, two billion people are living here,” he said.

Unlike other ports in the region, Sohar is located on the Indian Ocean outside the Strait of Hormuz, which neighbouring Iran has threatened to close over the years.

What has troubled Toet more so is how few people actually know where Oman is.

“What we found two or three years ago is that when we went around the world, we constantly had to explain that Oman as a country that is 200 kilometres [from]... Dubai,” he said.

“Every time we went to the [United] States, Asia or Europe, no one ... understood where Oman was,” he added.

Sohar Port has since identified six key markets; the UAE, Saudi Arabia, India, South Korea, China and Brazil, to make aggressive inroads in.

In the UAE, Sohar Ports has a billboard just outside Jebel Ali Port that points it out as just 200km away.

“Why go through the Strait when you go straight to the Gulf,” the sign reads.

Toet, who said the port has already “made some inroads” with the marketing blitz, sees Sohar as connecting customers with the Gulf, especially once a regional rail network comes online.

“We strongly believe we will fully benefit from our location,” he said.

“We could play a bigger role in the gateway concept so that ships drop off [cargo] in Sohar and then it’s pushed by rail up north,” Toet added.

The six countries of the Gulf Cooperation Council (GCC), which includes Oman and the UAE, are building national rail networks that will connect with each other. Uncertainty surrounds when the network will be complete. It was previously slated to come online in 2018 but a GCC representative stated this week that some countries may not be ready by then.

Toet, who sees the regional rail link as a “game-changer,” said he expects Oman to be connected by rail by “2018/2019” with a link from Sohar with Al Ain, in the east of the Abu Dhabi emirate.


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