Gulf of Aqaba- Logistics- Trade and Industry
 Chapter 2 Gulf of Aqaba
 INTRODUCTION  |  JORDAN  RIFT  VALLEY  |  GULF  OF  AQABA  | SOUTH  EAST  MEDITERRANEAN  | ISRAEL  PROJECTS        
3. Logistics, Trade and Industry
 Gulf of Aqaba- Logistics- Trade and Industry
   
 Gulf of Aqaba- Logistics- Trade and Industry
 Gulf of Aqaba- Logistics- Trade and Industry
Gulf of Aqaba-Eilat Logistic Center
 

The Northern Gulf of Aqaba is a natural transshipment center, given its pivotal location between four countries and two continents. Development of logistic infrastructure in the Gulf of Aqaba can convert the region into a center for regional and international trade and processing activities, which could serve on-route traffic between Europe and Asia and Africa and Asia, including regional exports to the Persian Gulf states.

The sea and airports at Aqaba constitute the kernel for logistic development of the northern Gulf of Aqaba. Enhancement of inner port facilities, including storage, packaging, processing, manufacturing facilities will create opportunities for value added activities around the port centers. Similarly, improvement of transshipping services and development of seamless intermodal routing and cargo handling will create the conditions to attract significant international transit traffic.

3.1. Eilat-Aqaba Logistic Center

Current planning strategies for the Eilat-Aqaba region recognize the potential engendered in developing logistic infrastructure in an integrated manner. Planned development of the Aqaba-Eilat area includes major important logistic elements which can expanded to create a logistic center in the area. After completion, the logistic center will constitute an inner port. It will include facilities serving the two sea ports and joint airport. In addition to transport facilities, the Center will include terminal storage areas, inter-modal transfer capacity and manufacturing facilities.

The creation of infrastructural continuity between the various ports of entry will convert what to date was an unrelated cluster of facilities to a logistic gateway. Increased logistic capacity will facilitate secondary development of production and transport-related services in the region.

The Aqaba-Eilat logistic center would be located near the Eilat-Aqaba Airport.

The main facilities at the Center include:

  • customs clearance and security;
  • cargo terminal facilities to receive, store and distribute containerized and general cargo. This will include facilities for, routing, repackaging, sorting and processing goods;
  • truck parking and maintenance facilities;
  • transportation, communication, food, rest stop, bank and other commercial services for drivers and airport passengers;
  • air freight and courier services;
  • a cold storage facility;
  • manufacturing and assembly facilities.

Local and international road systems are being designed to service the logistic center. In the future, rail connections may be possible.

a. Rationale behind the Logistic Center

There is a continuous growth of container traffic passing through the Gulf of Aqaba subregion. Future growth projections for container traffic suggest a 8% annual increase to the year 2000 and 4% thereafter. By the year 2010 it is estimated that combined throughput will total 2.8 million tonnes or 387 thousand TEUs (twenty-foot equivalent units).

Forecast of Container Traffic Using Aqaba and Eilat Ports

Year

Aqaba

Eilat

Total

 

000 tonnes

000 tonnes

000 tonnes

000 TEUs

1995

801

280

1,081

148

2000

1,169

409

1,578

216

2005

1,565

547

2,112

289

2010

2,094

732

2,826

387

Source: Harza , Jordan Rift Valley Integrated Development Study, 1997

Increased trade with the Far East and Indian subcontinent is projected for both Israel and Jordan. With the construction of the Aqaba-Ein Netafim Road, additional cargo traffic will pass through the area and the base for inter-modal transshipment is likely to increase. Projected industrial development in the region will also increase the demand for goods in the immediate region and freight services from it. Development of cargo handling facilities at the airport will generate opportunities for sea-air and air-surface intermodal transshipment.

b. Scale and Scope of Development

A prefeasibility study on this project was conducted within the framework of the Harza Group Master Plan for the JRV. According to this study, 21 hectares will be required initially to support the services outline in the following table. This table indicates space requirements. It is assumed that the project will be implemented as a joint venture between the public and private sectors:

Indicative Site Requirements for the Aqaba-Eilat Logistic Center (in thousand square meters)

 

Public

Private

Total

Warehousing

30

60

90

Gatehouses and weighbridges

0.75

0

0.75

Custom facilities

1.5

0

1.5

Hotel

0

2

2

Service station and repairs

0

10

10

Offices

2.5

0

2.5

Ancillary services (banks, etc.)

