An Analysis of Multimodal Route via Iraq to the Mediterranean and Europe compared to the Suez Canal

An Analysis of Multimodal Route via Iraq to the
Mediterranean and Europe compared to the Suez
Canal

Abstract
Title of dissertation: An Analysis of Multimodal Route via Iraq to the
Mediterranean and Europe compared to the Suez
Canal.
Degree: MSC
Multimodal transport contributes significantly to the concentrations of international
and domestic trade. There are several competition means, by which the different
modes of transport perform to attract more cargo to be moved. The users of
multimodal transport are concerned about its cost effectiveness and the level of
service provided by these modes. In most cases, sea transport is the cheapest mode of
transport compared with air, road and land transport, but it takes longer time due to
the ship speed and time spent in ports. Canals can act as bottlenecks for sea transport
through increasing transit time, limiting the vessel size and high canal dues, which
increase transport cost.
The dissertation analyzes the possibility of introducing an alternative multimodal
transport to the Suez Canal route in order to ascertain the competition between them.
By calculating transport costs for the existing and proposed routes, the Suez Canal
route has advantages in terms of cost effectiveness, environmental friendless and
being more certain in the current situation for international trade between Europe and
Asia. Another detailed analysis was carried out to evaluate the significance of the
new route to the Middle East and مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf countries. It discussed the potential
benefits and contributing of the new multimodal route to the economic growth of the
region, particularly in Iraq and Syria. The efficiency and reliability of the new route
are the conditions for increasing its competitiveness and attractiveness in the long
term. Further, the crude oil transport by pipelines from the gulf countries to the
Mediterranean for transshipment to Europe and the US is a cheaper and greener
transport system than the existing one.
Key Words: Multimodal transport, cost effectiveness, Suez Canal route, analysis,
economy growth, transport efficiency and reliability.
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Table of Contents
Declaration………………………………………………………………………… ii
Acknowledgements ……………………………………………………………… iii
Abstract ………………………………………………………………………….. iv
Table of Contents ………………………………………………………………… v
List of Tables ……………………………………………………………………. vii
List of Figures ……………………………………………………………………. viii
List of Abbreviation ………………………………………………………………. ix
Chapter 1 Introduction …………………………………………………………1
1.1 Background ………………………………………………………………..1
1.2 Significance of the Research……………………………………………….2
1.3 Research Objectives and Scope ……………………………………………3
1.4 Research Methodology …………………………………………………….4
1.5 Limitation of the Research …………………………………………………6
Chapter 2 Literature Review …………………………………………………..7
2.1 Port and Route Selection …………………………………………………..7
2.2 Multimodal Transport ………………………………………………………11
2.3 Alternatives to the Suez Canal ……………………………………………..13
Chapter 3 Selected Existing Multimodal Transport Systems ………………..15
3.1 The land bridge in the US ………………………………………………….15
3.2 Trans European Transport Network TEN-T ……………………………….18
3.4 Trans Siberian Railway TSR ………………………………………………24
Chapter 4 Distance and Cost Comparison between the Suez Canal and New
Routes ………………………………………………………………28
4.1 Distance …………………………………………………………………… 28
4.2 Transport Cost and Freight Rate ………………………………………….. 33
4.2.1 Sea Transport Cost ………………………………………………… 33
4.2.2 Inland Transport Cost ………………………………………………39
4.3 Crude Oil Transport ………………………………………………………. 43
4.4 Suez Canal Capacity and Efficiency ……………………………………… 45
4.5 Regional Integration and Crossing Borders ………………………………. 46
4.6 Port Efficiency and Cargo Handling ……………………………………… 48
4.7 Factors influencing the Competition with the Suez Canal ………………… 49
4.7.1 Security Concern …………………………………………………… 49
4.7.2 Environmental Concern and Air Pollution ………………………….51
4.7.3 Economies of Scale ………………………………………………… 54
4.7.4 Bunker Prices ………………………………………………………. 55
Chapter 5 Analysis of the Significance for Iraq of the New Route …………..56
5.1 Transport Cost for Trade between Iraq and Europe ……………………….56
5.2 Current Situation of Iraqi ports and approaches……………………………58
5.3 Identification of Bottlenecks for Iraqi Transport System ………………… 61
5.3.1 Port Accessibility and Safe Navigation ……………………………. 61
5.3.2 Land Transport Network System …………………………………… 64
