In April this year, Abu Dhabi Ports announced that it planned to move all of the UAE capital’s roll-on/roll-off (RORO) cargo operations to Khalifa Port.
RORO cargo refers to wheeled cargo that is driven on and off ships, as opposed to being lifted using cranes or put in containers. Heavy vehicles like tractors and bulldozers, as well as private and commercial automobiles like cars, trucks and buses, are typically transported as RORO cargo.
Abu Dhabi is seeing a surge in RORO cargo volume, recording 18.8% year-on-year growth in 2014, with an all-time high of 106,071 units handled. As RORO cargo continues to grow, Abu Dhabi Ports is confident that Khalifa Port will play an increasingly important role as a RORO hub for the UAE and wider Middle East, Africa and the Indian subcontinent.
Situated in Taweelah, the port is strategically located about halfway between Abu Dhabi and Dubai, offering automobile dealers transport connectivity as well as land to establish distribution centres and storage facilities in the adjoining Khalifa Industrial Zone (Kizad).
While Zayed Port, which previously handled Abu Dhabi’s RORO cargo, provided capacity for 132,000 vehicle units per year, Khalifa Port’s current annual capacity is nearly three times as much, at 360,000 units annually. Plans are afoot to upgrade this figure to half a million per year in the future.
Truck & Fleet ME sat down with Gary Lemke, executive vice president – Ports at Abu Dhabi Ports, to learn more about its vision for developing its new RORO hub, and how it is working with automotive industry stakeholders to boost growth in the sector.
“We’ve had great successes,” he says, commenting on the port’s journey since it began operations in 2012. “We had 41% year-on-year growth so far in the container business, and just over 11% growth until July in the RORO business.”
The process of transferring RORO operations from Zayed Port to Khalifa Port was far smoother than anticipated, as it was carried out in phases. Half of the business was moved in the first quarter of the year, with the remaining 50% transferred in the second.
New terminal operating systems have also been introduced at Khalifa Port, he adds. “When we took on the concession of the general cargo and RORO operations here last year, we inherited some legacy systems that were very antiquated, to put it kindly. Now we’ve introduced a new system, which allows us to introduce technology such as barcode readers, making our RORO handling much more efficient.”
Working with importers
Khalifa Port is well on its way to achieving its goal of becoming a RORO hub, handling record volumes of nearly 14,000 vehicles in the month of August this year, Lemke says. Previously, the average volume in a month at Zayed Port was between nine and ten thousand.
The port also offers four deep sea berths which can handle up to five RORO vessels. Ever since RORO traffic was redirected to the port, Abu Dhabi Ports has seen growing interest from carriers and automotive dealers keen on leveraging its enhanced capabilities.
The fact that the port is located alongside Kizad increases its appeal to local car importers, and many have made significant investments in facilities there, Lemke notes. “We have a number of car importers that have committed to land in Kizad. We have a lot of relationships with not only the shipping lines but also with the importers, because only half of our business is handling the cargo of the ship. The other half is delivering it to the trucks of the importers that are coming in, so we have a very wide range of customers and stakeholders in here as Abu Dhabi Ports.”
Importers can now bring in their cargo to Khalifa Port and have it reach their facilities, complete pre-delivery inspections on it and send it on its way to a showroom within 24 hours.
Currently, most of the importers bringing in cargo through the port cater to the Abu Dhabi market, though there has been interest from companies with a more nationwide focus in recent months, notes Lemke.
“We’re starting to see in the last year and a half a lot of interest from pan-Emirates companies and even from the Northern Emirates.
We’re only an hour away from the border of Dubai, and also have road access to Saudi Arabia. It’s very easy to get to Saudi from here.”
Moreover, as investments from car dealers and importers in Kizad grow, there is also an increased interest from support industries like spare parts distribution, which require logistics firms, creating further business opportunities, he points out.
Kizad offers its own value proposition to car importers, Lemke says. “We have very low utilities costs, wide open land, a lot of infrastructure services and the plots are ready. So a number of companies have committed to Kizad.”
