Comparison between Jebel Ali and Khalifa Port

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The research paper aims to compare of the ports Jebel Ali in Dubai and Khalifa in Kizad, which is in Abu Dhabi in United Arab Emirates. Due to the developed infrastructure, the country invested into the growth of shipping industry. The international trade and the abundance of logistics companies promoted the development of sea transport industry. The simplification of logistics life cycle and the extension of global trade in UAE made its ports demanded and developed. Jebel Ali port remains strong in the market, as the city of Dubai has more economic possibilities. Constructed in 2006, the port retains high market position on the local and international level among the countries of the Middle East since 2009. Its productive capacity remains high due to the high demand for its services, the volumes of cargo and the information applied for logistics life cycle. Khalifa port is also remarkable due to its semi-automatic technology for logistics and environmentally friendly processes. Its market share is smaller comparing to other ports in Middle East countries. That is why numerous projects on human resources and IT are aimed at increasing its competitiveness.

Comparison between Jebel Ali and Khalifa Port

Rapid economic growth has made the United Arab Emirates one of the most developed countries in the Middle East. The territory, which was a desert 40 years ago, became remarkable for its infrastructure and modernity after the oil deposits had been found. In order to build a stable economy and turn the country into a rich state, the government had to create proper infrastructure and logistics. The preferable trend in developing sufficient transportation suitable for oil was shipping. For this purpose, UAE started building ports to transport valuable resource across the Arabian Gulf. In fact, it was not only oil that had to be transported to other countries, but also valuable cargo, which needed to be imported from other countries.

Most ports are concentrated near the largest cities. Abu Dhabi and Dubai are the biggest administrative centers of the United Arab Emirates. Jebel Ali in Dubai was constructed in 1980 and became the largest port in UAE. Even now, it continues to be highly productive and remains competitive. The market share of the port has been the highest for many years now (Wippel, Bromber, & Krawietz, 2016; Elbayoumi & Dawood, 2016). Khalifa port in Khalifa Industrial Zone Abu Dhabi (Kizad) is also outstanding for its high productivity. Established in 2006, the port was under the management of Abu Dhabi Terminals (Abu Dhabi Terminals, 2017). It has become the first semi-automatic technologically advanced terminal for the local market. Having more than 60 direct international destinations, Khalifa port remains a strong competitor for the global market. The hub location and connectivity to other local ports makes Kizad perfect opportunity for further growth and development.

The technological development and the increase in internet marketing became another reason for the speedy expansion of logistics and shipping. Therefore, the authorities of UAE and its prominent economists concentrate their efforts on building ports. Automatization and quick logistics cycle will allow Arabic ports to become the part of global community and acquire numerous customers. Jebel Ali remains economically stronger entity on the market compared to Khalifa port, because Dubai region has more possibilities for growing the industry than Abu Dhabi. Therefore, Khalifa needs to engage in new projects and manage its logistics cycle to acquire higher market share and equalize with Jebel Ali.

Literature Review

The development of shipping industry remains an important condition for sustainable development of UAE and its network connectivity with the partner countries. As the member and the principal founder of OPEC, its main aim is to export oil into the world market. In addition, the United Arab Emirates depend on imports from the USA and the EU. Therefore, ensuring proper infrastructure and high quality services in the ports constitute its success both on local and international levels. Abu Dhabi and Dubai are the biggest cities in the UAE. They also hold two important ports, Khalifa and Jebel Ali. Yet, the working conditions and the efficiency level of the ports differ. Profound analysis of the ports and studies applicable for this topic provide a deeper understanding the existing situation, help detect problems and find new solutions.

Jebel Ali port first started functioning in 1980, when the free trade zone appeared in the region. The port provided employment for numerous inhabitants of the UAE. In fact, the city grew due to the appearance of Dubai Airport, Cargo Village and Automotive zone (Wippel et al., 2016). Such infrastructure attracted numerous investors from different parts of the world and enabled the development of various industries in the UAE. In spite of strike in 2008 due to the prohibition to employ foreigners that comprised the vast majority of the UAE population, the port free trade zone survived the calamity and preserved its high status. Though Jebel Ali does not remain the largest container port in terms of turnover, it is often considered as human-made harbor (Wippel et al., 2016). Jebel Ali remains essential in terms of its re-exporting activity. It encompasses more than 200 factories and free-trade zone. The factories manage manufacturing, distribution and transshipment of cargo. The major transshipment partners of the country remain India and Iran. The Indian transshipment was a $14 billion business in 2010, making it 37.6% of total export from UAE. Due to the diamond trade between Dubai and India, the UAE experienced almost fivefold export increase in 2006-2010 (Al Faris & Soto, 2016). Gold, as a main re-export item, has made Dubai the major competitor of Switzerland and South Africa. Constructing Khalifa port in Abu Dhabi contributed to the increase in competition.