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5.3.3 Port Capacity and Performance …………………………………….. 65
5.3.4 The Current Security Situation ……………………………………… 68
5.3.5 Red Tape Procedure and Corruption ……………………………… 69
5.4 Increasing Demand for Transport ………………………………………… 70
Chapter 6 Conclusions and Recommendations …………………………….. 76
6.1 Conclusions ………………………………………………………………. 76
6.2 Recommendations …………………………………………………………. 81
References ………………………………………………………………………….83
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List of Tables
Table 4.1 The distance comparison between existing and new routes (via Iraq and
Syria) ……………………………………………………………………………………… 29
Table 4.2 The distance comparison between existing and new routes (via Iraq and
Turkey) …………………………………………………………………31
Table 4.3 Freight Rates of Carrying a FEU from Dalian in May 2010 ……………36
Table 4.4 Economic of Scale in Bulk Shipping (including bunker) ……………….37
Table 4.5 The operation and bunker cost for three types of vessels ……………….38
Table 4.6 Total cost of sea transport via Suez Canal for different vessels …………39
Table 4.7 The combined cost of Sea/Land transport ……………………………….41
Table 4.8 Cost comparison for cargo transport through two route options ……….. 42
Table 4.9 CO2 emission comparison between existing and new routes ……………52
Table 5.1 Iraq’s top 10 export and import trading partners, 2003 …………………. 56
Table 5.2 Transport cost comparison for trade between Iraq and Europe ………… 57
Table 5.3 Maximum and average ship sizes called port of Um Qasr in 2004 and
2005 ……………………………………………………………………..62
Table 5.4 Iraq’s GDP growth estimates …………………………………………….71
Table 5.5 Estimated total passenger flows at governorate level (number of passengers
per day) ………………………………………………………………….72
Table 5.6 Distribution of forecasted inbound passenger flows in 2015 ……… 73
Table 5.7 Estimated growth of cargo export from Iraq to different regions ………. 74
Table 5.8 Estimated growth of cargo import to Iraq from different regions ……… 75

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List of Figures
Figure 3.1 The North American Land bridge …………………………………. 15
Figure 3.2 Comparison of major modes in the US ……………………………. 16
Figure 3.3 Trans European transport network TEN-T ………………………… 20
Figure 3.4 Trans Siberian Railway TSR ………………………………………. 26
Figure 3.5 Price fluctuation: TSR vs. Deep sea transport ……………………… 27
Figure 4.1 First option of proposed route ……………………………………… 28
Figure 4.2 Second option of proposed route ………………………………….. 30
Figure 4.3 The Viking Intermodal train project ………………………………. 32
Figure 4.4 Increasing growth of transport by Viking train ……………………. 33
Figure 4.5 General cost classification for Bulk Carriers ………………………. 34
Figure 4.6 The number of piratical attacks divided by regions 2009 ………….. 50
Figure 5.1 Location of major ports in Iraq ……………………………………… 59
ix
List of Abbreviation
AHP Analytic Hierarchy Process
BC Bulk Carrier
C.I.I.T.I Italian Consortium for Iraq Transport Infrastructure
CIF Cost, Insurance and Freight
CO2 Carbon Dioxide
CV Container Vessel
DWT Dead Weight Tonnage
EASA European Aviation safety Agency
EDI Electronic Data Interchange
EMSA European Maritime Safety Agency
ERA European Railway Agency
EU European Union
FEZ Free Economic Zone
FMCDM Fuzzy Multiple Research Topics – Criteria Decision Making
GC General Cargo
GCPI General Company for Ports of Iraq
GDP Gross Domestic Product
GHG Green House Gases
GPO Global Port Operator
GT Gross Tonnage
Gvt Governorate
H&M Hull and Machinery
IMB International Maritime Bureau
IMO International Maritime Organization
IOM Iraqi Oil Ministry
IMOP Iraqi Ministry of Planning
IRR Iraqi Republic Railways
ISPS code International Ship and Port Facility Security Code
JBIC Japan Bank for International Cooperation
JIT Just In Time
km/h Kilometer per hour
MARPOL Marine Pollution Convention
MT Multimodal Transport
NM Nautical Mile
NOx Nitrogen Oxides
P&I Protection and Indemnity
RORO Roll On Roll Off
SC The Suez Canal
SCA Suez Canal Authority
SECA Sulphur Emission Control Area
SOx Sulphur Oxides
TEN-T Trans European Transport Network
TEU Twenty Equivalent Unit
x
TSR Trans Siberian Railway
TTI Taxas Transport Institute
UK The United Kingdom
ULCC Ultra Large Crude Carrier
UNCTAD United Nation Conference on Trade and Development
UNDP United Nations Development Programme
US The United States of America
$ m p.a Million US Dollars per Annual
WMU World Maritime University
WTO World Tourism Organization
xi
Chapter 1
1. INTRODUCTION
1.1. Background
Today, the maritime industry is a major component of an integrated economy,
making up a substantial part of every country’s GDP and national employment.
