Middle East logistics update: new capacity, sanctions and rates

By James Calloway

Qatar Navigation (Milaha) will launch the Upper Gulf Express (UGX) service to Saudi Arabia’s King Abdul Aziz Port in Dammam from tomorrow, with two 1,000-TEU trips a week linking Sohar, Jebel Ali, Hamad Port, Shuwaikh Port and Umm Qasr Port, according to a statement.

The service gives Dammam shippers two more weekly sailing options and forwarders another Gulf connection to price. It also adds recurring calls for carriers at the five named ports.

What is changing in Gulf air cargo?

Etihad Cargo, Abu Dhabi Airports and Abu Dhabi Food Hub have partnered on a food air corridor. No launch date, lane, aircraft capacity or annual volume accompanied the announcement, so shippers cannot yet size the corridor’s contribution to food handling.

Bahrain International Airport is set to open an air cargo village soon on a 25,000-square-meter site north of the airport, with 10 warehouses. Mohammed Yousef Al-Binfalah, CEO of Bahrain Airport Company, gave the details, according to Al Ayam.

The project expands the airport’s planned warehouse footprint, but no opening date, throughput target or cargo capacity accompanied the announcement.

United Airlines asked the US Department of Transportation to block a Saudia-Kuwait Airways codeshare unless the Kingdom’s General Authority of Civil Aviation approves United’s own Emirates agreement for flights between the US and Saudi Arabia. United says GACA has ignored numerous requests since May.

The proposed United-Emirates codeshare would give either airline’s customers access to more than 100 destinations. The cited benefit is passenger network reach; the filing provided no cargo-capacity increase, and no forwarder benefit can yet be quantified.

Several Fly Baghdad flights from Baghdad International Airport were canceled earlier this week after the US Treasury Department sanctioned the airline and CEO Basheer Abdulkadhim Alwan al-Shabbani. Monday’s Treasury statement alleged that they delivered weapons, fighters and money to Iran-aligned militias in Iraq, Syria and Lebanon.

Fly Baghdad called the allegations “not based on any material or moral evidence.” It said: “The company will resort to the legal method to demand material and moral compensation.” The cancellations constrain its Baghdad schedule, but the source quantified neither cargo capacity nor affected freight routes.

What does Iran’s tanker seizure mean for freight?

Empire Navigation said Friday it expected progress on releasing the crew of the Marshall Islands-flagged St Nikolas after Iran released a cadet and the Philippine ambassador met 18 remaining crewmen. Iran seized the tanker on 11 January with Iraqi crude bound for Turkey.

The seizure came in response to the US seizure of the same vessel a year earlier, when it was known as Suez Rajan, and as a sanctions-enforcement step. Owners, charterers and oil traders still face cargo and crew detention risk; Empire Navigation reported neither the vessel’s release nor clearance to sail.

Where do freight rates stand?

Brent crude fell 0.74% to $79.47 a barrel and West Texas Intermediate dropped 0.72% to $74.22 on Tuesday, reversing part of the prior day’s gain. Rising supply in Libya and Norway offset geopolitical turmoil and US outages, pushing Brent below $80 for the first time since 26 December.

For marine-fuel buyers, Tuesday’s move lowered the oil benchmark used in bunker-price discussions, though no bunker-price adjustment followed. The source also flags continued Red Sea disruption as an earnings risk this year but names no company, route or earnings figure.

The Baltic Exchange’s dry bulk index rose 1% to 1,518 on Monday, its third consecutive gain and highest close since 11 January. The panamax subindex climbed 1.7% to 1,576, capesize gained 1.25% to 2,272, and supramax fell 3 points to 1,027.

The split points to firmer near-term pricing signals for panamax and capesize operators, while supramax remained outside the broad advance. Forwarders pricing bulk shipments should watch whether the larger-vessel gains persist; the index measures capesize, panamax and supramax rates rather than container or tanker rates.

Could India’s carbon-market plan change export costs?

India plans to ask the EU for concessions that would align its forthcoming national carbon market with the bloc’s emissions trading system, which started in January. The proposal would combine credits from India’s local fossil-fuel tax with EU allowances, recognize energy auditors approved by India and produce tax exemptions for small and medium-sized Indian enterprises.

New Delhi also plans to raise the EU carbon border adjustment mechanism’s impact on Indian industry during trade negotiations on 19 February. Exporters and freight forwarders with Indian cargo face a compliance-cost question if Brussels adopts the proposed credit integration, but no approval or implementation schedule exists.

China’s customs data, reported by Mehr, showed Chinese exports to Iran rising 8.6% in 2023 to $10.7 billion. Bilateral trade exceeded $14.6 billion but remained 6.2% below the previous year’s $15.5 billion. Iran’s overall exports to China fell 27% to $4.5 billion from $6.2 billion, although December 2023 shipments rose 30% year on year to $1.25 billion.

Which regional events could shape freight decisions next?

• Middle East Bunkering Convention, Dubai, 5-7 February: Global marine-fuel supply chains, decarbonization and new fuels.
• Cargo Facts EMEA 2024, Amsterdam, 5-7 February: Air-freight trends, forecasts and technology innovation across Europe, the Middle East and Africa.
• Sustainable Aviation Futures MENA, Dubai, 12-14 February: 80 expert speakers and up to 200 senior attendees on sustainable aviation fuel regulation, financing and investment in MENA.
• Future Warehouse & Logistics Conference, Dubai, 12-14 February: Disruptions, sustainability, Internet of Things, automation and workplace management.
• TradeTech Forum, Abu Dhabi, 27 February: About 180 trade leaders and experts examining the advanced trade environment and trade-tech solutions.
• Logistics Middle East Award, Dubai, 6 March: Recognition for the previous 12 months; nomination deadline 19 January.
• World Economic Forum special event, Riyadh, 28-29 April: Global collaboration and energy.
• Electric Vehicle Innovation Summit, Abu Dhabi, 20-22 May: Sustainable mobility and engagement with key industry decision-makers.

Watch the 19 February India-EU discussions, the UGX service’s first operating week and whether panamax and capesize rates extend Monday’s gains; any extension of the St Nikolas detention would keep sanctions risk high on Iraqi crude cargoes.