Unlike Wippel at al. (2016), the representatives of DP World UAE Region owing Jebel Ali state that the port is the largest marine terminal in the Middle East (“Jebel Ali Port,” 2017). Jebel Ali is the flagship facility that holds more than 65 marine terminals in six continents. Moreover, it provides market access to more than 2 billion people and connects 140 ports in the world as a premier gateway of over 90 weekly services. Jabel Ali uses paperless documentation due to online platform offering seamless business flow to facilitate the trade. The window trade enabler integrates 200 services that support supply chain of the industry. The users of this platform include 85 thousand companies that have conducted over 17 million transactions in 2013, making it 14% higher compared to 2012 (“Jebel Ali Port,” 2017). Jebel Ali can manage handle break-bulk, bulk, project, RORO, Livestock and other types of cargo. The company offers “Berth Booking, Monitoring gate moves and Yard inventories, Container release and acceptance, Vessel schedule, Container tracking, Port payments, Electronic timeslot booking, Customs declaration and payment, Truck registration, Container move planning” as its services (“Jebel Ali Port,” 2017). Such an extended range of activities combined with technological advancement has made Jebel Ali prosperous enterprise on the global level.

Khalifa port in Abu Dhabi seems to be no less successful compared to Jebel Ali. Though it started operating later in 2012, Khalifa had become the first semi-automatic container port in the region (“About Khalifa Port,” 2017; “Khalifa Port and Kizad, United Arab Emirates,” 2017). Owned by Abu Dhabi Ports, Khalifa operates all the types of cargo and Abu Dhabi’s traffic. The annual capacity is 2.5 million TEUs and 12 million tons of general cargo. Last year Khalifa became the second world largest port (Khalifa Port, 2017). However, the data provided by Elbayoumi and Dawood (2016) show that market share of Khalifa is much smaller compared to Jebel Ali port. Despite the technologies present in Khalifa can be less progressive unlike the ones available at Jebel Ali, both harbors remain important both globally and locally.

High level of development of ports in both sizes and in market share assumes that UAE’s initiative indicates the development of shipping industry. As Dubai is the leader in transshipment hubs of the region, the dynamic evolution between 1900 and 2010 deserves global attention (Akhavan, 2017). As the shipping industry was the backbone of the growth of Dubai, the port identified its development to be a result of proper infrastructure for the international operations and logistics. The building of Dubai channel with proper depth not far from the port also contributed to the development of infrastructure (Elhakeem & Amrousi, 2016).

Asian researchers Lee, Son, Park, and Jang (2016) pay more attention to the sphere of logistics in the Gulf, as most countries depend on oil and gas. In spite of the small size of domestic market, the international status of the country remains high. The extension of Jebel Ali terminal 3 can lead to enhancement of its container handling capabilities (Lee et al., 2016; Husn?in & Chakravarty, 2016). The geographical location of Dubai on the crossroads of Middle East Africa and Europe has also contributed and determined the direction towards building and extending ports. Yet, the decrease in oil prices can result in failure to direct the economic efforts towards logistics (Lee et al., 2016).

The analysis of the ports Jebel Ali I Dubai and Khalifa in Abu Dhabi shows that shipping industry and logistics in UAE as well as technological advance remain strong due to the international status of the country. Although the development of logistics can be risky due to the increase in prices of fuel resources, the UAE can remain strong because of the transportation of gold and precious stones. The ports by having numerous clients from different parts of the world will remain strong. Moreover, technological advances implied in their systems and automatization that quickens request processing and simplifies the supply chain management has a profound impact on the success of the shipping industry, especially ports. Deeper research on the methods dealing with comparison between Jebel Ali and Khalifa ports will support or disprove the existing findings and help better understand the trends of port, shipping and logistics industry in UAE.

Methods

The study dealing with comparison between Jebel Ali in Dubai and Khalifa port in Abu Dhabi, UAE combines different methods, such as screening of the numerical data taken from different years and analyzing the information linked with ports and the country’s economy. The research using numerical data represented in the diagrams and tables involves quantitative method. Through qualitative method, it is possible to research the available information and compare the two ports and their impact on the economy. The importance of each port on global and local market, and the role of logistics in UAE define the qualitative part of the research.

The comparison unlike contrast demonstrates that the ports under discussion are similar in regards of technological advancement and power. Their role for the country remains alike, yet they hold some differences regarding the number of clients and market share. Tracing the similarities and differences will demonstrate the numbers and statistics collected during 1980-2010. In addition, the websites dealing with the information on each port will demonstrate the marketing strategies that have been applied for better advertising of the offered services at the ports. The user interface (UI) design used in the websites will help recognize whether the information represented is easy to understand for inexperienced individuals.

