Breaking News

U.S. Had Tried to Rescue American Hostages in Syria: Pentagon
Tweet TWEET

Syrian War Helps Beirut Port Boost Lebanon Economy

At the Port of Beirut, three trucks hauling yellow and orange containers wait for cranes to load their cargo onto a Liberian-flagged ship recently arrived from the Saudi port of Jeddah and headed for Greece.

About 2,200 such vehicles enter the port daily, twice the number at the start of the year, and the multicolored containers are stacked up five high rather than three. While Lebanon’s growth has suffered during the 2 1/2 year conflict next door in Syria, port traffic has risen as traders avoid risky overland transit. Domestic demand also is increasing as Lebanon absorbs 1.2 million Syrians fleeing their war-torn country.

“Compared to the many negatives of what’s happening in Syria and the impact on the Lebanese economy, the increase in port activity is one of the positive consequences,” said Jihad Azour, a former Lebanese finance minister who’s now vice president of advisory firm Booz & Co. in Beirut.

The port, which services carriers including AP Moeller-Maersk A/S, the world’s largest container line, Mediterranean Shipping Co SA and CMA CGM SA, saw a 24 percent jump in revenue during the first six months of this year from 2012, according to its website. International Port Management, the group overseeing the company running the terminal, will complete an expansion by November, lifting capacity by as much as 60 percent.

“The port is severely congested,” Chairman Ammar Kanaan said in an interview in Beirut. “It’s like placing 20 people in a car that fits five.”

Trade Flurry

The activity is reflected in Lebanon’s trade figures even as the economy in the country of 4.3 million people grows at a fraction of the pace before the start of the uprising against Syrian President Bashar al-Assad in March 2011.

Gross domestic product will rise 2 percent this year, up from a rate of 1.5 percent in each of the previous two years, though below 7 percent in 2010, according to a forecast in the International Monetary Fund’s April World Economic Outlook.

Exports rose 6.5 percent in January through June, and imports jumped 11.5 percent “under the influence of the Syrian situation,” Central Bank Governor Riad Salameh said in an Aug. 16 interview at his office in Beirut.

The U.S. and its allies this week condemned an alleged chemical attack by the Syrian government on a rebel-held area and are moving closer to a decision on military action. U.S. Defense Secretary Chuck Hagel said yesterday U.S. forces are “ready to go,” while Syrian Foreign Minister Walid al-Muallem said the government won’t surrender.

More Traffic

Lebanon’s importers of consumer goods have stepped up their orders of canned food; paint and other raw materials for small industries; cables, switches and other electrical items and plastics to cater to the rising population, according to Nassif Saleh, owner of Saleh Shipping, a company at the port.

“Local traffic has increased even though the economy has slowed,” said Saleh, whose business grew 17 percent in 2012 and 8.4 percent in the first half of 2013 from a year ago.

Cargo handled at the Beirut container terminal has swelled to about 1 million 20-foot equivalent units, or TEUs, a year, from 350,000 in 2005, the year it opened after a port revamp, Kanaan said. The planned extension will increase the capacity to at least 1.5 million to 1.6 million TEUs annually, he said.

Beirut still is dwarfed among Mediterranean container ports by Valencia and Algeciras in Spain to the west, both of which handle more than 4 million TEUs a year, and Port Said at the mouth of the Suez Canal in Egypt. The Lebanese capital is also smaller than Piraeus in Greece, shipping statistics show.

Limited Impact

That limits the impact of shipping on the economy. The increased activity at the port will contribute positively “but it won’t compensate for all the cost that the Syrian conflict” is inflicting, such as a drop in tourism and building activity, said Azour, the former finance minister.

With the conflict showing no signs of ending, Beirut has greater scope to increase the amount of transshipments it handles as the new capacity comes on line. These are goods that pass through a container terminal en route for other destinations and are a measure of a port’s competitiveness.

While cargos have increased, transshipments have been declining, said Shailesh Garg, director and general manager for London-based consulting company Drewry Shipping in India.

The total dropped 12 percent to 217,958 TEUs in the first seven months of the year, accounting for about 35 percent of handled cargo, according to data from Drewry. Transshipments through Port Said’s larger terminal were as much as 90 percent of total traffic in 2012, while the proportion is 70 percent to 80 percent at the competing facility on Piraeus, Garg said.

Longer Route

Shipping activity in Beirut has increased as the Syrian war caused fewer goods to be carried overland. Lebanon is blocked by Israel to the south, so Syria is the country’s only legal land-access route for exports. At the same time, international financial sanctions against Assad have forced Syrian merchants to buy their products through Lebanon rather than importing directly into the country.

Some trade with oil-rich Gulf countries was handled overland via Syria until the conflict got bloodier, said Amer Kaissi, owner of General Transporting Services in Beirut. Kaissi said land shipping stopped in 2012 for a year and then restarted about three months ago at less than half the volume.

“The merchants are scared,” Kaissi said. Plus, insurers largely aren’t covering against war and hold-ups, and if they do they’re charging a very high premium.

Safer by Sea

Ara Bedirian, owner of Lebanon plastics maker Polymer Process Industries, said companies he deals with -- including Saudi Basic Industries Corp. (SABIC), the world’s biggest petrochemicals company by stock market value, and Qatar Petrochemical Co. -- started sending raw plastics to his company by sea more than seven months ago.

While the new route is safer, it’s meant an increase in his clearing costs to as much as $45 per ton from $5, Bedirian said. It also takes at least a month for him to receive his goods compared with five days for overland transit because ships travel around through the Red Sea to the Mediterranean.

Though good for shipping companies, the speed of the growth at the Beirut port is posing problems for management, Kanaan said. Last week, scores of trucks waited in line in the summer heat to finish paperwork and left laden with imports including foodstuffs, electrical parts and paper products.

Congestion is costly and delays are rampant, Kanaan said. “Once that capacity is on line, it will solve the problem.”

To contact the reporter on this story: Donna Abu-Nasr in Beirut at dabunasr@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.