The war is pushing Gulf container trade to ports outside Hormuz, and Khorfakkan is doubling capacity to catch it

The war is redrawing the Gulf’s container map, and ports just outside Hormuz are expanding to capture diverted cargo. Most shipowners won’t risk their vessels getting stuck behind the strait, so boxes bound for the UAE and northern Oman are landing on the UAE’s east coast and at Oman’s Sohar instead. The biggest wager so far is Khorfakkan, Gulftainer’s flagship terminal and the UAE’s largest container port outside Hormuz. It’s set for a USD 2 bn expansion that will double its capacity to 10 mn TEUs, alongside 2-3 mn TEUs of inland logistics capacity.

That flips a pecking order that held for decades. The east coast has long operated in the shadow of Jebel Ali’s 14 mn TEU hub. “This [expansion] has been on our radar since last year, but recent disruptions accelerated our plans,” Farid Belbouab, Group CEO of Gulftainer, tells EnterpriseAM in an exclusive interview. “2026 became the inflection point where Khorfakkan evolved from a transshipment hub into a key gateway on the UAE’s East Coast.”

Belbouab says the build-out will follow demand. “The expansion of Khorfakkan to 10 mn TEUs is not about building capacity overnight; it is about building an ecosystem aligned with demand,” he says. Phase 1 takes the terminal to 5 mn TEUs, with modular expansion to 10 mn+ TEUs “in the next few years,” underpinned by what he calls structural shifts in trade.

A port that lost its clients is back in business

Khorfakkan spent the 2010s losing ground to its bigger neighbors. It lost “its anchor clients during the 2010s both to Jebel Ali and the fast-growing Khalifa Port,” Eirik Hooper, senior associate at maritime consultancy Drewry and a former DP World executive, tells us. Since the war began, Gulftainer has revived the underused terminal and adapted it to stand in as the UAE’s primary gateway.

Turning a transshipment hub into a gateway meant building a landside. Khorfakkan was built to move boxes from ship to ship, not from ship to truck. Its original transshipment capacity was estimated at 5 mn TEUs, but its practical gateway capacity was closer to 3-3.5 mn TEUs, Hooper says. After Gulftainer built a landside gate complex, weekly throughput rose about 700%, from about 8k TEUs to 65k TEUs, which is the terminal’s current limit. Capacity is expected to reach 5 mn TEUs by the end of the month, allowing weekly throughput of around 100k TEUs.

The real build-out is inland

Gulftainer says it planned for this. In 2025, it launched the UAE’s largest bonded dry port in Sajaa, 90 km from Khorfakkan. Cargo is sealed at the port and cleared at the customer’s doorstep in Sajaa. “This shifts Khorfakkan from a sea-to-sea hub to a sea-to-door gateway,” Belbouab says.

A second inland hub will plug the port into the rail network. The Al Dhaid Multi-Modal Logistics Hub and Freezone, 60 km from the port, will cover 150 hectares and handle 1.5 mn TEUs a year. It is designed to tie Khorfakkan physically into the Etihad Rail network and is being developed as a public-private partnership with the Sharjah Ports, Customs, and Freezones Authority.

The pitch to shippers is a single corridor from ship to warehouse. The plan is “10 mn+ TEUs at sea, supported by 2.3 mn TEUs of inland capacity across Sajaa and Al Dhaid, including 1.5 mn sqm of logistics park,” Belbouab says. “Customers today don’t want just a plot; they want a bonded, AI-enabled corridor.” He points to the Khorfakkan-Sharjah road, the upcoming Etihad Rail link to Khorfakkan and Al Dhaid, and GT Lines’ 15-vessel fleet serving China, the Indian subcontinent, the GCC, Iraq, and East Africa. “Our trade corridors reflect our integrated platform — from ports to shipping, shipping to inland, and inland to industrial parks.”

Fujairah moves the crude, Khorfakkan takes the boxes

Fujairah is the east coast’s energy gateway. In recent months, it has become Adnoc’s primary shuttle transfer hub, letting buyers collect crude without sending tankers through Hormuz. The Adcop pipeline carries roughly 1.8 mn bbl / d to Fujairah and ran near peak nameplate capacity in the immediate aftermath of the war. Adnoc is also ramping up a second pipeline to Fujairah, targeted for 2027. The Port of Fujairah handles roughly 7.3 mn mt of marine fuel a year, placing it alongside Singapore and Rotterdam among the world’s top three bunkering hubs.

Containers are a tighter fit: AD Ports pushed more than 70k TEUs through Fujairah Terminals in a matter of weeks in May, but the terminal was never built for that role. Its last major upgrade was a USD 135 mn (AED 500 mn) investment, announced in 2021, to lift container capacity to 1 mn TEUs. “Fujairah currently has limited capacity to handle a substantial volume of container cargo diverted from ports inside the strait,” Hooper says.

