Beirut bids to reclaim its regional shipping crown

STR via Reuters Connect

• Debris of 2020 explosion still there
• ‘Rehabilitation’ plans announced
• $80m a year to fund scheme

The ruined grain silos that absorbed much of the Beirut Port blast still stand as a monument to Lebanon’s misery during the past four years. 

Much of the debris, scattered across the old port and lying on the seabed, remains unmoved from where it fell on 4 August 2020, when 2,750 tonnes of ammonium nitrate that was inadequately stored exploded, killing at least 218 people, causing $15 billion of damage and compounding Lebanon’s economic crisis.

The port is still operating, albeit at a reduced volume, and the Beirut Port Authority says it is ready to welcome more ships.

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On March 13 Lebanon’s caretaker prime minister, Najib Mikati, along with the minister of public works and transport, the director general of the Port Authority and the French ambassador, unveiled a new plan to rehabilitate the port.

Despite scepticism from some who think that Beirut’s days as a regional logistics hub may be over, officials say work could begin as early as next month, and could help Beirut become the endpoint of the planned India-Middle East-Europe Corridor. 

The port was previously processing around 4 percent of the total cargo in the Mediterranean basin, reaching more than 1.3 million 20-foot equivalent units (TEU) in 2017 and 2018. 

After the economic collapse the following year, the coronavirus outbreak and the port blast, this number fell by about half. 

It has ticked up slightly since then. Beirut Port's container terminal is operated by the French company CMA CGM, which won a 10-year contract in 2022.

The plan unveiled last month intends to deepen this recovery. It was conducted by the French companies Artelia and Egis in collaboration with the French Ministry of Economy, and there are proposals from the French state-owned energy company EDF on how to use solar power.

The port authority says it will fund the plans itself, holding back between $60 million and $80 million over the next few years to fund the “rehabilitation”.

Lebanon Port Authority

The terminology may be significant. Under its contract with the government, the port holds on to around 18 percent of its revenues, which were $150 million last year, for maintenance, sending the rest to the central government’s coffers.

The port authority's director general, Omar Itani, says he is in discussions with the prime minister’s office to increase this proportion to 40 percent.

Although the government has not officially signed off on this proposal, Mikati said at the plan’s unveiling that he would seek its implementation "as soon as possible, whether through external contributions that we look forward to providing, or from the port’s revenues”.

The port is in consultation with Artelia and Egis to produce tenders for an “open and transparent” bidding process. Itani says that work could begin this summer.

Different companies will bid to perform soil tests, dredge the basins to a depth of 13m to 14m, rebuild the damaged quays and redesign the layout of the port to optimise traffic flow. 

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Businesses will bid to install solar panels as per EDF’s recommendations and, at a later stage, will bid for a buy, operate, transfer tender to construct a passenger terminal.

Shipping troubles

It is a time of increased uncertainty for regional shipping. Since October, a spike in attacks in the Red Sea by Houthi forces in Yemen has deterred container ships from traversing the Suez Canal. In August, Beirut Port processed almost 90,000 TEUs. In March, Itani says, this dropped to 50,000. 

There is also the spectre of increased competition from Israel. The proposed India-Middle East-Europe Corridor is planned to run from the Arabian Gulf states up through to Israel, attracting billions of dollars of new logistics infrastructure for Lebanon’s rival to the south. 

Itani says the authority is in discussion with regional states to pitch Beirut as part of the corridor plans, as either an alternative or a supplementary port on the Mediterranean: “We are ready if they want to work with the port of Beirut and if they want to work with the port of Haifa.”

However, Beirut’s regional connectivity has been diminished by geopolitical divisions. There were discussions within the Arab League last year on normalising relations with Bashar al-Assad’s Syria.

But Lebanon’s only neighbour besides Israel, and the first destination for any goods unloaded in Beirut destined for countries to its east, remains a regional pariah. 

Christine Babikian Assaf, a historian at Université Saint-Joseph de Beyrouth, who has studied the port closely, said: “I don't see a clear vision for the Lebanese state regarding the ports in Lebanon.

“It looks like they have no plan. If we want to develop the movement of the port, we have to develop communications between Beirut and Damascus.” 

Deep-seated political challenges to development in Lebanon and beyond could mean that Beirut will struggle to regain its role as a regional hub, Assaf says.

 “I think its capacity will be good for Lebanon and for Syria,” she says, “and this will be enough for Beirut seaport.”