UAE plans new port to bypass Strait of Hormuz, end Gulf shipping crisis

The company is in discussions to build a new multipurpose port in Fujairah and a container terminal at the emirate’s existing harbour, people familiar with the matter told the newspaper. The project would mark a significant diversification effort for DP World, whose operations have long been centred around the Jebel Ali Port, the Middle East’s largest container hub and a key pillar of Dubai’s rise as a global trade and logistics centre.   The details of the proposed port emerged as Iran once again closed the Strait of Hormuz, a strategic waterway through which nearly 20 per cent of the world’s oil and gas supplies pass, while the United States reimposed a naval blockade amid renewed tensions. The strait has remained vulnerable to disruptions since the outbreak of the US-Israel-Iran conflict in February, severely affecting global energy supplies, although shipping had briefly resumed following a short-lived ceasefire agreement between the warring sides.      The proposed new port would be located on the Gulf of Oman, allowing cargo to enter and leave the UAE without passing through the Strait of Hormuz. Containers could then be transported overland to Dubai, Abu Dhabi and other Gulf destinations.   The move comes as the UAE seeks to strengthen the resilience of its economy and infrastructure following disruptions linked to the ongoing conflict involving Iran.   According to the report, activity at Jebel Ali dropped by as much as 90-95 per cent after Iran closed the Hormuz strait in response to US-Israeli military actions, prompting DP World to accelerate plans for alternative trade corridors.   Before the conflict, around 135 vessels passed through the strait each day. When it reopened, daily transits reportedly struggled to exceed 40 vessels, with recent attacks on shipping and renewed hostilities further affecting maritime traffic.   DP World is currently negotiating a term sheet with government authorities, while the project’s financing and ownership structure are still being finalised. A senior company official told the Financial Times that the new facilities could be operational within 18 months.   “There are plans in the works around diversification to get through this disruption,” Financial Times quoted DP World as saying, as it also acknowledged that diversification plans were being developed to mitigate disruption risks.      However, officials stressed that the expansion would not replace Jebel Ali, which remains central to Dubai’s economy. The sprawling port complex includes a vast free trade zone, logistics facilities and industrial infrastructure that have been built over several decades.      “Jebel Ali will continue to be Jebel Ali. It will never be downsized,” a senior company official was quoted as saying. Initial investments in the new facilities are expected to run into hundreds of millions of dollars, with further expansion possible depending on future demand. The project is being viewed as a defensive measure designed to safeguard the UAE’s trade flows against future disruptions in the Strait of Hormuz.   Since the onset of the crisis, DP World has already diverted cargo from Jebel Ali to ports on the UAE’s eastern coast, including Fujairah and nearby Khor Fakkan. Those facilities have experienced congestion as shipping volumes shifted away from the Strait of Hormuz route.      The planned expansion also comes amid increased competition on the UAE’s east coast. Sharjah-based logistics operator Gulftainer recently announced a USD 2 billion investment programme to expand capacity at Khor Fakkan port, another major container hub on the Gulf of Oman.   Fujairah already holds strategic importance in the UAE’s energy sector, serving as a key export point for Abu Dhabi’s crude oil shipments that bypass the Strait of Hormuz. The proposed DP World project would further strengthen the emirate’s role in the country’s trade and logistics network.