Traditionally, this industry in every country has established its unique advantage of
competitiveness due to its domestic demand and location in the international market.
However, with the globalization of the world economy and international market
formalization, the maritime industry faces double pressure from other modes of
transport and the change of demand.
The alteration of the market situation is the main dominating element of transport
need. Although sea transport has moved most cargo in terms of volume and value,
the modal shift of transport has been dramatically growing especially over short
distances for cargo when the advantages of economies of scale do not have a big
effect on transport cost. Moreover, the reduction of the environmental threats by
multimodal transport (MT) encouraged the diversification of transport modes. Since
the market is always changing according to development in different regions, the
potential ability of the Middle East and Africa to develop could dominate the future
market, which urges the hinterland connections to develop accordingly. The مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian
Gulf countries’ economies mostly depend on oil exportation which make them
relatively comfortable but the depletion of oil reserves could be a future threat.
Therefore, to overcome such difficulties these countries should explore other sources
to generate their income (Valsson, 2006).
Today, ports and shipping are apparently interrelated with other relevant factors in
the logistics and supply chain and an economically significant factor for
competitiveness in the shipping industry (Ma, 2010a).
1
The strategic position of Iraq connects the Middle East with Europe via Turkey by
highways and rail transport and with the Mediterranean via Syria and Jordan by
multimodal transport. A new route has been proposed from Asia to Europe via the
مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf by constructing a new hub port in the north of the Gulf to be connected
by railway, highway and waterway connections with Syria and Turkey, which have
hinterland connections with Europe.
The shipping lines are keen to use whatever routes that could be possible if they are
cost effective. Therefore, the new routes could be appropriate alternatives to the
present one due to piracy threats and future market development. On the other hand,
due to draft limits because of the sedimentation problems in the current ports of Iraq
and the long distance of the port approach, the new location of the port might have
geographical advantages and competitiveness with regional ports in terms of
importing and exporting cargo to increase the market share.

Furthermore, the location of the new seaport project might have advantages due to
consumption growth in the named region which will find a new industrial market
leading to manufacturing production centers. This dissertation will analyze the cost
effectiveness in order to draw conclusions on whether or not the alternative routes
can compete with the Suez Canal in terms of cost, security (piracy) and the
environment. Moreover, it seeks to analyze the impacts of the new port on Iraqi’s
economy, especially with the new trend of development in transport infrastructure
and the country’s trade.
1.2. Significance of the Research
Ports have a significant function for the national economy of a country due to the
economic and social impact which is demonstrated by any country’s economy
increasing by 1.4% when the port efficiency increases by 1% (Ma, 2010b).
The demand for having a port for cargo and ships to import and export cargo
increases in terms of services and facilities where the cargo is transferred from one
2
mode of transport to another. The most important elements affecting competition
between ports are as follows: port tariff, terminal throughput, market share, market
concentration, port location, accessibility, port infra/superstructure and hinterland
connections (Carriou, 2010b). Ports have always been considered as vital gateways
for the export and import of raw materials, semi-manufactured and manufactured
products from/to different markets located worldwide, especially in industrial
countries (UNCTAD, 1998).
The increasing demand of trade between Asia and Europe due to globalization of
trade, in addition to security problems related to piratical attacks in the Gulf of Aden
will probably increase the waiting time of ships that use the Suez Canal. Therefore,
the alternative route could be a competitor for the existing route in such sea transport.
It is also hoped to attract more shipping lines to call the new deep sea port, which is
proposed to be constructed in the north of the مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf to cope with the
development of Iraq as a logistic centre in the region.
The new route can improve the economic situation for Iraq, Syria, Jordan and Turkey
which obviously will contribute part of these countries’ GDP from transport and
logistics, which is considered trade improvement. The research took point of views
and benefits of both the ports and the shipping companies into consideration.
