Fitch Qatar Freight Transport & Shipping Report - 2019-03-14

2019
www.fitchsolutions.com
Qa
Qatar
tar
Fr
Freight
eight T
Trransport & Shipping
Report
Includes 5-year forecasts to 2023
Qatar Freight Transport & Shipping Report | 2019
Contents
Key View............................................................................................................................................................................................ 4
SWOT .................................................................................................................................................................................................. 5
Freight Transport & Shipping SWOT...................................................................................................................................................................................... 5
Industry Forecast........................................................................................................................................................................... 6
Trade Forecast................................................................................................................................................................................................................................ 6
Road Freight Forecast................................................................................................................................................................................................................. 9
Air Freight Forecast....................................................................................................................................................................................................................11
Shipping Forecast.......................................................................................................................................................................................................................13
Market Overview..........................................................................................................................................................................17
Company Profile...........................................................................................................................................................................20
Qatar Airways Cargo ..................................................................................................................................................................................................................20
Qatar Gas Transport Company (Nakilat) ............................................................................................................................................................................22
United Arab Shipping Company (UASC)............................................................................................................................................................................24
Milaha (Formerly Qatar Navigation) ....................................................................................................................................................................................26
Qatar Demographic Outlook ....................................................................................................................................................28
Freight Transport & Shipping Methodology........................................................................................................................31
© 20
2019
19 Fit
Fitch
ch Solutions Gr
Group
oup Limit
Limited.
ed. All rights rreserv
eserved.
ed.
All information, analysis, forecasts and data provided by Fitch Solutions Group Limited is for the exclusive use of subscribing persons or organisations (including those
using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced,
repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch
Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability
whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
This report from Fitch Solutions Macro Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch
Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2019 Fitch Solutions Group Limited.
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS MACRO RESEARCH and is NOT a comment on Fitch Ratings' credit ratings. Any comments or data included in the report are solely derived from Fitch
Solutions Macro Research and independent sources. Fitch Ratings' analysts do not share data or information with Fitch Solutions Macro Research.
fitchsolutions.com 3
Key View
Key View: Trade growth will remain resilient to the ongoing Qatar-Gulf Cooperation Council diplomatic dispute. Air freight growth
will outperform other freight segments although road will remain dominant in absolute terms. Port capacity will continue to grow
strongly as investment pours in to reduce Qatar's reliance on land transit through currently hostile neighbours.
Latest Developments And Forecasts:
• In 2019 trade growth will continue to rebound from the negative effects in recent years of low oil prices and the diplomatic feud
with the GCC. Strong construction sector activity will boost imports in the near term, and new sources of gas production will
result in steady export growth over the long term.
• There is nothing to suggest a resolution to the ongoing GCC diplomatic crisis will be forthcoming in 2019. A key factor behind
the lack of progress towards a resolution to date is that none of the parties to the crisis are under substantial pressure to end it
quickly because of limited negative economic fallout. While we expect the GCC to remain intact, we see little scope for genuine
advancement of intra-bloc cooperation and trade integration over the years ahead.
• Air freight volume growth will be robust in the coming wars, albeit slower than during the bumper growth of the past five years.
Expansion of the Hamad International Airport will play a major role in driving air freight growth, as will increased land-based
connectivity between the airport and other business centres in Qatar.
• Significant infrastructure projects in preparation for the 2022 FIFA World Cup, combined with healthy underlying growth
in commercial activity, will underpin a steady expansion in road freight volumes.
• Port development will continue to be fast tracked owing to land links with GCC members being curtailed by the ongoing Qatar-
GCC diplomatic dispute. Preparations for the 2022 FIFA World Cup will result in continued strong port throughput of construction
materials, and there will be strong expansion of liquefied natural gas exports in the long term.
• Rapid growth in air freight capacity will see the sector grab market share from road haulage over the coming years. While some
of the country's planned rail network could be operating by 2023, this will have a larger impact on passenger transport than
commercial cargo and only significantly affect the country's freight mix in the long term.
SWOT
Freight Transport & Shipping SWOT
SWOT Analysis
Strengths • Qatar's location on the Arabian Gulf allows the country access to major shipping
routes through the Strait of Hormuz.
• The Qatari government is heavily investing in road infrastructure, with
new highways and road upgrades taking precedence.
• Qatar's gas exports will continue to grow strongly over the coming decade.
• The economy has proved resilient to the ongoing Qatar-Gulf Cooperation Council
(GCC) diplomatic spat.
Weaknesses • A small population means container demand will never reach that of its
neighbours, with the country's port likely to remain a feeder port of call rather
than a direct stop.
• Qatar does not yet have a rail network.
Opportunities • The potential development of the GCC rail network would provide opportunities
to rail development companies.
• Qatar's Hamad Port became operational in 2016. The depth at the port's main
berths is 17m, which allows it to attract the largest ocean-going vessels, making
Qatar's maritime sector highly competitive against other Gulf deep-sea ports.
• The 2022 World Cup will boost freight transport volume and drive infrastructure
investment in the build-up to the event.
Threats • Qatar's exports are not diversified and are heavily reliant on gas.
• While unlikely, we cannot completely rule out an escalation of the GCC diplomatic
crisis. This would negatively impact investor perceptions towards Qatar (as well as
the broader region), weighing on non-hydrocarbon private sector investment and
activity.
Industry Forecast
Trade Forecast
Key View: In 2019 trade growth will continue to rebound from the negative effects of low oil prices and the diplomatic feud with
the Gulf Cooperation Council (GCC). Strong construction sector activity will boost imports in the near term, and new sources of gas
production will result in steady export growth over the long term.
Latest Updates:
• We forecast real trade growth to accelerate in 2019 and beyond as the negative impact of the 2014-2017 oil and gas price
collapse and the GCC diplomatic feud recede.
• We forecast headline real GDP growth of 2.5% in 2019, up from a multi-year low of 1.6% in 2017 and an estimated 2.3% in 2018.
• There is nothing to suggest a resolution to the ongoing GCC diplomatic crisis will be forthcoming in 2019. A key factor behind
the lack of progress towards a resolution to date is that none of the parties to the crisis are under substantial pressure to end it
quickly because of limited negative economic fallout. While we expect the GCC to remain intact, we see little scope for genuine
advancement of intra-bloc cooperation and trade integration in the years ahead.
Short Term
Both imports and exports will accelerate in 2019-2020. We forecast real trade growth of 2.1% in 2019 and 2.2% in 2020 compared
to the previous five-year average of -0.1%. Exports will be supported by higher gas prices, and imports will be boosted by strong
government infrastructure spending and steady underlying household consumption growth. Both exports and imports will
continue to recover from the short-term realignment of bilateral trading relationships that was required following the ramp up of the
GCC-Qatar diplomatic dispute in 2017.
Still-elevated government investment coupled with perceptions of receding political risk from the GCC diplomatic crisis will support
business and consumer confidence and thus trade. However, falling hydrocarbon output will prevent a more robust recovery in
2019. Hydrocarbon output fell by 1.6% y-o-y in H118 and we expect modest further declines over 2019-2021. Factors such as the
delay in the start-up date for the Barzan gas field - which was postponed until 2024 - have prompted our Oil and Gas team to revise
down forecasts for Qatari hydrocarbon production growth to -0.6% y-o-y in 2019 and to -1.0% in both 2020 and 2021. Previously,
the team expected modest production increases in the 2019-2021 period. As hydrocarbons still account for almost half of
Qatar’s GDP, the forecast contraction in production will limit economic growth and thus imports. We forecast real GDP growth to
accelerate only slightly to 2.5% in 2019 compared with 2.3% in 2018 and 1.6% in 2017.
Steady Recovery In Trade Growth

