As of March 11, three commercial container vessels were struck by missiles or drones in Gulf waters within days of each other. These incidents included a Thai-flagged vessel that was hit 11 nautical miles north of Oman, a Japanese vessel that struck off the coast of the UAE, and a third vessel targeted northwest of Dubai. And they weren’t near misses or accidents; most were hit directly. This has changed how logistics works in the region.

The industry has responded quickly, though cargo owners have been disoriented. Major container ship operators terminated their contracts, offloaded their legal obligations, and dropped containers at the nearest safe port. However, “the nearest available port” is a loosely applied concept. Because operators make unilateral decisions about where goods land, there is little transparency or logic behind their choices. Cargo owners are now finding their shipments stranded in ports they never contracted for.

Ports in Saudi Arabia, Bahrain, and the UAE have suspended operations entirely, while others are working with significant delays. Although the global port network remains open, it is currently absorbing a surge of redirected traffic that has led to congestion and vessel bunching at major hubs like Singapore and Rotterdam. This phenomenon, where ships must queue because ports cannot process arrivals fast enough, has created a prominent side effect characterised by rising labour costs, lower unloading speeds, and significant strains on storage capacity.

Cargo owners will bear the brunt of this catastrophe in the coming days. Goods are sitting exposed at ports without adequate storage infrastructure and are vulnerable to loss and damage.

Recovering these losses depends on the contracts that were signed between shippers and vessel owners, though they vary from company to company and contract to contract. Delay-related losses are usually excluded under the standard Institute Cargo Clauses (A), meaning the cargo policy simply will not pay out.

In addition to cargo owners, ports and terminals face significant hardships as congestion-related incidents become increasingly common and insurance coverage remains dependent on regional policies.

Consequently, businesses moving goods through Gulf waters must review their contracts, stress test their insurance coverage, and prepare for persistent delays and rerouting for the duration of the conflict.

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On a post on its X (formerly Twitter) platform, Mwani Qatar, the integrated port and logistics services provider responsible for managing the Gulf nation’s seaports and shipping terminals, confirmed the news, as the cargo and container throughput increased by around 60% and 8% respectively, compared to November 2024. Livestock volumes and vessel arrivals also increased by 81% and 14% respectively.

“The ports received 272 vessels while the container handling through the three ports stood at 117,941 TEUs (twenty-foot equivalent units). The general and bulk cargo, RORO, livestock, and building materials during the same period accounted for 159,480 tonnes, 8,475 units, 50,373 heads, and 9,846 tonnes, respectively,” reported the Mwani Qatar data.

The Hamad, Ruwais, and Doha ports serve as an effective link between markets in Asia, the Middle East, Africa, Europe, and America, contributing to reducing cargo transit time and improving the efficiency of supply chains. These facilities are also supporting the country’s plan to diversify the domestic economy by facilitating export and re-export operations, enhancing the ability of local industries to access foreign markets, and promoting maritime tourism.

“The ports received 245 vessels in October 2025, while the container handling through the three ports stood at 119,003 TEUs (twenty-foot equivalent units). The general and bulk cargo, RORO, livestock, and building materials during the same period accounted for 216,466 tonnes, 9,566 units, 7,682 heads, and 11,362 tonnes, respectively,” informed Mwani Qatar.

It is worth mentioning that Qatar recently won the “Favourite Cruise Destination” title at the “2025 Wave Awards,” one of the United Kingdom’s leading events celebrating the cruise and travel industry. The recognition further reflects the Gulf nation’s growing status as a premier global cruise destination, supported by favourable factors like advanced infrastructure, rich cultural attractions, and high-quality visitor experiences.

“The announcement follows the launch of Qatar’s 2025-2026 cruise season, which began with the arrival of the luxury cruise ship MSC Euribia at the Doha Port. Qatar expects to welcome 72 cruise calls this season, including 40 transit stops, 15 turnaround trips, and three maiden calls,” reported The Peninsula.

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Oman’s ports are bustling with new highs in ship and cargo traffic, and a new salary law is reshaping workplace dynamics. These developments highlight a broader strategy to secure fiscal sustainability and drive diversification under Oman’s “Vision 2040” blueprint. The following section examines each of these shifts in turn and their implications for Oman’s economic outlook.

Gulf’s first income tax on its way

In a historic step for the region, Oman has decided to introduce a personal income tax on high earners, becoming the first Gulf Cooperation Council country to tax individual incomes. On June 22, 2025, a royal decree established a 5% flat tax on personal income above an annual threshold of OMR 42,000. The tax will take effect on January 1, 2028, giving a multi-year lead time for businesses and households to prepare.

According to the Oman Tax Authority, with a very high exemption threshold, approximately 99% of Oman’s population will not be subject to the tax. In practice, only 1% of residents will pay, making this a socially targeted levy aimed at equity and fiscal gain without burdening middle- and low-income groups.

Oman’s move follows years of economic stress from volatile oil prices and the COVID-19 shock, which highlighted the need for more sustainable revenue streams. Oil still influences up to 85% of Oman’s public revenue, a vulnerability the government is keen to reduce. The personal income tax is the latest piece in a broader fiscal reform puzzle that already included a 5% value-added tax, excise taxes, and corporate income tax. By “completing Oman’s tax system,” officials expect the new tax to shore up state finances and fund social programmes.

Importantly, the tax aligns with Oman’s Vision 2040 goals to diversify income sources, strengthen the social safety net, and reduce hydrocarbon dependence.

Minister of Economy Said Al-Saqri noted that the measure will “strengthen fiscal resilience and reduce exposure to oil price volatility,” which currently sways the majority of public revenue.

The law will formally come into force in 2028, with executive regulations expected by 2026 to clarify implementation details. Oman’s Tax Authority has been preparing administrative and IT systems to ensure a smooth launch when the time comes. Notably, no other GCC state imposes personal income tax, relying instead on indirect taxes or fees to raise revenue.