1.3. Research Objectives and Scope
The dissertation will discuss the present situation of existing routes and the
advantages of new routes for international trade and supply chains by analyzing their
cost effectiveness. In addition, the opportunities of a new concentrated market and
Iraq’s economic benefits will be analyzed, as well as the selection of routes and ports
by shipping lines as these are the most important elements since they are the users of
the new routes. Therefore, the research will analyze the available infrastructure for
Iraq’s transport system and the cost of infrastructure of new multimodal transport in
order to demonstrate the probable advantages which could be acquired by ship
3
owners and cargo owners. Moreover, the environmental impact of the new route will
be discussed in terms of gas emissions and the impact of new constructions on the
ecosystem and the life of organisms.
An analysis of the present situation of the traffic in the Suez Canal will be carried
out with regard to the tendency of constructing bigger vessels in order to get benefit
from economies of scale which require deeper water and wider approaches, which
needs considerable investment by the Suez Canal Authority (SCA) to cope with such
development. Finally, the dissertation provides comprehensive recommendations for
the application of all requirements for a modern and efficient port that could improve
the transport sector in Iraq and the country’s GDP.
1.4. Research Methodology
The research adopted a qualitative study by approaching available data about the
multimodal transport in the region. The methodology used for the purpose of
research was classified into three main methodologies: First, a literature review to
study previous researches which have been carried out by different authors and
organizations contributing to the importance of the topic selection. Second, an
assessment of the current situation for existing routes between East and West
(Asia↔Europe) using annual reports of the Suez Canal and calculating the distance
of the new route as well as the old one and determining the operation cost for vessels
in both cases.
Finally, based upon data available about previous performance of Iraqi ports and the
obstacles that prevented them from development, an analysis of the past and present
situation of the Iraqi transport system and anticipated growth of demand for cargo
and passengers was done. An assessment of the suitability of the transport system
was also measured in terms of how much it could positively or negatively impact
(i.e. bottleneck) on the economic development.
4
The research structure has been divided into six chapters in order to cover the scope
of the research. The first chapter reviews the background and introduction of the
proposed route, the significance of the research, the objective of the research, scope
of research, research methodology and limitation of the research. It concentrates on
how the shipping lines are the decision makers about which route and port have the
preference to be chosen.
In order to realize the decisive factors affecting the selection of port and route by
carriers and shippers, a literature review has been carried out in chapter two. Further,
the multimodal transport (MT) system definition and its consequence are covered in
this chapter. Due to the role of MT in international trade and economy, many
literatures were written. The dissertation explains the influential factors affecting the
efficiency of global advanced transport network. Although, the suggested route has
been studied by a limited number of researchers, the dissertation attempted to
mention possible studies related to the subject matter.
Chapter three assessed the land bridge systems in United States of America, the
European MT system and the Trans Siberian railway system. Each system has its
special features according to the geography of the countries, the technology used for
serving cargo transport and the objectives of introducing the mentioned MT systems.
The intention of discussing those MT systems was to illustrate the reasonability of
suggesting the new route as an efficient integrated transport system.
Chapter four analyses and assesses the cost comparison between the existing route
and new suggested route, the distance comparison, the capacity of Suez Canal and
the factors that may affect the cargo flows. The crude oil transport from the Gulf
States to Europe and the US by pipelines through Syria is assessed with available
details. The expected factors that would influence the competition level between the
two routes are discussed such as crossing borders, port efficiency, security concerns,
environmental concerns, economy of scale and bunker price.
5
Chapter five analyses the significance of the new route for Iraq and its economy by
assessing the current situation of the transport system and the forecasted increasing
demand for efficient integrated transport system. An identification of bottlenecks
facing the port sector particularly is carried out in the dissertation in order to provide
comprehensive justification for the needs of improving the transport network to
handle this increase of cargo.
Chapter six provides a conclusion for the level of competitiveness between the
existing route and new one in terms of cost effectiveness, time saving and the
potentiality of a new regional trade area in the Middle East. Some recommendations
are given for developing the integrated transport system in order to make the new
MT system more realistic and reliable.

