A transport corridor to rival the Suez Canal?

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What we're tracking today

TODAY: Iraq to host regional ministers to discuss economic cooperation + SCZone in China

Good morning, friends. We have a busy post-weekend issue for you this morning, with lots of big updates from the region on everything from railways to maritime shipping.

THE BIG LOGISTICS STORY- Iran and Russia will build the Rasht-Astara railway, which will complete the 7.2k-km International North-South Transport Corridor (INSTC) — a network of ship, rail and road routes connecting South Asia to Europe and aiming to rival the Suez Canal.

HAPPENING TODAY-

Egypt rolls out the sixth phase of its export subsidy program: Egypt’s Export Development Fund approved rolling out a new phase for its export subsidy program allowing exporters to receive their subsidies in a single payment, according to a Trade Ministry statement. Export shipments made before 1 January, 2023 are eligible for subsidies in this phase and companies that submitted their applications prior to 1 April are set to be paid in July. Applications that will be submitted after that date, and before 1 June are set to be paid in August, according to the statement.

Remember: The Egyptian government’s spending on export subsidies will almost quadruple to EGP 28 bn in the coming fiscal year.

SCZone heads to China + Hong Kong for investment roadshow: Suez Canal Economic Zone CEO Walid Gamal El Din is in China and Hong Kong to drum up investments from Chinese investors and companies at the Egyptian-Chinese Investment Forum in Beijing, according to an SCZone statement. Gamal El Din is also scheduled to discuss possible cooperation with China’s Teda Group, which is already a chief industrial developer in the Sokhna Industrial Zone.

ICYMI: Gamal El Din was in the Netherlands last week to discuss possible cooperation with the Rotterdam port on green fuels, which includes a “green corridor” from Singapore to Rotterdam that would pass through the SCZone for green bunkering purposes. The SCZone’s roadshow comes as part of efforts to achieve its 2020-2025 strategy.

Dubai’s Roads and Transport Authority has put off re-opening the Floating Bridge until further notice, according to a tweet. Traffic will remain closed in both directions so that tests can be carried out to assess safety and gauge the efficiency of recent maintenance work, the authority said.

SPEAKING OF BRIDGES-Abu Dhabi has a new bridge and new roads open in Al Reef area, Abu Dhabi’s Integrated Transport Centre said.

WATCH THIS SPACE #1- Tunisia plans to invest TND 36 bn (USD 11.7 bn) in rail transport by 2040, Agence Tunis Afrique Presse reported, citing Tunisian Transport Minister Rabi Mejid. This will involve purchasing 54 new vehicles for TND 540 mn and renovating and modernizing 50-80 light rail vehicles for an estimated TND 150-350 mn between 2024-2026. The Transport Ministry will also modernize old railway cars and purchase 600 new wagons for TND 300 mn. The investment is part of a package of 47 infrastructure projects valued at an estimated total of TND 68 bn.

WATCH THIS SPACE #2- Jordan’s Transport Minister Maher Abu Al Samen has called for establishing a logistics hub for goods in Jordan, according to state owned news agency Petra. The minister, speaking at the General Assembly and Board of Directors meetings of the Arab Union for Land Transport, said that the hub would benefit from Jordan’s strategic location.

WATCH THIS SPACE #3- Iraq to host regional ministers to discuss economic cooperation: Iraq is preparing to host a conference with regional transport ministers from the GCC, Iran, Turkey, Syria, and Jordanto discuss prospects for economic cooperation, state-owned Iraqi News Agency quotes Iraqi Prime Minister Mohammed Al Sudani as saying. At the conference, the date for which has yet to be determined, the transport ministers will discuss

Iraq’s Development Road Project, which aims to link Iraq’s Southern Faw Port to Turkey by rail.

DATA POINT #1- The UAE’s Etihad Airways reduced its carbon emissions by 42% between 2019 and 2022, according to its sustainability report (pdf). The airline’s carbon emissions fell to 5.28 mn tons in 2022, down from 9.1 mn tons in 2019, the report said.

DATA POINT #2–Egypt’s Transport Ministry will reportedly invest USD 4 bn in its river transport network as a means to ease traffic congestion, time, and costs, local news outlet Youm7 reports.Transport Minister Kamel El Wazir highlighted the benefits of river transport of goods as having low operational costs, less maintenance, and the possibility of cutting down on pollution, the news outlet writes.

Background: The Transport Ministry will invest a total of EGP 321 bn into its infrastructure in FY2023-24, up 4.6% y-o-y. Railways are getting EGP 4.2 bn to build and develop 164 railroads, and 166 stations. The ministry has already constructed two berths in Nubaria Canal worth EGP 263 mn, and converted two fixed bridges into mobile bridges for EGP 50 mn, as part of its river transport infrastructure developments, according to Youm7.