The research on the economics of Dubai and Abu Dhabi will disclose the general information about the ports, their environment and their role in strengthening the global status of UAE. In turn, the findings will help identify the risks and obstacles and suggest the solutions for the existing issues. These materials also contribute to the qualitative part of the study. Urbanization, as the consequence of extension of the ports, and creation of favorable environment within the cities under discussion prove the success of the ports. Since shipping is a lucrative business, creating proper environment in the city and attracting human and business resources towards the port cities is a part of urbanization and a subject of qualitative investigation. Providing sufficient analysis of the data will disclose the principal issues and the reasons of growing economy and suggest solutions regarding its sustainability.

Data Analysis

The investigation on Jebel Ali and Khalifa ports cover the statistical and analytical data. The research on market share will cover the global and local logistics sectors. The economy of UAE will distinguish the principal trends essential for maintaining the sustainable development and establishing prosperous cooperation with Middle East, Asian and European partners. In fact, the ports play an important role as the crossroads between different countries and places of exchange of cargo.

Ports take important place in transportation sector. Shipping accomplishes 90% of all trading operations in the world (Elbayoumi & Dawood, 2016). Middle East region is vital as the exchange point of trade between the East and the West. Moreover, the ports have to ensure high productivity to correspond to the present-day market competition. Among the 24 ports, Jebel Ali and Khalifa Bin Salman take the first and the tenth places respectively. They comprise the existing strategic points in the logistics hub of the Arabic Gulf region. The following table demonstrates the market share of Dubai Jebel Ali port, which takes the first place since 2009 with 23.2% and has growth to 29.0 % in 2014.

The Herfindal inex from the table shows market concentration in the mentioned region. High degree of market concentration starts with 2.500 and more, whereas moderate concentration corresponds to 1.500 to 2.500, while 0.128 indicates low market concentration (Elbayoumi & Dawood, 2016). The indices on all the ports demonstrate low market concentration under 1. Lowering of market concentration shows the increasing competition between the terminals. The throughput’s and market share’s gradual growths prove increasing competition. The exception was Jeddah terminal, the market share of which fell from 10.363 % in 2009 to 6.87% in 2014, as demonstrated in the following Figure:

The chart demonstrates that Jebel Ali is undeniable and constant leader leaving all its competitors far behind. The location and larger scale of production concentrated in Dubai comprise the major reasons why the port retains the leading positions. Khalifa has smaller indices ranging from 0.582 in 2009 to 1.160 in 2013, and reducing to 0.630 in 2014. The vast differences in the indices of market share prompt the experts to suggest closing the port. Yet, according to the data provided by the recent research by Abu Dhabi Ports (2017), Khalifa became the second largest port in UAE. Its geographical positions is better compared to Dubai port, thus more ships enter the harbor making the annual capacity reach 2.5 million TEUs and 12 million tons of general cargo in 2016.

As more ecologically clean Khalifa port does not pose any environmental danger for the marine ecosystem. The port is located further into the gulf and its activity does not interfere with tourism. The following photo proves that Khalifa has developed infrastructure prominent for its modernity.

The picture demonstrates an orderly structure in which the port building is located. The convenience for the ships includes being served at the deep-water area and semi-automated facilities, which quicken the process. In fact, such characteristics have contributed to another prominent harbor in the country. The prognosis states that the port will add 100,000 jobs and increase the non-oil GDP by 15% by 2030 (“Khalifa Port and Kizad, United Arab Emirates,” 2017). Such measurements will help increase the competitiveness of the port alongside with Jebel Ali harbor having more technologies that simplify numerous operations.

Unlike Khalifa, Jebel Ali incorporates multiple technologies and is more advanced in automatization of the procedures. Though such high levels of technological progress mean less workplaces, it results in cost efficiency and optimization, which help the port acquire and keep higher market shares. Due to proficient level of information security, the harbor in Dubai was the first to receive ISO 27001:2005 Certification. The IT strategy applied at the terminal covers the business operations and transactions with the customers, suppliers, Jebel Free Zone companies and governmental agencies (“Jebel Ali Port,” 2017). Jebel Ali also incorporated IoT tools in order to trace the processes at the terminal, such as Remote Reefer Container Monitoring System or Refcon. The temperature problems or other irregularities within the reefer or refrigerated container turn on the alarm and send the mechanic to investigate. Such service enables high quality supply chain, promotes efficiency of the harbor, and reduces the risk of delays and flows.