Qatar - Import & Export Value (2018-2023)
e/f = Fitch Solutions estimate/forecast. Source: UN, Fitch Solutions
Medium And Long Term
In the long term, the expansion of gas output, particularly from the North Field, looks set to prop up exports. Qatar Petroleum (QP)
plans to add a total of four LNG mega trains to its North Field gas output expansion project - increasing production by over 40%
-from 77mn tonnes per annum (mtpa) to 110mtpa - within the next five-to-seven years. Strong export revenue will sustain both a
robust construction sector pipeline and generous government transfers to households. This will sustain steady import growth of
construction materials and consumer goods.
The positive outlook for gas production bodes poorly for long-term economic diversification, and we thus expect Qatar's trade
profile to remain largely unchanged over the coming decade. Exports will be dominated by natural gas and related gas- or energy-
intensive products. such as plastics, aluminium and nitrogen fertiliser. In line with its fellow GCC member states, Qatar is looking to
gradually reduce its hydrocarbon reliance over the years ahead in order to limit its vulnerability to oil price fluctuations. In this vein,
the government is specifically targeting the development of non-hydrocarbon sectors, such as manufacturing, tourism and financial
services. It is aiming to increase private investor and business participation in these sectors in order to limit their dependence on
government funding and to this end has enacted several business environment reforms, including the loosening of permanent
residency regulations and foreign-ownership restrictions. However, Qatar faces stiff competition from fellow reform-
minded GCC states, such as the UAE. Qatar ranks relatively poorly in our GCC Diversification Tracker, placing fourth out of the six
member states, behind the UAE, Saudi Arabia and Oman.
TRADE OVERVIEW (QATAR 2016-2023)

Indicator 2016 2017 2018e 2019f 2020f 2021f 2022f 2023f
Exports, real growth, % y-o-y -3.88 0.67 1.10 1.20 1.40 3.80 3.40 3.00
Imports, real growth, % y-o-y 4.88 -2.78 2.60 3.00 2.90 3.00 3.30 -2.00
Import growth, % y-o-y -1.25 5.11 1.84 4.48 5.40 5.40 5.51 0.21
Total trade growth, % y-o-y -13.62 11.36 7.24 6.31 10.09 5.02 7.35 5.10
Total trade, USDbn 130.88 145.75 156.30 166.16 182.92 192.11 206.23 216.75
Imports, USDbn 58.51 61.50 62.63 65.44 68.97 72.69 76.70 76.87
Export growth, % y-o-y -21.56 16.42 11.18 7.53 13.13 4.79 8.47 7.99
Exports, USDbn 72.37 84.25 93.67 100.73 113.95 119.41 129.53 139.89
Total Trade, real growth, % y-o-y 0.50 -1.05 1.85 2.10 2.15 3.40 3.35 0.50
KEY TRADE INDICATORS (QATAR 2017-2023)
Indicator 2017 2018e 2019f 2020f 2021f 2022f 2023f
Agricultural raw materials, imports, USDmn 148 159 171 184 197 211 219
Agricultural raw materials, imports, % y-o-y -5.8 7.6 7.6 7.5 6.9 7.1 3.6
Agricultural raw materials, exports, USDmn 17 18 19 20 21 23 25
Agricultural raw materials, exports, % y-o-y 47.1 2.5 7.2 6.1 6.4 7.4 7.6
Ores and metals, exports, USDmn 1,717 1,888 2,047 2,182 2,274 2,366 2,470
Ores and metals, exports, % y-o-y 34.7 10.0 8.4 6.6 4.2 4.1 4.4
Ores and metals, imports, USDmn 1,855 1,953 2,065 2,191 2,331 2,454 2,567
Ores and metals, imports, % y-o-y 2.7 5.3 5.7 6.1 6.4 5.3 4.6
Iron and steel, exports, USDmn 484 516 537 546 559 583 611
Iron and steel, exports, % y-o-y 60.5 6.5 4.1 1.7 2.3 4.3 4.7
Iron and steel, imports, USDmn 1,233 1,299 1,372 1,452 1,539 1,634 1,720
Iron and steel, imports, % y-o-y -5.2 5.4 5.6 5.8 6.0 6.2 5.2
Manufactured goods, exports, USDmn 7,094 7,953 8,231 8,354 8,523 8,842 9,200
Manufactured goods, exports, % y-o-y 41.6 12.1 3.5 1.5 2.0 3.7 4.0
Manufactured goods, imports, USDmn 24,193 25,575 26,766 28,305 30,227 32,292 33,768
Manufactured goods, imports, % y-o-y -4.3 5.7 4.7 5.8 6.8 6.8 4.6
Fuels, exports, USDmn 57,857 62,949 67,038 68,855 71,337 76,026 81,288
Fuels, exports, % y-o-y 25.4 8.8 6.5 2.7 3.6 6.6 6.9
Fuels, imports, USDmn 292 319 348 378 409 441 459
Fuels, imports, % y-o-y -3.7 9.3 9.0 8.8 8.0 8.1 4.1
e/f = Fitch Solutions estimate/forecast. Source: UNCTAD, Fitch Solutions
Road Freight Forecast

Key View: Significant infrastructure projects in preparation for the 2022 FIFA World Cup, combined with healthy underlying growth
in commercial activity, will underpin a steady expansion in road freight volume.
Latest Updates
• We forecast a minor slowdown in road freight growth in the coming years, with average annual growth of 2.2% over 2019-2023
compared with 3.2% over the previous five years.
• In January 2018, Qatar's public works authority Ashghal announced that it plans to spend QAR21.8bn (USD5.94bn) on
infrastructure development projects in 2018 as part of the country's wider transport infrastructure upgrades. The authority will
spend QAR11.08bn (USD3.02bn) to complete expressway projects, QAR8.88bn (USD2.42bn) on infrastructure and local road
projects, and QAR1.84bn (USD501.36mn) on sewage treatment schemes. Ashghal will complete 113km of new highways in
2018, involving 20 interchanges, 210km of cycling and foot paths and start a new major expressway project to decongest traffic
on 22 February Road.
• Qatar plans to earmark about QAR20bn (USD5.49bn) for the reconstruction of selected areas in and around Doha City as part of
second phase infrastructure works planned for the 2022 FIFA World Cup. The projects will be carried out in 2019 and include the
rebuilding of internal roads in and around Doha
Short Term
We forecast road freight volume to grow by 2.1% in 2019 and 2.0% in 2020. Transport of construction materials and project cargoes
associated with 2022 FIFA World Cup-related infrastructure will drive growth in road haulage volumes over the next few years. The
Gulf diplomatic spat and resultant restrictions on cross-border movements between Qatar and Saudi Arabia, the UAE, Bahrain and
Egypt will limit growth in cross-border road freight due to reduced intra-regional trade.
Slow But Steady Expansion

Qatar - GDP Per Capita (2017-2028)
Over our medium-term forecast to 2023, we see road freight volumes growing at 2.2% annually on average, reaching 16.7mn
tonnes. The biggest long-term impact on road freight could stem from a long-proposed regional Gulf Cooperation Council (GCC)
railway network. Once completed, the GCC Railway Network would connect Kuwait, through Saudi Arabia, to the UAE and Oman,
with branches linking Bahrain and Qatar. The original proposed completion date for this project was 2018, but in 2017 the
committee of ministers of transport of the GCC announced that this was being pushed back to 2021. The eventual construction of
the network could shift much regional road freight onto rail.
Roads and bridges account for the majority share of transport infrastructure industry value in Qatar, around 57% of the total, and
connections are relatively well developed across the country. The growth outlook for the roads and bridges segment is strong, partly
owing to efforts to improve connections prior to the hosting of the 2022 FIFA World Cup, tackle the high levels of congestion
around Doha and improve rural connectivity, all of which are limiting freight transport. Our forecasts show the roads and bridges
sector expanding by 8.3% in real terms over 2019, before moderating to a forecast annual average growth rate of 3.9% over the
remainder of the forecast period up to 2027. Plans in the pipeline include the construction of 8,500km of highways, 200 bridges
and 30 tunnels over the next five years.
The country has one of the most developed road networks in the GCC and, therefore, the road network is widespread and has high-
quality surfaces which minimise the risks of supply-chain delays and concerns for cargo safety and extra costs. Congestion is the
largest risk posed to sectors such as retail, oil and gas, and refined products owing to the immense pressure on the road system and
minimal international connections via road. This is expected to decrease over the medium term as various road and rail projects
come online.
ROAD FREIGHT (QATAR 2017-2023)

Road Freight Tonnes (000) 14,768 15,048 15,364 15,664 16,038 16,450 16,737
Road freight tonnes, % y-o-y 2.4 1.9 2.1 2.0 2.4 2.6 1.8
e/f = Fitch Solutions estimate/forecast. Source: National Statistics, Fitch Solutions
Air Freight Forecast