Oman’s decision thus breaks a regional taboo, setting a possible precedent as the Gulf grapples with fiscal reform. By limiting the tax to individuals and keeping the rate low, Oman hopes to avoid denting its investment appeal. Foreign investors will see no corporate impact, and the tax’s narrow scope seeks to balance much-needed revenue diversification with the Sultanate’s traditional tax-free allure for expatriates and entrepreneurs.

The introduction of income tax signals both opportunity and adjustment. For Omani society, it marks a cultural shift: citizens and residents will, for the first time, directly contribute part of their salary to the state. The government has built in generous deductions and exemptions to cushion the impact, and framed the tax as a contribution toward the public good.

Businesses, on the other hand, must gear up for payroll withholding and compliance. Companies will need to upgrade payroll systems and contracts to handle employee tax deductions. Many firms are already reviewing compensation packages and talent strategies, knowing that tax-free salaries were a longstanding draw for expatriate workers.

Still, the impact should be limited: with only high-income staff affected, most employers will see little to no change for the bulk of their workforce. And for the broader economy, experts view the tax as a fiscal safety valve providing a steady revenue stream that can help finance development projects and social services even when oil prices dip.

In short, Oman’s bold tax experiment is a bet on long-term stability. A carefully calibrated sacrifice by the wealthy few today to secure the country’s finances for tomorrow.

Moody’s gives Oman an upgrade

Another vote of confidence in Oman’s economic management came in mid-2025 when Moody’s Investors Service upgraded Oman’s credit rating to investment grade for the first time in years. In July 2025, Moody’s lifted Oman’s long-term sovereign rating from Ba1 to Baa3 (investment grade), citing stronger debt metrics and fiscal reforms. This upgrade reflects a remarkable turnaround from the debt-laden days of the mid-2010s.

“We expect Oman’s debt metrics to remain robust and consistent with a Baa3 rating even under scenarios where oil prices moderate below our $65/barrel assumption,” Moody’s noted, emphasising improved resilience to oil price swings.

The agency changed the outlook to “stable,” acknowledging that despite progress, Oman’s finances are still exposed to oil market volatility, given a heavy reliance on hydrocarbons.

Moody’s decision lauded Oman’s significantly improved fiscal position and reform efforts. Oman’s public finances have been shored up by a combination of high oil revenues in 2022–2023 and disciplined government measures.

According to Oman’s Ministry of Finance, government expenditure has been pared down to 29% of GDP, from an average of over 41% during 2016–2020, indicating much tighter spending control. Oil windfalls were wisely used to pay down debt.

Public debt fell from 37.5% of GDP at the end of 2023 to 35.5% by the end of 2024, and is projected to continue declining. As a result, Oman’s debt-servicing costs have eased (interest payments now 7.2% of revenue, down from 9% in 2021). The fiscal breakeven oil price has dropped below $70, down from about $84 just a few years ago. These metrics point to a more resilient budget that can weather moderate oil downturns.

Moody’s also highlighted that Oman recorded a budget surplus of 2.8% of GDP in 2024, alongside low inflation and a current-account surplus.

Non-oil reforms are beginning to pay off as well. Initiatives to boost non-hydrocarbon revenues (like VAT and soon income tax), the development of a green hydrogen industry, and plans to expand liquefied natural gas capacity by 2030 all signal a strategic pivot to a more diverse economic base. In short, Oman has demonstrated that it can bring its finances back under control through a mix of austerity and forward-looking investments.

Regaining investment-grade status is more than just a gold star for policymakers. First, the upgrade enhances Oman’s attractiveness to global investors. Many institutional investors and funds have mandates that prevent them from buying “junk”-rated bonds; Oman’s Baa3 rating clears that hurdle.

The government should face lower borrowing costs going forward, saving money on any new international loans or bond issuances. A stable outlook from Moody’s also reassures investors that Oman’s progress is likely to hold. Indeed, the rating agency noted that improved fiscal health gives the government “greater fiscal space and time to implement structural reforms” to further reduce oil dependence.

The upgrade can thus feed a virtuous cycle. Cheaper financing and increased investor confidence will help Oman fund its diversification projects and infrastructure, which in turn support long-term growth and creditworthiness.

Domestically, the vote of confidence boosts economic sentiment. Omani authorities touted Moody’s decision as validation of the Sultanate’s reform programme and of the “Vision 2040” path. It’s worth noting that other agencies have echoed this positive trend. S&P Global upgraded Oman to BBB in late 2024, and Fitch has also improved its outlook.

The overarching message is that Oman has escaped the debt trap that loomed in the last decade. However, as Moody’s warned, the job isn’t done and reducing the still-heavy oil reliance remains critical to avoid slipping back if oil markets weaken. For now, though, Oman can celebrate a milestone.

Property sector inspires investor confidence

Oman’s economic upswing is perhaps most visible in its booming real estate sector, which has recently notched record highs in both activity and headline-grabbing deals. After a pandemic-era slowdown, Omani real estate has come roaring back, reflecting renewed investor confidence in the country’s prospects.

Property transactions hit all-time highs in 2024, with the total value of real estate deals surging nearly 30% that year to reach OMR 3.3 billion. This marked one of the strongest performances on record, driven by a mix of foreign investment inflows and government-led market reforms. Oman eased rules on foreign property ownership and rolled out new incentives, encouraging Gulf and international investors to enter the market.

By mid-2025, the Sultanate recorded OMR 613 million in real estate sales contracts in the first half (roughly $1.6 billion), up 12.4% compared to the same period a year prior. Although there were signs of slight cooling in early 2025, the broader trend remains robust.

