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Qatar blockade - carriers suspend services and look for alternatives

On Monday 5th June Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt announced the severing of all diplomatic relations with Qatar and closed their land borders with Qatar and closed airspace, airports and seaports to Qatari carriers, the consequences of which are significant for logistics.

The political dispute escalated after years of tensions in the region, and Qatar is now being accused of supporting terrorist groups. Yemen, the Maldives and Libya later joined the ‘blockade’. Kuwait offered to mediate the dispute.

Maritime

On Monday 5th June week United Arab Emirates extended the ban to not just Qatari carriers, but to also include all vessels destined for or arriving from Qatar. Carriers are now considering alternatives to their schedules. Maersk Line confirmed that DP World Jebel Ali and Abu Dhabi Terminals would no longer accept cargo to and from Qatar ports, including transhipment cargo. Two deepsea services by the Ocean Alliance and MSC will also be affected as these services call at Doha, Dubai and the Saudi port of Dammam.

Several carriers have suspended services between these countries and are now looking for alternatives. Transhipment cargo will be most affected by the ban, as larger container ships are unable to dock at ports in Qatar due in part to shallow waters so shipping lines especially use feeder services, which transport container boxes from the larger port of Jebel Ali. Saudi Arabia and Bahrain have announced similar bans, although Egypt’s Suez Canal transits have not been affected and all Qatar-flagged vessels are free to transit.

Industry sources have suggested that the ports of Salalah and Sohar in Oman could for the time being replace Jebel Ali as the main hub for container traffic to and from Qatar while the diplomatic dispute continues between Qatar and the Saudi-led coalition. There is also some concern what the diplomatic dispute could mean for Hapag-Lloyd. The recent merger with Gulf-based United Arab Shipping Company (UASC) meant UASC’s two shareholders – Qatar Holding and Saudi’s Public Investment Fund (PIF) – took 14.4% and 10.1% stakes in the combined company. Hapag-Lloyd declined to comment.

Another issue concerns bunkering and bunkering prices. The UAE port of Fujairah is the key bunkering port in the region. Fujairah’s ban on Qatari-flagged and owned vessels as well as vessels moving to and from Qatar is expected to weigh heavily on bunker sales in the hub, as well as result in increased costs for owners who have to seek alternative ports for refuelling.

Aviation

All three major Gulf airlines (Emirates, Etihad and Qatar airways) will be affected – the most serious impact will be felt by Qatar Airways, which will be unable to fly to these countries or via their airspace. The move is likely to result in longer flight times for Qatar Airways, as well as higher fuel bills. Qatar airways has announced the suspension of all flights to Saudi Arabia, and Emirates, Etihad, Saudia, Gulf Airways, flyDubai and Air Arabia announced they would suspend all flights to and from Doha. The ban will have the biggest impact in transhipment cargo via Qatar and other gulf countries part of the ban. Carriers and forwarders are now looking for alternative options for their cargo.

Source: CLECAT



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