Key View: Air freight volume growth will be robust in the coming wars, albeit slower than during the bumper growth of the past five
years. Expansion of the Hamad International Airport will play a major role in driving air freight growth, as will increased land-based
connectivity between the airport and other business centres in Qatar.
Latest Updates
• An expansion in airport capacity will help boost air freight volume by 8.7% in 2019 and 8.6% in 2020.
• Average annual freight volume growth of 9.1% over 2019-2023 will be a slowdown from the annual rate of 21.1% over the
previous five years, but will nonetheless see volumes surge from 2.4mn tonnes in 2019 to 3.4mn tonnes in 2023.
• Expansion of the Hamad International Airport will boost the airport's capacity by two-thirds and enable an annual capacity of
50mn passengers.
Short Term
An expansion in airport capacity will help boost air freight volume by 8.7% in 2019 and 8.6% in 2020. While slower than the five-year
average annual rate of 21.1% before 2019, this will still comfortably outpace the rate of growth in road haulage. Airport
infrastructure industry value will grow by 8.8% growth in 2019 following growth of 11.5% in 2018. This growth is based largely on
the expansion of the Hamad International Airport to increase the size of the passenger terminal to about 900,000sq m and will add
24 plane gates, directly attached to the terminal. The expansion will boost the airport's capacity by two-thirds and enable an annual
capacity of 50mn passengers. We anticipate the project to be complete in 2019.
Pharmaceuticals will be a key driver of air freight growth in value, if not volume, terms. Air freight is well suited for transporting high-
value low-volume temperature-controlled drugs to market. We forecast imports of pharmaceuticals to grow by over 4.0% per
annum in 2019 and 2020, in line with a similar pace of growth in overall healthcare expenditure.
Slower But Still Impressive Growth

Qatar - Air Freight Tonnage (2011-2023)
Over our medium-term forecast period to 2023, we forecast air freight volume to grow at an annual average rate of 9.1%. This will
be a slowdown from the annual rate of 21.1% over the previous five years, but will nonetheless see volumes surge from 2.4mn
tonnes in 2019 to 3.4mn tonnes in 2023.
Qatar has invested aggressively in infrastructure on all levels in order to try and establish itself as a global logistics transit hub and
attract international events, such as the 2022 FIFA World Cup. Businesses benefit from the high quality and capacity of Qatar's air
sector, largely as a result of the coming online of Hamad International Airport in 2014 and the extensive international reach
of Qatar Airways. This ensures safe and highly efficient supply chain travel via air for key importing sectors, such as consumer and
luxury goods, as well as packaged medicaments. The only downside risk is the location of Hamad International Airport on the east
coast of the country, necessitating costly and lengthy overland haulage for goods destined for or originating from western or central
Qatar. This will improve over the medium term, with the expanding capacity of Hamad Port, which is located close to this airport, and
the coming online of various rail projects. These will improve the airport's connectivity and reduce overall transit times and costs for
supply chains.
AIR FREIGHT (QATAR 2017-2023)

Air Freight Tonnes (000) 2,020.9 2,194.0 2,385.1 2,591.3 2,840.7 3,117.2 3,394.6
Air freight tonnes % y-o-y 22.7 8.6 8.7 8.6 9.6 9.7 8.9
Air freight tonnes-km (mn ton km) 10,970 11,716 12,489 13,301 14,165 15,086 16,223
Air freight tonnes-km % y-o-y 19.2 6.8 6.6 6.5 6.5 6.5 7.5
e/f = Fitch Solutions estimate/forecast. Source: Ministry of Development Planning and Statistics, World Bank, Fitch Solutions
Shipping Forecast
Key View: Port development will continue to be fast-tracked owing to land links with Gulf Cooperation Council (GCC) members
being curtailed by the ongoing Qatar-GCC diplomatic dispute. Preparations for the 2022 FIFA World Cup will result in continued
strong port throughput of construction materials and there will be strong expansion of LNG exports in the long term.
Latest Updates
• Public investment in port infrastructure has been accelerated by the ongoing Qatar-GCC diplomatic rift and the resulting
disruption of regional supply chains. Qatar is heavily reliant on ports to facilitate trade, particularly since the blockade led by Saudi
Arabia which has closed its only land border.
• QTerminals has received approval to design, develop and operate the second phase of Hamad Port in Qatar, which includes
development of a second container terminal. The port is currently capable of handling 2mn twenty footequivalent units (TEUs)
annually and the capacity will increase to 7.5mn TEUs upon scheduled completion of the second phase in 2020. The second
phase is likely to be launched by early 2019, according to Qatari Minister of Transport and Communications Jassim bin Saif al
Sulaiti.
Short Term
Hamad Port, also known as the New Port of Doha, officially opened in September 2017, taking over operations from the old Port of
Doha. The bulk of trade passing through the port consists of food and construction materials. The new port will help Qatar achieve
its goals of ensuring food security and economic diversification in line with Qatar National Vision 2030. During the Qatar diplomatic
crisis that began in June 2017, the port authority established new direct shipping routes, including the Mundra and Jawaharlal ports
in India and Sohar Port in Oman.
Despite the continuing diplomatic crisis in the region, Qatar's liquefied natural gas (LNG) exports remain largely unaffected by
political tensions in the Gulf. The country’s export destinations are well diversified, with Europe remaining a key trade partner.
However, higher prices of LNG in Asia, supported by growing demand of natural gas in the region, will continue driving global export
dynamics. As part of efforts to reduce pollution in urban areas, Asia's demand for cleaner-burning natural gas is set to increase in the
coming years. With low production costs and spare capacity, Qatar remains well placed to meet rising demand in the face
of competition for market share in the region from the US, Russia and Australia.
Autos is a key sector informing growth in the shipping sector in Qatar; imports in this sector are a key component of total tonnage
handled at Qatari ports. We expect autos sales to rebound after a severe weakness in recent years. We forecast vehicle sales to grow
by 5.1% in 2019 after double-digit rates of contraction in each of the previous three years. Our upbeat forecasts come against a
backdrop of rising oil prices and our view that the ongoing diplomatic isolation of Qatar by its neighbours will not result in any
significant impact on overall economic growth in 2019, with the key hydrocarbon and infrastructure sectors set to face few major
disruptions.
Port Of Doha/New Doha Port Container Throughput

Qatar - Port Of Doha/New Doha Port Throughput, TEUs (2016-2023)
e/f = Fitch Solutions estimate/forecast. Source: Milaha, Fitch Solutions
In 2017 Qatar inaugurated the first phase of the USD7.4bn Port of Hamad, which upon eventual completion in 2020 will be the
largest port in the Persian Gulf and allow the country to compete in the regional transhipment market which is currently dominated
by the Port of Jebel Ali in Dubai. The opening of the first phase of the port has been crucial in allowing the country to mitigate the
negative economic impacts associated with the June 2017 blockade (which saw some GCC neighbours cut diplomatic ties and
border crossings), with the volume of import containers at the Port of Hamad doubling in September 2018, compared with the
average number of import containers received in each of the first six months of the year. Prior to its inauguration, Qatar was largely
forced to rely upon imports passing through other regional GCC ports.
The project is being carried out in three phases, with the final completion date set for 2020, ahead of the 2022 FIFA World Cup. It
involves the development of a port with a capacity of 6mn TEUs - eight times that of Doha Port - as well as a new base for the Qatar
Emiri Naval Forces and Qatar Economic Zone 3. The increased port capacity will facilitate and help to diversify the country's trade
flows. As noted by our Operational Risk team, this will help to reduce the risk of supply chain disruptions and construction input
costs, supporting Qatar's rapidly increasing infrastructural development as it prepares to host the 2022 FIFA World Cup. It will also
support growing private consumption in Qatar, which is set to increase as a percentage of GDP over the next five years and is
fuelling the import growth rate. At present, it takes 17 days to import and export goods in Qatar, much longer than the average of
seven days in the UAE (although still less than the regional average of 20 days). With the port's size reducing the number of delays
and demurrage charges, lead times will become shorter and less costly in future. Our forecasts for the ports sub-sector are buoyant
for 2019, at 10.2%, and over the first half of our forecast up to 2023 (averaging 9.1%). As the Hamad Port project is completed,
growth in the ports sector will shrink, and over the latter stages of the forecast period we expect to see a slight contraction in port
infrastructure industry value.
The long-term outlook for LNG exports from Qatar ports is robust. Qatar Petroleum (QP) plans to add a total of four LNG mega
trains to its North Field gas output expansion project - increasing production by over 40%, from 77mn tonnes per annum (mtpa) to
110mtpa - within the next five-to-seven years. Despite widespread forecasts indicating an LNG glut, China’s attempts to combat
pollution led to a 43% increase in LNG imports in 2017, with Qatar often acting as a swing supplier increasing its exports to the
region to meet demand spikes. LNG exports from Qatar to China increased 49% in 2017 and were more than double the 5mn
tonne per annum contract volumes that are in place.
We forecast that growth in box throughput at Hamad Port will average 5.9% over the course of our medium-term forecast period to
2023. Growth at the port will continue to be driven by the extraordinary growth in the Qatari construction activity. A total of 47.0% of
budgeted spending in Qatar will be dedicated to major infrastructure projects. Transport infrastructure will account for as much as
21.2% of total spending. These projects will necessitate the import of project cargoes and construction materials, contributing to
our very high growth projections.
MAJOR PORTS DATA (QATAR 2016-2023)