Abu Dhabi Ports is also investing in equipment to enhance its capacity to handle RORO cargo. “We’ve spent about $1.5 million on trucks for our cargo operations, and about half of that is on the heavy-duty trucks that we’re putting into our RORO terminal.”
Moreover, the port operator is buying equipment to better handle non-rubber tyre vehicles, which have the potential to damage the terminal paving if moved too far from the ship.
There are other challenges and safety hazards associated with RORO cargo, Lemke explains. “Traditionally, RORO cargo has a quite high damage element to it. We have to make sure that it’s safe and secure and that we’re protecting the customers’ property, both externally and internally.”
Additionally, staff typically have to work in confined spaces in RORO vessels, presenting challenges in terms of well-being as well as making sure the cargo isn’t damaged. “When you think about moving heavy cargo within confined spaces of ships, and the type of equipment and safety gear that you need to move it, we have to make sure that the safety equipment doesn’t damage the vehicles.”
It’s also important to ensure that the staff don’t accidentally damage the vehicles, on the exterior or interior. “We handle some very high-value vehicles. It’s no good having people in oily overalls sitting in a Porsche or Bentley.”
Although there are several challenges on a day-to-day basis, the port is well-equipped to handle them, he says. This is primarily done through staff training and safety briefings at the start of each RORO shift or operation.
The permanent workforce on-site at the RORO terminal is fairly small, with a significant portion of labour subcontracted, Lemke says. “We have contracts for subcontract labour for drivers, which we can expand and contract as we need. Sometimes we have five vessels, sometimes we have none, so subcontract labour gives us the flexibility to be able to bring in the number of drivers that we need.”
“We have a very small team running the RORO terminal, but that’s part of what this is about. It’s about being efficient. If we’re efficient, it makes it financially efficient for our customers as well.”
Strict safety rules apply to both contractors and subcontractors, and contractors have to undergo a mandatory safety induction. “We’ve also introduced a training regime for our subcontractors, for all of their staff, where they have to have been trained by approved training providers if they’re going to work with us.”
Economic diversification
As oil prices continue to stay low, the need for economic diversification becomes even more prevalent in oil-dependent economies. Abu Dhabi Ports has a significant role to play in the emirate’s diversification, with a target to contribute 15% of its non-oil and gas GDP.
Khalifa Port is set to play a key role in this growth by supporting local industry, Lemke says. “It’s a great location, and it has a huge potential for expansion. We can provide suitable capacity for maybe up to a million vehicles if we decide to develop that capacity in Khalifa Port, which means that we’re future-proof.”
“And that’s important, because the local industry and international organisations don’t want to be with us for a year and then they get told that we don’t have the capacity to be able to deal with their growth. They need to be able to do it all in one place. So I think it’s the future-proof solutions that really have given us a competitive edge in Khalifa Port.”
Khalifa Port vs Jebel Ali: Is there a competition?
One of the main factors contributing to Khalifa Port’s success is its strategic location between the thriving economies of Abu Dhabi and Dubai. Despite its proximity to Dubai, however, are importers seeing the appeal of bringing RORO cargo to Khalifa Port, with well-established Jebel Ali Port less than an hour away? How does Khalifa Port see itself in relation to its neighbour?
“Each of us has a role to play. Each of us has our own market,” Lemke says. “Domestic business is set up such that you have specific dealers for Abu Dhabi, specific dealers for Dubai and the other emirates also, and then you have some pan-emirates dealers. We obviously are the main gateway for the Abu Dhabi dealers, and we hope that we have an offering that attracts the pan-Emirates dealers here as well.”
Even though there is rising interest in Khalifa Port’s services, there is always going to be a balance between it and Jebel Ali.
“We believe we have a very compelling proposition with the amount of land we have available and the amount of land required for RORO storage for the importers. We have the ability in Kizad to offer quite sizable plots that allow a large amount of vehicle storage for the importers here, whether they’re Abu Dhabi dealerships or pan-emirates dealerships.”
