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French Version

Aqaba’s boom dilemma

Maritime transport in Aqaba is controlled by the Aqaba Ports Corporation (APC), which is publicly owned and managed by Jordan’s Ministry of Transport. The APC runs the main port, the container port and the industrial port. The main port handles general cargo, including bulk items such as phosphates and grain.

The container port is smaller than the main port, and has dedicated berths for bulk rice and cement exports. The industrial port is located close to the Saudi border and is used for bulk exports of chemical fertilizers and potash, and for the import of livestock and oil.

The past year has been anything but mild for Aqaba: 2003 started badly for the regional economy in general and Jordan in particular, with the Iraqi crisis finally erupting in the spring, but the summer promised a return of the boom years in the wake of the western occupation of Baghdad.

However, as fortune seemed to smile on the Jordanian port in the form of UN aid shipments to Iraq and lively post-Saddam trade, what followed confirmed the notion that fate had punished Aqaba by granting its wishes for more business. Humanitarian aid to Baghdad via Aqaba, alongside massive Iraqi imports, including many thousand of used cars, proved to be a shock to the port’s facilities.

Unloading procedures that used to take hours started to take days. In June-August 2003, 76,000 vehicles arrived at Aqaba, a 36 percent increase over the same period of the previous year. The boom was exacerbated by shipments of oil, which had previously entered the country by truck from Iraq but was now being brought in by sea from the Gulf. The first nine months of 2003 thus saw a marked increase at 13m tonnes, up from almost 11m tonnes in the same period of 2002.

The APC handled the highest volume of containers in its history during September 2003: 30,000 compared to 23,000 during the same month in 2002. One consequence was that in September 2003 international maritime companies raised shipping charges for containers arriving at or leaving Aqaba. This was done to cover the additional operational costs incurred because of delays at the port, and the decision resulted in importers and exporters paying an extra $7.5m per month.

The APC then began to react with solutions to the congestion problem. Close to $23m was allocated in late 2003 to buy additional handling equipment (mainly new cranes, carriers and tugboats), increase the port’s storage facilities, expand its wharves, and computerize operations. As a result, plans are for Aqaba Port to witness in 2004 a leap in its ability to handle more cargo. For example, the port’s container wharf, now 540 meters in length, will be expanded to 1000 meters to enable the port to handle more containers.

Up until 2003, Aqaba Port dealt with nearly 300,000 containers every year, but the port authorities hope the upgrading will increase the figure to 500,000 from 2004. Privatizing the port is a long-awaited step, but for the time being it looks like this plan will affect the facility’s management, while ownership will remain with the state.

The APC has its own budget but is nevertheless subject to supervision by various ministries. Interference by various government bodies in details concerning the administration of the port and its operation, as well as in the charges levied, not only cause confusion but also raises the cost of services, making the port still further unable to compete with regional rivals. The last word on Aqaba’s crisis belongs to His Majesty King Abdallah, who in January 2004 called for a plan to be implemented within three months to solve the congestion problem facing the container terminal. He said the problem had affected people around the country through the increase of prices of some food items.

The King stressed that the APC should be restructured and computerized, and that port staff should receive more training to boost their efficiency. Aqaba, like other ports of the region, needs to be more responsive to trends in international maritime industry and trade. In particular, it must respond more positively to new technology such as the use of highly automated container vessels.

The current situation in Aqaba cannot continue, and blaming the woes of the port on the vagaries of Iraq bound shipping will no longer serve as an excuse for its inability to operate efficiently. If major sustainable positive change does not occur in the APC soon, Aqaba will be in the ludicrous position of dreading an increase in business and welcoming stagnation. The alternative must be for the Jordanian port to become a thriving center for modern maritime transport. The Oxford Business Group.

Amman,04 13 2004
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