As the Iran war drags on and the reopening of the Strait of Hormuz is delayed, Dubai in the United Arab Emirates (UAE) is pushing to build a new port that will bypass the strait.
On the 13th, the Financial Times (FT) in Britain reported, citing sources, that DP World, a logistics company owned by Dubai, is pursuing plans to build a new port and container terminal on the UAE's east coast. DP World is developing a new multipurpose port in Fujairah and is in talks to create a new container terminal at the existing Port of Fujairah.
Dubai has long used Jebel Ali Port in the south of Dubai as the Middle East's largest logistics hub. Jebel Ali handled 15.6 million 20-foot (TEU) containers last year alone, serving as a key logistics base linking China and Africa.
However, Jebel Ali is located inside the Persian Gulf, meaning ships must pass through the Strait of Hormuz. As a result, after Iran closed the strait, Jebel Ali's cargo throughput reportedly plunged by 90% to 95%. Credit rater Moody's estimated that DP World's annual revenue will fall to about $5.9 billion (about 9 trillion won) this year from $6.6 billion (about 10 trillion won) last year due to the war's impact.
By contrast, the new port planned for Fujairah on the UAE's eastern coast facing the Gulf of Oman will connect directly to the Arabian Sea without going through the Strait of Hormuz. Containers can be moved overland from Fujairah to other emirates such as Dubai and Abu Dhabi, raising expectations that the UAE can maintain its logistics network even if the strait is blocked.
DP World is still discussing project structure and financing with government authorities for the new port, and the final plan has not been set. The company is considering investing several hundred million dollars initially and then increasing the size depending on demand, and it expects the new port could be completed in as little as a year and a half.
The UAE has already formalized a policy to reduce reliance on the Strait of Hormuz. In an interview with Bloomberg last month, Thani Al Zeyoudi, the UAE minister of foreign trade, said, "Even if the Strait of Hormuz reopens, the ultimate goal is to bring reliance on this strait to '0,'" adding that the country will continue to build bypass logistics networks.
Since the Iran war, the country has already begun shifting some cargo to Fujairah and nearby Khor Fakkan to reduce reliance on Jebel Ali. Gulftainer, a port operator headquartered in the UAE emirate of Sharjah, also announced early this month that it will invest $2 billion (about 3 trillion won) to expand Khor Fakkan's handling capacity.
However, the new port is unlikely to fully replace Jebel Ali. Jebel Ali is a world-class logistics hub built over decades, with extensive free zones, warehouses, and manufacturing and heavy industry facilities concentrated there. A senior DP World official told the FT, "Jebel Ali will remain Jebel Ali," adding, "Its absolute scale will not be reduced."
FT assessed the new port plan as "aligned with the government's long-term strategy to protect the UAE economy by reducing reliance on the Strait of Hormuz, where maritime transport has been disrupted by Iran's drone and missile attacks, so that even if clashes with Iran recur in the future, the economy is shielded."