Complementing, not Competing

National Port Strategy

Despite allegations of competition between Abu Dhabi Ports and DP World, the two operators maintain different, complementary strategies that seek to preserve the UAE's position as the top trade destination in the region.

One of the most important unwritten rules of the UAE is never to compare Abu Dhabi with Dubai, and vice versa. Despite sharing a border and a brotherly relationship, the two Emirates have historically been marked by different lifestyles, mentalities, and approaches to business. Any analogy has little reason to exist, and it is often taken poorly by UAE nationals. Moreover, recent efforts by the country’s leadership have seen a much stronger presence and power of federal authorities at the hands of local departments, which have gone through extensive consolidation and restructuring as a result of austerity measures that followed the oil price crisis of 2015-2017.

Sheikh Mohammed bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi, and Sheikh Mohammed bin Rashid Al Maktoum, Ruler of Dubai, have been relentlessly instilling the idea and sentiment of one nation in the hearts and minds of Emiratis. As such, when early in 2018 MSC Shipping decided to follow in COSCO’s footsteps and shift much of its container traffic in the region from Jebel Ali, in Dubai, to Khalifa Port, in Abu Dhabi, many eyebrows were raised, as the move was seen as a direct competitive exercise. Nothing could be further from truth.

The strategies of Abu Dhabi and Dubai through their respective Abu Dhabi Ports and DP World are complementary, not competing. Their difference is clearly reflected in their approach: national, and eventually regional, for the first, explicitly global for the second one. In this sense, their parallel portfolios offer a compelling evidence. Jebel Ali made a name in the region as a transshipment hub; it has become a model for multi-modal transport corridors around the world and is operated by the third best port operators in the world which handles 9% of global volume.

Abu Dhabi meanwhile has smaller port terminals each catered to a specific purpose: its historical Zayed Port saw all container traffic and RoRo cargo moved to Khalifa Port, seeking to become a premier regional hub for cruise tourism, as well as general and bulk cargo services; Musaffah Port offers a general cargo terminal with a wide range of facilities such as break-bulk and RoRo operations, is home to the second longest channel in the region, after the Suez Canal, and provides warehousing for multiple industrial and commercial sectors including steel, dredging, shipbuilding and offshore construction; Fujairah Port is the only multi-purpose port on the Eastern seaboard of the country and part of the long-term strategy to link the northern Emirate to KIZAD; and Khalifa Port, the first semi-automated container port in the GCC region, is located halfway between Abu Dhabi and Dubai, with the longest breakwater in the Middle East and whose capacity is expected to jump from 2.5 to 8.5 million TEU in five years.

At this point, critics may claim that though Abu Dhabi Ports and DP World are not competing, Khalifa Port and Jebel Ali are. Both are going through extensive expansion projects, both seek to attract international investors to their respective free zones, and both aim to grow their cargo volumes. However, despite being currently located 40km from each other, an analysis both inside and outside the UAE borders highlights how their long-term strategies may be aligned. On the one hand, the inland of the two Emirates is getting closer, with developers already starting projects, and the growing capacity means growing physical offering of terminals and port facilities. As such, in the long term, it is not utopian to project a physical convergence between the two port operators. On the other hand, the Persian Gulf is a geographic choke point and a main artery for the transport of oil, gas, and goods from the East to the West. Indian investments in Iranian Chabahar Port, China’s investments in Gwadar Port and the CPEC, the resilient Mina Sulman in Bahrain, and Dammam in Saudi Arabia all compete for the same volumes, but single-handedly. A dual offering by the UAE, in this sense, comes as a stronger, nimble option.
Despite allegations of competition between Abu Dhabi and Dubai’s port facilities, the two Emirates are each cruising toward the strengthening of a single, national port strategy.