U.A.E. Ports & Transportation Infrastructure Industry and Opportunities for Partnership
“The U.A.E. in particular offers many advantages as an international port of call, as it is home to some of the world’s top 10 container ports and is located just hours away from leading Asian and European markets.” — H.E. Sheikha Lubna Al Qasimi, U.A.E. Minister of Foreign Trade
The United Arab Emirates (U.A.E.) is engaged in a vigorous campaign to develop its ports and transportation infrastructure in an effort to bolster the country’s position as a vital hub in the global logistics supply chain. Moreover, this infrastructure development is a key element of the country’s ongoing effort to diversify its economy away from an overriding dependence on oil and gas. In fact, the leadership has implemented several comprehensive economic plans—notably the U.A.E.’s Vision 2021, Abu Dhabi’s Vision 2030, and Dubai’s Vision 2015—to mandate an aggressive schedule for the development of the country’s land, air, and water infrastructure.
Over the next ten years, the U.A.E. is projected to host the world’s largest number of air travelers through Dubai, be connected to the other Gulf Cooperation Council (GCC) countries via a regional railway system, and to advance its status as a global commercial port-of-call. In managing this rapid growth, the U.A.E.’s leadership has sought to streamline coordination of the regulatory regimes in each of the seven emirates.
The following report provides an overview of the regulatory framework that governs the U.A.E.’s ports and infrastructure sector; offers information about key U.A.E. ports and infrastructure companies and agencies; and highlights opportunities for increased investment and partnership for U.S. and U.A.E. companies.
Federal Regulatory Environment- Ports & Transportation
Four agencies regulate the U.A.E.’s ports and transportation infrastructure at the federal level. Plans for a fifth federal agency, that will regulate the U.A.E. railway sector, are underway.
– The Ministry of Public Works, established in 1972 shortly after the unification of the seven emirates, is headquartered in Abu Dhabi and plans and develops federal roads and ports projects. His Highness Sheikh Hamdan bin Mubarak Al Nahyan serves as the Minister of Public Works and the President of the Higher Committee of U.A.E. Civil Seaports and Airports Security.
Website: http://www.mopw.gov.ae/en-us/Pages/default.aspx
– The National Transport Authority (NTA), established in 2006, is the U.A.E.’s federal transportation regulatory authority, and proposes policies, laws, and legislation on marine and land transport services. His Highness Sheikh Hamdan bin Mubarak Al Nahyan serves as the Chairman of NTA and His Excellency Dr. Nasser Saif Al Mansoori serves as the Director General. The NTA works in coordination with state and local transportation regulatory agencies in the Emirates to ensure a consistent federal transportation policy agenda.
Website: http://www.nta.ae/
– The General Civil Aviation Authority (GCAA), established in 1996 by Federal Cabinet Decree, regulates the U.A.E.’s federal civil aviation sector. The GCAA works to ensure that the country’s aviation facilities and practices are safe, secure, and in line with international standards. His Excellency Engineer Sultan Bin Saeed Al Mansouri, the U.A.E. Minister of Economy, serves as the Chairman of GCAA and His Excellency Saif Mohammed Al Suwaidi serves as the Director General. The Board of Directors is comprised of senior officials representing all seven emirates and oversees the regulation of the country’s civil aviation system.
In the fifteen years since its inception, the GCAA has successfully redeveloped the U.A.E.’s aviation industry and modernized the country’s aviation technology. The GCAA has completed a modernization overhaul of the country’s air traffic control technology. Furthermore, the GCAA has recently completed construction of an air traffic control center in Abu Dhabi and increased the workforce at their busy regional office in Dubai to better serve the Northern Emirates. The GCAA is committed to providing the U.A.E. with the latest technologies, including the introduction of a Satellite Navigation Global Positioning System (GPS) approach procedure for Dubai International Airport. The GCAA works to strengthen the U.A.E.’s aviation sector as the country develops into a leading global aviation hub.
