Red Sea crisis hits container volumes at Salalah Port

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Muscat – Oman’s Port of Salalah has reported a 16% drop in container volumes during the first half of 2024, mainly due to the ongoing crisis in the Red Sea, which has forced several shipping companies to alter their routes.

The Container Terminal at Salalah Port handled 1.679mn TEUs (twenty-foot equivalent units) between January and June 2024, down from 1.999mn TEUs handled during the same period last year.

‘The decrease in container volume is mainly attributed to the Red Sea issue,’ Salalah Port Services Company, which operates and manages the Port of Salalah, said in its latest financial report submitted to the Muscat Stock Exchange.

However, despite the challenges in container shipping, Salalah Port’s general cargo volumes saw a 4% increase in the first half of 2024, largely due to higher gypsum shipments. The port’s General Cargo Terminal handled 11.655mn tonnes of general cargo during the first half of this year, up from 11.215mn tonnes in the same period last year.

The company explained that the ongoing Red Sea crisis continues to disrupt global shipping routes, significantly affecting trade between Asia and Europe.

‘The attacks on ships, which began in Q4 2023, show no signs of abating, necessitating rerouting that has increased costs for shipping lines and, consequently, end users,’ the company noted.

Salalah Port Services Company also pointed out that the situation in the Red Sea has led to congestion at most key regional ports, with Salalah being one of the few exceptions.

Despite these challenges, the company is optimistic about the future. It anticipates that the container shipping market will grow in the second half of 2024. According to BIMCO, global container volumes are expected to rise by 5-6% for the full year.

‘The Middle East and GCC regions, in particular, are anticipated to experience faster-than-average growth due to increased trade volumes, though capacity constraints, port congestion, and high operational costs may temper this growth,’ the company added.

Looking ahead, Salalah Port Services Company expects a further decline in container volumes in the third quarter and the remainder of 2024 if the Red Sea situation remains unresolved.

Regarding the general cargo business, the company predicts a mixed outlook for the Middle East/GCC in the second half of 2024.

‘Ongoing geopolitical complexities, such as the crisis in the Red Sea, continue to impact the region’s shipping dynamics, influencing cargo volumes, port congestion, and overall market stability. Despite these challenges, key export commodities like limestone and gypsum are expected to maintain a growth trend, driven by demand from developing markets in India and other Asian economies. Consequently, the forecast for the second half of 2024 remains positive for Salalah,’ the company said.

Salalah Port Services Company reported a consolidated net profit of RO1.570mn for the first half of 2024, compared to RO2.363mn during the same period last year. Total revenue from operations decreased marginally by 2% due to the lower container terminal volumes, primarily caused by the Red Sea crisis.