Middle East container ports expand growth, investment opportunities

Al-Monitor Pro Members

Afshin Molavi 

Senior Fellow, Johns Hopkins School of Advanced International Studies

June 30, 2022

Middle East and North Africa container ports are rising rapidly, emerging at the top of global indices in terms of volume growth and efficiency. Competition and investment are accelerating, raising questions about possible over-capacity. Still, the region’s growing role as an emerging markets and global transshipment hub will accelerate, supporting economic growth and attracting investment as traditional powerhouses feel the pinch of competition. 

Scenario 1: A combination of overcapacity, fierce competition and slowing trade could spark a race to the bottom, hurting existing ports operators and crimping new investment. This is less likely. Global compound annual growth for containerized trade is projected at 3.2% from 2022-2025, according to IHS Markit, and nearly 3% through 2030. Even amid the COVID-19 pandemic, trade flows only fell modestly. Shipping lines — bursting with profits — are actively investing in ports operations and logistics infrastructure in the region. Competition is rife in the ports sector worldwide, not just in the Middle East. Cutthroat competition is a way of life in the ports business. This will make the ports more efficient, though some may find insurmountable challenges. On the whole, the competition will improve the players.

Scenario 2: Carbon emissions regulations could crimp investment in shipping, while ports that fail to keep up with “green initiatives” could find themselves excluded from shipping lines. This is also less likely. The leading MENA ports are actively engaged in sustainability initiatives and well connected with global shipping trends. They are unlikely to fall behind. What’s more, Russia’s invasion of Ukraine and the attendant energy disruptions have slowed the rush to net zero and the world has become more willing to stretch out the energy transition. Yes, the world will continue to move to decarbonize, but the timelines are likely to be stretched further out. By then, green advances in shipping will likely have developed.

Afshin Molavi has nearly 25 years of experience covering the geo-economics of the Middle East and North Africa and broader emerging markets with postings in Riyadh, Jeddah, Dubai, Tehran and elsewhere. Currently a senior fellow at the Johns Hopkins School of Advanced International Studies in Washington, he has also held various research, reporting, analyst and leadership roles at Reuters, Oxford Analytica, the International Finance Corporation of the World Bank, emerge85 and the New America Foundation. His articles have also appeared in Bloomberg, the Financial Times, the Washington Post and the Journal of Commerce, and he is the founding editor of Emerging World, a Substack newsletter that explores the intersection of emerging markets, globalization and the key global trends shaping our future.