Kuwait Transportation Profile 2012

Shipping Report Q3 2010

Kuwaiti shipping firm the Kuwait Oil Tanker Company appears to have weathered the downturn well, and is making the most of the uptick in the shipping market, which has been obvious since the beginning of 2010, by looking into expanding its fleet.

The company already holds an orderbook for new-build oil tankers, some of which the line is prepared to bring online earlier. This further validates the view that the company is in a strong position, as other carriers have been forced to defer delivery of vessels because of the downturn.

The planned expansion of the company's fleet would also see the carrier diversify further into the bulk liquid trade with a fleet of chemical tankers. Kuwait has a growing petrochemicals sector, with the country being the first in the region to begin producing petrochemicals, establishing a fertilisers industry (ammonia and urea) in the early 1960s. Recent discoveries of significant gas reserves bode well for future feedstock and an integrated downstream energy sector, further highlighting the growth potential of the petrochemicals sector and so by extension the transport industry that caters for it.

KOTC was able to ride out the downturn because of the relatively buoyant global liquid bulk sector, which saw tankers used for oil storage, staving off the impact of overcapacity, which was expected to hit the sector. Kuwait's port sector, however, is estimated to have felt the brunt of the downturn on the back of total trade estimates of a decline of 6.67% in 2009.

According to our estimates, throughput at the Kuwaiti port of Shuaiba fell by 9% in 2009. We are predicting year-on-year (y-o-y) growth in Kuwait's port sector in 2010, with tonnage throughput at Shuaiba forecast to increase by 1.38%. Considering the strength of the downturn and the relative weakness of the recovery, with our Country Risk desk forecasting growth of 1% in 2010, we  asserts that throughput at Kuwait's ports will not be able to recover to pre-downturn levels for the next couple of years.

Kuwait’s transport sector weathered the global economic turmoil in 2008 and 2009 in relatively good shape. While commercial cargo and airline passenger businesses saw a temporary drop in demand, logistics firms were protected by long-term fixed defence and government contracts. Indeed, Kuwait-based logistics leaders such as Agility and Kuwait and Gulf Transport (KGL) maintained their solid providing services linked to US military operations in Iraq.

While Kuwait continues to vie for a regional role in transport and logistics, its proximity to Iraq and access via a land border will remain its major competitive advantage in the short to medium term. Some new players are entering the fray, looking to capitalise on the Iraq logistics market. Project developers have cited Kuwait’s excellent highway infrastructure, international links, proximity to Iraq and security as factors that make the country an ideal base to enter the Iraqi market.

Indeed, the country ranks high on road quality measures (it earned the 36th spot in the WEF’s 2009-10 Global Competitiveness Report). However, the country received a relatively low global ranking for both its port infrastructure (68th) and air transport infrastructure (58th), with capacity issues in both segments hampering the country’s competitiveness as a regional logistics centre. But there is fresh optimism that long-awaited projects like the airport expansion, Boubyan Island and the railway network will finally come on-line in the near future.

Though airline traffic suffered in 2009 on account of the global crisis, Kuwait is likely to enjoy a strong rebound in air traffic volumes – both from regional and wider international demand – in 2010. Two private Kuwaiti airlines, Wataniya Airways and Jazeera Airways, pressed ahead with expansion plans that are designed to cater to both the high and low ends of the passenger market.

The aim is to serve specific niches that were underserved by the state-owned Kuwait Airways, which, as the only long-haul operator in Kuwait, maintains its specific niche and is also facing increased competition from regional providers.

Kuwait has an extensive, modern and well-maintained network of highways. Roadways extended 5,749 km, of which 4,887 km is paved.

The government plans to construct US$11 billion rail network which will include a city metro for its capital. Bus services are provided by City Bus and state-owned Kuwait Public Transportation Corporation.

Kuwait has speed cameras in all highways and main roads and traffic lights, which captures the cars that speed or cross a red light, the Kuwaiti government spent over 450 million USD on these speed cameras in cooperation with the traffic Police. There is only one civil airport in Kuwait.

Kuwait International Airport serves as the principal hub for international air travel. State-owned Kuwait Airways is the largest airline in the country. I

In 2004, the first private airline of Kuwait, Jazeera Airways, was launched.

In 2005, the second private airline, Wataniya Airways of Kuwait was founded.

Kuwait has one of the largest shipping industries in the Persian Gulf region. The Kuwait Ports Public Authority manages and operates ports across Kuwait.

The country’s principal commercial seaports are Shuwaikh and Shuaiba which handled combined cargo of 753,334 TEU in 2006.

Mina Al-Ahmadi, the largest port in the country, handles most of Kuwait's oil exports. Construction of another major port located in Bubiyan island started in 2005. The port is expected to handle 1.3 million TEU when operation starts in 2008.