Hamad Port container throughput, TEU 528,323 772,835 844,708 892,857 944,642 1,000,376 1,060,399 1,125,083
Hamad Port container throughput, TEU, % y-o-y 46.3 9.3 5.7 5.8 5.9 6.0 6.1
e/f = Fitch Solutions estimate/forecast. Source: Milaha, Fitch Solutions
MAIN IMPORT PARTNERS (QATAR 2006-2013)

2006 2007 2008 2009 2010 2011 2012 2013
US, USDmn 1,623 2,628 2,520 3,068 3,480 3,076 3,935 5,454
US, USDmn, % of total 9.9 11.2 9.0 12.3 15.5 12.7 14.2 18.0
UAE, USDmn 991 1,638 1,848 1,763 2,310 2,980 3,166 3,137
UAE, USDmn, % of total 6.0 7.0 6.6 7.1 10.3 12.3 11.4 10.3
Saudi Arabia, USDmn 839 1,144 1,361 1,330 1,742 2,248 2,388 2,366
Saudi Arabia, USDmn, % of total 5.1 4.9 4.9 5.3 7.8 9.3 8.6 7.8
UK, USDmn 820 1,138 1,311 1,133 1,362 1,494 1,784 1,915
UK, USDmn, % of total 5.0 4.9 4.7 4.5 6.1 6.2 6.4 6.3
Mainland China, USDmn 957 1,367 2,013 1,967 946 1,319 1,325 1,881
Mainland China, USDmn, % of total 5.8 5.8 7.2 7.9 4.2 5.5 4.8 6.2
Total 16,441 23,430 27,900 24,922 22,382 24,153 27,728 30,324
Total, top five countries, USDm 5,230 7,914 9,053 9,261 9,841 11,117 12,598 14,753
% from top five trade partners 31.8 33.8 32.4 37.2 44.0 46.0 45.4 48.7
Note: The total import figure is from Direction of Trade Statistics; consequently, there may be some discrepancy with data used elsewhere in this report. Source: IMF
MAIN EXPORT PARTNERS (QATAR 2006-2013)

2006 2007 2008 2009 2010 2011 2012 2013
Japan, USDmn 14,116 17,042 18,849 14,482 19,723 27,380 32,601 33,630
Japan, USDmn, % of total 42.0 41.1 33.8 31.2 29.2 25.5 26.6 27.1
Korea, Republic Of, USDmn 4,725 7,334 11,957 7,624 10,832 18,867 23,186 23,522
Korea, Republic Of, USDmn, % of total 14.1 17.7 21.5 16.4 16.0 17.6 18.9 19.0
India, USDmn 1,647 2,664 2,851 3,734 5,596 10,257 14,717 13,191
India, USDmn, % of total 4.9 6.4 5.1 8.1 8.3 9.6 12.0 10.6
Mainland China, USDmn 397 333 567 1,247 2,223 4,263 6,599 7,660
Mainland China, USDmn, % of total 1.2 0.8 1.0 2.7 3.3 4.0 5.4 6.2
Singapore, USDmn 3,209 4,744 6,413 4,190 4,998 6,761 6,958 7,176
Singapore, USDmn, % of total 9.5 11.4 11.5 9.0 7.4 6.3 5.7 5.8
Total 33,627 41,491 55,727 46,354 67,528 107,231 122,389 124,082

2006 2007 2008 2009 2010 2011 2012 2013
Total, top five countries, USDm 24,093 32,117 40,637 31,277 43,373 67,528 84,061 85,179
% from top five trade partners 71.6 77.4 72.9 67.5 64.2 63.0 68.7 68.6
Note: The total export figure is from Direction of Trade Statistics; consequently, there may be some discrepancy with data used elsewhere in this report. Source: IMF
Market Overview
Key View: Rapid growth in air freight capacity will see the sector grab market share from road haulage over the coming years. While
some of the country's planned rail network could be operating by 2023, this will have a larger impact on passenger transport than
commercial cargo and only significantly affect the country's freight mix in the long term.
Qatar is one of the MENA region's outperformers in terms of its transport network. This status is guaranteed through the superior
quality of all transport infrastructure in Qatar rather than the extent of its transport network. Qatar has invested aggressively in
infrastructure on all levels in order to try and establish itself as a global logistics transit hub and attract international events, such as
the 2022 FIFA World Cup. Supply chains are reliable owing to the high quality of Qatar's road, port and aviation infrastructure.
Problems largely arise from the comparatively small extent of the transport network available, relatively limited international
connectivity of its road and port infrastructure, and lack of diversification options for overland freight haulage. Qatar currently has no
freight rail capacity. This leads to huge pressure on the country's road network, especially in Doha, and causes supply-chain delays
and extra costs.
The international connectivity of Qatar's ports increased fairly significantly in 2017 with the inauguration of the Hamad Deep Sea
Port and the launch of various new direct maritime routes between this port and ports in Pakistan, Turkey, India, Taiwan and China.
This process has been accelerated by the Saudi-led air, land and sea blockade which has meant that Qatar has not been allowed to
use blockade members' ports as feeder ports, has had its only international road connection cut off and has had to direct air routes
as certain international airspace is now currently off limits. Modest price pressures associated with higher import costs from the
ongoing diplomatic crisis in the Gulf - and the resultant restrictions on intra-regional cross-border movements - appear mostly
transitory and are fading with the government-led (and partly government-funded) development of new supply chains.
Downside risks to our freight capacity outlook are few, given the government's ability to finance projects and thus ensure their
realisation. Funding issues and project delays have been minimal ever since the start of the bank boycott imposed on Qatar by the
quartet of Saudi Arabia, Bahrain, UAE and Egypt in June 2017. However, potential for delays and cost overruns is increasing. The
reliance Qatar has on foreign project management and international construction firms, especially for the more technically
challenging projects, has led to a shortage of consultant-level labour. This has resulted in delays in bringing projects to the
construction phase and has inflated labour prices. Moreover, the huge demand for workers and construction supplies from other
infrastructure projects catering for the 2022 FIFA World Cup will continue to delay momentum into non-related projects.
Air Freight To Gain Market Share