Introduction of artificial lagoon channel became the alternative for creating environmentally friendly conditions suitable for both tourism and shipping. The division of the harbor and the lagoon intended to maintain healthy water and diminish possible pollution. The following figure shows the distance and shape of the channel according to the project:

Further inland location of the channel has a positive influence on the dry mainland territories. Proper saturation and water supply also simplifies the access of water towards the plants. As water in UAE is expensive, the implied technological advancements by the ports are suitable for the lagoon as well. Besides, the extraction of salt from the seawater to hydrate the palms is also a complicated and costly procedure. Yet, due to a high level of economy in the region, such expenses are affordable for Dubai. The city is able to switch its strategies towards not only shipping and logistics, but also towards tourism, which has been the principal profit-making sector for Dubai for years.

After having considered the peculiarities of Jebel Ali and Khalifa ports, it became possible to distinguish positive and negative sides of each harbor. Higher market share of Jebel Ali port in Dubai became possible due to its IT tools, IoT remote control and practically complete automatization. Semi-automated technologies at Khalifa are less progressive and enable partial processing of the supply chain and transactions. Yet, the harbor is more environmentally friendly being further from coast. The employment possibilities at the Abu Dhabi region can become more optimistic due to work available at Khalifa port. The combination of environmental protection strategies with efficient human resource management can help reveal new ways of income for the country beside oil and gas production.

Results and Discussion

The productivity and high indices of each port demonstrate sustainable development of UAE in terms of shipping, logistics and international trade. More countries of Asia become dependent on the operations exercised by ports as well as the velocity of supply chain in Dubai and Abu Dhabi. The efficient functioning of Jebel Ali and Khalifa ports is dependent on the latest software technologies, IoT for remote control and transition from semi-automatic to completely automatic transactions and other procedures at Khalifa.

Much attention deserves non-oil production, which promotes economic diversification in the country. Diversified economy in the UAE results in higher GDP and increases demand for the ports. Dubai free trade zone is the place where international cargo exchanges take place. As the number of customers increases, the necessity to use automated appliances grows. IT quickens numerous procedures and eases the complexity of the supply chain for both the client and employees. Yet, the overload of ships and tankers within the harbor complicate the environment. Therefore, ensuring marine protection policy and promoting tourism are other tasks of the owners of Jebel Ali. Building the lagoon with artificial channel can become an alternative for the marines due to the location of the port, decreased pollution through automatization and application of environmentally friendly trends.

When considering Khalifa port, the number of links and websites providing information about the harbor is larger compared to those informing about Jebel Ali. This phenomenon suggests an efficient advertising policy on the port in Abu Dhabi. Since more web resources offer the extended material on Khalifa port, more clients are willing to cooperate with the company. Besides, after having been approved as the main place for exercising the exchange and supply chain regarding non-oil products and as the environmentally friendly port, more international organizations are willing to use the offered services. The project related to employment at Khalifa is also vital, as the country is still struggling with the problem. Engaging environmental organizations and extending IT base in Khaifa through proper advertisement and promotion can increase the employment of IT people in tourism and real estate. In addition, its market share is likely to increase after engaging the international organizations and environmental funds.

Jebel Ali and Khalifa ports play a vital role in diversifying the economy of UAE. Both harbors are strategically important for the country. Economic diversification due to vital cargo exchange operations and developed infrastructure at ports create favorable conditions for successful operations at the international level, improve their competitiveness and increase GDP. For this reason, Jebel Ali and Khalifa will be able to retain sustainable development and maintain high market positions for many years.

UAE is outstanding for its rapid economic growth during the last several decades. Having shifted from the desert to the country with developed infrastructure, admitted as the best in the world, it continues prospering in many spheres. Building ports for maintaining the international trade operations has become one of the key directions sustaining numerous economic and trade processes in the Middle East Asia and Europe. The seaports in Dubai and Abu Dhabi deserve special attention due to their high performance, location, technological advancement and world recognition. Jebel Ali and Khalifa ports have a vital role in the local and international market. The loaded cargo includes precious metals and stones, fuel resources and many others.

Jebel Ali port is prominent for its ability to pertain the leading market positions among the ports in the Middle East. Its automatized facilities enable the performance of thousand and millions of operations simultaneously, skilled and trained personnel and increasing capacity helps sustain its development and maintain the clients’ base. High quality services, the velocity with which the company meets the requests make Jebel Ali a vital harbor on the international level.

Khalifa port is less competitive compared to Dubai port. Its semi-automated operations needs improvement and the company owner wishes to enroll more personnel. Such directions can reduce unemployment rate in the country and create alternative jobs in tourism and real estate. Diversification of economy will increase GDP level and improve the living standard. Efficient advertising campaign and numerous web resources continue engaging new clients. The excellent reputation of the port and its efforts to stay environmentally safe also implies alternative solutions and encloses additional market with more clients.