1.5. Limitation of the Research
This dissertation is limited to the economic impact of introducing a new transport
system to create a competitive route for shipping companies and give more choices
to the shipping industry. It does not cover the legal framework for the carriage of
goods by the various modes of transport. The current political situation of the region
is considered as a current inconsistence, so the paper will focus on transport factors
without discussing the political factors. The assessment of land transport cost will be
based upon the current costs in Iraq because there in not sufficient data available
about Syrian transport system costs, which have an impact on the outcome of total
transport cost.

6
Chapter 2
Literature Review
2.1. Port and Route Selection
In a competitive market, the decision of route and port selection is more demanding
on shippers and carriers because they are not separate entities any more due to trade
globalization and market variety. The importance of the topic has led to several
studies by a number of authors concerning the subject matter, because it is a crucial
element in competition between ports themselves and sea transport with other modes
of transport. According to the expert system approach, the port selection is
determined by a number of factors such as distances, compatibility between ships
and ports and vessel characteristics (Jansson & Shneerson, 1987). UNCTAD (1992)
has emphasized “on time delivery as a major concern by most shippers and freight
forwarders” (as cited in Tongzon, 2009, p.188).
In a study made by UNCTAD (1998) regarding the impact of ports and shipping, it
is stated that the port should be located close to an attractive regional market and
other smaller ports which have limited capacity in order to be a transshipment and
hub port attractive to shipping lines. Wedly, Choo and Schoner (2001) have noted
that the Analytic Hierarchy Process (AHP), which was initiated by Saaty, was
developed to be a technique for evaluating the process of decision making and port
attractiveness to be chosen by shippers and carriers. Tzong (2001) noted that the
reasons for the port of Singapore’s leading position in the world are the strategic
geographical location, high productivity, port connectivity, sufficient
infra/superstructure, and proper supportive policy by the government. According to
Malchow and Kanafani (2001) the Multinomial Logit Model can be used to specify
the factors of port selection. They practiced the model for a specific commodity
exported from the USA to eight different ports and found that the most significant
factor was the oceanic distance and the inland distance whereas ship capacity and
number of voyages were not so significant. Similarly, Tiwary, Itoh and Doi (2003)
7
selected 14 port-carrier options in their model in order to examine the Chinese
shippers’ behaviour. They discovered that the most influential factors were the
distance from origin (imported cargo), distance from destination (exported cargo),
port congestion, and the availability of capacity in shipping lines. Chou, Chu and
Liang (2003) suggested an Equilibrium model and a fuzzy multiple criteria decisionmaking model (FMCDM) considering port administrators, carriers and domestic
shippers as market players in the Taiwanese market to estimate factors dominating
the port selection with a different approach. They realized the characteristics of a
port with the revenue gained by the shippers as well as carriers were the most
influential factors affecting port choice.
Lirn, Thanopoulou, Beynon and Beresford (2004) observed that the main factors of
port and route selection are the cost of carriers, location, physical/technical
infrastructure and port administration by using the Delphi method for global carriers
and major ports in the world. Song and Yeo (2004) specifically deliberated the
Chinese ports using AHP in order to assess the competitiveness of the ports with
regional ports to attract more cargo and traffic. They found the dominating factors
were: strategic location, port facilities, service quality and cargo volume. The system
dynamic model was used by Hong and Menachof (2004) to assess the relative
attractive factors of the port of Busan in which the port revenue, port investment and
competitive port investment were taken into consideration in the model as most
major factors.
Hwang and Tai (2005) found that the main factors affecting the port choice were
handling efficiency and draft of the harbor as port internal factors, cargo source of
hinterland and frequency of routes as port external factors and savings in operating
cost for shipping lines. They used three criteria: previously available data, a
questionnaire survey, and the Gray decision model in their assessment of East Asian
ports. Using a Likert-style questionnaire, Ng (2006) surveyed the top 30 shipping
lines in North Europe to monitor the attractive factors of ports in this region and
8
found that in addition to the cost effectiveness, geographical location and time
efficiency, the quality of the service had to be taken into consideration. Another
study made by Ugboma, C., Ugboma, O. and Ogwude (2006) monitored the reaction
of Nigerian shippers applying AHP to select the port when they import and export
their cargo. The researchers used a model with six criteria among which the
frequency of vessels call and port efficiency were the most prioritized. They found
that the port of Lagos was preferable among other regional ports. Panayides (2006)
noted that the selection of transport does not exclusively flow from the need of a
product, but also from numerous needs for cost minimization, enhancing reliability
and adding value to transported goods while they are moved from the point of
production to distribution centers.