High-value deals and new developments are grabbing headlines, indicating sustained optimism. In fact, Oman saw its most expensive home sale ever in 2025 — a luxury penthouse in the new Sustainable City — sold for over OMR 2 million, setting a national price record.

The demand for this property was so strong that the project’s Phase 1 sold over OMR 10 million worth of units in its early launch, even before the official sales kickoff. The fact that local and international buyers are willing to pay top dollar for Omani real estate, especially in sustainable and tourism-oriented projects, signals confidence in the country’s future.

Several factors are fuelling Oman’s real estate resurgence. Economic recovery and the credit rating upgrade have improved local sentiment and purchasing power, while wealthy regional investors increasingly view Oman as an attractive, stable market relative to pricier neighbours. Oman’s government has also actively catalysed the sector. It launched a long-term “Investor Residency” visa to encourage foreign buyers of property, and it allows 100% full foreign ownership in designated integrated tourism complexes. Additionally, low inflation and interest rates under 1% have made financing large property purchases more appealing.

The real estate boom has broad implications for Oman’s diversification story. Rising property values and construction activity mean more jobs in construction, real estate, and tourism, helping absorb the growing young workforce. Government revenue also benefits from higher transaction fees and stamp duties. Moreover, big-ticket investments like the “Yiti Sustainable City” align with Vision 2040’s goals of balanced regional development and sustainability.

Yiti, for example, is envisioned as Oman’s first net-zero community, a “green city” flagship that provides housing and tourism attractions and exemplifies Oman’s pivot to environmentally conscious growth. The strong demand for such projects suggests that Oman can position itself as a niche market for sustainable luxury living in the Gulf.

Perhaps most importantly, the confidence driving real estate is self-reinforcing. Of course, prudent eyes will watch for any overheating risk, but so far, the growth appears to be on solid footing backed by genuine end-user demand and long-term investment interest rather than speculative frenzy. For Oman, the real estate record-breakers of 2024–2025 have become visible symbols of an economy shaking off stagnation and moving into a new growth phase.

Oman: A trade and logistics hub

Activity at Oman’s seaports has reached unprecedented levels, highlighting the Sultanate’s emergence as a regional logistics hub. Ship traffic and cargo throughput have hit new highs, buoyed by heavy investment in port infrastructure and Oman’s strategic location on global trade routes. In the first half of 2025, the number of vessels calling at Omani ports jumped by 11.1% year-on-year to 6,586 ships.

Major gateways such as Salalah (a transhipment hub on the Indian Ocean), Sohar (an industrial port near the Strait of Hormuz), and even smaller ports like Shinas all saw upticks in arrivals. This builds on a trend from 2024, when total vessel calls across Oman exceeded 12,000 for the first time.

Alongside more ships, cargo volumes have swelled. Oman’s ports handled 70.1 million tonnes of goods in H1 2025, up 5.2% from 66.6 million tonnes in H1 2024. Container traffic is booming in particular. At the three main container ports (Salalah, Sohar, Duqm), combined throughput reached about 2.43 million TEUs (twenty-foot equivalent units) in the first six months of 2025. It was an 11.7% jump over the previous year. Such double-digit growth in container handling underscores the efficiency gains and expanded capacity resulting from recent upgrades.

Oman’s ports also play a crucial role in importing vehicles, food, and livestock for the nation. For instance, in just six months, they facilitated the import of over 50,000 cars and 2.7 million head of livestock, underscoring their importance to domestic commerce and food security.

Oman’s push to become a logistics powerhouse is rooted in its advantageous geography and heavy state investment aligned with Vision 2040. Unlike some Gulf neighbours, Oman’s coastline opens directly onto the Arabian Sea and Indian Ocean, allowing ships to bypass the choke point of the Strait of Hormuz. The government has capitalised on this by modernising ports and developing free zones.

Duqm Port is a brand-new deep-sea port and special economic zone carved out of the desert, and is a centrepiece of this strategy, attracting international projects and handling growing volumes each quarter. Meanwhile, Port of Salalah has expanded its container terminal and remains one of the region’s busiest transhipment hubs due to its prime location on east-west shipping lanes. Sohar Port, developed in partnership with the Port of Rotterdam, has grown into a major industrial and bulk goods port, serving not just Oman but also acting as an alternative entry point to the nearby UAE.

Government figures attribute the recent performance to infrastructure projects by the Ministry of Transport and Communications; investments in new quays, deeper drafts, cargo equipment, and digital systems are boosting capacity and turnaround speeds. For example, authorities in 2025 commissioned designs for further port expansions (like the Khour Gramma project and upgrades at Shannah and Masirah ports) to keep pace with rising demand.

Additionally, partnerships with private operators, such as Shinas Port’s new fuel storage facility under a public-private deal, are expanding the range of services available at Omani ports.

The booming port metrics are a positive bellwether for Oman’s non-oil economy. Growing throughput means more business for Omani logistics firms, port operators, and associated industries (warehousing, trucking, manufacturing), contributing to GDP and job creation outside the oil sector.

It also cements Oman’s reputation as a reliable trade corridor. At a time when global supply chains are being reshuffled and Gulf states are vying to be logistics gateways, Oman’s performance shows it can compete with the region’s larger ports.

Officials note that these achievements “highlight Oman’s growing competitiveness in the logistics sector and reinforce its ambition to become a leading regional hub for maritime transport.”

Companies are already choosing Omani ports because of their efficiency and strategic location. For instance, some shippers find Salalah port a convenient redistribution point for East Africa and the Indian subcontinent.

The ports’ rise also feeds into Vision 2040’s aim of leveraging Oman’s geography for diversification. A modern logistics sector reduces the economic reliance on oil and integrates Oman more deeply into global trade networks. Challenges remain (global shipping is cyclical, and competition from Gulf neighbours is intense), but the trend is clear.

