Oman’s logistics sector rises to the challenge of Iran war

• Omani logistics value up 45% in April
• Taking on displaced Hormuz cargoes
• New depots and railway line

Oman’s logistics sector is absorbing a sharp rise in regional trade flows as conflict-driven shipping disruptions push more cargo onto overland routes and alternative Gulf corridors, increasing pressure on the sultanate’s ports, border crossings and transport infrastructure.

“We are rising above the regional conflict with our shipping and transportation services at home and abroad, particularly in the Gulf, where the crisis may worsen,” said Abdullah Al Busaidi, director-general of Oman Logistics Center (OLC), the executive body appointed by the state to manage supply chains.

The value of logistics operations in Oman reached OMR1.4 billion ($3.6 billion) in April, up 45 percent from March, Al Busaidi told AGBI: “This is a record level.”

Operations include the transportation of food, construction materials, fertiliser, medicine and manufacturing products.

OLC is part of the Ministry of Transport, Communication and Information Technology and supervises logistics for Omani shipping, border routes, airports, ports and free zones.

It monitors state-owned listed logistics company Asyad Group, which Al Busaidi said handled more than 52 percent of such operations by value in April.

“We also expect to expand our operations further if the crisis continues. We are now investing to extend our logistics facilities at all ports and land borders because we don’t want to lag behind,” Al Busaidi said.

Abullah Al Busaidi

Asyad Shipping is taking delivery of four new vessels this year, while plans are underway to extend dockyard facilities at Sohar and Duqm ports to handle more cargoes.

Sohar is closer to the UAE border, and Oman earlier this year completed the development of a food depot as part of the logistics corridor between the two countries.

OLC also set up an online system, called Bayan, to allow regional food-chain suppliers to purchase in advance. It will connect with the $2.5 billion Hafeet railway, which Oman and the UAE started to build in May last year.

Sohar, home to Oman’s biggest free trade zone, is the starting point for the 240km railway.

“Plans are now afoot to set up another food deport at Duqm port, since it is located away from the Strait of Hormuz,” Al Busaidi explained.

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The war that started with Israeli-US attacks on Iran has affected all countries in the region, severely restricting supplies within the GCC states after Iran effectively closed the strait.

Oman, which sits outside the strategic waterway and has been relatively spared from the conflict, is also providing peace mediation between Iran and the US.

Around a fifth of global oil and gas supplies passed through the strait before the conflict began, but a stranglehold on shipping has all but halted seaborne exports.

Al Busaidi also said logistics operations at the Oman-Saudi border are set to expand this year.

“Trade between the two countries has gone up during this war and this encourages expansion plans later in the year to divert routes away from the conflict,” Al Busaidi said, providing no further information.

The value of goods crossing the Oman-Saudi border almost trebled to OMR320 million in March, compared with OMR112 million in February, according to the Oman Public Authority for Special Economic and Free Zones.

“We are constantly monitoring the situation to make sure supplies are not affected by this conflict, both domestically and regionally,” Al Busaidi added.