COVID-19 impacts: Salalah Port foresees 20% decline in local trade volumes

Muscat: Port of Salalah anticipates limited impacts to its mainstay transshipment business on account of the global COVID-19 pandemic, but foresees a roughly 20 per cent slump in local import and import volumes over the remainder of 2020.

The transshipment and logistics hub overlooking the Indian Ocean is banking on the diversification of its commodity profile and service offerings to boost revenues, according to a top official of the maritime gateway.

“While it is difficult to predict full year impact at this stage due to the uncertainly of the situation, based on available intelligence, we expect the impact on the transshipment volume, which constitutes 95 per cent of our overall volume, to be limited due to our ongoing mitigation plans with (principal customer) Maersk, the impact of the local export / import trade is being assessed but initial indications expect a drop of about 20 per cent for the rest of the year,” said Ahmed bin Nasser al Mahrizi, Chairman.

Writing in the Directors’ Report of the company’s performance for the quarter ended March 31, 2020, Al Mahrizi cautioned that the global shutdowns triggered by the pandemic are expected to “negatively impact the overall container trade”.  Shipping lines face a cumulative loss of over $23 billion this year alone, he warned.

While the outlook for Salalah Port appears “positive” over the immediate short term, the longer term outlook remains “uncertain” due to the continuing decline in global demand coupled with supply chain disruptions, the Chairman noted.

“We are also closely working with our main customer to mitigate the potential drop in volumes through new value added services and supply chain support options. All initiatives will however be assessed to ensure that these options do not hinder the ability of the port to continue to operate as a regional transshipment hub,” he stated.

Salalah Port handled 1,167K TEUs of containers during the first quarter of this year, which was up 28 per cent over corresponding figures for Q1 2019.  The uptick was attributed to the resumption of normal operations at the Container Terminal following disruptions caused by Cyclone Mekunu nearly three years ago.

General cargo volumes, chiefly limestone, gypsum, methanol and cement, rose marginally to 4,350K tons during Q1 2020, as compared to 4,324K in Q1 2019. However, with the demand for some of these commodities expected to dip, notably in India and South East Asia, volumes at the General Cargo Terminal are expected to fall during 2020-2021, according to the Chairman.

“The port, however, continues to see success from its focus on diversification of its commodities and customers with new revenue streams accruing from RORO carriers and Aid & Relief operations. Recent successes in securing business for providing value added services have also resulted new avenues of diversification of revenue streams and mitigate the downside in volumes,” he added.