Oman’s bet on ports and logistics is paying off, turning its harbours into engines of growth. In the long run, this positions the country to capture a larger share of commerce flowing through the region, anchoring one pillar of its post-oil economy.

Balancing oil and opportunity

As these various threads weave together, Oman’s economic outlook in the latter half of the 2020s appears cautiously optimistic and focused on the long game of “Vision 2040.” The developments of 2024–2025 suggest that Oman is gaining economic momentum.

Growth forecasts are positive. The IMF estimates Oman’s real GDP growth will accelerate from 1.7% in 2024 to about 2.4% in 2025 and 3.7% by 2026, buoyed by diversification and an expected easing of OPEC oil production cuts. Notably, the recent growth has been driven mainly by non-oil sectors. This marks a significant shift, and the economy is gradually tilting away from the oil dependency that once defined it.

That said, oil and gas will remain integral in the near term. Oman is a substantial oil producer (around one million barrels per day in recent years) and a rising liquefied natural gas exporter. Hydrocarbons still account for the majority of government revenue and export earnings in 2025. The challenge facing Oman is to use the current period of stability to future-proof the economy before the global energy transition catches up. “Vision 2040,” the national development masterplan, explicitly calls for a “diversified and sustainable economy, less reliant on oil.”

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This initiative is a major component of Saudi Arabia’s “Vision 2030” economic diversification programme, which aims to reduce the Kingdom’s dependency on oil revenues.

Omar Hariri, the president of the Saudi Ports Authority, announced in August 2024 that, thanks to fruitful partnerships between his organisation and the private sector, investments in the Kingdom’s maritime industry have surpassed SR25 billion ($6.66 billion).

Hariri stated that partnerships with both domestic and foreign businesses have led to large investments over the last four years.

Pierroberto Folgiero, CEO of Fincantieri, one of the world’s largest shipbuilding companies, discussed how Saudi Arabia’s investment in maritime infrastructure is influencing the course of international trade routes.

“By expanding its shipbuilding capacity and enhancing its logistics infrastructure, the Kingdom can address global supply chain bottlenecks, strengthen its maritime influence, and foster resilience in international trade flows,” he said.

Folgiero stated that his company views this as an opportunity to leverage its shipbuilding and maritime technology experience, adding that Saudi investments in cutting-edge maritime infrastructure could open up alternate trade routes and reduce dependency on chokepoints like the Suez Canal.

“Investments in shipbuilding, ports, logistics, and shipping services have allowed the Kingdom to capitalise on its geographic advantages. Notable projects include the development of the King Salman International Maritime Industries Complex in Ras Al-Khair, set to become one of the world’s largest shipyards, and the modernisation of key ports such as the Jeddah Islamic Port and King Abdulaziz Port,” he said.

According to the CEO, Saudi Arabia is advancing its shipbuilding and maritime technology by forming strategic alliances with leading companies across the globe.

“These collaborations focus on transferring expertise and technology, accelerating the Kingdom’s evolution into an influential player in the international maritime and shipping sectors,” Folgiero continued.

He highlighted that a key component of Saudi Arabia’s maritime strategy is its focus on smart ports, which use automation, IoT, and AI. By streamlining trade, increasing transparency, cutting costs, and speeding up turnaround times, these technologies will make the Kingdom a desirable location for international shipping and logistics firms.

Fincantieri Arabia, a subsidiary specialised in shipbuilding, maritime systems and equipment, and naval logistics support services such as training and simulation, was established in May 2024.

According to Folgiero, this expansion will strengthen Saudi Arabia’s maritime presence internationally, localise technology, and create jobs.

National developments

The expanding maritime industry in Saudi Arabia will benefit more than just well-known foreign corporations.

Launched in 2024, Folk Maritime, supported by the Public Investment Fund, initially ran two routes but now operates twice as many. Poul Hestbaek, the former CEO of Hamburg Sud, heads the company.

He emphasised the Saudi government’s proactive measures to modify its regulatory structure and attract international investors to the sector, adding that his business is fully aligned with these initiatives to promote innovation in maritime commerce.

“As Saudi Arabia modernises its regulatory framework, we are leveraging the adoption of digitisation, automation, and AI-driven solutions to optimise port operations and streamline the logistics chain. This transformation is enhancing Saudi Arabia’s position as an attractive destination for international investors,” Hestbaek noted.

According to Hestbaek, his organisation contributes significantly to this change, particularly with its growing fleet and direct liner services along key routes, such as those connecting India with the Gulf and the Red Sea.

He also emphasises Folk Maritime’s contribution to increasing cargo efficiency on key trade routes, such as the Red Sea and the Gulf.

“As we increase regional shipping capabilities and expand our fleet, key economic indicators to watch include the growth in port throughput, the development of new shipping routes, and the rise in non-oil exports,” the CEO said.

Sustainable maritime operations

Hestbaek stressed that Saudi Arabia aims not only to grow the industry but also to ensure that its expansion is sustainable.

“We are aligned with Saudi Arabia’s net-zero carbon by 2060 goals, incorporating advanced green technologies into our fleet, using energy-efficient technologies to reduce emissions, and optimising fuel consumption,” he said, explaining how sustainability is at the core of his company’s operations.

Hestbaek highlighted Folk Maritime’s commitment to decarbonisation through adherence to global standards, prioritising International Maritime Organisation regulations, implementing alternative fuels, and substituting environmentally friendly vessels, such as the M/V Folk Jeddah, for older ones. The company has recently acquired 5,600 recyclable containers.

The maritime industry is constantly concerned about security, as evidenced by the Houthi-led attacks in the Red Sea. Hestbaek stressed Saudi Arabia’s multifaceted strategy for protecting shipping lanes from cyber and physical threats.

