National oil companies and logistics, MENA to become global commodity hub?
After decades of ruling international oil and gas production and trade, the Middle East is setting up new inroads for prosperity. With its vast oil and gas reserves, the Arab/Persian Gulf has been in the spotlights for decades, presenting not only a hydrocarbon power house, as shown by its position within OPEC, the region is now setting new inroads into becoming a major logistical hub for global trade. After the full-scale developments in the UAE, proponing the latter to become a hotspot for oil, gas, LNG, bunkering and logistics, another giant is entering the game. Saudi Arabia, the Kingdom of Oil, has presented in its Saudi Vision 2030 the target to become not only the new logistical hub for the region, diverting trade from the east coast (Arab/Persian Gulf region) to its west coast, but also for trade flows between Europe and Asia. At the same time, the region is looking at securing and increasing non-hydrocarbon trade flows to its diversifying economies and to support its burgeoning population.
All shipping traffic from energy-rich Gulf countries converges in the strait, including crude oil and liquefied natural gas exports from Iran, Iraq, Kuwait, Bahrain, Qatar, Saudi Arabia and the United Arab Emirates. Thirty percent of the world’s crude oil flows through this 21-mile wide waterway. In terms of volume, the global trade/logistics industry is expected to reach 92.1 billion ton by 2024. Factors such as the rapid globalization, increasing trade volume, and the revival of the global economy are some of the major contributing factors to the growth of the 3PL market. The rising exports and imports drove the supply chain and logistics market and the Middle East, led by the UAE, to become one of the most important hubs in the changing global trade lanes. Thus, overall, as MENA countries pursue political transformation and economic diversification, transportation and logistics investment is the cornerstone to its future growth.
MENA has trade relations with almost every country/region across the globe. The region exports hydrocarbons and hydrocarbon-related products that are in great demand, and meets a large part of its food requirement through imports. Data from the WTO suggests that MENA engages in maximum merchandise trade with Asia (55% of all exports and imports), followed by Europe (31%), and North America (8%). Others like the CIS and South/Central America account for the remaining 6% share. MENA countries also lead in Sea and Air Trade routes with the UAE and Saudi Arabia ranking among ‘Top 10 Air Freight Lanes’ globally. Although the region has a diversified network of air, sea and road transport, the bulk of economic activity is skewed toward maritime transport. The region has total of 134 Sea ports handling a total of 48.3 million TEUs of container traffic. Of these, the GCC has nearly 41 ports (35 major ports) which together handle 68% of MENA container port traffic. Besides sea transport, the region has 114 international and domestic airports of which 43 airports are located within GCC.