MARKET WATCH-

Fuel oil inventories at Fujairah’s oil hub spiked to a five-month high for a second straight week in the week leading up to 15 May, according to data published by S&P Global. Total inventories jumped 7.5% to 24.9 mn barrels, on the back of rising imports and a surge in jet fuel, diesel and other middle distillates. Total inventories are now up 20% since the end of 2022.

Indian oil imports from Middle East plummet as Russian oil flows surge: India’s record-high oil imports from Russia in April drastically reduced the proportion of oil imports from the Middle East and Africa to a 22-year low, Reutersreports. Refiners in India have welcomed Russian oil after some countries eschewed Russian products over the Ukrainian invasion. India’s oil imports from CIS countries (Azerbaijan, Kazakhstan and Russia) made up 43.6% of its total oil purchases. This has reduced the country’s share of oil imports from the Middle East, which typically sources more than half of India’s oil imports, to around 44%. African oil accounted for 3.4% of India’s imports last month.

The Baltic Exchange’s main sea freight index fell to a three-month low last week on the back of lower shipping rates across larger vessels, Reutersreports. The overall index — which takes into account the rates for capesize, panamax and supramax shipping vessels — fell 1.3% to 1,384 points, its lowest since 19 April. The capesize index fell 1.7% to a more than three-week low, while the supramax index was also down by 8 points and panamax index fell by 1.1%.

Iran and Russia ink EUR 1.6 bn agreement to build Rasht-Astara railway

Russia + Iran agree to build Rasht-Astara railway: Iran and Russia have signed an agreement to construct the Rasht-Astara railway, according to an Iranian Roads and Urban Development Ministry statement. The construction of this railway will complete the 7.2k-km International North-South Transport Corridor (INSTC), which is a network of ship, rail, and road routes connecting South Asia to Europe.

The details: Russia will invest EUR 1.6 bn in the Rasht-Astara railway, which should be complete in four years, according to the statement. The INSTC, which links Russia, India, Iran, and Azerbaijan, had a missing link of 162 km between Rasht in Iran and Astara in Azerbaijan. Negotiations on bridging this gap began two decades ago, but had been delayed for undisclosed reasons, according to the Iranian Roads and Urban Development Ministry.

An artery to rival the Suez Canal? “This unique North-South transport artery, the Rasht-Astara railway, will become a part of, and will help to significantly diversify, global [cargo] traffic flows. Transportation along the new corridor will offer significant competitive advantages,” Russian President Vladimir Putin said, according to Russian news agency TASS. Delivery time for goods transported from Saint Petersburg to Mumbai will be slashed from 30-45 days using traditional routes to just 10 days through the new corridor, Putin is cited as saying. “There is a significant savings in terms of time and costs,” the Kremlin noted.

And potentially a boon for food security: The new route will be used, in particular, for the transportation of foodstuffs and other agribusiness products intended for consumers in Iran and in the Persian Gulf and Africa, Putin added.

Part of Iran’s push to strengthen its position in global trade networks: Iran has been making efforts to bolster its trade capabilities, including through construction of the Shalamcheh-Basra railway with Iraq and the Chabahar-Zahedan railway connecting the Gulf of Oman to Europe. Iran has for decades been placed under severe sanctions by the West, crippling both its trade and economy.

Neom invites bids for high-speed railway rolling stock tender

Saudi Arabia’s USD 500 bn mega project Neom has asked companies to submit their bids in October to provide rolling stock vehicles for the high-speed and freight railways dubbed the Connector South and the Spine, MEED reported last week. The Spine railway is an infrastructure corridor running along The Line residential development, while Connector South links The Line to the Oxagon industrial city. Neom declined to comment when approached by Enterprise Logistics.

Also up for grabs: Tenders will also be open for the electrification, signaling, and control systems for the The Spine and Connector South railways.

Six international companies are expected to offer bids: These include French rolling stock manufacturer Alstom, Spain’s CAF and Talgo, China’s state-owned CRRC, Japan’s Hitachi Rail, and Germany’s Siemens.

Background: Neom awarded aUSD1.5 bn contract to Italy’s WeBuild and KSA’s Shibh Al-Jazira Contracting (SAJCO) earlier in May for the construction of the 75km Connector South railway connecting The Line with Oxagon. The contract also covers viaducts, road and railway underpasses, a freight line, maintenance depots, and other infrastructure and auxiliary facilities.