“The Kingdom works closely with international and regional partners to counter piracy and maintain secure sea routes in the Arabian Gulf, Red Sea, and beyond. Saudi Arabia has invested in state-of-the-art naval and coast guard assets, as well as enhancing port security to safeguard ships and cargo,” he continued.

According to the CEO, cybersecurity is a major concern for Saudi Arabia and Folk Maritime, and the company plans to protect its operations by working with domestic and foreign authorities.

“We are committed to safeguarding our fleet and digital infrastructure from emerging cyber threats, implementing cybersecurity measures such as secure communication channels, real-time monitoring systems, and advanced protocols for data protection and cargo tracking,” Hestbaek remarked.

Maritime tourism

There is also more to the maritime sector than simply moving cargo from one port to another. In line with Vision 2030’s objective of establishing Saudi Arabia as a global centre for tourism, Saudi gigaprojects like NEOM and the Red Sea are revolutionising the Kingdom’s cruise ship sector, according to Folgiero of Fincantieri.

“Futuristic cities like The Line and Sindalah Island, alongside the ecotourism focus of the Red Sea Project, offer bespoke and sustainable experiences that cater to the high-end travel market, sharpening Saudi Arabia’s competitive edge in the global tourism landscape,” he said.

To ensure the Kingdom takes full advantage of this, the sovereign wealth fund PIF-backed Cruise Saudi was established in 2021 to bring in one million passengers annually by 2035.

Additionally, by 2035, it aims to create 50,000 direct and indirect jobs in the cruise industry. In December 2024, Cruise Saudi launched its first ship, the Aroya, at Jeddah Islamic Port. The ship has 19 decks, 1,678 cabins and suites, and space for up to 3,362 passengers.

Saudi Arabia’s maritime investments are poised to reshape global trade logistics, offering new trade routes and boosting economic growth. By focusing on sustainability, technological innovation, and strategic partnerships, the Kingdom is diversifying its economy and enhancing its position as a leading global player in the maritime and tourism sectors.

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However, the one industry that suffered the most from the crisis has been global merchant shipping. Both the Suez Canal and the Red Sea have become collaterals here. Egypt lost around $7 billion in revenues from the Suez Canal in 2024. The loss has been more than 60% of the canal’s revenues in 2024 compared with 2023.

Yemen-based Houthi fighters have carried out nearly 100 attacks on ships crossing the Red Sea in what they describe as solidarity actions with Palestinians. In response, shipping firms have diverted vessels from the Suez Canal to longer routes around Africa, disrupting global trade by delaying deliveries and sending costs higher.

The attacks by the Houthis have caused a significant shift in global trade. Ships using the Asia-Europe and Asia-Atlantic trade routes have been forced to avoid the Suez Canal and the Bab El-Mandeb strait, leading them to divert their shipping routes around Africa’s Cape of Good Hope. This change has had a devastating impact on Egypt, which relies heavily on the Suez Canal as a key source of foreign currency.

Is Africa missing the bus?

Diversions of the global shipping through the Cape of Good Hope route was what African ports needed to play a bigger role in the transportation industry. The rerouting has seen ships travel longer distances, adding an average of 14 days for a vessel to sail from China to Europe. These additional 11,000 nautical miles have disrupted global trade and added operational costs for merchant vessel liners.

Estimates show that each diversion adds approximately $1 million in fuel costs, with more going towards insurance premiums and security measures.

“The risks in the Red Sea are not short-term; they are now ingrained in shipping logistics forcing long-term adjustments,” told Bilal Bassiouni, Head of Risk Forecasting at South Africa-based Pangea-Risk, while interacting with the World Finance.

“For African ports, especially those that are strategically located on the maritime route around the Cape of Good Hope, the Red Sea diversions should have presented an opportunity for a boom from offering restocking and bunkering services. Durban, Cape Town and Gqeberha in South Africa, Toamasina in Madagascar, Port Louis in Mauritius, Maputo in Mozambique and Walvis Bay in Namibia are among ports that have the potential to seize the moment,” he added.

Data reveals that over the six-month period to May 2024, maritime trade through the Cape of Good Hope route surged by a staggering 125%. The number of container ships and LNG tankers using the route went up by 260% and 180% respectively. Other major African ports also witnessed increased traffic, including Mombasa in Kenya, Dar es Salaam in Tanzania and Beira in Mozambique.

George VanDyck, Lecturer at the Plymouth Business School, University of Plymouth, however, added that African ports were caught off guard by the sudden traffic surge. Blame poor infrastructure and operational bottlenecks, which have made it impossible for the continent to capitalise on the opportunities presented by the crisis, particularly restocking and bunkering.

Many ports are struggling with outdated equipment, insufficient storage facilities and a shortage of skilled workers. Moreover, inadequate investment in expansions and development has resulted in inefficiencies that are slowing down operations, contributing to long wait times and congestion.

The ports which are facing problems in Africa are exacerbated by corruption, bureaucratic delays, and inconsistent regulatory frameworks. Additionally, high logistics costs and limited connectivity between ports and inland transport networks contribute to inefficiencies. To make matters worse, the lack of deep-water facilities means that most ports on the continent cannot accommodate larger vessels.

Massive shipping congestion

The ports of Durban and Cape Town have become the poster boys of Africa’s deeply rooted infrastructural and operational inadequacies. A sharp increase in traffic by 328% from December 2023 to March 2024 ignited unprecedented congestion at the two facilities, literally bringing operations to a standstill.

Durban, South Africa’s biggest container seaport that handles approximately 60% of traffic, was the worst impacted. At one point, about 80 vessels were reportedly forced to wait offshore for weeks as the logjam crisis paralysed operations.

“South African ports seemingly lost their credibility in extending support services to vessels diverting through the Cape of Good Hope,” says Francois Vrey, Professor Emeritus in the Faculty of Military Science at Stellenbosch University, South Africa, while identifying that one critical area in which African ports have failed to rise to the occasion is on bunkering services.