Website: http://www.gcaa.gov.ae/en
– The Critical National Infrastructure Authority (CNIA) was established by His Highness Sheikh Khalifa bin Zayed Al Nahyan by presidential decree in 2007. The CNIA, led by Chairman Staff Brigadier Pilot Faris Al Mazrouei, is the government authority responsible for protecting the U.A.E.’s infrastructure from potential foreign threats, sabotage, and destruction. Headquartered in Abu Dhabi, the CNIA protects the U.A.E.’s infrastructure in cooperation (?) with the U.A.E. Armed Forces. Branded as the “Guardians of the Nation’s Prosperity,” the CNIA monitors the national infrastructure as well as the safety and security of the Emirate of Abu Dhabi’s maritime environment. The CNIA protects the U.A.E.’s land and maritime infrastructure, including its ports, offshore and onshore petroleum facilities, and its national energy reserves.
Website: http://www.cnia.ae/default.aspx
State Regulatory Environment- Ports & Transportation
Abu Dhabi
Aviation, maritime, land transportation, and road works policy is formulated in Abu Dhabi by the Department of Transport. His Excellency Abdallah Rashid Al Otaiba serves as Chairman of the Department of Transport and also serves on the board of the GCAA. The Department of Transport works to execute Abu Dhabi Vision 2030 to develop and maintain a sophisticated and sustainable transportation infrastructure for the rapid diversification of Abu Dhabi’s economy in the following sectors:
• Aviation: The Department of Transport develops economic regulations in coordination with federal GCAA regulations, oversees the Abu Dhabi Airport Company’s strategic planning and operations, and monitors the performance and actively promotes the development of Abu Dhabi’s aviation sector. Abu Dhabi Airports Company manages five airports in the Emirate, including the Abu Dhabi International Airport— home to Abu Dhabi’s flagship airline, Etihad Airways.
• Maritime: The Department of Transport develops and coordinates state regulations in line with the federal framework aimed at maintaining a safe, secure, environmentally-friendly, and economically sustainable maritime policy; oversees the Abu Dhabi Port Company’s strategic planning and operations; and monitors the performance and actively promotes the development of Abu Dhabi’s maritime sector.
• Public land transportation: The Department of Transport develops regulations, provides licensing and registrations services for hired vehicle and mass transit operators, oversees public and hired transportation operations within Abu Dhabi, and monitors the performance and actively promotes the development of the road transportation sector. Additionally, the Department of Transport manages Abu Dhabi’s transportation and traffic operations on main highways and oversees the planning of major highway development projects.
Ajman
Ajman’s maritime policy is formulated by the Government of Ajman’s Department of Ports & Customs, led by its Director General, Sheikh Mohammed bin Abdullah Al Nuaimi. The ports and customs operations of Ajman are managed by Emirates Ports Services (EPS) LLC, a joint-venture between ETA-Ascon LLC of Dubai and Union Holding Co. LLC of Ras Al Khaimah. In addition to port operations and management, EPS supports the Government of Ajman’s regulation of customs inspections, maritime security, and environmental protection.
Ajman is in the process of building Ajman International Airport to augment its transportation and logistics sector. The airport is expected to be completed in late 2011 or early 2012 and will focus 65% of its operations on cargo flights, with the remainder being passenger flights. By its second year of operation, Ajman International Airport expects to support 250,000 passengers and 20-25 flights per week, increasing to 1 million passengers and 100 flights per week by its fourth year.
Dubai
Maritime, land transportation, and road works policy is formulated in Dubai by the Roads & Transportation Authority (RTA). The RTA, established in 2005, is led by its Chairman, His Excellency Mattar Al Tayer. The RTA works to develop a modern transportation infrastructure to connect the Emirate with surrounding states and neighboring countries and to provide an integrated system to serve Dubai’s vital economic and social interests. RTA oversees the development of integrated road and marine networks built to advance Dubai’s economic diversification objectives while meeting the highest international standards.
Aviation policy is formulated and driven in Dubai by the Dubai Civil Aviation Authority (DCAA), led by His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman of the Dubai Airports Company, and Emirates Airline. The DCAA oversees the development of Dubai’s aviation sector and the expansion of the state’s airport facilities —Dubai International Airport and Al Maktoum International Airport— to accommodate forecasted world-record passenger numbers in the coming years.
