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Qatarisation of supply chains

The trade embargo and sanctions imposed on Qatar have interrupted cargo flows and severely disrupted established distribution Networks.

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In early June of this year, Saudi Arabia, UAE, Bahrain, Egypt, Yemen, Libya and the Maldives imposed sanctions on Qatar. The decision was taken on the basis of the regime’s alleged support for terrorist groups, such as Daesh/ISIS, the Muslim Brotherhood and Al Qaida, and its sympathy with the Iranian Government. Iran and Saudi Arabia are enemies and fighting against each other in Yemen.

While the dispute has mainly affected Qatar’s container traffic and the way this is moved in and out of the country, both dry bulk and breakbulk cargoes have also been affected. The demand for aggregates and other construction materials, for instance, is significant, given the country’s ambitious infrastructure improvement and property development programmes.

In addition, the country’s imports of grain and other agribulk commodities, including sugar, and alternative routing options have had to be found, as an estimated 80% of Qatar’s food needs were processed and sourced from neighbouring countries, notably Saudi Arabia and Dubai.

On the export front, aluminium has been one of the commodities most impacted by the embargo, as most shipments, which are estimated to total over 1 Mtpa, were handled via Jebel Ali.

Indeed, prior to the embargo, most of Qatar’s general and containerised cargo was either handled via the port of Dammam in Saudi Arabia and trucked into the country, or relayed over the UAE ports of Jebel Ali and Fujairah, and fed to Doha, and more recently the new port of Hamad. Bulk commodities, notably aggregates, were generally relayed over the port of Fujairah. In all cases, shipments stopped once the embargo was announced.

Bulk Materials International understands that, in the aftermath of the sanctions, several long-term bulk contracts have been terminated. In particular, the trade in aggregates between Middle East countries has fallen, as has the demand for cement and clinker, with daily charter rates for Handymax/Supramax tonnage softening since the crisis.

Ports in Oman (Salalah and Sohar) and, to a lesser extent, Kuwait and Iran, are now being used by Qatari importers and exporters as transhipment hubs. Moreover, increased volumes of cement and gypsum are being sourced from Oman. The governments of Oman, Kuwait and Iran have not severed diplomatic ties with Qatar.

Despite the disruption immediately following the embargo, the situation has settled down and new trading patterns are stabilising.

Qatar Ports Management Company (Mwani Qatar), which operates the port of Hamad, recently announced record traffic volumes for July. A total of 48,873 containers and 80,275t of general cargo were handled, with the latter sector’s volume up almost 160% on the previous month. In addition, Hamad processed 74,148 head of livestock and 7,897t of gabbro and building materials.

Port plans

Moreover, Mwani Qatar is determined to press ahead with the next phase of development at the port. In the past couple of months, several new projects have been launched, including investment of at least QAR1.6B (US$436M) to build specialised facilities for the handling and processing of food items, such as rice, raw sugar, and edible oils. The planned development also involves waste residues from the refining operations being recycled and used to produce animal feed.

The so-called Strategic Food Security Facilities Project will be developed on a 53-ha site, with ships berthing along 500m of quay. A system of conveyor belts will be installed to move the cargoes from vessels to a range of storage sites, including dedicated silos.

According to Jassim Bin Saif Ahmed Al Sulaiti, the country’s minister of transport, the new facility will secure Qatar’s basic food supplies, as it will be capable of storing each main commodity for two years, enough stock to feed 3M people.

Mesaieed ahead

The port complex at Mesaieed has also registered growth, with the Qatar Primary Materials Co (QPMC) facility especially busy. The company, which imports large quantities of gabbro and limestone building materials into the country, has been quick to replace contracts it had with suppliers in Fujairah (UAE) with companies based in Oman and this has maintained cargo flows.

But Essa al Hammadi, CEO of QPMC, explained that its sourcing diversification programme had started in 2014, and that at least 1 Mt of gabbro had been imported from Oman since early 2016. QPMC is now working hard to build up stockpiles so that construction projects will not be interrupted.

“We have succeeded in stock piling 14 Mt of materials – 11 Mt of gabbro and 3 Mt of limestone – which covers the needs of Qatar for more than a year, and we have an abundance of soft and washed sand that covers current and future projects in the private and governmental sectors,” said Hammad .

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