Supply chain disruption left the Gulf’s rail busier, but with capacity limits

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WHAT WE’RE TRACKING TODAY

TODAY: Post-crisis track record

Good morning, ladies and gentlemen. Gulf rail proved it could handle a crisis, but the recovery will decide which emergency workarounds stick and which fade as shipping normalizes. Capacity limits and sea freight's cost advantage mean the gains are real but modest.

On the agreements front, Itochu picked up a stake in Abu Dhabi mid-life lessor Sirius Aviation as manufacturer backlogs keep lease rates elevated.

AD Ports’ Karachi Terminal completed a USD 60 mn dredging project, and ALCN has in-principle board approval for a new logistics zone in Alexandria. Let’s dive in.

AviLease taps debt market

PIF-backed AviLease is planning a five-year USD-denominated Regulation S bond offering, kicking off investor calls today, Zawya reports. The notes are expected to list on the London Stock Exchange’s International Securities Market, rated Baa2 by Moody’s and BBB by Fitch.

The new issuance continues a pattern: AviLease is funding its expansion through its own balance sheet rather than drawing on the PIF directly, consistent with the sovereign fund’s push to build certain portfolio companies, including AviLease, into self-financing, internationally competitive businesses that attract more foreign direct investment.

REMEMBER- The aircraft lessor has been ramping up its exposure to debt instruments over the past months, pricing a USD 850 mn offering of senior unsecured notes due November 2030 under its Global Medium Term Note Program.

ADVISORS- AviLease appointed BNP Paribas and Mizuho as joint global coordinators, bookrunners, and lead managers for the offering, alongside Credit Agricole CIB, Emirates NBD Capital, HSBC, JP Morgan, and Morgan Stanley as joint bookrunners and lead managers.

Zone in motion

Alexandria Container & Cargo Handling (ALCN) is moving to structure an integrated logistics zone in Alexandria. The company’s board has granted in-principle approval for the project following a preliminary concept and feasibility study, according to a disclosure (pdf). Final implementation is subject to completing technical, financial, and regulatory studies. The zone’s location, capacity, cost, or expected completion date were not disclosed.

The company is now working out the project’s financing, structure, and delivery model. The project’s management team will determine final capex, assess funding and capital-structure options, secure the required approvals, and prepare detailed engineering, operational, and compliance studies. The team will also examine whether the zone should be developed directly by the company, through an SPV, or with strategic investors.

Background: ALCN operates two terminals with a combined capacity of 1.5 mn TEUs in Alexandria and El Dekheila ports, which handle about 60% of Egypt’s foreign trade. Its two terminals together span approximately 1.6 km of quay length and connect directly to Egypt's national rail network. In FY 2024-25, ALCN turned in an EGP 8.37 bn top line last year, with an adjusted EBITDA margin of 64%.

Back in the air

An airfreight leg: Middle East Airlines (MEA) has resumed air cargo and re-export services from Lebanon to Saudi Arabia after Saudi authorities cleared the reception of shipments under approved procedures. The service covers both Lebanese exports and third-country goods re-exported though Lebanon, with MEA cargo putting arrangements in place to move shipments to the Saudi airport served by the carrier.

The move expands the trade restart beyond the port: The first container bound for Jeddah left Beirut over the weekend, marking the return of Lebanese export to Saudi Arabia after a five-year hiatus. Saudi Arabia lifted its import ban earlier this month after Lebanon introduced new screening protocols at Beirut and Tripoli ports aimed at flagging suspicious cargo.

Breathing room

Dubai Customs has extended customs declaration deadlines under suspended duty arrangements by another 120 days, covering import-for-re-export transactions, temporary admissions, and transit shipments across all modes, according to a notice on its website (pdf). The extension runs from the expiry of the original suspension period, which covered 27 February through 31 July 2026.

Fire contained

The deadly restart at Ras Laffan won’t affect LNG exports. The Barzan gas processing facility’s explosion, which killed thirteen people and injured 66 in Qatar’s Ras Laffan Industrial City on Sunday, didn’t affect the rest of the facilities, port, and wider logistics operations, meaning the incident will not affect export capability. The Barzan plant had only resumed operations two days earlier after being offline since December for urgent maintenance.

The damage is contained. The fire has been brought under control, with an investigation ongoing into what the Qatari energy minister described as a technical accident rather than sabotage or a hostile incident. Barzan primarily supplies pipeline gas to domestic industry and power generation, while also producing LPG and other export products.

Market watch

Oil prices continued to fall and were trading near a four-month low, as more tankers stranded in the Gulf since the start of the Iran war moved out of the Strait of Hormuz, Reuters reports. Brent crude futures were down USD 0.37 to trade at USD 76.71 / bbl by 04.10 GMT, while WTI slipped USD 0.36 to USD 72.85 / bbl.

The Baltic Index stops the bleeding: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — fell 0.6% to 2,667 points on Friday. The capesize index dropped 0.7% to 4,046 points, while the panamax index slipped 0.7% to 2,045 points. The smaller supramax index fell 0.6% to 1,705 points.

