Port of call: Khalifa Port Special
Khalifa Port, the new state-of-the-art gateway to Abu Dhabi, commenced commercial operations on Saturday. Before the launch, Arabian Business caught up with Abu Dhabi Ports Company chief executive officer, Tony Douglas.
When Britain’s queen Elizabeth II inaugurated the $6bn Terminal 5 at London’s Heathrow airport in March 2008, British Airways boss Willie Walsh smiled as the UK’s largest free-standing structure was finally open.
Ten days later, when around 42,000 bags had gone missing and over 500 flights were cancelled, the Irishman’s smile was long gone.
As Abu Dhabi counts down the hours before the official opening of the $7bn Khalifa Port — the emirate’s largest ever infrastructure project — Tony Douglas, CEO of Abu Dhabi Ports Company (ADPC), will be hoping he doesn’t suffer the same fate as the beleaguered British Airways boss.
“On average we are doing about 1,700 tests every day at the moment… This is a megaproject, the biggest megaproject in the region and it has been deliberately kept low-key,” Douglas says with pride, having just come from briefing Sheikh Mohamed bin Zayed Al Nahyan, the Crown Prince of Abu Dhabi, on the final steps under way before the big launch.
“The project is now complete. We go live and operational at precisely 7 am on September 1,” an upbeat Douglas adds.
When asked how he plans to avoid the fate of Heathrow’s Terminal 5, Douglas steals an infamous quote from former US Secretary of Defence Donald Rumsfeld: “There are known knowns; there are things we know that we know. There are known unknowns; that is to say there are things that, we now know we don’t know. But there are also unknown unknowns — there are things we do not know, we don’t know.”
“What you talk about, with big pieces of integration like this, is that you meticulously plan,” Douglas adds. “You look at risks you can sensibly identify and mitigate and then you test them rigorously.
“You try to simulate when things go wrong and how you can recover, and we’ve done all that at Khalifa Port. Are we in as good a shape you could ever possibly hope for? We think we are.”
Size matters when it comes to mega projects in the Middle East and to put the epic scale of this opening into perspective, Douglas points out that Khalifa Port and Khalifa Industrial Zone Abu Dhabi (Kizad) combined are the size of a small country.
Around 420 square kilometres (sq km) in size, the project will be four times bigger than Abu Dhabi island, two-thirds the size of Singapore and will be a quarter the size of Greater London, stretching from Canary Wharf to Slough.
While the opening of the port has been kept relatively low-key, its long-term growth plans are anything but. The port will handle about 800,000 containers this year compared with 767,000 last year which was about a 45 percent increase on the previous year.
At present the main port in Abu Dhabi is Mina Zayed, but the 40 year-old facility is set to hit its capacity of 800,000 containers, just in time for the entire container business to be transferred over to Khalifa Port from the start of September.
“When we move [to Khalifa Port] on September 1, we will use Terminal 1, which [can handle] two and half million containers… Then, when that gets to be full, we will add Terminal 2… So five million containers plays 800,000,” Douglas explains.
Once demand has exceeded the first two terminals at Khalifa Port, ADPC plans to expand further in the run-up to the emirate’s 2030 vision, which presumes a GDP (gross domestic product) growth target of about $417bn.
“Capacity is for 5 million and… when demand fulfils capacity, we will put another L-shape on [the port] and total theoretical capacity in 2030 is 15 million [containers per year],” Douglas says.
However, he is realistic that the port does not want to develop to full capacity straight away and growth will be in stages. “The smart thing is to try and phase it as best you can… You wouldn’t put 15 million in from day one.”
In 2009, about 60 percent of Abu Dhabi’s GDP was generated from oil and gas, with the rest coming from other sectors. However, by 2030, the plan is for that position to be reversed.
“There is four times more [potential non-oil and gas] GDP. There are a wide range of sectors which will provide that growth: aluminium, glass, steel, heavy engineering and targeted industry sectors which the 2030 Vision identified,” Douglas says.
Kizad was designed to supply around fifteen percent of the non-oil and gas GDP in Abu Dhabi and Douglas says around 44 industry heavyweights have signed up to lease land in the industrial zone, which will add around $40bn to Abu Dhabi’s economy.
Leasing of space began in May and so far around two square kilometres have been leased. A further eight square kilometres are in the final stages of negotiations, while a total of 22 square kilometres is available for rental.
