Sailing with the trade winds in the Arabian Gulf
With the end of the Iraq war, shipping is booming again in the Arabian Gulf, but how long will it last? Abdulla Mady Al-Mady, the president and chief executive officer of the United Arab Shipping Co. S.A.G, is not afraid of a short term recession in the shipping market in the Arabian Gulf - in fact he sees new possibilities for expansion on a long-term basis.
"I think Middle East shipping is more exposed to long term influences, rather than short term trends. Trade in the region has been built up over the past 30–40 years from almost nothing. The Iraq invasion of Kuwait in 1990 and the 11 September attacks pushed the rates and the insurance premiums up for a short time, but trade in the region has been steadily growing despite political unrest. Most of the Arab countries have built up a very good education, health and infrastructure system during these years, which has contributed to a continuous increase of regional trade," says Al-Mady.
He continues; "The successful US-led invasion of Iraq and the rebuilding of the country will benefit all operators. Also, if the Road Map to peace in the Middle East succeeds it will be fundamental for long-term development in the region. Crown Prince Abdullah’s latest initiative in this process has proved most people in the Arabic world are geared up for peace and eventually for development, which will benefit the shipping industry."
Massive capacity leap
United Arab Shipping has become one of the dominant forces in Middle East shipping. The Kuwait-based container line has grown to operate a fleet of 30 ships and is now looking for new opportunities.
"We have therefore decided to replace our old general cargo ship fleet and move into the post-Panamax area. We expect to phase out the last part of our K-class vessels within a few years," says Al-Mady.
"In 1998 we ordered ten new ships and we also plan to order another eight 6,500-teu container vessels by the end of this year."
In spite of the shift towards containers, the company has decided not to loosen its grip on general cargo business just yet. "A lot of business exists in the rebuilding of Iraq. Once the country is moving again it will have to rebuild its infrastructure, which will require huge cargo movements for the next 5 – 10 years. We consider this a short-term, but good business market for us. We have therefore decided to go for charter deals to meet these specific needs," explains Al-Mady.
Consolidating for success
United Arab Shipping was founded in 1976 by Saudi Arabia, Kuwait, the United Arab Emirates, Iraq, Qatar and Bahrain, and is one of the first shipping companies to introduce the joint venture philosophy in international shipping.
"We considered this move to be realistic in terms of surviving international competition, not only in the Middle East but worldwide. We have consolidated the existing cargo business in the region. It has proved to be a success in spite of political unrest, and we are expanding our services to serve global trade as well. Politics does not play a part in how we run our business. The board of directors represents the owners of six governments. They set the agenda, but the business is run by professionals. That is why our company has become a success," concludes Al-Mady.