Qatar - Freight Mode Breakdown (2018-2028)
Road Freight
In general, businesses face low risks from Qatar's road system. The country has one of the most developed road networks in
the Gulf Cooperation Council (GCC) and, therefore, the road network is widespread and has high-quality surfaces which minimise
the risks of supply chain delays, concerns for cargo safety and extra costs. Congestion is the largest risk posed to sectors such as
retail, oil and gas, and refined products owing to the immense pressure on the road system and minimal international connections
via road. This is expected to decrease over the medium term as various road and rail projects come online.
Air Freight
Air freight occupies a disproportionate and growing share of Qatar's total freight transport sector. Average annual growth of 21.1.%
in air freight volumes over the past five years saw the sector's share of total freight surge to 13.4% of total freight in 2018, from 6.9%
in 2014. We expect high single digit annual growth rates in air freight to see this share rise to one-fifth by 2028.
Businesses benefit from the high quality and capacity of Qatar's air sector, largely as a result of the coming online of Hamad
International Airport in 2014 and the extensive international reach of Qatar Airways. This ensures safe and highly efficient supply
chain travel via air for key importing sectors such as consumer and luxury goods as well as packaged medicaments. The only
downside risk is the location of Hamad International Airport on the east coast of the country, necessitating costly and lengthy
overland haulage for goods destined for or originating from western or central Qatar. This will improve over the medium term, with
the expanding capacity of Hamad Port, which is located close to this airport, and the coming online of various rail projects. These will
improve the airport's connectivity and reduce overall transit times and costs for supply chains.
Ports
Prior to the inauguration of the Hamad Port in 2017, the main risk posed from Qatari ports to exporting sectors and importing
sectors, such as construction and retail, stemmed from their geographical location on the eastern side of the country which creates
potentially costly and lengthy overland journeys for freight to access Qatar's western and central areas. Furthermore, in the past,
congestion at Doha Port has caused two-to-three day delays for ships, which elevates transit times and costs for key importing
industries, such as construction and retail. These issues have now been eased somewhat by the coming online of the first phase of
the new Hamad Port. The Saudi-led land, air and sea blockade (which means that ships destined to dock at a Qatari port are not
allowed to dock at Saudi, Bahraini, Egyptian or Emirati ports) has meant that alternative direct shipping routes with other partners,
such as Oman, Turkey, Pakistan and India, have had to be established to ensure food security in Qatar and that construction
materials arrive for FIFA 2022 projects. However, the opening of the first phase of the Hamad Port has been crucial in allowing the
country to mitigate the negative economic impacts associated with the June 20 2017 blockade.
Even with challenges and increasing competition in the region, Qatar's position will remain dominant and the country is well placed
to meet rising global demand for liquefied natural gas (LNG); welcome news for output at Hamad port. With the planned expansion
of LNG capacity in Qatar, the country will increasingly focus on new emerging LNG markets in the region. As a result of
growing demand for gas in Pakistan and Bangladesh and rising consumption in more established markets, such as India and
Thailand, we are expecting to see greater volumes of LNG supplies delivered to these less traditional but faster-growing demand
centres in Asia.
Potential For Future Railways
Although a negligible rail system exists in Qatar, the impending 2022 FIFA World Cup has instigated the Qatar Rail Development
Program, scheduled to be completed by 2019. This comprises four main projects: the Doha Metro, Long Distance Passenger Rail,
Long Distance Freight Rail and a Light Rail Transit System in Lusail.
The GCC has also long proposed to create a regional railway network - the GCC Railway Network - which, once completed, would
connect Kuwait, through Saudi Arabia, to the UAE and Oman, with branches linking Bahrain and Qatar. The original proposed
completion date for this project was 2018, but in 2017 the committee of ministers of transport of the GCC announced that this was
being pushed back to 2021. The 2014 collapse in the price of crude oil has negatively impacted our construction sector growth
outlook for oil-reliant GCC countries, with governments in the region increasingly forced to scale back their ambitious infrastructure
plans in light of falling oil-related tax revenue. We note the significant hurdles inherent in implementing a high-value cross-border
infrastructure project involving six different countries. In this context, we expect that the planned GCC regional railway will be subject
to additional delays (if not outright cancellation) that will render its estimated year of completion (2021) impractical. Nevertheless,
we recognise that business cases do exist for some proposed railway developments within various GCC states to operate as
independent rail networks outside of the planned GCC regional developments, as with the UAE's Etihad Rail Project. In 2018 the
Bahraini portion of the GCC rail saw some traction and in August 2018 it was reported that work has begun on the 111km Kuwaiti
section of a railway project that will connect the country to the rest of the GCC countries. The section will run from Kuwait City to
Nuwaiseb on the Saudi border. Saudi Arabia, the UAE and Qatar will reportedly operate the GCC railway in 2021 and Kuwait, Bahrain
and Oman will take over operations in 2023.
Company Profile
Qatar Airways Cargo
SWOT Analysis
Strengths • Qatar Airways Cargo has recorded rapid growth, with double-digit expansion rates in recent years.
• The cargo carrier has access to the belly-hold capacity of the passenger planes owned by Qatar Airways.
• Third largest air freight carrier globally.
• Its Doha hub lies strategically between Asia, Africa and Europe.
Weaknesses • The company currently only has 10 dedicated freighter craft.

• The ongoing Gulf Cooperation Council-Qatar spat will continue to divert business from potential regional
customers.
Opportunities • Qatar Airways Cargo intends to increase the cities it serves to 120 over the next five years.
• Qatar Airways has an ambitious expansion plan, with about 200 new aircraft on order or optioned.
Threats • While unlikely, we cannot completely rule out an escalation of the GCC diplomatic crisis. This would
negatively impact investor perceptions towards Qatar (as well as the broader region), weighing on non-
hydrocarbon private sector investment and activity.
Company Overview
Qatar Airways, founded in 1993, is the Qatari flag-carrier. It is 50% owned by the Qatari government, with the rest held by private
investors. Qatar Airways Cargo is the company's cargo wing. It operates largely through utilising the belly-hold capacity of the parent
company's passenger planes although a major expansion is under way. The cargo carrier operates out of its hub at Doha
International Airport.
Strategy
Qatar Airways Cargo is one of a number of Middle East-based air freight companies, such as Emirates SkyCargo and Etihad Crystal
Cargo, which have been expanding rapidly. According to the company's website, Qatar Airways Cargo has an 'unprecedented
expansion rate averaging almost 40% every year'. The rapid growth of these companies is contributing to making the Middle East
the fastest growing region in the world in terms of airfreight tonne per kilometre over the past 12 months, according to IATA data.
The company now delivers to over 90 destinations and aims to increase this to 120 over the next five years. Cargo is freighted in the
belly hold of the passenger aircraft owned by Qatar Airways, in addition to three dedicated Airbus A300-200s and seven Boeing
777F freighter craft. The company also has 13 more Airbus freighters in the process of coming online, in addition to some 230
passenger planes on order.
Qatar Airways Cargo's India focus continues with the company launching a new weekly freighter service between the airline's hubs
in Doha and Delhi. The Indian air freight market is rapidly expanding, with pharmaceuticals a major driver - a sector which Qatar
Airways Cargo is increasing its exposure to with its QR Pharma division.
The service runs from Doha to the Indira Gandhi International Airport in Delhi. Qatar Airways Cargo is using one of its Airbus A330
freighters, with the planes offering further capacity on two daily passenger flights with belly-hold cargo capacity that are currently in
operation between Doha and Delhi. Qatar Airways Cargo's new route will target the cargo demands of the pharmaceutical sector
and consumer goods industries including electronics, gems, jewellery, textiles and leather.
The new freighter service to Delhi marks an expansion in Qatar's India cargo focus. In April 2014, the company launched a service to
Hyderabad. The company now offers six freighter routes to destinations in India (Chennai, Bengaluru, Kolkata and Mumbai).
Qatar Airways Cargo has developed a specific product to meet the pharmaceutical sector's supply chain needs, with the
development of its QR Pharma service which offers temperature-controlled containers that have been designed to maintain a
constant temperature throughout the entire transport chain.
The comany's two-pronged cargo-expansion strategy will see the company expand its freighter fleet and gain exposure to the
global air freight market. Its internal plan will see the carrier convert 15 of its Airbus SAS A330 passenger fleet into freighters. The
conversion is scheduled to be completed by 2016, but will depend on the availability of slots at Airbus's German conversion factory.
The cargo unit of Qatar Airways has three Airbus A300-600 cargo freighters.
Investment is being ploughed into the country's freight transport sector as internal and external supply chains will be needed to
keep pace with Qatar's rapid economic growth. Externally, Qatar is developing its airfreight operations. The country is also
developing a new port, the New Port of Doha, to meet the country's growing maritime needs. The country's internal freight network
is dominated by road, but rail could develop a role in the medium term, with the country currently developing its railway network,
with the aid of Germany-based Deutsche Bahn.
Qatar Gas Transport Company (Nakilat)

SWOT Analysis
Strengths • Half-owned by government-related bodies, Nakilat has significant financial backing and a guaranteed
customer in the state-owned gas companies.
• The fact that Nakilat is 50% public-owned ensures the company continues to evolve and grow.
• Nakilat is the undisputed leader of liquefied natural gas (LNG) shipping in terms of fleet capacity.
• Qatar is one of the fastest-growing economies in the world, with considerable remaining gas reserves.
Weaknesses • The US shale gas drive has deprived Nakilat of a considerable market for Qatari exports.
Opportunities • Nakilat is diversifying by investing in offshore shipping and shipbuilding ventures.