The increased sailing distances have led to a surge in demand for bunkering services. Ports such as Port Louis, Walvis Bay, and Maputo have attempted to position themselves as refuelling hubs. However, they have encountered challenges in managing larger volumes, which have been exacerbated by fuel supply shortages and inadequate refuelling facilities.

Durban, the largest bunkering hub in South Africa, was expected to reap maximum benefits from the bunkering boom. Despite making progress in expanding capacity, limited investments in advanced infrastructure and services have denied the port a competitive edge. Elements like storms, severe winds and high waves have further worsened the situation.

Another big setback arrived for the African shipping industry in 2024 when a deal between South Africa’s state-owned logistics company, Transnet, and a company owned by Filipino billionaire Enrique Razon to expand and run Durban container port was put on hold. The decision in the Durban High Court was taken in October in response to an application after AP Moller-Maersk (APM Terminals) challenged the awarding of the deal to ICTSI, the Filipino port operator.

The likelihood of an all-out war in the Middle East may force the global merchant shipping industry to be dependent on African ports for an indefinite period. The continent has the chance to tap future windfalls.

However, the continent needs to prioritise investment in expanding port infrastructures, improving logistics networks and upgrading equipment to handle larger volumes of traffic. Besides, governments must improve the regulatory frameworks, strengthen regional cooperation and provide incentives for private sector involvement. A fiasco like the one involving Transnet must not be repeated.

Infrastructure: Another mess

Africa also needs to focus on enhancing the integration of ports with railways and road networks, which is critical in guaranteeing better connectivity between ports and inland markets. However, budgetary constraints and competing national interests force most governments to decide against mobilising the required resources.

South Africa alone requires a mind-boggling $9.2 billion to address the infrastructure woes plaguing its ports and rail network. Namibia, which has made significant offshore oil discoveries, needs $2 billion to expand port infrastructures.

Even though the continent has seen the capacity of its ports grow significantly over the years, a 2024 report from the Africa Finance Corporation said that these expansions, upgrades and investments have not led to better inland logistics and supply chains.

Since 2005, African ports have received an estimated $15 billion in investments, allowing them to accommodate larger ships and offload more cargo for transportation across the continent.

According to the African Development Bank, port development led to increased traffic. Between 2011 and 2021, containers passing through African ports increased by nearly 50%, from 24.5 million to 35.8 million.

However, Africa Finance Corporation’s 2024 report claims that the “state of Africa’s Infrastructure,” the increased capacity has yet to lead to an efficient logistical supply chain across the continent. As per the analysts, African governments have neglected road and railway networks, which are unevenly distributed, of poor quality and underused, which limits their usefulness.

In the words of Gabriel Sounouvou, a specialist in logistics and supply chain management based in Guinea, “bad roads make it hard to do business in Africa, especially outside coastal areas.” The road corridors are not suitable for truck movements.

Jonas Aryee, head of Maritime Economics and International Trade Modules at Plymouth University in England, said human factors also make it difficult to transport goods across Africa.

“Some countries are still not opening up, and they’re protecting their local industries from those of their fellow African countries. You will find several roadblocks — from police, from customs, from gendarmes — in many countries when goods are going through. And it’s made the cost of doing business in Africa so high,” Aryee said.

The Africa Finance Corporation further showed that the continent has 680,000 kilometres of paved roads, just 10% of the total found in India, which has a similar population but one-tenth the land area.

The experts noted that the roads connecting African countries have remained in bad shape because the governments have not formed a joint team to invest in, build and manage highways that could improve the free flow of goods and people.

Floating loans

African governments are also failing to raise massive resources, thereby being forced to bring on board global operators not only to invest but also to take over the running and management of ports with the sole objective of improving efficiency.

Francois Vrey, Professor Emeritus in the Faculty of Military Science at Stellenbosch University, South Africa, contends that while port infrastructure investments are critical, Africa must be conscious of the risk of overinvestments to avoid creating white elephants in the pursuit of short-term gains.

Kenya’s Lamu port offers a classic example of such irrational investments. While the government committed $367 million to build the first three berths that were commissioned in 2021, the port that was expected to become a transhipment hub is today largely a white elephant. Since its commissioning, less than 70 vessels have called at the facility.

Investments in port infrastructure are essential for Africa to compete effectively on a global scale. This is particularly important, as the World Bank’s Container Port Performance Index (CPPI) for 2023 shows that none of Africa’s ports are ranked among the top 100 in the world.

The Port of Berbera in Somaliland is the highest-ranked African port, coming in at position 103 globally. While improving infrastructure is crucial, Africa must also enhance maritime security to make its ports more appealing. There is still much work to be done for the continent’s ports, but addressing these issues could position them at the forefront of global maritime trade.

The post Are African ports ready for global trade boom? appeared first on International Finance.

According to the most recent data from the Saudi Ports Authority, or Mawani, the Kingdom’s terminals received 271,465 standard containers in July of this year. This marks an increase from 234,592 in July of 2023. Additionally, there was a 9.11% annual rise in handled tonnage, bringing the total to 27.38 million metric tons.

The rise is in line with the National Transport and Logistics Strategy’s objective of positioning Saudi Arabia as a hub linking three continents and a global logistics centre. It also supports Mawani’s initiatives to boost the effectiveness of port operations and the Kingdom’s connectivity to international markets, both of which promote domestic exports.

The company’s commitment to improving the King Abdulaziz Port in Dammam, which can accommodate a wide range of vessel sizes and kinds, is evident in the expansion as well, bolstering Mawani’s status internationally in the maritime transport and logistics industry.

According to the data, the Kingdom shipped 701,606 metric tons in general, of which 4.48 million were solid bulk cargo and 15.34 million were liquid bulk freight. In July, there were 622,856 container handling activities, which is a 14.4% reduction from the same month the previous year.