The big operators are moving to close that gap:

• DP World has reached an “agreement in principle” with Fujairah Ports Authority to develop new container and multipurpose terminals at Al Rugaylat, plus a general cargo facility in Dibba. Al Rugaylat is designed for 2.5 mn TEUs, nearly three times the capacity of Fujairah’s existing container terminal;
• AD Ports is wiring Fujairah into Abu Dhabi’s industrial base. Its rail-linked network of dry ports and cargo depots, announced in May, connects Fujairah Terminals and Khalifa Port to Kezad’s Industry City of Abu Dhabi, meaning industrial cargo can now land on the east coast and reach Kezad without transiting Hormuz. Emirates Global Aluminium, Emsteel, Al Ghurair Iron and Steel, and Tenaris have signed on as anchor clients.

Those projects give Fujairah a much broader supply-chain role, Hooper says, “though for the container market it will be secondary to Khorfakkan.” Across the border, CMA CGM and Oman’s Asyad Group have signed a framework agreement for a USD 400 mn logistics terminal at Sohar, which has become an alternative route for Gulf trade during the war.

The long way round costs more, and shippers are paying it

Every box landed outside the strait still has to cross the mountains. Cargo landed at Khorfakkan or Fujairah has to cross the Hajar mountains by truck, or eventually by rail, to reach Dubai, Abu Dhabi and the UAE’s industrial centers. Overland rerouting costs 2.4 to 4.2 times more per ton-km, according to a study, but breach-of-warranty premiums and war-risk surcharges on a Hormuz port call now outweigh that.

The bigger deterrent is the risk of getting stuck. “The majority of shipowners cannot risk their vessels getting stuck behind the strait, even if they could afford the war risk premiums being applied for both the hull and cargo,” he says. Until there is a resolution that the ins. market believes in and shipowners trust, Khorfakkan, Fujairah and Sohar will remain the primary maritime gateways for the UAE and northern Oman. That resolution looks distant, with Iran intensifying attacks on ships in recent days.

A quick return to normal would slow Khorfakkan’s later phases. Hooper says rapid normalization and the removal of Hormuz from war-risk classifications would delay phases 2 and 3 of the expansion; “otherwise, the masterplan is likely to proceed quickly to meet demand.”

Drewry’s verdict: the east coast “can be made to work” as the gateway for UAE and northern Oman consumption. It can also serve as a transshipment platform for some Upper Gulf needs, “though certainly not all,” at a higher cost base and with some strain on existing rail and road infrastructure. Ports inside the strait will keep serving Upper Gulf trades, where Hooper expects them to stay cost-competitive against routes via Red Sea ports, which carry much longer overland legs.

Jebel Ali loses some ships but keeps its crown

Regional transshipment “won’t return to the Gulf in its pre-2026 form,” Hooper concludes. Jebel Ali “will be relegated to Gulf transhipment plus re-export, a materially smaller, though still substantial, market,” he says.

Even a smaller Jebel Ali is in a different weight class. DP World’s flagship handles roughly 14-15 mn TEUs a year against capacity of more than 19 mn TEUs, and it’s tied directly into Jafza, which hosts more than 10k businesses and accounts for nearly 36% of Dubai’s GDP. Jebel Ali “will still retain its preeminence in the region largely due to Jafza, the freezone, warehousing, industrial cluster, and cargo airport around Jebel Ali, which took four decades to build and cannot be easily replicated or relocated,” Hooper says.

That freezone is where the money sits. A port earns a handling fee once per box. A freezone cluster earns rent, services and re-export margins from the businesses that own the cargo, year after year. The war can move the ships, but it can’t easily move 10k companies. Gulftainer’s answer to Jafza is Al Dhaid, which, at 150 hectares, is starting four decades behind. The nearer-term trend is east coast ports plugging into the freezones that already exist. The inland investments by Gulftainer, DP World, AD Ports and CMA CGM “are geared toward moving cargo as efficiently as possible between the east coast ports and the existing logistics hubs at Jebel Ali and Khalifa,” Hooper adds.

Knitting rival operators into one network will take time, and it will likely bend toward Dubai. “There is no substitute for competitive pressure and time to develop a cohesive logistics system among separate commercial organizations each working toward its own goals,” Hooper says. When it does take shape, he expects it to bend toward Dubai. “The Jafza logistics cluster should remain the preeminent force in the UAE, and I expect the network will be incentivized to arrange itself to prioritize Jafza’s customers’ needs.”