DP World’s long-term issuer default rating upgraded

Fitch Ratings has upgraded DP World’s long-term issuer default rating to BBB+ from BBB-, with a stable outlook, according to a statement.The ratings agency also upgraded DP World’s short-term rating to F2 from F3. The upgrade came as a result of the company successfully reducing its debt and improving its financial position, the agency said.

The rationale: The company’s reliable cashflow from various business operations, ports-related revenue, as well as the long-term maturity (82 years remaining) of its key assets — Jebel Ali Port and Jebel Ali Freezone — were cited as the main reasons behind the upgrade. DP World’s acquisition-focused strategy and “corporate-like, bullet and uncovenanted debt structure” also played a role in the upgrade. Most of DPW’s cashflow is not subject to major restrictions, Fitch said.

By the numbers: The company’s debt-to-EBITDA ratio fell to below 4 by the end of 2022, meeting its target, Fitch said. On the other hand, the company’s leverage reached 6.4x in 2020 as a result of its debt-financed privatization.

SOUND SMART- Debt-to-EBITDA ratios higher than 4 or 5 typically indicate that a company is less likely to pay off its debts in a timely manner, and thus is less likely to take on more debt, according to Investopedia. Leverage, on the other hand, measures the ratio of debt and equity when it comes to a company’s financing operations, with leverage ratios higher than 2 signaling significant amounts of debt.

Long-term predictions: Fitch expects the company’s leverage ratio to stay below 4.5x until 2027.

Minerva Bunkering eyes 8k ships for Suez Canal’s bunkering services

Minerva wants to attract 8k ships for bunkering in first phase of Suez Canal operations: Bunkering service provider Minerva Bunkering aims to attract some 8k ships in the first phase of its bunkering services in the East Port Said and Ain Sokhna ports, Al Mal reports, citing sources it says are in the know. The average cost of the bunkering services is USD 120k per day, the sources said.

The details: Minerva will add more fuel barges to its units in the ports, targeting five units — three north of the canal and two in the south — before the end of June, the sources told Al Mal. The Suez Canal Economic Zone also aims to have Minerva provide refueling services worth 3.5 mn tons of fuel for ships crossing the canal within its first year of operations, they added. The SCZone will supervise and manage the services.

Background: The Suez Canal granted one-year bunkering licenses to Coral Energy, Minerva Bunkering, and Peninsula last year through a tender. Two of the licenses are on the Red Sea, while two others are on the Mediterranean. The SCZone first announced plans to launch the new marine services back in January, as part of its 2020-2050 strategy.

Still to come: Peninsula is also setting up shop up north near the Mediterranean sea to provide bunkering services within a few days, the sources also said.

UAE, Bosnia-Herzegovina in trade talks + Indonesia, Iran set for trade agreement. PLUS: Turkey + Qatar want to boost cooperation on transport

UAE + Bosnia-Herzegovina discuss boosting trade and investment ties: UAE Foreign Trade Minister Thani bin Ahmed Al Zeyoudi and Bosnia-Herzegovina’s Foreign Trade and Economic Relations Minister Stasa Kosarac discussed potential trade during a meeting, Emirati state news agency WAM reports. This follows numerous bilateral discussions held recently by the UAE with seniors and officials from countries including Jordan, Egypt, Lebanon, Iraq, Uzbekistan, and Sri Lanka to boost bilateral trade.

Iran + Indonesia set to sign trade agreement: Iran and Indonesia have completed negotiations on a bilateral trade agreement, the signing ceremony for which is set to take place during Iranian President Ebrahim Raisi’s visit to Jakarta on 22-24 May, Iran’s Tasnim News Agency reports. The volume of trade between the two countries reached USD 54.1 mn in 1Q 2023, marking a 23% y-o-y increase. The two countries concluded talks on a barter agreement, allowing the exchange of goods and services without relying on conventional currency settlement.

ALSO WORTH KNOWING-

Turkey wants to enhance trade with Qatar: Qatar’s Transport Minister Jassim Saif Ahmed Al Sulaiti received a written message from his Turkish counterpart Adil Karaismailoğlu on enhancing bilateral relations in transportation, ports, and civil aviation, during his meeting with Turkish ambassador Mustafa Goksu. (Statement)

Ship recycling could increase by double over the next decade

Ship recycling industry expected to surge: Some 15k ships with a deadweight capacity of over 600 mn tons could be recycled by 2032, more than twice the amount recycled over the past decade, according to international shipping association BIMCO. The deadweight capacity of ships has been rising over the decades, which explains the increase of recycling practices, and which raises the possibility of recycling increasing again in the 2030s and 2040s.

