In an interview withMuscat Daily,David Gledhill, CEO of the Salalah Port Services Co (SPSC), which operates and manages the port, talks about competition in the global market and Salalah port's strategies to maintain its positionas a transshipment hub and further develop the cargo business.

Therehad beena decline in volumegrowth at the CT over the past couple of years. But in the first half of 2016, the port achieved strong growth and volumes at both its terminals grew. What are the major drivers of growth this year?

Salalah was suffering from the global slowdown in transshipments. As new bigger ships were introduced by the lines there was a greater availability of small vessels that can call directly at ports that were traditionally served by feeder vessels. However, to fully achieve the economies of scale that bigger vessels bring those vessels need to spend as little time in ports as possible. That is where Salalah wins over itscompetitors. First, we are closer than many other ports to the major shipping lanes so there is a shorter diversion to call here, and second we provide an extremely efficient and reliable service which means that vessels can come and go in a very short time.

At the GCT, we are seeing continued growth in our core products of limestone and gypsum but we are also handling an increasing amount of cargo going to Yemen. The range of cargo that the GCT handles is extremely diverse. We have liquid bulk, cruiseships and navy vessels and even handle a million goats each year. All of these sectors are seeing growth as Salalah continues to establish itself as an important regional hub for Oman, Yemen, East Africa and the Indiansub-continent.

There has been stiff competition in the global transshipment market in recent years. How are you planning to maintain the port's position as a transshipment hub? Isn't it difficult to attract new customers in the current challenging economic environment?

The transhipment market is a very competitive one and to compete we need to be the best at what we do. Traditionally, ports have improved their efficiency by either high levels of manning or process improvement. In Salalah we are taking the middle ground, we have a good mixture of skilled Omani workers and less-skilled guest labour and a very high focus on developing efficient methods of working. We have had periods in the recent past when our performance has been world-beating and the challenge now is to imbed that so it becomes the norm. It is great working in an environment where people embrace change and celebrate success.

Of course, the real challenge in a highly competitive environment is the downward pressure on pricing. It is, therefore, essential that we continue to identify and eliminate waste. We have been successful at cost-control and we need to continue to focus on that even as the business grows.

Given the challenges in the transshipment market, would your focus be on boosting volumes or diversifying the business?

It is always unhealthy to be too dependent on one type of business so it's vital that we continue to developimport andexport cargo. The important thing about the growth in our transshipment business is that the services that call in Salalah come from or go on to many parts of the world. This puts Salalah in a unique position. It is close to the sources of many raw materials, it has a high availability of labour and it is two weeks shipping time to just about anywhere in the world. Salalah, therefore, has a vital part to play in thegovernment's drive to diversify the economy.

What is the strategy to increase volumes at the GCT? What commodities are you focusing on to drive the general cargo business?

To handle the ever-increasing growth inlimestone andgypsum exports we need to mechanise more of our handling processes and over the course of the next12months we will focus on that strongly. We have put a lot of time and effort into identifying the most efficient way to do this and we are now placing orders for new equipment. These products are very land hungry and we need to work closely with thegovernment to identify property that is close to the port where we can store stockpiles in a safe and environmentally sensitive manner.

Despite a sharp increase in volumes and revenue, SPSC's consolidated net profit remained flat at RO2.67mn in the first half of 2016. Do you expect this trend to continue, going forward?

During the first half we experienced some exceptions, like the increased cost of working during Ramadan and Khareef. We are, therefore, confident that volume growth will have a beneficial impact on profitability in the second half.

The SPSC, in its first half 2016 report, said negotiations on the construction of a corridor and pipe rack are ongoing with Ministry of Transport & Communications and Oman Oil. When do you expect construction to commence and how would this contribute to business growth in future?

Construction of the corridor and pipe rack will start soon and this will link our new liquid jetty withSalalahFree Zone. There are already a number of new projects that have been identified that will use this new facility but it is premature for us to discuss them now.

Global growth has slowed down and most regional economies are facing challenges amid weak oil prices. What is your outlook on the global container shipping industry? Is there too much competition on rates?

The shipping industry is going through a very difficult time as demonstrated by the recent demise of the South Korean shipping line Hanjin. Salalah is, however, one of the few ports that is seeing growth at the moment and our customers are some of the largest in the world. We are, therefore, confident of our immediate prospects.

How do you collaboratewith the Salalah Free Zone (SFZ)to boost business at the port?

The port and the freezone have always worked very closely together because, apart from our transshipment trade, we are interdependent. Thegovernment's recent decision to consolidate its shareholdings in logistics-related businesses (20per centin SPSCand 100per centin SFZ) means that through Oman Global Logistics (OGL) we have a common stakeholder which will strengthen our bond. All three parties, OGL, SPSCand SFZ, are committed to the GlobalLogistics Strategy and in particular its aim to make it easier to do business in Oman.

How has the conflict in Yemen impacted the port's performance?

We have always had strong links with Yemen and many of the traders there recognise the importance of Salalah's connectivity with the major shipping routes. The unfortunate conflict in Yemen has strengthened that business because the onward transit to and from Yemen can be done by both land, through Mazyunah, or by sea. Salalah is also proud to host the International Red Cross and the Red Crescent who play a vital role in providing aid to the war-torn areas.