Dubai Airports Company manages the Dubai International Airport Freezone— home to Dubai International Airport and Dubai’s flagship airline, Emirates Airline— and Al Maktoum International Airport — located at Dubai World Center (DWC).
Dubai Maritime City Authority—led by its Executive Chairman Ahmed Butti Ahmed and Executive Director Amer Ali— was established in 2007, as a major step to establish a world-class maritime authority in Dubai. DMCA plays a major and leading role in regulating and addressing all maritime-related activities, challenges and business needs for both the local and global maritime audiences. DMCA works to enhance Dubai’s position in the maritime industry by overseeing the development of maritime sectors such as maritime services, maritime management, licensing of vessels, chartering of vessels, maritime and educational research, design and building of vessels, maritime shipment organization, maritime exhibition, conferences, training and workshops, maritime tourism and maritime specialized arbitration.
Jebel Ali Free Zone Authority (JAFZA) is Economic Zones World’s flagship operation. One of the world’s largest and the fastest growing free zones; JAFZA was established in 1985 and is spread over an area of 48 square kilometers, and is home to over 6400 companies— including over 120 of the Fortune Global 500 enterprises— from across the world. It is a leading economic driver for the U.A.E. economy and international trade traveling through the Emirates.
DP World —lead by its Chairman, His Excellency Sultan Ahmed Bin Sulayem— was formed in September 2005 with the integration of the terminal operations of the Dubai Ports Authority (DPA), which was focused on the U.A.E. ports of Rashid and Jebel Ali, and DPI (Dubai Ports International) which had been set up to export this success internationally. DP World operates more than 60 terminals across six continents, with container handling generating around 80% of its revenue. In addition, the company currently has 11 new developments and major expansions underway in 10 countries.
Jebel Ali Port —DP World’s flagship port— is located 35km to the southwest of Dubai, on the Arabian Gulf coast. The port’s strategic geographic location along international trade routes has enabled it to act as a maritime link between the east and the west; providing a gateway to access a huge international market. It is a technologically advanced facility, employing state-of-the-art equipment, including the world’s largest gantry cranes capable of lifting four 20 foot containers or two 40 foot containers simultaneously- a total capacity of 80 tons, twice that of traditional cranes. These improvements will enable Jebel Ali Port to cater to the new generation of mega-ships (14,000 + TEU) and to meet its goal of reaching a total capacity of 19 million TEU by 2014.
Fujairah
Fujairah is strategically located between eastern and western international shipping lines near the Strait of Hormuz and its port is the sole multi-purpose port on the eastern seaboard of the U.A.E. The Port of Fujairah operates under the leadership of His Highness Sheikh Saleh bin Mohammad Al Sharqi, Chairman, and Captain Moosa Murad, General Manager. The Port of Fujairah has an alliance with Dubai’s DP World as a concessionaire for container and bulk cargo— including oil shipments— effectively placing Fujairah among global container shipping destinations.
Additionally, Fujairah is expecting to launch a regional, low-cost airline connecting the Emirate regionally, nationally, and internationally in 2012, providing another option for Emiratis looking to connect to the region’s larger airports.
Ras Al Khaimah
Ras Al Khaimah (RAK) is a key shipping and logistics destination and industrial hub located near the Strait of Hormuz. RAK is home to five ports, managed by the Saqr Port Authority under the leadership of Chairman His Highness Sheikh Saud bin Saqr Al Qasimi, Ruler of Ras Al Khaimah, and General Manager Captain Colin Crookshank. RAK’s maritime policy is formulated by the Government of Ras Al Khaimah Customs & Ports Department, established in 1930, currently under the leadership of H.H. Sheikh Saud bin Saqr Al Qasimi, Chairman, and Mr. Mohammad Abdullah Al Mehrazi, General Manager. RAK Ports Group’s concessions include: Saqr Port, RAK Maritime City—a land and waterfront free zone development, Al Jazeera Port, Al Jeer Port, and RAK Khor Port. RAK’s maritime infrastructure supports the Emirate’s economic diversification as it expands its footprint in the tourism and hospitality sectors.