According to Muller (2006), the selection of ports and routes is affected by shippers’
expectations of high quality service, lower cost, and short delivery time of cargo
even though they prefer to pay a higher price to get goods delivered in time.
According to the World Bank (2007), it is reported that the main influential factors of
port choice were the inland transport system (road, rail, waterways, and pipeline) and
price quality ratio of port services.

Chang, Lee and Tongzon (2008) examined the differences of port selection
behaviour of 158 international container carriers world wide with specific routes
using exploratory factor analysis and confirmatory factor analysis with various
criteria factors. The survey revealed that the port should follow different strategies
because it was concerned about how container lines adapted to port selection factors
rather than the effectiveness of the port. Nevertheless, this research is inapplicable
for some shipping types like dry bulk and wet bulk.
Wiegmans, Hoest and Notteboom (2008) interviewed 12 major container carriers in
the Hamburg-Le Havre range and they also exhibited in their model the hinterland
connection, reasonable port traffic and immediate availability of consumers.
9
Furthermore, the total portfolio of the ports and environmental issues has been
considered as additional criteria. Thus they found that the speed, handling cost,
reliability and hinterland connection have an impact on the port selection. By using
the system theory, Magala and Sammons (2008) looked at the whole supply chain
instead of taking the port as a part of an individual element to realize that the total
logistic cost, the quality of services and the reliability of the supply chain were the
major factors of port choice.
Mangan, Lalwani, and Fynes (2008) have considered that the ownership model of
ports and the relationship between the public and private sectors have a significant
impact on ownership reform. On the other hand, deregulating the ports’ ownership
allowed the Global Port Operators (GPOs) involvement that provide efficient and
cost effective services in many ports in the world in order to be chosen by major
carriers. The contracts of carriage of goods and INCOTERMS used in the contract
have an influential impact on which mode of transport should be used as well as the
port of destination. For instance, if it was agreed to use the CIF term, the seller be
assumed to carry the cargo by sea and the port of destination should be specified if
using other terms (Donner, 2009).
According to Moon (2009) the ideal port to be called by vessels should have
adequate depth of water within the harbor and its approaches, minimum tide and
current volatility, free of fog and ice, appropriate anchorage area inside/outside the
harbor and efficient inland connections with value added service facilities. The
current tendency of international transport to decide about routes and port selection
mostly depend on a number of factors such as the shipping service pattern (Liner,
Tramp and Industrial), the logistics concept and the best quality services with cost
effectiveness (Ma,2010).
Regardless of the model used and the researcher, two links could be dominating the
selection of ports by carriers as well as shippers. The sea link, which is related to port
10
location, accessibility, and distances between ports, whereas the land link is decided
by port efficiency, facilities for value added activities and connectivity with the
hinterland, which require effective multimodal transport systems to cope with the
cargo transported by sea.
2.2. Multimodal Transport (MT)
Due to different destination and time factors, cargo and passengers can be
transported by more than one mode of transport (sea, rail, road, air, and pipelines) or
by combining different modes together. The following definition is given by
UNCTAD (2000, p.5)
International multimodal transport means the carriage of goods by at least two
different modes of transport on the basis of a multimodal transport contract
from a place in one country at which the goods are taken in charge by the
operator to a place designated for delivery situated in a different country.
The consequence of recent trends in global trade, such as multimodalism,
containerization, e-commerce, information technology, safety, security and
environmental issues, forced the international community to have a positive reaction
to reform many systems and legislation like the Rotterdam Rules to cover the legal
side of such development. Since the MT concept has a very wide range and many
researchers discussed it in detail, this paper is limited to mentioning some of them.
An analysis of the MT system between Maghrab and Western European countries by
Martino and Morvillo (2005) using an empirical analysis found that the structure of
the transport chain, which includes the infrastructure of the system and the
interchange points, such as seaports, would influence the transport system. The
strategies of operators to be efficient and the level of interoperability of the transport
chain have an influential impact on the MT reliability.
11
According to Whitehurst (2005), the efficient MT managed by a multimodal
transport company with a centralized decision making can cope with the shippers’
requirements, geographical markets, production cost, transport technology and
competitor strategies. Therefore, the control of modes properly managed in terms of
cost effectiveness, will result in benefiting from economies of scale and
environmental friendliness decently monitored.