0

1

1

Truck/container park & circulation

100

0

100

Total

134.75

73

207.75

Source: Based on data from Harza , Jordan Rift Valley Integrated Development Study, 1997

  • Warehouses would include public and dedicated facilities. Approximately 60% of the warehouse area will be used for storage, while the remainder for unloading, sorting, limited processing and repackaging.
  • Gatehouses and weighbridges will be required for security and traffic control. The Center will probably be granted free trade zone status;
  • Provisions are made for a 100 room hotel with cafe and restaurant facilities. Other private sector facilities would include a service station and garage, banking, and related shipping services companies. Proximity to the airport creates demand for tourism and public transport services as well.
  • Office space will be required for administration of the center and for resident service companies.
  • 10 hectares will be needed for truck and container parking and handling.

c. Project Costs

Annual operating costs are estimated at $9.2 million. Estimated project costs are outlined below:

Indicative Investment Costs for the Eilat/Aqaba Logistic Center (in thousand US dollars, 1996 prices)

 

Public

Private

Total

Site Preparation/ Infrastructure*

2,695

1,460

4,155

Warehousing

6,000

12,000

18,000

Storage Equipment

2,400

4,800

7,200

Weighbridges

280

0

280

Custom facilities

300

0

300

Hotel

0

2,000

2,000

Service station & garage

0

600

600

Offices

1,125

0

1,125

Ancillary services (banks, etc.)

0

500

500

Total

12,800

21,360

34,160

*Including preparation of parking lots for trucks and containers.
Source: Harza Jordan Rift Valley Integrated Development Study, 1997

d. Project Viability

The project was found to be economic viability under the following assumptions:

  • project lifespan is 25 years;
  • annual operating costs of $1 million will be incurred by the public sector. Other operating costs are calculated based on an estimated 1,500 at $5,000 per employee plus a 2% allowance of the investment cost. This comes to $8.2 million;
  • the throughput of goods is estimated at : 350 thousand tonnes for year one; 525 thousand tonnes for year two and 700 thousand for years 3-25.
  • investment costs come to $33 million, excluding hotel and service station components;

The implied unit cost peton handled at the Center ranges between $15.1-16.2.

3.2. Science-based Industrial Park along the Arava Highway

This project is part of the Eilat-Eilot Regional Development Plan. It entails the development of an employment center in the northern tip of Eilat extending from the current industrial area to Nahal Amram. The purpose of this industrial park is to promote science-based industries, high-tech companies, light non-polluting industry and services. The park can serve as a location for joint ventures with Jordanian and Egyptian investors.

The development will comprise 7 municipal blocks with an initial total area of 1800 thousand sq. m. It will be designed to blend into the desert environment and will be based on low buildings separated by large landscaped public areas. It is estimated that by the year 2005, the park will employ 1,500-2,000 people. Total investment (including land) for the first stage is estimated at $40-50 million.

3.3. Expansion of Cold Storage Facilities in the Northern Gulf of Aqaba

This project is outlined as a separate project in the Harza Master Plan. It comprises establishment of cold storage facilities at Center for high-value export grade agricultural produce and fresh fish. It is intended that this serve as a joint facility serving tourism, agricultural and retail sectors in both Eilat and Aqaba. A joint venture between the private sectors in Israel and Jordan can implement this project. A prefeasibility study on this project has been completed.

The major cold storage facilities in the region are located in Aqaba, with a total capacity of 7,500 tonnes. Frozen cargo passing through the Aqaba port is highly variable, but generally on an upward trend. Development of the tourism industry in Aqaba-Eilat and the Sinai Peninsula, increased usage of the Aqaba Port for Israeli exports, and increased trade by both countries with the Persian Gulf, other Mashreq countries and India provide the rationale for this project.

The cold storage center would be adjacent to the planned Aqaba Airport Logistic Center on an area of 2.5 hectares. It will provide an initial capacity of 6000 tonnes. It would comprise a singe story structure with multiple compartments equipped with individual temperature control ranging from -23° C to +5° C. The facility will also include loading and shipping docks, equipment rooms, offices and battery charging room. It is estimated that the project could be completed within 18 months.

Annual operating costs at 70% capacity are estimated to be $2.8 million. Required investment was estimated at $8 million.

3.4. Global TransPark at the Aqaba-Eilat Logistic Center

A Global TransPark is a multi-modal transport facility integrated into an advance industrial park facility. The TransPark concept integrates air, rail, road and sea transportation modes with the latest advancements in electronic data interchange (EDI), customs facilitation and technology transfer.

The TransPark program is an American initiative which has already been established in various locations throughout the world: the United States, the Philippines and Thailand. Discussions are in progress for additional sites in Germany, Brazil and Panama. Together these parks will constitute a global network linking manufacturing and service centers throughout the world.

Global TransParks are designed to provide:

  • Dedicated cargo flights to facilitate global manufacturing;
  • Employee training and technology transfer at on-site education center;
  • Introduction of innovations in manufacturing practices;
  • A vehicle to attract foreign investment and joint ventures.

Aqaba has been selected as a possible location for a branch of the Global TransPark network, given its logistically strategic location and stage of infrastructure development. Possible recognition of the Logistic Center as a Qualified Industrial Zone, which would confer U.S.-Israel Free Trade Zone status for goods produced in the Zone, could promote this project.