STEP BY STEP

Port of Salalah CEO Martijn Van De Linde talks to V L Srinivasan about the port’s expansion plans, including construction of a dedicated cruise terminal

What is the status of the expansion project at the Port of Salalah (PoS)?

To meet the demands of a growing industry and regional development, Port of Salalah has been under phased expansion since its inception. Today expansion continues to take place at both the container terminal and general cargo terminal. Our master plan is updated periodically and has expansions going through to 2029. The expansion that will take place over the next few years includes expansion of the general cargo terminal to handle up to 40mn tonnes of dry bulk commodities and 5mn tonnes of liquid products annually while the development of the container terminal envisages over 8km of quay with an annual capacity of over 15mn TEU (twenty-foot equivalent unit).

Today at our container terminal, we have six linear berths running 2.20km. We have just completed a conversion of the general-purpose berth space to container berths and have begun transfer of cranes. This will give us an additional 376m of quay and 800,000 TEU additional capacity on top of our existing 5mn TEU.

The second phase of container terminal expansion to develop berths 7, 8 and 9, has been completed recently, thus adding another 1.3km of quay and 3mn TEU additional capacity. The general cargo terminal, which has seen double-digit growth for eight consecutive years, is also being expanded to provide new berths and facilities to meet the growth of existing business as well as new business from the Salalah Free Trade Zone.

What is the capital expenditure and time schedule of the expansion project?

The capital expenditure for the next phase of expansion at the container terminal is estimated at US$525mn. We expect to begin development as soon as we receive the correct market indicators. At the general cargo terminal, we plan an additional 1.2km of multi-purpose berths and facilities at an estimated cost of US$120mn. This is expected to be tendered during the current quarter.

Is there any plan to build a separate terminal for cruise ships that visit Salalah?

Our master plan includes a dedicated cruise terminal at the Port of Salalah. The current plan is to have a dedicated cruise terminal by 2012-13. There were 36 cruise vessel calls and we had 25,000 passengers visiting the port last year. Along with a planned national ferry service, we are currently in discussions with the government on the development of dedicated cruise terminal as part of our general cargo terminal development.

Has the ongoing slowdown in economic activity affected the port’s business?
The financial crisis that began in the second half of 2008 has had a severe effect on global trade, which is being felt by all industries. This, coupled with low consumer confidence, has impacted demand and has had a negative effect on cargo since the financial crisis began.

Some in our industry have called this a year of survival for many shipping lines. At the Port of Salalah we have taken a proactive approach to the financial crisis, working closely with our customers and looking for new business opportunities whilst maximising cost savings. This has resulted in higher volumes, increased demand and the signing of several new customers. Overall, despite the depressed market, we still expect to see five per cent growth in business this year.

This in no way means that everything has been easy for us. I do not believe any entity can claim to be unaffected by the crisis. We have had to make some tough decisions in the best interests of the company and its stakeholders but believe we will ultimately have a stronger company when the crisis is over. While we will continue to keep a tight rein on our costs we are optimistic about the future and I am very pleased with how we have adapted to meet the challenges of these difficult times.

How is the productivity of workers in the port of Salalah?

Our business is based on efficiency and vessel turnaround time so productivity is one of our key performance indicators and an area in which we are constantly looking for improvement and innovation. I am proud to say that Salalah is one of the most productive ports in the region and in our ten years of operations we have broken the world record for crane productivity twice.

In the recent months, we have witnessed significant increases in productivity and records bring achieved, partly due to the addition of eight new quay cranes this year and also because of new operational initiatives. I think it is important to add that as well as record volumes and productivity, we are also achieving a record year in LTIs (lost time incidents) and safety.

Has the port expansion helped the Salalah Free Zone?

A large, efficient port with direct global connections is a major asset to any free zone. The Port of Salalah is a common-user, multi-purpose port that has facilities to handle bulk cargo, containers, general and liquid cargoes. In addition, it offers value-added services such as bunkering, container repairs, container freight station, warehousing and ship repairs. This provides the free zone customers with a wide array of advantages and services at their doorstep and is one of the reasons the free zone has attracted so much interest. Industries already in operation or under development include petrochemicals, methanol and caustic soda.

Does the port have any role in developing the free zone?

The port and free zone development are directly linked as the port provides the free zone its entry and exit points for its cargo whilst the free zone companies provide growth in domestic cargo growth for the port. Both the container terminal and the general cargo terminal are critical to the future growth of the Salalah Free Zone and continued expansion of the transshipment capabilities in the region.

What are the industries that can use natural resources available in Salalah?

Salalah lends itself to numerous industries. Natural resources currently being exploited include limestone and gypsum and with the development of the free trade zone and its move from light to medium/heavy industry there is potential for an even greater range of natural resources and commodities being handled at the port.

We have existing proposals for new business that include coal, iron ore, billets, salt, phosphate and HCL liquids. Further to this, with its excellent location along the east-west trade lanes and world-class communications (sea, air, road and proposed railway) Salalah also offers an ideal location to become a regional distribution hub. It also has the potential for sea and air cargo and businesses that favour transport, warehousing and logistics.