• Nakilat is at the forefront of developing LNG-powered vessels.
Threats • While unlikely, we cannot completely rule out an escalation of the Gulf Cooperation Council diplomatic
crisis. This would negatively impact investor perceptions of Qatar (as well as the broader region), weighing on
non-hydrocarbon private sector investment and activity.
Company Overview
Qatar Gas Transport Company (Nakilat) was established in 2004 by the state of Qatar to operate a fleet of liquefied natural gas (LNG)
vessels in order to serve the needs of the booming Qatari gas export sector. The company, listed on the Doha Stock Exchange, is
50% owned its founders - which include Qatar Shipping (Q-Ship), Qatar Navigation and a number of Qatari pension funds - and 50%
by public shareholders. It has become an integral part of the Qatari hydrocarbons sector and is involved in major projects with Qatar
Petroleum, Qatargas and RasGas.
At the company's general meeting in 2015, it was agreed that Nakilat will increase its non-Qatari ownership from 25% to 29%. In
addition, Qatari government institutions, Qatari not-for-profit organisations and the Qatari Governmental Pensions and Investments
Fund can own a percentage of share capital up to 5% of the company's total shares.
Strategy
Nakilat was founded to integrate with Qatari gas companies to facilitate the fuel's export from the Gulf state, and the shipping of
LNG is still the company's core business area. It has diversified into shipbuilding and repair, offshore shipping and LPG shipping. The
company works closely with major Qatari companies such as Qatar Petroleum and Qatar Shipping, which are major shareholders in
Nakilat, ensuring a fully integrated supply and shipping chain to successfully take Qatari gas to market.
The initial phase of ‘what will be the world’s largest management transition of LNG carriers has been completed by Nakilat. Al Mafyar
(which is wholly owned by Nakilat) had its Q-Max LNG carrier transition from Shell to Nakilat, making it the 10th vessel to do so in
the space of 10 months. This latest vessel transition sees Nakilat’s fleet size grow to 18 vessels (14 LNG and 4 LPG carriers). Abdullah
Fadhalah al Sulaiti, the Nakilat managing director, stated that the company is proud of achieving the milestone with long-standing
strategic partner Shell while stressing the company’s ‘commitment to be a global leader and provider of choice for energy
transportation and maritime services in line with Qatar’s National Vision 2030’.
Fleet
Nakilat's fleet of 54 LNG vessels, with a combined carrying capacity of over 8.5mn cubic metres (cu m), makes it the largest carrier of
LNG in the world. Of these, 25 ships are wholly owned by Nakilat. The remaining 29 are owned between Nakilat and leading
shipping companies as joint ventures (JVs), with its share of these vessels ranging from 20% to 60% and averaging 43%. The wholly
owned fleet includes 14 Q-Max vessels, with a cargo capacity of 263,000-266,000 cu m, and 11 Q-Flex vessels which have a capacity
of 210,000-217,000 cu m.
All of Nakilat's LNG vessels were built at South Korean shipyards in keeping with our view that South Korea is still the world leader
when it comes to the construction of high-specification vessels. However, the Qatari company may one day be able to produce its
own LNG carriers. In January 2010, Nakilat formed a JV with Netherlands-based company Damen Shipyards Group. The JV was
formed to manage a new shipbuilding facility, the Erhama Bin Jaber al Jalahma Shipyard at Ras Laffan, for the construction of high-
value vessels. These are currently limited to smaller vessels, but Nakilat is involved in the repair and maintenance of large LNG
carriers. This removes the reliance of Nakilat and other Qatari shipping companies on facilities in Singapore, the UAE, South Korea
and China.
In addition to its sizeable LNG-carrying fleet, Nakilat is also the co-owner of four very large liquefied petroleum gas carriers. These
are operated in a 50:50 JV with Qatar Shipping called Gulf LPG Transport Company.
Latest Activity
Memorandum Of Understanding Signed
An memorandum of understanding between Nakilat and Hoegh LNG was signed in July 2017, relating to collaboration on the
exploration of establishing a floating storage and regasification unit business as the former looks at diversification strategies.
Abdullah al Sulaiti, the managing director at Nakilat, stated, ‘Nakilat views this strategic alliance with Hِoegh LNG, a leading owner
and operator of FSRUs, as a huge stepping stone for further growth.’ He added: ‘The agreement paves the way for greater business
opportunities to create substantial platforms for local players to get involved in the project. It will help exposing them to innovative
technologies and expertise that would be beneficial to the growth and the development of Qatar’s energy and maritime industry.
Nakilat is always looking at opportunities of diversifying solutions to deliver clean energy worldwide, supporting the rising global
demand of LNG.’
United Arab Shipping Company (UASC)

SWOT Analysis
Strengths • Six different Middle Eastern countries have a stake in the company.
• UASC operates a mix of owned and chartered-in tonnage.
• UASC's fleet of mega-vessels puts it in company with the world's biggest shipping lines.
Weaknesses • The company is based in a volatile part of the world, with political turmoil having affected a number of its
stakeholder countries in recent months.
• UASC withdrew its Asia-Adriatic service, operated in conjunction with other liner companies.
Opportunities • The company is growing, introducing new services from Europe to South America and establishing
subsidiaries to serve its interests in Poland and France.
• A planned merger with Hapag Lloyd will offer efficiency savings.
Threats • While unlikely, we cannot completely rule out an escalation of the Gulf Cooperation Councildiplomatic crisis.
This would negatively impact investor perceptions towards Qatar (as well as the broader region), weighing on
non-hydrocarbon private sector investment and activity.
• Iranian threats to close the Strait of Hormuz would affect UASC's business were they to be followed through.
• The company's mega fleet primarily operate on the Asia-Europe route, where lines have had trouble in
raising rates.
Company Overview
Since its founding in 1976, United Arab Shipping Company (UASC) has done much to make its vision to linking the Middle East to
the world a reality. Formed under the joint auspices of six Middle Eastern countries (Kuwait, Iraq, Bahrain, UAE, Saudi Arabia and
Qatar), UASC is a truly regional company, headquartered in Kuwait but with a corporate office in the UAE.
Strategy
UASC anticipates a slow recovery in the container shipping industry with stable freight rates, according to the company's President
and CEO Jorn Hinge. The statement comes in light of one of the longest down cycles in the industry, with smaller players ceding
shipping operations to giant alliances. UASC formed the Ocean Three alliance with France-based CMA CGM and China Shipping
Container Lines. It expects to cut operational costs by at least USD100mn annually through big, fuel-efficient ships to carry out
shipping services.
UASC is targeting new markets as it seeks to boost its business and grow its geographical footprint across the world. In order to
achieve its goal, the company is entering into major partnerships with other shipping firms. The company has also ordered 17 new
ships with fuel-efficient technologies from Hyundai Heavy Industries. This contract, estimated to be worth over USD2bn, is
comprises 11 ships with 14,000 twenty-foot equivalent unit (TEU) capacity and a further six with 18,000TEU capacity. The first ship is
scheduled for delivery by the end of November 2014, according to Chief Trade Officer Lars Christiansen.
Fleet
UASC is the 18th-largest container liner in the world, with fleet capacity of 346,759. This gives UASC a global market share of around
2.0%. According to AXS Alphaliner, this capacity is spread over 55 vessels, 29 of which are chartered-in and 26 of which are owned.
Chartered vessels, with a capacity of 148,595 TEUs, comprise 42.9% of the total fleet. This chartered-to-owned vessel ratio is quite
low compared with the rest of the top 20, reflecting the investment UASC has been making in developing its fleet. However,
shipping lines generally look to charter around 50% of their tonnage to protect them in case of another downturn in the shipping
sector, meaning that UASC could find itself exposed if the container shipping industry suffered another sharp downturn from its
already low current level.
UASC's order book is by far the largest of all container shipping companies and at 75.8% would represent a considerable expansion
of the current fleet. This is because a fleet of mega-vessels of 14,000-18,000 TEU vessels have been ordered from Hyundai Heavy
Industries. The 262,726 TEUs on order are split between 17 vessels. In January 2013 the UASC president and chief executive
confirmed rumours that UASC was looking into ordering ships as large as 18,000 TEU capacity in order to take advantage of the
economies of scale. This has now been confirmed.
Terminal Investment
UASC's increased focus on the Asia-Europe trade route continues to develop, with the shipping line set to invest in a planned
second container terminal at Egypt's East Port Said. The port already operates as a box transhipment hub for the Suez Canal, playing
a vital role on the Asia-Europe container route. UASC's shipping focus has expanded beyond regional trade, with the company
seeking to play a bigger role on this major east-west trade link, having ordered a fleet of the world's largest container vessels that it
will utilise on this route.
East Port Said is Egypt's largest container port. The facility started handling containers in 2004 and has developed a role as a
transhipment hub for goods on the major east-west trade routes via the Suez Canal. The container terminal at the port is operated
by APM Terminals.
Milaha (Formerly Qatar Navigation)