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Where does rail fit in when shipping is back to normal?

The Gulf rail workaround is moving from emergency rerouting to a recovery-phase strategy. The question for Gulf rail is no longer whether trains can carry crisis cargo – they already did — but which of those emergency workarounds become permanent second routes and which fade as shipping normalizes.

The restart is a two-strait problem: Hormuz reopening does not restore normal flows if the Red Sea remains unsafe, and vice versa. Rail normalization therefore waits on the slower of the two maritime recoveries, Urs Mosimann, a former strategy director at Etihad Rail and a Dubai-based transport, logistics, and infrastructure expert, tells EnterpriseAM. The binding constraint is the security and ins. environment, not readiness — war-risk premiums, protection-and-indemnity cover, and stranded fleet positions have to normalize before the sea reclaims its default share.

Rail’s response has to be separated into blocks. The first block is utilization of the asset base that already exists — more services, more frequent running where crew allows, reactivated corridors. The second is rolling-stock capital, where locomotives and wagons carry two-to-three-year lead times and only make sense against sustained baseline demand. The third is network capital, where new lines are 50-year-plus assets governed by long-run demand, Mosimann says.

The crisis proved that the fast lever works. Etihad Rail Freight moved 459k tons and around 7.9k containers on more than 100 trains in nine days, using its existing fleet of 38 locomotives and more than 1k wagons, while activating additional corridors and pushing intermodal capacity toward east-coast ports. “No new line was laid to do this. No locomotive was ordered. The railway simply ran harder on the track it had,” Mosimann says. Saudi Arabia Railways opened a Gulf-to-Jordan freight corridor from Dammam, Jubail, and King Fahd ports to Al Haditha on the Jordanian border, more than 1.7k km on the existing North-South line, carrying more than 400 containers per train, with onward reach at Aqaba.

“The crisis leaves rail busier, not bigger,” Mosimann says. Rail keeps a larger role than it had before the war, but a modest one, and only where the reason is proven economics or deliberate policy. Two increments stand out. The first is any lane where rail proved genuinely cost-competitive during the disruption: a corridor with the right distances and volumes, where the economics worked on their own terms rather than only under emergency conditions, can retain real and durable business as a secondary route.

The second is the political increment on capital. A government may choose to underwrite a corridor for its strategic value, accepting a lower return hurdle to buy resilience. The Saudi design tender on the 672 km Al Khafji-to-Al Batha segment of the GCC Railway — issued in May, covering the Saudi side of the link toward Ghuwaifat — is exactly this channel in motion. It is a real cross-border milestone, but it remains a design tender, not a construction start or financial close, and the broader GCC Railway program predates the conflict.

Sea is the cheapest mode for the long haul, and when it returns, it pulls volumes back off both rail and road. “Rail does not get to hold a share it cannot defend on price against either of them,” Mosimann says.

The limits of rail

Capacity is the hard ceiling. Against UAE domestic container demand of roughly 6-7 mn TEU a year, rail can absorb low hundreds of thousands of TEU of diverted cargo today, rising into the low mns within three to five years under a focused program and capped by a five-link stack of east-coast port capacity, rail terminals, rolling-stock availability, single-track sections, and inland receiving terminals at ICAD, Jebel Ali, and Khalifa, Mosimann tells us. The binding constraints now are the missing rail connection at Khorfakkan and the cross-border gap to Saudi Arabia.

Rail ticks the right boxes, but not every box. Where rail connects directly to a port on one side and needs only one truck feeder, it can start beating direct trucking somewhere past 200-250 km. Where rail needs feeders on both ends, the haul has to clear roughly 400-500 km before rail gains. Cross-border flows are the exception: customs-bonded trains can cross without stopping, while trucks queue at the border, which can swing the time comparison sharply toward rail.

The one worth building is already underway

“The genuine resilience story is not new and is not war-driven. It is the multi-corridor network already being built: Indian Ocean access through Fujairah and Sohar; Red Sea access through the Saudi Landbridge and the SAR-to-Jordan corridor; northbound reach through the UAE-Jordan railway toward Aqaba and, eventually, the Mediterranean and Turkey,” Mosimann says.

Saudi Arabia and Turkey are exploring a rail link through Jordan and Syria, with MoUs covering rail cooperation, logistics, signaling, communications systems, and digitization already signed — though around 400 km is still missing between Jordan and Syria, and reconstruction, customs harmonization, and financing still need to come together before it operates as a through-corridor.

“Connect those, and no single chokepoint — at sea or on land — shuts the region down. The two-strait disruption is in fact the cleanest argument for that diversity: a Hormuz workaround that leans on Red Sea ports is only ever as good as the safety of the Bab El Mandeb. Real resilience needs more than one alternative,” Mosimann adds.

Japan’s Itochu takes stake in Abu Dhabi-based Sirius Aviation

Abu Dhabi aviation is drawing another global player into its orbit. Itochu, one of Japan’s largest trading and investment firms, acquired a stake in Abu Dhabi-based aircraft lessor Sirius Aviation Capital, according to a press release. The investment size and price of the stake weren’t disclosed.