RAK’s General Civil Aviation Authority, chaired by Engineer Salem bin Sultan Al Qasimi, Vice Chairman of RAK Airways, and established in 1974, regulates the Emirate’s aviation sector and manages RAK International Airport. RAK International Airport is home to RAK Airways, established in 2006, a private joint stock company incorporated in the RAK Investment Authority Free Zone. His Highness Sheikh Omar bin Saqr Al Qasimi serves as the Chairman of RAK Airways and Mr. Omar Jahameh serves as its Chief Executive Officer.
RAK’s land transportation and maritime infrastructure development is key to the development of the U.A.E. federal rail system which will link RAK through the country to Abu Dhabi, effectively integrating the country’s key industrial zones.
Sharjah
Maritime policy is formulated and driven in Sharjah by the Sharjah Department of Seaports & Customs and the Sharjah Port Authority under the leadership of its Chairman, His Excellency Sheikh Khaled bin Abdullah Al Qasimi. The Sharjah Port Authority manages and governs the operations of the three deepwater ports in the Emirate: Khorfakkan Port, Hamriyah Port, and Port Khalid. Sharjah ports are strategically located along significant international trade routes connecting the East and West. Each port is well equipped to handle the volume of cargo and shipments that regularly travel through Sharjah, originating from all corners of the world. The primary port operator in Sharjah is Gulftainer, an international company with operations throughout the Middle East North Africa (MENA) region.
Sharjah’s aviation policy is formulated by the Sharjah Department of Civil Aviation led by its Chairman, His Excellency Sheikh Abdulla bin Mohammed Al Thani. The Department governs the Sharjah Airport Authority, led by Dr. Ghanem Al Hajeri, Director General. The Authority manages the Sharjah International Airport Freezone, home to Sharjah International Airport and Sharjah’s flagship airline, Air Arabia.
The Ministry of Public Works formulates Sharjah’s transportation infrastructure, overseeing the building and development of the Emirate’s land transportation infrastructure that links it with the broader U.A.E.
Umm Al Quwain
Umm Al Quwain will benefit from the federal injection of funds to further develop the transportation and physical infrastructure of the Northern Emirates. Located on the west coast of the U.A.E., Umm Al Quwain (UAQ) is home to the Ahmed Bin Rashid Port & Free Zone Authority. The government-regulated Free Zone complex boasts an 845 meter-long quay wall capable of handling deep-sea vessels and 118,000m² of land reserved for commercial and light industrial development. The further development of UAQ’s transportation and maritime infrastructure is a key component of the state and federal governments’ economic development plans to connect the U.A.E. by land, air, and sea.
Key Infrastructure Projects in the U.A.E. that Present Opportunities for U.S. Partnership & Investment
Abu Dhabi International Airport expansion
In 2009, Abu Dhabi Airports Company (ADAC) commissioned the renovation and expansion of Terminal 2 and the building of Terminal 3 and a new air traffic control tower at Abu Dhabi International Airport. In May of 2011, ADAC issued tenders for the construction of the Midfield Terminal building; a new 65-gate, 700,000 square meter passenger terminal at Abu Dhabi International Airport. Upon completion (set for 2017), the terminal will be capable of hosting 30 million passengers.
• Parsons managed the design and construction for the expansion of Terminal 2, the construction of Terminal 3, the building of the new air traffic control tower, and will contribute to the construction of the Midfield Terminal.
Website: http://www.adac.ae/english/
Dubai International Airport expansion
His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the U.A.E. and Ruler of Dubai, recently endorsed a $7.8 billion expansion plan for Dubai International Airport and Al Maktoum International Airport at Dubai World Center (DWC) forecasted to drive passenger traffic to 98.5 million passengers and air freight numbers to four million tons by 2020, according to the Dubai Civil Aviation Authority (DCAA). Furthermore, facilities and operations to accommodate the rapidly increasing international traffic volume traveling through Dubai International and Al Maktoum International airports, currently undergoing expansion, are forecasted to generate 22% of the total employment and 32% of the Dubai’s Gross Domestic Product (GDP) by 2020, according to Dubai Airports Company. The expansion plan calls for Dubai International Airport’s Terminal 2 to be expanded and for a new concourse, Concourse 4, to be built.
