Posted: April 30th, 2022

Analyzing the Competitiveness of Red Sea Ports in Attracting Transhipment and Logistics Hubs with the Expansion of the Suez Canal

Analyzing the Competitiveness of Red Sea Ports in Attracting Transhipment and Logistics Hubs with the Expansion of the Suez Canal

The Red Sea is a strategic waterway that connects Asia, Africa and Europe through the Suez Canal, which handles about 12% of global trade (Partington, 2024). The canal has undergone a major expansion project that was completed in 2015, doubling its capacity and reducing transit times for vessels. The expansion has increased the competitiveness of the canal and the Red Sea ports as a route for transhipment and logistics hubs, which are facilities that facilitate the transfer and distribution of cargo between different modes of transport or destinations.

Transhipment and logistics hubs are important for enhancing the efficiency and connectivity of global supply chains, especially for containerized goods. They can also generate economic benefits for the host countries, such as employment, investment, infrastructure development and trade facilitation. However, the location and performance of these hubs depend on various factors, such as geographical proximity, market demand, port infrastructure, service quality, costs, security and regulations.

The aim of this research essay is to analyze the competitiveness of Red Sea ports in attracting transhipment and logistics hubs with the expansion of the Suez Canal. The essay will address the following research questions:

– What are the main drivers and challenges for transhipment and logistics hubs in the Red Sea region?
– How does the expansion of the Suez Canal affect the competitiveness of Red Sea ports as transhipment and logistics hubs?
– What are the best practices and recommendations for enhancing the competitiveness of Red Sea ports as transhipment and logistics hubs?

The essay will adopt a comparative approach, using secondary data from various sources, such as academic journals, websites, reports and databases. The essay will focus on four major Red Sea ports: Djibouti, Sokhna (Egypt), Jeddah (Saudi Arabia) and Salalah (Oman). These ports have been selected based on their geographical location, size, traffic volume, infrastructure development and strategic plans.

The essay will be structured as follows: The first section will provide a background on transhipment and logistics hubs, their benefits and challenges, and their main characteristics. The second section will discuss the drivers and challenges for transhipment and logistics hubs in the Red Sea region, such as market demand, trade patterns, regional integration, security issues and environmental concerns. The third section will analyze the impact of the expansion of the Suez Canal on the competitiveness of Red Sea ports as transhipment and logistics hubs, using indicators such as transit times, costs, service quality and market share. The fourth section will compare the performance and potential of the four selected Red Sea ports as transhipment and logistics hubs, highlighting their strengths, weaknesses, opportunities and threats. The fifth section will provide some best practices and recommendations for enhancing the competitiveness of Red Sea ports as transhipment and logistics hubs, based on benchmarking with other successful cases around the world. The sixth section will conclude the essay with a summary of the main findings and implications.

Background on Transhipment and Logistics Hubs

Transhipment is defined as “the transfer of cargo from one vessel to another at an intermediate port” (UNCTAD, 2019). Transhipment can be classified into two types: relay transhipment and interlining transhipment. Relay transhipment occurs when cargo is transferred between vessels belonging to

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