Livestock discharges from the ports increased significantly, reaching 506,016—a 127.6% increase from July 2023. But only 908 ships arrived in July, representing an 11.24% decline in marine traffic. Additionally, the number of passengers decreased by 31.8% to 52,191 during the month. There were 90,471 vehicles in July, an 8.64% decrease in traffic. In July, the number of outgoing containers rose by 7.78% to 228,031.

Mawani’s performance increased from 76.16 points in the second quarter of 2023 to 77.66 points in the third quarter of 2023, according to the United Nations Conference on Trade and Development, indicating advancements in the maritime industry.

Saudi Arabia moved up 17 spots to take 38th place worldwide in the World Bank’s Logistics Performance Index in 2023.

Reinforcing Saudi Arabia’s strategic position in international shipping and logistics, the country’s continuous rise in container handling and logistics performance improvements shows the country’s progress toward becoming a major player in global marine commerce.

The post Container throughput growth at Saudi ports reinforces country’s position in global shipping appeared first on International Finance.

The rise is in line with the National Transport and Logistics Strategy’s objective of positioning Saudi Arabia as a hub linking three continents and a global logistics centre. It also supports Mawani’s initiatives to boost the effectiveness of port operations and the Kingdom’s connectivity to international markets, both of which promote domestic exports.

The company’s commitment to improving the King Abdulaziz Port in Dammam, which can accommodate a wide range of vessel sizes and kinds, is evident in the expansion as well, bolstering Mawani’s status internationally in the maritime transport and logistics industry.

According to the data, the Kingdom shipped 701,606 metric tons in general, of which 4.48 million were solid bulk cargo and 15.34 million were liquid bulk freight. In July, there were 622,856 container handling activities, which is a 14.4% reduction from the same month the previous year.

Livestock discharges from the ports increased significantly, reaching 506,016—a 127.6% increase from July 2023. But only 908 ships arrived in July, representing an 11.24% decline in marine traffic. Additionally, the number of passengers decreased by 31.8% to 52,191 during the month. There were 90,471 vehicles in July, an 8.64% decrease in traffic. In July, the number of outgoing containers rose by 7.78% to 228,031.

Mawani’s performance increased from 76.16 points in the second quarter of 2023 to 77.66 points in the third quarter of 2023, according to the United Nations Conference on Trade and Development, indicating advancements in the maritime industry.

Saudi Arabia moved up 17 spots to take 38th place worldwide in the World Bank’s Logistics Performance Index in 2023.

Reinforcing Saudi Arabia’s strategic position in international shipping and logistics, the country’s continuous rise in container handling and logistics performance improvements shows the country’s progress toward becoming a major player in global marine commerce.

The post Container throughput growth at Saudi ports reinforces country’s position in global shipping appeared first on International Finance.

The Prime Minister emphasised the significance of the Ministry of Investment and Foreign Trade’s role in this critical stage.

According to the State Ownership Policy Document, the Egyptian government increased its efforts to support the private sector and draw in more foreign direct investments while maximising its potential in several industries.

PM Mostafa Madbouly stated that there was a rise in foreign direct investment rates in 2023, which he attributed to projects and programmes run by the government, such as the Ras El Hekma agreement. He emphasised the significance of maintaining these investment rates.

The Prime Minister made the point that bringing the foreign trade file under the Ministry of Investment aligns with the goals of improving coordination and hitting targets for expanding export markets and drawing in more foreign capital.

PM Mostafa Madbouly stressed that in order to accomplish the goals of the state in this area, collaboration and coordination with export councils and joint business councils are essential.

El-Khatib gave a presentation on the ministry’s role and future goals during the meeting, stressing the importance of combining investment and foreign trade because of their strong interdependence.

He emphasised that Egypt must make significant progress in the export and investment sectors. He also emphasised that the government must send investors a clear message about policy stability in the fiscal and monetary domains and its commitment to carrying out the state policy document.

In order to develop a clear plan for foreign trade and investment, the Minister continued, he will start holding meetings with all parties involved. He stressed that, in order to draw investment into Egypt, it is crucial to focus on large international investment organisations, especially in specific industries where industry is of the utmost importance.

The new Egyptian government aims to achieve a 4.2% growth rate in its first year, with the target of surpassing 5% during its reform programme, while shifting towards a greater role for the private sector in generating GDP and employment opportunities.

In a statement to the Egyptian Parliament on July 8, PM Mostafa Madbouly affirmed his government’s adoption of comprehensive economic reforms, including fiscal discipline and an annual average increase of 16% in public revenues until the fiscal year 2026-2027. Additionally, the government aims to increase female participation in the workforce to 19% by 2026-2027.

The new government now aims to increase the contribution of the green economy to the GDP by doubling the percentage of green public investments to total public investments to about 55% by 2026. Egypt also aims to become a global hub for green hydrogen production by 2030.

PM Mostafa Madbouly added that the government will work to stimulate both local and foreign investments through a national investment strategy (2024-2030) aimed at encouraging investment in several priority sectors supporting national economic growth targets. This includes increasing private investments to between 60% and 65% of total investments and raising the annual growth rate of foreign direct investments to around 14%.

The Prime Minister’s statement also affirmed the government’s goal to attract 30 million tourists by 2028 through multiple strategies to enhance competitiveness and sustainability in the tourism sector.

Additionally, the government’s agenda aims to transform Egypt into a global hub for logistics and trade by adopting various measures, including establishing integrated international logistics centres adjacent to seaports. This involves developing seven comprehensive international logistics corridors to connect production zones with seaports via fast and secure transport routes, including dry ports and integrated logistics zones.

