Delivery of goods to the Russian Federation from the UAE became complicated due to severe congestion at the port of Jabal Ali

Due to the conflict in the Red Sea, which has exacerbated the need for alternative routes for global trade, one of the largest ports of the UAE, Jabal Ali, through which Russian container cargo also passes, has become overloaded. Market participants note an increase in the price of port services, an increase in transit times and the cost of delivery from the UAE to the Russian Federation. They are looking for new routes, but other ports in the region are smaller and even more expensive. However, passage through the Red Sea is not closed to Russian ships, which reduces the severity of the problem.

Disruption of logistics chains and the rhythm of ship calls due to the conflict in the Red Sea has overloaded the port of Jabal Ali in the UAE, market participants say. Due to the situation in the Red Sea, global lines cannot pass through Suez, explains Pavel Osvetimsky, head of the maritime transport department of Barrus Projects: “In order to continue delivering cargo to the countries of the Middle East and the Mediterranean, in addition to the route bypassing Africa, they use Jabal Ali or Dammam. further delivering goods by land transport through the Arabian Peninsula. Because of this, the Jabal Ali port is heavily congested, which affects the speed of vessel processing.”

The Jabal Ali Deep Sea Port is located in Dubai and is the tenth largest seaport in the world (operated by DP World). Handles general cargo as well as 19.3 million TEU of container cargo per year. The port has three container terminals and is building a fourth, after completion of which the capacity will increase to 22.5 million TEU. As the head of PEC: Global Anton Buyanov notes, the port handles more than 80% of all container cargo that travels to the Russian Federation through the UAE. The leaders in trade turnover in this direction based on the results of 2023 are electronics, cars, spare parts, lubricants, tea, cosmetics, says Abdullah Farrukh, director of Pak Shaheen (Pvt) Ltd (line agent of Neco Line Asia).

“The port is heavily overloaded,” confirms Yulia Shlenskaya, president of customs broker KBT. “Prices for all services have increased significantly.” In January-March, the average time for sea freight delivery from the UAE to Russia increased from 25 to 52 days, depending on the route, weather conditions and line congestion, according to the PEC review. As of April, transit time for transportation from Jabal Ali to Novorossiysk is 45–50 days, to St. Petersburg – 65 days. According to Prime Shipping Agency Business Development Director Saniyat Mustafayeva, in January-March the period for unloading a vessel in Jabal Ali increased from one to five days, and loading – to two days.

“According to our observations, this does not have a big impact on the services of lines running, for example, from Jabal Ali to Novorossiysk,” clarifies Pavel Osvetimsky. “There are schedule shifts of two to three days, sometimes more, but this is not critical.” The founder of VIG Trans, Igor Rebelsky, also believes that the deadlines have not stretched critically: “Vessel raids take four to five days, exactly up to a week, but against the backdrop, for example, of problems with raids that occurred in the Russian Far East in the fall of 2022, these are just small workers delays.”

The PEC review states that shipping rates between Russia and the UAE increased by 40% year-on-year in the first quarter. At the same time, Igor Rebelsky claims that “there is an increase, but not 1.5 times,” if we are talking about freight specifically for import to the Russian Federation. As of April, delivery along the Jabal Ali-Novorossiysk route will cost $2 thousand per TEU and $3 thousand per FEU, respectively, says Anton Shonin, head of the Lantrans customer service department.

Director of multimodal transportation at FM Logistic in Russia, Dmitry Sukhoversha, says that the difference between the rate to Novorossiysk in November-January and March-April is about $100. According to him, it is mainly European shipowners and cargo owners who are experiencing difficulties: “There are no significant problems for Chinese and Russian consignees; navigation through the Red Sea continues taking into account precautions.”

The greatest impact of congestion in Jabal Ali is on the route through Iran, Mr. Osvetimsky notes: “Iranian feeder ships sometimes wait 10–15 days to load in Jabal Ali. This is critical since the transit time from Jabal Ali to the Iranian port of Bandar Abbas is several hours. Vessels are also gathering for processing in Bandar Abbas itself. In general, transit time on the route through Iran increases by three weeks or more, which is critical for Russian recipients. The situation was aggravated by the holidays in Iran, but now it should improve. I think that Russian importers already have several established routes in their arsenal and, in case of difficulties, switch cargo flows one by one to alternative ones.”

A restructuring of logistics in connection with the overload of the Jabal Ali port is taking place, confirms Kommersant’s interlocutor in the telecommunications market: “The sea route around the Arabian Peninsula was profitable due to economies of scale – the larger the port, the cheaper the transportation. In this sense, Russia was built into the pan-European logistics system, since the Azov-Black Sea region is part of a large Mediterranean route.”

The Europeans have already begun creating alternative, partially overland logistics through the Arabian Peninsula, Kommersant’s interlocutor says: “German Hapag-Lloyd announced the development of such a route back in January 2024, but due to the current geopolitical situation, there is no place for Russian cargo in it.”

Serving the maritime part of the route to the Mediterranean-Black Sea region alone, he continues, “may not be profitable for Russian logisticians due to the relatively small share of domestic cargo in the scale of all transportation in this direction.”

According to Saniyat Mustafayeva, an alternative to Jabal Ali could be the Al-Hamriya port in Dubai, which also has SEZ status, and the Khalid port in Sharjah: “They are operating as normal, we do not see any congestion. By processing shipments at these sites, companies can speed up delivery from the UAE to the Russian Federation by an average of seven days. However, it is important to consider that the cost of handling containers at the ports is more expensive, and the tariffs of shipping lines are 25% higher compared to delivery through Jabal Ali.”

Companies with small cargo (B2C segment) will probably prefer delivery by air in this situation, believes Artem Vaskanyan, Deputy General Director for Logistics and IT at NC Logistic. Large customers, he adds, “will begin to look for an alternative that will not always be winning.” “Other seaports in the region were not so in demand before, because delivery and insurance of cargo during transportation there were more expensive,” explains Mr. Vaskanyan. “In addition, they are not in such a convenient location, some are not designed for a large volume of supplies and do not allow all ships. It is unclear whether anyone will invest in adapting the ports to the growing load. The search for an alternative will lead to an increase in the transport shoulder and an increase in the cost of transportation against the backdrop of artificial demand that has formed due to the load on the key channel.”

For Russia, according to Kommersant’s interlocutor in the telecommunications market, alternative routes may become relevant as a result, for example, a partially land route along the North-South transport corridor through Iran and the Caspian Sea or a route from China through Kazakhstan.

Natalya Skorlygina, Tatyana Isakova