In Indonesia, which is an archipelago with 17,000 islands, the MT has a crucial
impact on the country’s transport system in terms of local transport among islands
and international transport with other countries. Obviously, the sea transport
represents a larger part in the system for moving passengers and goods. In such a
country the efficiency of nodes, such as ports, is considered as the main influential
factor of transport cost and MT system efficiency, as noted by Lubis, Isnaeni,
Sjafruddin and Dharmowijoyo (2005).
Woodburn, Allen, Browne and Leonardi (2008) discussed the international MT
system crossing the borders between countries by road and rails. The customs
clearance, political decisions, security and the globalization of trade have a decisive
ability to enhance the MT. For example, the most efficient international MT system
can be seen in Europe due to the elimination of most constraints between the EU
countries, which encourages global producers to have their assembling and
production centers distributed. Litman (2009) suggested the main factors affecting
the MT were the traveling time, the operating cost of the used mode, the
environmental impact of the transport mode, speed, and congestion delays. The
research focused on ground transport taking into consideration the highway and rail
and was comprehensive for such specific modes.
MT plays a role as a major part of the recent competitive economy, particularly in
the shipping industry. Today, many carriers prefer to have full control of logistics
and deliver the goods to the shelf of the retail rather than keep them in the port
12
premises. Therefore, efficient MT is one of the decisive factors in the total supply
chain. In fact, it seems reasonable to evaluate how it is significant to this dissertation.
The cooperation between inland transport companies, shipping companies, railway
companies, and appropriate highways illustrate the efficient movement of goods.
2.3 Alternatives to the Suez Canal
A modern transport model was studied by the Italian Consortium for Iraqi Transport
Infrastructure to generate the distribution of the traffic flows in the multimodal
network in Iraq and abroad. As a matter of fact, the implications of the Iraqi network
on international traffic are worth mentioning. Consequently, the network description
also has to cover a large part of the transport network away from the Iraqi border.
After the beginning of the stabilization of Iraq, it was expected that new corridors
will be opened (i.e. through Syria) or that old corridors will be restored (i.e. via Iraqi
southern harbors). This will, probably, be moving the attention away from the
corridor used during the embargo (C.I.I.T.I, 2008).
Although, this study has shown the demand trend increasing in terms of general
cargo and passenger traffic, the first factor is mainly related to the capacity of the
Iraqi transport system to operate in a competitive fashion in an international market
of transport services. An additional factor is the capacity of the Iraqi transport system
to not only support but to act proactively for the economic development of the
country. In other words, since the achievements of the Iraqi economy are intimately
linked to the efficiency of the transport system, the suitability of the transport system
is also measured in terms of how much it can positively or negatively impact (i.e.
bottlenecks) on the economic development. Moreover, the study discussed the
advantages of new routes for ports and Iraq’s benefits in addition to the benefits for
the shipping lines as the most important users of the new routes. Therefore, this
dissertation will analyze the cost of new multimodal transport routes in order to
demonstrate the advantages for ship owners and cargo owners as well.
13
A dissertation was written by Mohsenpour (2004) on a similar topic comparing the
cost of carriage of goods between the north-south corridor through Iran and the Suez
Canal route. The writer concluded that “Using a new route as a new possibility in
transport can reduce costs, save time and provide better flexibility”. Especially for
valuable cargo, which is more dependent on time rather than cost, the fast
multimodal transport can be the alternative if a new production market is introduced,
because the market is moving from one region to another.
Ma (2009) said a “land bridge can be a terrible threat to maritime transport,
especially the ones across the Euro-Asia continent”. It could also be the idea of
introducing a new market in Iraq, especially for agricultural products, to serve the
مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arab Gulf countries if the new logistic system is introduced.
This dissertation will discuss the possibilities of having new markets of a free trade
area in the مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf countries and also, if Turkey joins the EU, their impacts on
new multimodal transport routes. Obviously, the domestic data is not sufficient to
prove the competitiveness of new routes without making an international transport
analysis, because the shipping industry tends to be globalized rather than localized.
In particular, the effect of climate change can have an impact on shipping routes
between the Far East, Europe and the United States of America.
