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Shipping-maintaining the balance.

ABHA MEHTA, AN official of the Dubai-based United Arab Shipping Company confirms that shipping in the Gulf has undergone significant change since the Gulf war. During the war, shipping in some of the Gulf region came to a virtual halt. There was a massive loss of confidence when traders did not want to move things into or out of the region, Mehta told The Middle East. Immediately after the war, however, confidence in the local trading community began to be restored.

Kuwait was formulating its priority reconstruction plans and project equipment and consumables began to move. Simultaneously, Iran, which had started to see some of the benefits of a stabilisation of its economic sector, following the long war with Iraq, was also re-initiating economic activity in a serious way.

Shipping operators recognised that trade volume in the region had achieved a significant upturn. The number of ships serving the region began to increase again, after a virtual close down by foreign operators during the terms of the hostilities. "Many foreign shipping lines withdrew their services to the region," Abha Mehta explained. "Although UASC being the national operator of the region, was determined to maintain services at the same levels as before. This move undoubtedly increased confidence. Traders realised that UASC -- which began trading in 1976 and operates around the region also beyond to Europe, the Far East and North America -- was a line that was here to stay."

There has been great rationalisation in shipping throughout the Gulf region since the war. Some lines have reorganised, others have banded together to be able to offer a more efficient service. As a result, Abha Mehta feels, full confidence has been restored.

"Shipping has always played a very important role in this region because the area is largely dependent on imported consumables, which means somebody has to transport the goods in. Countries in the region are also large-scale exporters of crude oil, which can only be transported efficiently and economically by sea. However, shipping is an international industry and we, in this region, are obviously affected by what happens worldwide.

"Generally, taking an overall view we expect shipping in the Gulf to perform well, probably maintaining present levels throughout 1993-94. However, we have observed that with the increase in trade volume, there has also been a significant increase in the tonnage deployed here. There are more shipping lines serving the region than before the war and it is still on the increase. At some time the balance between supply and demand could become adverse. We saw such a situation in 1986-87, when there were more lines serving, the region than could be sustained. As a result of the competition, freight rates dropped and a lot of lines incurred serious losses. However, this is just speculation at the moment, something we are keeping our eye on. In the long term this industry is a self regulating one -- if the lines cannot financially survive they withdraw or re-group and the balance of power shifts again."
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Title Annotation:Special Report; Middle East's shipping industry
Publication:The Middle East
Date:Dec 1, 1992
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