Emirates Aluminium (EMAL) is Kizad’s anchor tenant. Its smelter opened in December 2009 and the site features the biggest one-site greenfield aluminium smelter in the world.
Silicon metal smelting company Al Braik Investments, construction parts manufacturer Talah Board and logistics firm Al Batha Trading & Industry Group are set to set up in Kizad and Sharjah aluminium manufacturing firm Mulk Holding plans to launch in the near future.
“For an industrial zone to be successful, it needs three factors,” Douglas. “Firstly, they need access to global markets and we have a deepwater port and two international airports… Etihad Rail runs all the way through the centre of [the site] and onto the port island, so it is the first ever deepwater port to have rail running out to it.
“Second is low operating cost... Energy costs and power are very competitive here. Third is ease to do business,” Douglas says of the attraction of Khalifa Port and Kizad.
The site is expected to create up to 100,000 new jobs when it is at full capacity, even though Khalifa Port will be one of the most automated seaports in the world. Eagerly, Douglas traces out a container’s seamless progress through the port.
Container number one comes along on the truck. An online portal registers the container, processes all online bookings, and facilitates payment of export and customs duties.
“If you are a frequent user, your trucking company will have a radio frequency tag onboard which uploads your registration data,” Douglas says. “When the truck comes along, the automated gate reads the data off the tag and knows which container it is and knows it’s been customs cleared. It checks it has all the appropriate approvals and the gate automatically opens and you drive straight in. If any of that hasn’t happened the gate won’t open.”
After the gate opens, the truck and container is processed through the facility.
“While Mina Zayed has a vast army of workers, Khalifa’s high-tech system means the workforce is relatively low. We have about 450 people working on this shift [at Mina Zayed] at the moment. The comparison at Khalifa Port would be zero,” he points out.
With this level of automation it also means security and scanning has become faster and more efficient, Douglas says.
“New technology helps towards high-level screening,” he says. “The parallel I would use is when you check in your suitcase [at the airport] and it goes through five levels of screening. We have introduced a screening method that has a similar methodology and which all containers go through.
“We also have in Khalifa Port some specific trace detection gateways… Taking Heathrow as an example, even as a passenger when you go out through the departure where you go to the declare and non-declare area, you go through some big arches. Most people don’t know what they are but they are nuclear trace detectors.
“So if you are carrying anything on you that has any small level of radiation it will trigger. It is those kinds of technologies we have in place [at Khalifa Port],” he says proudly, but refuses to elaborate on the specifics of the nuclear-detecting technologies incorporated into the system.
In addition to security, a major hot topic for those developing mega infrastructure projects around the world is the environmental element. Khalifa Port is to be built beside the location of the Ras Ghanada Reef, a seven-kilometre-long coral habitat, which is home to marine life such as turtles, dugongs, dolphins, sea snakes and clownfish.
One of the biggest and densest coral reefs in the Gulf, Douglas says ADPC has gone to expensive lengths to protect the unique area.
“It is a massive story here… This is not only a national treasure this is an international treasure… The leadership was very clear from the outset that this had to be protected.
“This was non-negotiable, this had to be protected and consequently we had to design a scheme and engineer a solution that guaranteed during the construction [that there would be no damage].”
In order to protect the coral, ADPC built an eight-kilometre environmental breakwater and a one-kilometre causeway bridge linking the port to the shore, which allows for continued current flow to the reef.
“We had, and still do have, the Florida Coral Marine Institute and Al Ain University doing all the original surveys to determine whether the condition of Ras Ghanada Reef has continued to be preserved,” Douglas says.
“From a civil engineering point of view, it was a massive marine sustainability project in the way it was engineered. It that hadn’t existed you would have done it slightly differently… [The breakwater and bridge] cost $240m. That gives you an idea of the investment and scale we are talking about,” Douglas explains.
With a budget of AED26.6bn ($7.2bn), the money existed to plan around the environmental obstacle and Douglas is very proud of the fact that the project has so far come in under budget and is ready to be unveiled to the public on September 1.
“What you can be absolutely sure about is we are inside the budget…handsomely inside the budget,” he says, smiling.
Come 7am on September 1, when the green button is pressed, let’s hope Douglas’ smile lasts longer than Willie Walsh’s.