Website: http://www.dubaiairport.com/en/Pages/home.aspx
Dubai Metro
Dubai Metro opened on September 9th, 2009 with phase one of the rail network complete. Since then, the metro has opened numerous stops and transit lines linking key locations across the sprawling Emirate. The Metro is set to expand even further to connect Jebel Ali and the Dubai World Center with downtown Dubai city and Dubai International Airport. The project is being overseen by the Road & Transportation Authority (RTA) and is setting world-class standards for similar projects in the pipeline across the emirates and the region.
• Under a joint venture, Parsons is providing overall program management, design review, and construction supervision for the design-build Red and Green Lines of the Dubai Metro.
Website: http://www.rta.ae/dubai_metro/english/home.html
Etihad Rail
Etihad Rail, established under Federal law number 2 of 2009, is the national entity mandated by the federal government to manage the development, construction, and operation of the U.A.E.’s national railway. Etihad Rail operates under the leadership of His Excellency Nasser Al Suwaidi, Chairman, His Excellency Mattar Al Tayer, Vice Chairman, and Mr. Richard Bowker, Chief Executive Officer. The company is 70% owned by the Government of Abu Dhabi and 30% owned by the Government of the U.A.E.
The Etihad Rail project is the U.A.E.’s 1,200 kilometer national freight railway system that will ultimately connect all seven emirates as well as connect the U.A.E. to Saudi Arabia and Oman. The first phase of the project will be a 264 kilometer freight line in Abu Dhabi, transporting granulated sulphur from gas fields in Shah and Habshan to Ruwais for export. The second phase will connect key logistics sites throughout the emirates, including Jebel Ali port, and build the infrastructure for a freight and passenger rail network connecting the U.A.E. to other countries in the GCC. The first contracts for the second phase are set to be awarded by the second quarter of 2012, according to Etihad Rail executives. The third phase will connect the rail system with the Northern Emirates, establishing a complete national and international network.
American companies have been heavily involved in the tender process for the project and continue to compete to play a role in its development. In June of 2010, the Association of American Railroads (AAR) and the U.S.-U.A.E. Business Council took a delegation of American companies to the U.A.E. to meet with senior rail and infrastructure executives to speak about the opportunities for partnership and Etihad Rail’s project development schedule. The delegation visited key logistics and infrastructure sites around the U.A.E. and received high-level briefings on the development of the country’s port and infrastructure facilities for a better understanding of how the desert climate effects labor operations and equipment.
• Wilbur Smith Associates— newly branded as CDM Smith after merging with CDM at the beginning of 2012— prepared the freight and passenger traffic forecast study and developed the traffic forecasting model; underpinning the commercial viability of the Etihad Rail project.
• A joint venture between AECOM and Parsons was awarded the contract to manage the construction of the Dh40 billion (US$10.89bn) Etihad Rail project.
• A joint venture between Parsons and Systra was awarded the project management consultancy contract for phase 1 and part of Phase 2 of the rail project. Parsons-Systra also provides project management services for Dubai metro.
• Good Harbor Consulting won the contract from Etihad Rail to provide strategic safety, security and risk management consulting services throughout the duration of the national project.
• Electro-Motive Diesel, a division of Caterpillar, was selected to provide seven diesel-electric freight locomotives to the project in 2012. The 187 ton locomotives are specially designed for desert terrain; featuring sand ploughs, sealed cars, and filtration devices to rid the trains of sand particles. Once operating, the EMD trains will have up to 110 cars each and transport around 22,000 tons of granulated sulphur between Habshan and Ruwais in Abu Dhabi, the first phase of the railway.
