Cosco Shipping Signs $738 Million Deal to Expand U.A.E. Port

 

(Bloomberg) — Cosco Shipping Co., a unit of China’s biggest shipping group, agreed to build and operate a new container terminal in Abu Dhabi, securing a foothold in the Gulf with a $738 million deal that would more than double cargo-handling capacity at Khalifa port.The company signed an accord with state-run Abu Dhabi Ports Co. on Wednesday to invest in a planned second terminal at Khalifa, boosting the port’s capacity to about 6 million 20-foot containers from 2.5 million currently. The 35-year agreement will boost Abu Dhabi’s role in regional logistics, Abu Dhabi Ports Chairman Sultan Al Jaber said at a news conference at Khalifa. 

The concession is valued at about $738 million, Cosco Shipping said in a statement to the Hong Kong stock exchange. It’s the Chinese company’s first such deal in the Gulf, Abu Dhabi Ports Chief Executive Officer Mohamed Al Shamsi said in an interview.

“It’s important because Khalifa port will be the hub for Cosco within the region, and this is part of the initiative of the Silk Road,” Al Shamsi said, referring to China’s effort to establish a maritime equivalent of the fabled Asian overland trade route.“We are confident that Cosco will bring big volumes into Khalifa port.”

Largest Fleet

Cosco Shipping is the world’s fourth-largest container liner with a market share of 7.5 percent as of September, according to shipping data provider Alphaliner, and it has the world’s largest dry bulk fleet, used to transport commodities. Abu Dhabi, the capital and largest sheikhdom in the United Arab Emirates, is seeking to expand its trading facilities as part of a strategy to diversify its oil-based economy. Abu Dhabi holds 6 percent of global crude reserves.

The agreement with Cosco Shipping “will significantly expand trade between China, the U.A.E. and the broader region,” said Al Jaber, who is also a national minister of state.

Khalifa port’s existing terminal will handle 1.65 million containers this year, he said. By 2030, the emirate expects the port to move 15 million containers and 55 million metric tons of cargo, Ali Majed Al Mansoori, head of the Abu Dhabi Department of Economic Development, said in a speech last October.

© 2016 Bloomberg L.P