Etihad Rail inks seven MoUs + AD Ports to develop Karashi ports. PLUS: News from Royal Jordanian, IndiGo, WEE, Dubai Maritime Authority, Etihad Cargo and Egypt’s tax authority

RAIL-

Etihad Rail signs seven agreements at Middle East Rail 2023:Etihad Rail inked seven agreements with local and global partners at the closing of Middle East Rail 2023,according to company statements. The most important of these wasa 20-year partnership with DHL Global Forwarding that will see the establishment of a JV enabling DHL to employ the UAE’s national railway for its main freight operations in the country. The company also signed MoUs with:

Italy-based Arsenale Group to establish a luxury train route;
Morocco’s National Railway Office (ONCF) to exchange knowledge and best practices;
Uber to broaden the reach and accessibility of transport solutions across the UAE;
AD Ports Group logistics subsidiary MICCO to establish intermodal freight solutions;
SkyGo to use drones to inspect and monitor railway freight operations;
Fujairah Natural Resources Corporation, a government watchdog that oversees mining operations in the Emirate of Fujairah, according to the International Railway Journal, though it’s not clear what the MoU involves.

PORTS-

AD Ports and Pakistan’s Karachi Port Trust are looking into developing advanced port and terminal infrastructure in Pakistan,according to a press release. The two sides inked an MoU to enhance bilateral cooperation and conduct feasibility studies to develop, expand, and digitize ports in Pakistan.

AVIATION-

Royal Jordanian’s fleet is expanding: Brazilian plane makerEmbraer and commercial aviation lessorAzorra will supply eight aircraft to Royal Jordanian for USD 635 mn, according to a statement by Embraer. The Jordanian airline will acquire four E190-E2 — which can seat 92 passengers — and four E195-E2 jets, which can seat 120. The E2 models were chosen for their “superior performance and operational efficiency,” the statement said. The E2 “reduces the investment cost of pilot training and spare parts provisioning significantly, whilst also lowering crew scheduling and maintenance costs,” the airline’s Vice Chairman Samer Majali said. The aircraft also provide 25% fuel savings compared to the airline’s current aircraft, which will save in operating costs and reduce carbon emissions, Majali added.

IndiGoexpands its reach to the Middle East: Indian airline IndiGo is launching direct flights between Indian and Middle Eastern cities, according to a statement. Flights between Bengaluru and Dubai, Kochi, and Bahrain, and Lucknow and Dammam will operate starting 1 June, while flights between Ahmedabad and Jeddah will start on 11 August. IndiGo will be the first Indian airline to provide direct Bengaluru-Dubai and Kochi-Bahrain flights. It will also be the only airline to provide daily flights connecting Dammam to Khochi, Lucknow, and Chennai.

E-COMMERCE-

Dubai-based e-commerce startup WEEMarketplace has launched its last-mile logistics platform in the UAE, according to a press release. The company aims to have over 500 retailers and sellers on its platform by the end of the year, with plans to increase its fulfillment services to stock over 500k products by the end of the year. The startup currently has a network of 50k riders and local partners.

TAXATION-

Egypt enacts tax breaks on importing industrial equipment: Companies in Egypt will be given a temporary VAT exemption on the import of equipment used in the production of goods, the country’s Finance Ministry said. The move aims to encourage local industry and attract investment, the ministry said.

ALSO WORTH KNOWING-

TheDubai Maritime Authority has reported a 12% y-o-y growth rate in the number of maritime companies in 1Q 2023. (Zawya)
Egyptair Cargo resumed flights to Libya’s Mitiga International Airport last week after an eight year absence. The flights will operate once a week. (Ahram Online)

New US sanctions on Russia target economy and military trade with Iran

Washington has announced a fresh set of sanctions against Russia, including measures that target its military trade links with Iran, according to a White House statement. The latest sanctions take aim at Russia’s war efforts, energy sector, and access to international finances. The measures also aim to close loopholes around sanctions and bolster efforts to limit Russia’s access to sovereign assets abroad. The new sanctions also target Iran-Russia logistical networks and Iranian shipping firms involved in military-related transfers to Russia, according to the White House statement.