Website: http://www.etihadrail.ae
Khalifa Industrial Zone Abu Dhabi (KIZAD)
Khalifa Industrial Zone Abu Dhabi (KIZAD) is intended by the Government of Abu Dhabi to be “an industrial development of unprecedented scale, ambition, and vision.” Set for completion in 2012, KIZAD will provide extensive business-centric logistics and a transportation network to international businesses with commercial interests in the U.A.E. and around the region while utilizing one of the most advanced ports in the world, Abu Dhabi Port Company’s Khalifa Port. According to recent reports, upon completion, KIZAD will boast over $5 billion in development projects across numerous sectors; from aluminum to renewable energy. Branded by KIZAD executives as “an integral part” of Abu Dhabi’s long-term economic development plan, the free zone is expected to account for 15% of Abu Dhabi’s non-oil Gross Domestic Product (GDP) and support over 100,000 jobs by 2030. Furthermore, KIZAD will complement the operations of major free zones around the country in the coming years to elevate the U.A.E.’s multimodal logistics and infrastructure profile.
Website: http://kizad.com/en
Northern Emirates Infrastructure Development
The federal government of the U.A.E. has placed a high priority on the development of infrastructure and the creations of jobs in the Northern Emirates (Fujairah, Ras al Khaimah, Ajman, and Umm al Quwain). Transportation infrastructure and roads works projects in the pipeline will aid the Northern Emirates in their economic development efforts and effectively connect the seven emirates by land, sea, and, ultimately, by rail. Furthermore, the U.A.E. has committed 5.7 billion Dhirams ($1.55 billion) to provide the Northern Emirates with water and electricity. This investment, ordered by U.A.E. President His Highness Sheikh Khalifa bin Zayed Al Nahyan, is seen by many Emiratis as a unifying gesture and a welcome acknowledgement of the significant economic potential of the Northern Emirates.
RAK Maritime City (RAKMC)
RAK Maritime City (RAKMC) was launched on May 16th, 2011 by His Highness Sheikh Saud bin Saqr Al Qasimi, Supreme Council Member and Ruler of Ras Al Khaimah (RAK). RAKMC is the Emirate’s newly-opened land and waterfront free zone development and port facility, spanning 8 million square meters. The free zone, which complements Saqr Port’s activities and buttresses RAK’s standing as a global business center, provides international companies with an attractive locale for hosting regional and international shipping, logistics, and industry operations.
Website: http://www.rakmaritimecity.ae/Home.aspx
Saadiyat Island
Saadiyat Island, being developed by the Tourism Development Investment Corporation (TDIC), is an island located 20 minutes from downtown Abu Dhabi. The island will serve as a tourism and commercial hub. The island’s population—expected to reach 145,000— and its visitors will enjoy 12 km of highways, 10 km of light rail network, and 3 inter-island bridges. Two major highway bridges will connect the island to the mainland.
• Parsons is heavily involved in the building of Saadiyat Island—including the Louvre and Guggenheim Museums.
• Additionally, Parsons is providing construction supervision for an estimated $5.6 billion of groundwork, roads, water and wastewater infrastructure, and multiple bridges linking Abu Dhabi’s mainland to Saadiyat Island.
Website: http://www.saadiyat.ae/en/
Challenges & Opportunities
“Investing in infrastructure is the driving force for the economy.” — H.E. Mattar Al Tayer, Chairman of Dubai’s Roads & Transport Authority (RTA)
For decades, U.S. engineering and infrastructure design firms have played an integral role in designing, planning, and building some of the U.A.E.’s flagship air, land, and sea transportation systems. Increased competition from government-backed companies from the Middle East and Asia have presented a challenge to American companies— even those well established in the U.A.E. — trying to win contracts for significant federal and state infrastructure projects. Local companies once reliant on American know-how have developed their own resources and capabilities and present an attractive and frequently less expensive alternative. Furthermore, price is becoming a significant consideration in the tendering process of infrastructure development projects as the U.A.E. seeks to sustain its ambitious economic development and diversification strategy.
Conversely, the quick turnaround sought for the country’s national projects such as the Etihad Railway build-out present opportunities for American companies looking to provide the highest quality products, advisory services, and engineering expertise. The U.A.E. is ripe for development and the leadership is looking to a diverse range of global expertise for potential corporate partners, project managers, and advisors.
The major infrastructure development projects outlined in this report—notably phase two of the Etihad Rail project— and several projects that are currently in the early planning stages will provide opportunities for U.S. companies to compete with local and international companies for contracts to provide all levels of support. More prospects for partnership and investment will arise as the U.A.E.’s economic development progresses over the coming months and years.