SWOT Analysis
Strengths • Milaha makes up 5% of the Qatar Exchange Index.
• Qatar is one of the fastest-growing economies in the world.
• Qatar Navigation owns 30% of Nakilat, which continues to grow in line with Qatari gas exports.
• The company recorded record half-year revenue in H114.
Weaknesses • The company's container shipping arm serves only regional needs.
• The ongoing Gulf Cooperation Council (GCC)-Qatar diplomatic spat will divert business from potential
regional customers.
Opportunities • The company has taken on the management of the Port of Doha.
• Milaha is looking for new areas in which to invest in order to help drive the Qatari economy forward.
• Subsidiary Qatar Shipping has secured a finance deal for the purchase of 19 harbour assistance vessels.
• Through subsidiary Halul Offshore Services, Milaha has exposure to the rapidly growing offshore support
sector.
• Involvement in managing the new Hamad Port offers lucrative diversification for Milaha.
Threats • While unlikely, we cannot completely rule out an escalation of the GCC diplomatic crisis. This would
negatively impact investor perceptions towards Qatar (as well as the broader region), weighing on non-
hydrocarbon private sector investment and activity.
Company Overview
Qatar Navigation rebranded in November 2011 and is now known as Milaha. The company was founded in 1957 and is the primary
shipping company in Qatar. Formed to facilitate the growth of the Qatari economy, it provides shipping and transportation services
to the Gulf state. The shipping company is listed on the Qatar Exchange. It is involved not only in shipping but also in port
management and ship repair, among other services. It is the 100% owner of Qatar Shipping (Q-Ship) and has a 30% stake in Qatar
Gas Transport Company (Nakilat). Another subsidiary in which Milaha has an interest is Halul Offshore Services.
Strategy
Milaha is a well-diversified company involved in a number of different businesses aside from just shipping. These include real estate
development, tourism, investment, trading agencies and port management. The latest venture the company has taken on in this
field is the management of the Port of Doha following an agreement reached with Qatar Ports Management in February 2011.
In terms of shipping, the company also has a well spread portfolio. It is 100% owner of Q-Ship, Qatar's liquid and dry bulk shipping
company, and owns a 30% stake in Nakilat, a rapidly growing LNG carrier.
Milaha's core business is in shipping containers, which it does through Qatar Navigation Lines. The liner works as the main feeder
operator between Qatar and the UAE for both imported and exported transhipped boxes, with a market share of over 90%. The
importance to the company of shipping to and from the UAE is shown by the fact that Milaha has an office in Dubai from which it
promotes not only the core container shipping business but also ancillary revenue streams, such as ship repair and maintenance.
Shipping to Iran is currently suspended.
Milaha employed Roland Berger Strategy Consultants to help devise a long-term strategy. The managing director of Milaha, Ali bin
Jassim al-Thani, said, 'Since its inception, Qatar Navigation [Milaha] has been playing a key role in Qatar's economy and now we have
an opportunity to expand our role in various sectors, and we intend to seize this opportunity. We have a strong presence and
portfolio of business in Qatar and the region, and will leverage this foundation to take us to the next level'.
In order to do this, Milaha will not focus solely on its core business of container shipping and dry and liquid bulk shipping, but will
look to have a greater concentration in future on operating activities rather than asset ownership. In order to achieve this, Milaha
stated in a press release, the company will invest in its existing businesses in addition to new areas in which it is not currently
involved.
A new feeder service has been introduced Milaha between the capital of Sri Lanka, Colombo and Chittagong in Bangladesh in a
move designed to strategically tap into increasing Indian subcontinent shipping demand, JOC reported in November 2017. Two
1,200 twenty-foot equivalent unit vessels will be used on the new service, which will take five days and is designed to boost
connectivity for South Asian trade.
Milaha has been benefitting from higher earnings from the global shipping market owing to a combination of the opening of
Hamad port, as well as the establishment of new shipping lines, Hellenic Shipping News reported in October 2017. This
development should also also provide support for Qatar’s ‘broader maritime trade ambitions’, according to a report compiled by
Oxford Business Group.
Qatar Demographic Outlook

Demographic analysis is a key pillar of our macroeconomic and industry forecasting model. Not only is the total population of a
country a key variable in consumer demand, but an understanding of the demographic profile is essential to understanding issues
ranging from future population trends to productivity growth and government spending requirements.
The accompanying charts detail the population pyramid for 2017, the change in the structure of the population between 2017 and
2050 and the total population between 1990 and 2050. The tables show indicators from all of these charts, in addition to key
metrics such as population ratios, the urban/rural split and life expectancy.
Population
(1990-2050)
f = Fitch Solutions. Source: World Bank, UN, Fitch Solutions
Qatar Population Pyramid

2017 (LHS) & 2017 Versus 2050 (RHS)
Source: World Bank, UN, Fitch Solutions
POPULATION HEADLINE INDICATORS (QATAR 1990-2025)

Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, total, '000 476.4 592.3 864.9 1,779.7 2,481.5 2,791.8 3,028.6
Population, % y-o-y 4.01 13.97 11.87 4.51 1.75 1.49
Population, total, male, '000 319.0 386.3 584.4 1,349.5 1,871.2 2,081.7 2,228.9
Population, total, female, '000 157.4 205.9 280.5 430.2 610.4 710.1 799.7
Population ratio, male/female 2.03 1.88 2.08 3.14 3.07 2.93 2.79
na = not available; f = Fitch Solutions forecast. Source: World Bank, UN, Fitch Solutions
KEY POPULATION RATIOS (QATAR 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Active population, total, '000 335.5 429.9 666.4 1,528.2 2,111.4 2,352.8 2,526.2
Active population, % of total population 70.4 72.6 77.0 85.9 85.1 84.3 83.4
Dependent population, total, '000 141.0 162.3 198.5 251.4 370.1 439.0 502.4
Dependent ratio, % of total working age 42.0 37.8 29.8 16.5 17.5 18.7 19.9
Youth population, total, '000 134.9 152.4 187.8 232.9 343.1 390.1 416.8
Youth population, % of total working age 40.2 35.4 28.2 15.2 16.3 16.6 16.5
Pensionable population, '000 6.1 10.0 10.7 18.6 27.0 48.9 85.6
Pensionable population, % of total working age 1.8 2.3 1.6 1.2 1.3 2.1 3.4
URBAN/RURAL POPULATION & LIFE EXPECTANCY (QATAR 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Urban population, '000 442.1 570.4 842.8 1,755.7 2,462.8 2,778.5 3,018.4
Urban population, % of total 92.8 96.3 97.4 98.7 99.2 99.5 99.7
Rural population, '000 34.4 21.8 22.1 23.9 18.8 13.3 10.1
Rural population, % of total 7.2 3.7 2.6 1.3 0.8 0.5 0.3
Life expectancy at birth, male, years 74.1 75.4 75.7 76.4 77.3 78.0 78.9
Life expectancy at birth, female, years 76.2 77.7 78.4 79.0 79.7 80.5 81.2
Life expectancy at birth, average, years 75.0 76.3 76.8 77.3 78.0 78.8 79.5
POPULATION BY AGE GROUP (QATAR 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, 0-4 yrs, total, '000 51.6 54.8 68.2 90.1 127.4 134.8 137.3
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, 100+ yrs, total, '000 0.0 0.0 0.0 0.0 0.0 0.0 0.0
POPULATION BY AGE GROUP % (QATAR 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020f 2025f
Population, 0-4 yrs, % total 10.84 9.26 7.89 5.06 5.13 4.83 4.53
Population, 100+ yrs, % total 0.00 0.00 0.01 0.00 0.00 0.00 0.00
Freight Transport & Shipping Methodology

Industry Forecast Methodology
Our industry forecasts are generated using the best-practice techniques of time-series modelling and causal/econometric
modelling. The precise form of model we use varies from industry to industry, in each case being determined, as per standard
practice, by the prevailing features of the industry data being examined.
Common to our analysis of every industry is the use of vector autoregressions, which allow us to forecast a variable using more than
the variable's own history as explanatory information. For example, when forecasting oil prices, we can include information about oil
consumption, supply and capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own history is often the most
desirable method of analysis. Such single-variable analysis is called univariate modelling. We use the most common and versatile
form of univariate models: the autoregressive moving average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historical data or data quality is poor. In such cases,
we use either traditional decomposition methods or smoothing methods as a basis for analysis and forecasting.
We mainly use OLS estimators and in order to avoid relying on subjective views and encourage the use of objective views, we use a
'general-to-specific' method. We mainly use a linear model, but simple non-linear models, such as the log-linear model, are used
when necessary. During periods of 'industry shock', for example poor weather conditions impeding agricultural output, dummy
variables are used to determine the level of impact.
Effective forecasting depends on appropriately selected regression models. We select the best model according to various different
criteria and tests, including but not exclusive to:
• R2 tests explanatory power; adjusted R2 takes degree of freedom into account;