Post-transaction: Sirius is owned by Mubadala and Alpha Wave Global-backed Abu Dhabi Catalyst Partners, with Itochu joining as a shareholder. Itochu will combine Sirius’ network with its own 90 aircraft and engines. Currently, Sirius leases mid-life aircraft to airlines internationally and also handles acquisitions, debt financing, and lease management.

Why it matters: Airlines are desperate for aircraft they can’t get from manufacturers — Airbus and Boeing’s combined order backlog now stands at over 11 years, and the chronic delivery delays are pushing lease rates higher. That makes mid-life lessors like Sirius — which specializes in aircraft that are already built and flying — increasingly valuable.

The scale of the backlog is striking: At the start of 2026, Airbus and Boeing had a combined backlog of over 3k aircraft for the UAE, India, and Saudi Arabia alone — more than double those markets’ current combined fleets — with only 900 deliveries slated for the next three years.

Not the only ones: Dubai Aerospace Enterprise partnered with Blackstone Credit and Ins. in April to launch an aircraft leasing investment platform, targeting USD 1.6 bn in annual deployment.

KGTL completes dredging project as part of infrastructure investment push

KGTL makes headway at Karachi Port: Karachi Gateway Terminal (KGTL) — a JV by the majority shareholder AD Ports and UAE-based Kaheel Terminals — has completed a USD 60 mn dredging project at Karachi Port and is now preparing a new investment phase focused on container handling capacity, bulk export infrastructure, warehouses, silos, and automation. The company is planning up to USD 100 mn in new investments over the next five years as it seeks to capitalize on cargo flows redirected during the Iran conflict.

BACKGROUND- The JV secured a 50-year concession from Karachi Port Trust to operate and develop container berths on the East Wharf in 2023. AD Ports then expanded its presence at the port in 2024 through a separate 25-year concession agreement for more berths, with plans to invest some USD 75 mn in the first two years in port infrastructure and equipment.

Bigger ships, faster turnaround: The dredging project is expected to double the size of bulk vessels Karachi can accommodate to some 120k tons, up from 60k tons, while also upgrading bulk-handling facilities to cut turnaround times for a 60k-ton vessel to as little as three days from as much as two weeks currently.

The expansion goes beyond the port itself, with investments in rail freight infrastructure, including locomotives, rolling stock, and inland storage facilities near agricultural production areas. The goal is to create an integrated logistics chain linking farms to export terminals and lowering transport costs for commodities, including rice and corn.

This is becoming a familiar playbook across emerging logistics hubs: Use a geopolitical disruption to attract cargo, then invest fast enough to keep it after trade routes normalize. The real competition is no longer between ports alone, but between entire logistics corridors.

MIS secures new Humain hosting award

Humain taps MIS for data-center hosting services

MIS lands Humain data-center hosting award: Saudi IT firm Al Moammar Information Systems (MIS) has been awarded a contract to provide data-center hosting services to PIF-backed AI company Humain, MIS said in a disclosure to Tadawul. The value exceeds 30% of MIS’s consolidated 2025 revenue, though the company did not disclose an exact figure. The contract is expected to be signed on 22 September.

Not the first collab: The firm had secured a roughly SAR 1.9 bn contract to design and build an AI-focused data center for Humain under a contract over 155% of its 2024 revenue.

DP World scales up Southampton’s quay capacity

DP World brings in Europe’s largest quay cranes at Southampton: DP World has received two new ship-to-shore cranes at its Southampton terminal under a GBP 60 mn upgrade, with each unit weighing over 2k tons. The pair is the first of four cranes due this year, which will lift the terminal’s quay-crane fleet to 15 once the second pair arrives later in 2026. The cranes can handle vessels of up to 24k TEUs and use tandem lifts to move two 40-ft containers at once, giving the terminal a tool to raise berth productivity and cut vessel turnaround times.

Calendar

AUGUST

30 August-1 September (Sunday-Tuesday): Air Cargo Middle East, Riyadh, Saudi Arabia.

30 August-1 September (Sunday-Tuesday): Saudi Warehouse and Logistics Expo, Riyadh, Saudi Arabia.

SEPTEMBER

16-17 September (Wednesday-Thursday): Saudi Maritime & Logistics Congress, Dammam, Saudi Arabia.

22-24 September (Tuesday-Thursday): Seamless Middle East, Dubai, UAE.

28-30 September (Monday-Wednesday): Transport Logistics Middle East, Riyadh, Saudi Arabia.

OCTOBER

12-14 October (Monday-Wednesday): The Airport Show, Dubai, UAE.

21-22 October (Wednesday-Thursday): Global Ports Forum, Singapore.

26-29 (Monday-Thursday): Air Cargo Forum, Miami, US.

27-29 October (Tuesday-Thursday): Routes World, Riyadh, Saudi Arabia.

NOVEMBER

2-5 November (Monday-Thursday): ADIPEC Maritime and Logistics Exhibition and Conference, Abu Dhabi, UAE.

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