ALSO WORTH KNOWING-

The Panama Canalis imposing restrictions on vessels passing through it as of this Wednesday, 24 May, including reducing drafts by carrying less and cutting the weight of their cargoes, due to severe drought affecting the canal, in turn causing vessels to pay higher fees. (Bloomberg)

MSC inks MoU for design ammonia dual-fuel containership

MSC inks MoU for design of 8200 TEU ammonia dual-fuel containership: Lloyd’s Register (LR), Shanghai Merchant Ship Design & Research Institute (SDARI), MAN Energy Solutions (MAN-ES) and MSC have inked an MOU to design an ammonia dual-fuel containership for MSC, Marine Insight reports. Technical specification and design documents will be drafted for an ammonia-powered variant of SDARI’s 8.2k TEU container ship. LR will verify safety standards, SDARI will provide the design documentation, and MAN-ES will contribute engine design and ammonia fuel supply data.

What they said: “The application of ammonia as a marine fuel for the container ship sector will be crucial for our industry to achieve the emission reduction targets set by the IMO,” said CEO of Lloyd’s Register Nick Brown.

Calendar

MAY

May: The Suez Canal Economic Zone (SCZone) plans to hand over a new 1k-meter container berth to the East Port Said Port.

May: The ArabAcademy for Science, Technology and Maritime Transport (AAST) will roll out its first locally-made electric cargo transport vehicle.

16-23 May (Tuesday-Tuesday): Subscription window will be open for retail Investors for the Adnoc L&S IPO.

16-24 May (Tuesday – Wednesday): Subscription window will be open for institutional investors for the Adnoc L&S IPO.

24 May (Wednesday): Fleet and Mobility Summit, Dubai.

23-24 May (Tuesday-Wednesday) Seamless Middle East 2023 summit, Dubai World Trade Center.

29-31 May (Monday-Wednesday): Translogistica Libya 2023, Misurata, Libya.

29-31 May (Monday-Wednesday): Electric Vehicle Innovation Summit 2023 Adnec, Abu Dhabi

JUNE

June: Suez Canal Economic Zone holds a roadshow in Delhi.

1 June (Thursday): Listing of shares on ADX, Adnoc L&S IPO

4-6 June (Sunday-Tuesday): IATA Annual General Meeting and World Air Transport Summit, Hilton Bomonti Hotel, Istanbul, Turkey.

6-7 June (Tuesday-Wednesday): Ports and Customs Week, Cape Town, South Africa.

12-15 June (Monday-Thursday): Saudi Plastics & Petrochem, Riyadh, KSA.

14-16 June (Wednesday-Friday): International Conference on Models and Technologies for Intelligent Transportation Systems, Nice, France.

20-23 June (Tuesday-Friday): Conference on the Marine Transportation System Innovative Science and Technologies Toward Greater Sustainability, Washington, DC, US.

JULY

1 July (Saturday): A new greenfield liquid bulk terminal in Khalifa Port Abu Dhabi will kick off operations.

16-17 July (Thursday-Friday): The Levitate Conference and Exhibition, St. Regis Amman Hotel.

24-25 July (Monday-Tuesday): ICSG Istanbul, Istanbul Lutfi Kirdar Convention & Exhibition Centre, Istanbul.

SEPTEMBER

5 September (Tuesday): The Leaders in Logistics KSA Summit, Riyadh.

20-22 September (Wednesday-Friday): Transport Evolution Africa Forum and Expo, Inkosi Albert Luthuli ICC Complex (Durban ICC), South Africa.

OCTOBER

3-5 October (Tuesday-Thursday): Smarter Mobility Africa Summit, South Africa.

NOVEMBER

1 November (Wednesday): Smart Maritime Network Dubai Conference, Conrad Dubai, UAE.

14-15 November (Tuesday): Supply Chain & Logistics Arabia, Narcissus, Riyadh, Saudi Arabia.

15 November (Wednesday): Leaders in Logistics UAE Summit, Dubai.

21-23 November (Tuesday-Thursday): Intermobility Expo 2023, Dubai World Trade Center, Dubai, UAE.

EVENTS WITH NO SET DATE

2H2023:Construction of Neom’s first hydrogen fueling station will kick off.

2H2023: Expansion of Baghdad International Airport to begin.

2024

FEBRUARY 2024

12-13 February (Monday-Tuesday): Breakbulk Middle East conference, Dubai Trade Centre.

12-15 February (Monday-Thursday): African Air Expo, Cape Town.

28 February-1 March (Wednesday-Friday): MENA Transport Congress and Exhibition 2024, Dubai.

MARCH 2024

12-14 March (Tuesday- Thursday): IATA World Cargo Symposium, Hong Kong International Airport.

MAY 2024

2-3 May (Thursday-Friday): Geneva Dry, Geneva, Switzerland, Hotel President Wilson.

2025

Iraq will complete phase one of the construction of the Grand Faw Port.

DHL and Aramco’s logistics and procurement hub in Saudi Arabia will commence operations.

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