“The Egyptian government also aims to develop ports by constructing new docks to extend the total dock lengths to 100 kilometres. It plans to enhance the Egyptian maritime fleet’s capacity to transport 20 million tons of diverse goods annually. The government is working to form strategic partnerships with major companies managing and operating global container terminals and shipping lines to ensure increased arrival and frequency of international vessels at Egyptian ports. It also aims to complete the implementation plan for establishing 31 dry ports and logistic zones,” reported Forbes Middle East.

Egypt has not yet announced its economic growth rate for the past fiscal year, but the former Minister of Planning and Economic Development, Hala El-Said, forecasted in June 2024 that Egypt’s economy would grow between 2.9% and 3%.

The post Egypt aims to boost investment, open new markets as it targets 5% growth by 2026 appeared first on International Finance.

The Saudi Ports Authority (Mawani Authority) stated in a press release that granting these permits is in line with their objective of establishing high-quality and efficient port operations in the Kingdom.

Permits have been granted for a number of activities, including pilotage, maritime support, marine traffic signals, ship repair, and routine maintenance, according to Mawani.

The statement also stated that licenses were granted for the provision of port storage and container handling services, as well as maritime consulting.

The granting of these additional permits is a component of Mawani’s larger plan to establish Saudi Arabia by the end of this decade as a major hub for global logistics.

The sector’s share of the Kingdom’s GDP should rise from the current 6% to 10%, according to Saudi Arabia’s National Transport and Logistics Strategy, by 2030.

Mawani also disclosed in the statement that extra licenses were granted for ship bunkering in terminals, waste recycling, ship waste management, hydrographic surveying, and port work training.

The King Fahd Industrial Port in Yanbu has new ship anchorage areas, according to an announcement made by the authority in January 2024.

Mawani said in a statement that newly created ship docking zones will aid in modernising a number of port logistical services, such as supplying ships with fuel and supplies.

The body also mentioned that the terminal’s operational performance indicators will rise and ship docking times will decrease as a result of these new anchorage zones.

In the UN Conference on Trade and Development’s Liner Shipping Connectivity Index for the fourth quarter of 2023, Mawani received 79.01 points in December 2023, up from 77.66 points awarded in the preceding three months.

According to the World Bank, the Kingdom moved up 17 spots to take 38th place out of 160 countries in the Logistics Performance Index.

The post Saudi Ports Authority issues new licenses to strengthen logistics sector appeared first on International Finance.

According to the Oman News Agency, the terminals at Sultan Qaboos, Salalah Sohar, Khasab, Shinas, and A’Suwaiq carried about 91.8 million tonnes of general, liquid, and bulk cargo in 2022.

It also revealed a notable jump in the number of ships berthed in 2023, with an estimated 11,005 boats in 2023 as opposed to 10,553 in 2022, or a rise of 4.3%.

The number of cruise ship visitors at the ports of Sultan Qaboos, Salalah, and Khasab rose significantly. This accomplishment is a result of the government’s cooperative efforts with travel partners to increase Oman’s hospitality industry.

According to the news agency, the government has been successful in drawing large cruise liner companies to various Omani shipping hubs. Some 229 cruise ships carried 599,000 passengers to Omani terminals in 2023, while approximately 87 ocean liners transported over 205,000 passengers in 2022. This indicates a commuter increase of more than 190%.

Credit Ratings

Analysts are crediting government initiatives to rein down expenditure, cut debt, boost non-oil revenue, and improve financial performance metrics for Oman’s upgraded credit rating.

The Oman Development Bank’s chairman of the board of directors, Mohammed Abu Bakr Al-Ghassani, stressed that his nation’s improved credit rating, which came from Standard & Poor’s, among other international agencies, from “BB” with a positive outlook in March 2023 to “BB+” with a positive outlook in March 2024, underlines the government’s dedication to optimising spending, raising revenue, and steadily lowering public debts, especially those with high costs.

Al-Ghassani stated that Oman would profit from future loans with lower interest rates, which would encourage foreign investors to engage in a variety of investments and large capital inflows. He also stated that the improvement in credit rating is a critical indicator of confidence for investors and borrowers in the economy and the banking sector.

Balance Of Trade

Oman’s trade balance at the end of January 2024 was in surplus of 877 million rials (about USD 2,280 billion), as opposed to a surplus of 686 million rials at the same time in 2023, according to preliminary figures issued by the National Centre for Statistics and Information.

Additionally, the data demonstrated that at the end of January 2024, the value of commodity exports had surpassed 2.3 billion rials, indicating a 16.7% rise over the same time in 2023.

The state news agency reports that the increase in Oman’s oil and gas exports, which reached 1.45 billion rials at the end of January 2023, a 9.6% increase from 1.32 billion rials, is the main reason for the notable increase in export value. Significantly, Oman exported 1.13 billion rials worth of crude oil by the end of January 2024, a 30.5% rise from the same period in 2023.

But the value of the nation’s liquefied natural gas exports fell to 229 million rials, a loss of 26.1% from January 2023, while the value of its refined oil exports fell to 95 million rials, indicating a 36.5% decline.

By the end of January 2024, non-oil commodity exports reached 749 million rials, up 38.5% from 540 million rials at the end of January 2023, according to the same figures. Out of all the non-oil commodity exports, metal items had the highest value, coming in at 356 million rials, a significant rise of 115.9%. Ordinary metals and their products came next, with a jump of 21.3% to 122 million rials. Products from the chemical industry then suffered an 11.2% fall in export values, totalling 86 million rials.

According to the data, Saudi Arabia was also in the lead in non-oil commodity export trade activities, with a value that increased by 82% from the end of January 2023 to 103 million rials by the end of January 2024.

However, the UAE was in the lead when it came to Oman’s re-exports, which at the end of January last year totalled 31 million rials. With a value of 315 million rials, the Emirates also achieved the top rank on the list of nations that export the most to Oman, up 4.2% from the end of January 2023.

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