• Testing the directional movement and magnitude of coefficients;
• Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value);
• All results are assessed to alleviate issues related to autocorrelation and multicollinearity.
We use the selected best model to perform forecasting.
Human intervention plays a necessary and desirable role in all of our industry forecasting. Experience, expertise and knowledge of
industry data and trends ensure analysts spot structural breaks, anomalous data, turning points and seasonal features where a
purely mechanical forecasting process would not.
Sector-Specific Methodology
There are a number of principal criteria that drive our forecasts for each transport variable:
• GDP Growth
As transport activity is heavily influenced by real GDP growth, this factor is examined to ascertain its relationship with overall trade
volumes. Projected GDP growth is calculated using our own macroeconomic and demographic forecasts. The level of port
throughput activity is also influenced by real GDP growth. This is used to represent the level of demand in a country and movement
in this indicator will indicate changes in net exports volumes, hence throughput volumes.
• Real Trade Volumes
The sum of imports and exports plays a particularly important role in developing countries with a small domestic industrial sector.
The focus is on goods, as services do not employ transport. The volumes are forecast based on the following criteria:
• Trends manifested through historical data;

• The impact of future step changes to the economy (such as future membership of the EU or some other regional body).
The port throughput forecasts consider historical trends in trade data and the impact of changes to the trade openness in an
economy, such as sanctions or membership of trade unions.
• External Factors
External factors also influence the shipping throughput forecasts. These include the likelihood and impact of strikes
at local port level, and future investment plans that aim to improve port capacity.
Freight Transport Tonnage Estimates
We aim to generate best estimate figures for freight transport for countries where raw data on freight tonnage is not published or
accessible. The estimate for tonnage data integrates macroeconomic, country area, transport and infrastructure data into our
model. A parent market is selected which represents the benchmark for the region, and we then use weighted scale factors to
adjust the raw data of the parent to calculate estimated proxy figures for a given market.
The three indicators for which we estimate tonnage data are road freight, rail freight and air freight.
One indicator used in estimating for all three indicators is real GDP. This is the value of output for a given country adjusted for
inflation. This is used to represent the size of an economy and the level of transport activity in a country. It is one of the main scale
factors used when generating our estimates.
The additional indicators used in freight tonnage estimations are given below:
• Population: The number of people living in a country. The data is sourced from the UN and the World Bank.
• Total road length: The total length of the road network in a given country. The data is sourced from the CIA World Factbook.
• Country area: The sum of all land and water areas within international boundaries. The data is sourced from the CIA World
Factbook.
• Number of airports with paved runways: The number of airports with concrete or asphalt landing surfaces. The data is
sourced from the CIA World Factbook.
• Length of railways: The total length of the railway network in a country. The data is sourced from the CIA World Factbook.
• Number of airline take-offs: The number of domestic registered carrier departures worldwide from a given country. The data
is sourced from the World Bank.
Road Freight
Road freight tonnage data is estimated with parent market data, which is then scaled by a 25% weighting for real GDP, 25% for
population and 50% for total length of roads.
The population in a country represents demand for goods and thus the size of the road freight market. The total length of the road
network determines how much freight can be carried by heavy trucks and goods vehicles.
Rail Freight
Rail freight tonnage data is estimated with parent market data, which is then scaled by a 25% weighting for real GDP, 25% for
country area and 50% for length of railways.
The length of railways and the country's size will determine the demand and capacity to carry rail freight. A large country with an
active railway network will likely use this to move greater volumes of goods over long distances.
Air Freight
Air freight tonnage data is estimated with parent market data, which is then scaled by a 25% weighting for real GDP, 50% for number
of airline take-offs and 25% for number of airports with paved runways.
The number of domestic airline take-offs is used to represent how active the airline market is in the country. Airports with paved
runways indicate that a country is able to accommodate larger planes which carry goods.
Sources
Sources used in Freight Transport & Shipping reports include local transport ministries, officially released company results and
figures, established think tanks and institutes and donor agencies such as the World Bank and the Asian Development Bank.
For shipping tonnage and container data we source information from port authorities, officially released shipping company
performance reports, and established port news reports and articles.
Fit
Fitch
ch Solutions, 30 North C
Colonnade
olonnade,, Canary W
Wharf
harf,, L
London.
ondon. E14 5GN, UK
Tel: +44 (0)20 7248 0468
Fax: +44 (0)20 7248 0467
Web: www.fitchsolutions.com
IS SN: 2397-1487
ISSN:
Copy Deadline: February 2019

opy
© 20
2019
19 Fit
Fitch
ch Solutions Gr
Group
oup Limit
Limited.
ed. All rights rreserv
eserved.
ed.
All information, analysis, forecasts and data provided by Fitch Solutions Group Limited is for the exclusive use of subscribing persons or organisations (including those
using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced,
repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch
Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability
whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
This report from Fitch Solutions Macro Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 ('FSG'). FSG is an affiliate of Fitch
Ratings Inc. ('Fitch Ratings'). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2019 Fitch Solutions Group Limited.

Fitch Qatar Freight Transport & Shipping Report - 2019-03-14

Uploaded by

Copyright:

Available Formats

Fitch Qatar Freight Transport & Shipping Report - 2019-03-14

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Fitch Qatar Freight Transport & Shipping Report - 2019-03-14

Uploaded by

Copyright:

Available Formats

2019

Qatar Demographic Outlook ....................................................................................................................................................28

Freight Transport & Shipping Methodology........................................................................................................................31

Latest Developments And Forecasts:

Steady Recovery In Trade Growth

e/f = Fitch Solutions estimate/forecast. Source: UN, Fitch Solutions

Medium And Long Term

TRADE OVERVIEW (QATAR 2016-2023)

Indicator 2016 2017 2018e 2019f 2020f 2021f 2022f 2023f

Agricultural raw materials, exports, USDmn 17 18 19 20 21 23 25

Road Freight Forecast

Slow But Steady Expansion

e/f = Fitch Solutions estimate/forecast. Source: UN, Fitch Solutions

Medium And Long Term

ROAD FREIGHT (QATAR 2017-2023)

Air Freight Forecast

Slower But Still Impressive Growth

e/f = Fitch Solutions estimate/forecast. Source: National Statistics, Fitch Solutions

Medium And Long Term

AIR FREIGHT (QATAR 2017-2023)

Port Of Doha/New Doha Port Container Throughput

e/f = Fitch Solutions estimate/forecast. Source: Milaha, Fitch Solutions

Medium And Long Term

MAJOR PORTS DATA (QATAR 2016-2023)

MAIN IMPORT PARTNERS (QATAR 2006-2013)

Total 16,441 23,430 27,900 24,922 22,382 24,153 27,728 30,324

MAIN EXPORT PARTNERS (QATAR 2006-2013)

Total 33,627 41,491 55,727 46,354 67,528 107,231 122,389 124,082

2006 2007 2008 2009 2010 2011 2012 2013

Air Freight To Gain Market Share

e/f = Fitch Solutions estimate/forecast. Source: National Statistics, Fitch Solutions

Potential For Future Railways

Weaknesses • The company currently only has 10 dedicated freighter craft.

Qatar Gas Transport Company (Nakilat)

Opportunities • Nakilat is diversifying by investing in offshore shipping and shipbuilding ventures.

Memorandum Of Understanding Signed

United Arab Shipping Company (UASC)

already low current level.

Milaha (Formerly Qatar Navigation)

Qatar Demographic Outlook

f = Fitch Solutions. Source: World Bank, UN, Fitch Solutions

Qatar Population Pyramid

Source: World Bank, UN, Fitch Solutions

POPULATION HEADLINE INDICATORS (QATAR 1990-2025)

Population, % y-o-y 4.01 13.97 11.87 4.51 1.75 1.49

Indicator 1990 2000 2005 2010 2015 2020f 2025f

Freight Transport & Shipping Methodology

• R2 tests explanatory power; adjusted R2 takes degree of freedom into account;

We use the selected best model to perform forecasting.

• Real Trade Volumes

• Trends manifested through historical data;

Freight Transport Tonnage Estimates

Copy Deadline: February 2019

You might also like