Sanctions take toll on Jebel Ali shipments from Iran

Decline of 300,000 container units which is equivalent to 16 of the world's largest ships.

Cargo containers at the Terminal 1 in Jebel Ali port in Dubai. Pawan Singh / The National

Shipping volumes from Iran at Dubai’s Jebel Ali Port fell by 300,000 standard container units last year as a result of fresh sanctions imposed on Iran, according to the port’s operator.

That is equivalent to 16 of the world’s largest container ships.

The EU imposed restrictions on Iran’s oil export revenues in January 2012, while the US imposed financial sanctions against all banks trading in the Iranian rial last June, in a move widely regarded to have crippled Iran’s banking sector.

“It took the June round of sanctions from the US and the EU to really choke trade off in Iran, which fell precipitously,” said Bryan Plamondon, a senior economist for the Middle East at IHS.

Before this, Jebel Ali and Dubai were conducting a busy trade in so-called “roll-on roll-off” cargo, in which vehicles make one leg of a journey by sea, with 50 per cent of Jebel Ali’s roll-on roll-off traffic destined for Iran.

“On the basis of [roll-on roll-off cargo], Dubai is the gateway to Iran,” said Dalibor Gogic, a maritime analyst at IHS.

The value of trade between the two countries “is not a negligible number”, Mr Plamondon said. “For non-oil trade figures, Iran was one of the top trading partners in both imports and exports.

“The business relationships are already established. You have Iranians working in Dubai and sending goods back and forth,” he said.

Trade between Dubai and Iran sank by nearly a third in 2012 to Dh25 billion, down from Dh36bn the year before, according to Dubai Customs.

Abdullah bin Damithan, a director at DP World, which runs Jebel Ali, was optimistic about the prospects for trade with Iran as sanctions ease, however. “If we look at the positivity of what’s happening now between the US and Iran, things are improving,” he said.

“We’ve seen the volume coming back slowly, we’ve seen the shipping lines crawling back to Iran. I believe Iran will return to the point where it used to be and even go further.”

Mr Plamondon was less optimistic. “Trade finance is still a big issue even for the sectors that aren’t sanctioned – so there will still be a lot of impediments even when Iran is open to business again,” he said.

In the long run, Iranian trade is likely to continue to pass through Jebel Ali due to a lack of maritime facilities, Mr Damithan said.

“Iran has not expanded its port infrastructure … so Jebel Ali has always been a transshipment gateway to Iran, and I believe this will continue for some years to come.”

Jebel Ali handled a record 13.6 million standard container units in 2013. The port will expand capacity to 19 million units by the end of this year.

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