Kuwait Financial Centre “Markaz” recently published the executive summary of its report on Kuwait Ports. In this report, Markaz analyzes the importance and contribution of Kuwait Ports in the economy of Kuwait.According to Markaz report, economic benefits provided by the Kuwait seaport sector include its support for a large contribution to GDP through facilitating sea trade, contribution towards achieving economic diversification in the country, stimulating demand in the economy and Kuwait’s development as a transport and logistics hub, by capitalizing on GCC ports’ lack of capacity.

Kuwait has three commercial ports namely: i) Shuwaikh, ii) Shuaiba and iii) Doha. The three ports are operated by Kuwait Ports Authority (KPA). The ports in Kuwait have witnessed a volume growth at a CAGR of 2.92 per cent in TEUs between 2005 and 2012. The cargo volume at Kuwait ports have increased at a CAGR of 1.59 per cent in Tonnes between 2005 and 2012.

The number of vessels arrived at Shuwaikh Port has remained almost constant between 2005 and 2012. The Cargo volume at Shuwaikh Port has increased at a CAGR of 2.60 per cent between 2005 and 2012. The total container throughput at Shuwaikh port has increased at a CAGR of 3.13 per cent between 2005 and 2012.

The largest Port Development under execution in Kuwait is the Boubyan Island Port Project (Mubarak Al Kabeer). The Kuwait Government has plans to privatize Kuwaiti ports to develop them and steps taken in September 2013 for privatization of Mubarak port are the beginning of the process.  

The growing trade in Kuwait also has an impact on its port developments. Exports in Kuwait are predominantly oil based with hydrocarbon exports forming about 90 per cent-95 per cent of total exports. Kuwait’s total exports have grown at a CAGR of 12.63 per cent between 2006 and 2012. Kuwait’s non-oil exports have grown at a CAGR of 11.38 per cent during the same period while Kuwait’s imports have grown at a CAGR of 6.37 per cent. Re-exports in Kuwait form a very small portion of total exports. However, the contribution of re-exports in total non-oil exports has varied between 19 per cent and 35 per cent for the period 2006-12.

The growing trade in Kuwait has resulted in some of countries becoming important trading partners for Kuwait. Some of the major trade partners of Kuwait in 2012 in terms of exports were China, the U.A.E, Saudi Arabia, India, European Union, the United States and Indonesia. Notably, while Kuwait has consistently maintained a positive balance of trade, it has a negative balance of trade with these countries implying that these countries are also major importing partners for Kuwait. 98 per cent of exports in 2012 were made through ships. Contribution of other modes of transport, were miniscule for exports. In 2012, 62 per cent of Kuwait imports were made through ships. In Kuwait seaport transports is preferred over other modes of transport due to its strategic location and also because sea transport is ideal for moving heavy goods.       

Some of the demand drivers for Kuwait port sector are its geographic location, growing trade, economic growth and diversification, growing importance of emerging markets, expected lack in handling capacity in the GCC region between 2013-14 and the plans for growing rail network which complements transport through seaports.

Challenges for Kuwait seaport sector include delays in implementing Kuwait Development Plan, political uncertainty in the country, effects of global economic environment, Kuwait public private partnership project put on hold, possible overcapacity in the GCC ports in 2015 and financing.    

Economic benefits provided by the Kuwait seaport sector include its support for a large contribution to GDP through facilitating sea trade, contribution towards achieving economic diversification in the country, stimulating demand in the economy and Kuwait’s development as a transport and logistics hub.

Kuwait needs to improve significantly the efficiency of its ports in terms of various parameters like efficiency of customs administration, inland supply transit, availability and quality of seaport transport infrastructure and sea transport service levels.
Source: CPI Financial