Maersk resumes bookings and services to and from Qatar

6/13/2017

Maersk Line has reopened bookings for cargo to and from Qatar after setting up a transhipment service via the port of Salalah in Oman.

The first sailing ex-Salalah is due on 19 June and is set to arrive in Doha on 25 June. The frequency of this service is every 10 days.

Maersk said booking acceptance for cargo to and from Qatar was open for all countries except the United Arab Emirates (UAE), Saudi Arabia, Bahrain, Egypt and Yemen – “in compliance with government guidelines”.

However, the new solution for cargo to and from Qatar was expected to come with increased costs to customers. Maersk said it would update customers this week on rate levels effective 1 July “to continue to provide reliable service in this market”.

The move comes after the Saudi Arabia-led alliance severed ties with Qatar and blocked ships to and from Qatar from entering a number of key ports in the allied Gulf states. Jebel Ali in the UAE, a major transhipment port for cargo from and to Qatar, is one of the ports implementing the embargo. Several shipping lines, including Marek Line, OOCL and Evergreen have confirmed to Lloyd’s List that their Qatar services were suspended and disrupted.

And in a customer notice seen by Lloyd’s List, CMA CGM also said it had ceased taking any fresh cargo bookings to and from Qatar until further notice. The French line added that it was working on a contingency plan concerning the matter, which, in addition to the “associated additional costs”, would be communicated to customers as soon as possible.

Qatar’s container volumes are relatively small compared with neighbouring Saudia Arabia and the UAE, and those volumes had already been falling this year. Indeed, Drewry noted today that Qatari imports from Asia crashed by 50% for the year to date, so that Qatar’s share of the westbound Asia to Middle East trade halved to just 1.6%.

While Qatar is a very small piece of the pie, the decision made by Saudi Arabia, the UAE and Bahrain to sever diplomatic and transport links will cause some operational disruption to container lines. “MSC (Falcon) and CMA CGM (CIMEX 3 under the Ocean Alliance banner) each have a direct service out of Asia to the Qatari port of Doha that will have to be pulled from the rotation indefinitely as ships also call at ports in the blockading countries,” Drewry noted.

It observed that Hapag-Lloyd was also “embroiled in the diplomatic conflict”. Following its merger with UASC, concluded last month, it is now part owned by the state-run Qatar Holding (14.4%) and Saudi Arabia’s Public Investment Fund (10.1%) among others shareholders, including from Bahrain, Iraq, Kuwait and the UAE, Drewry noted. “No former UASC ships are Qatar-registered, so they will not face bans from any blockading ports, meaning the impact will not be felt immediately, operationally at least. However, it remains to be seen whether it will disrupt strategic plans to ease the company’s debt burden through a $400 million capital rights issue that was scheduled for before the end of the year.”

Previously, the majority of Qatar’s container moves were either transported overland from Saudi ports or by feeder vessel from Gulf hubs, especially Jebel Ali in the UAE, Drewry observed. “Following the blockade, to bring in cargoes new feeder connections from hub ports in countries that are not part of the boycott will have to be established.

“Ports in Oman seem the most likely option, as Sohar and Salalah have good facilities and an established role in the container trades in the region. Using Iranian ports is another possibility, as are Kuwaiti ports, although the latter would be a big diversion.”

Qatar also faces an overland blockade, leading Iran to organise an air drop last weekend.

As they wait for the new transport links to be set up, Qataris have been panic shopping to stockpile food and other goods, Drewry noted.

Qatar’s sudden isolation stems from allegations that it supports extremist groups and for having warmer relations with Iran than some of its neighbours, Drewry observed. “It appears to be a victim of a much bigger power struggle in the region that has the potential to derail trade to a far greater degree than the blockade itself,” Drewry added.

“The ratcheting up of hostility towards Iran threatens to undo its trading rehabilitation following the lifting of sanctions, with negative implications for our regional container handling outlook. Iran is one of the very few bright spots for container trade in the region, with CTS (Container Trades Statistics) data showing that four-month year-to-date volumes from Asia increased by 60% to around 46,000 teu.”

CTS figures for the Middle East region as a whole in the first four months of 2017 indicate that volumes from Asia were down in virtually all Middle East countries, with notable exceptions for Iran and Yemen. The United Arab Emirates, the biggest market accounting for about one-third of containers imports into the region from Asia, declined by 8%, while inbound traffic to the second largest market, Saudi Arabia, decreased by 3%. Additionally, Iraq imports shrank by 5% with inbound Kuwaiti traffic down by 20%, Drewry said.