14
Chapter 3
3. Selected Existing Multimodal Transport Systems
3.1 The land Bridge in the US
The location of the United States of America between the two biggest markets in
Europe, crossing the Atlantic Ocean, and Asia, crossing the Pacific Ocean, resulted
in developing land bridge routes for freight movement. According to Muller (1999),
it started in the mid 1960s to connect different modes of transport such as railroads
with waterways and roads when cargo was being containerized. The cargo that was
shipped by ocean vessels from Europe to the western parts of the US has to pass
through the Panama Canal, which takes more time and involves higher cost. The
same applies to the cargo moved from Asia to the eastern parts of the US as shown in
Figure 3.1 .Therefore, the efficient West/East land bridge links the ports of New
York, New Jersey and Hampton Roads on the East coast with the ports of Los
Angeles, Long Beach, Portland and Seattle on the West coast of the US as gateway
ports to hinterland markets.
Figure 3.1 The North American Landbridge.
Source: http://people.hofstra.edu/geotrans/eng.
15
The major part of container transport is carried by the railroads by using the double
stack trains and trucking which is not only for cargo moved in and out of the United
States but also for domestic transport. According to the US Department of Transport
(2006), the trucking services represented 34% of the total domestic freight
transported in terms of ton-miles for distances less than 500 miles, followed by rail
transport 31%, pipelines 16% and short sea shipping 11%. On the other hand, for
distances more than 500 miles, rail transport was the dominant mode as shown in
Figure 3.2.
Nonetheless, the inland waterways traffic is increasing in some parts of the US on the
Mississippi River between Texas and Louisiana. Similarly, the regular lines between
the port of Portland and Idaho have increased the cargo movement linking the East
with the West by waterways transport (Port of Portland, 2009).
Figure 3.2 Comparison of major Modes in the US
Source: U.S. Bureau of Transport Statistics (2006).
The transport system in the US has mostly relied on road transports for carriage of
goods between states. Nonetheless, environmental concerns due to road congestion,
since trucking is the major pollutant in land transport, and the cost comparison with
16
other modes pressed the US government to reassess the transport system. The Texas
Transport Institute TTI (2002) studied the economic impact of road congestion and
found that the total congestion cost was $67.4 billion, illustrated as 3.6 billion hours
of extra traveling and 5.7 billion gallons of fuel consumed in congestion (as cited in
Brown and Hatch, 2002). As a result, railroad transport became an alternative to
trucking by carrying the loaded trailers (trailer piggyback) to move them by train
between states to reach their final destination. Moreover, the US Department of
Transport has seriously emphasized short sea shipping along the coast lines to
develop the transport system by eliminating the impact of congestion on the
economy and to reduce exhaust gas emissions generated by road transport.
Nevertheless, the combined transport system in the US is functioning as an efficient
transport system, especially in door-to-door services. In the United States
specifically, goods can be transported by ocean going vessels for the international
trade whereas the domestic carriage of goods by rail is considered to be efficient. The
railroad transport is preferable for long-haul transport between the West and East,
whereas trucking is the most significant mode of transport for pick-up and delivery
of cargo and ocean carriers for international transport (Muller, 2010).
Although there is trade imbalance between the West and East of the US, the MT
system in the US is considered to be efficient due to a number of factors:
• The transport and communication networks in all modes are developed and
internal, regional and international connections enhanced.
• The U.S. Government has adopted the latest technology and created a favorable
business environment through adopting proper policy and regulatory frameworks.
• The developed programs for outsourcing of some activities, particularly in the
field of communications and land, sea and air transport. The privatization policy,
while controlling the competition among the service suppliers, resulted in a high
service level of the transport sector.
• The MT function within one country, which means that borders crossings and
customs cannot be seen as obstacles and bottlenecks to the transport system.
17
Moreover, it enjoys the advantages of standardization of rules, documentation
and uniform railroad gauge.
• The continental strategic location of the U.S. between the two biggest markets in
Asia and Europe.
• On top of all the mentioned factors, the information exchange with the clients by
the EDI system is efficient and reliable.
Although the MT system is recently performing a considerable role in the transport
sector, the expansion project of the Panama Canal can be foreseen as a challenge.
The extended Canal, projected to be operational in 2014, will have locks 427 m long,
55 m wide and 18.3 m deep (Panama Canal Authority, 2006). In other words, cape
size bulk carriers and the super-post panamax container vessels will easily be able to
pass through the Canal. Therefore, the trade between the East and West of the US
with Europe and Asia might increase using shipping rather than land transport due to
the economies of scale and environmental concerns.
3.2 Trans European Transport Network (TEN-T)
Recently, the enlargement of Europe and removing the barriers between European
countries demanded an integrated transport system in order to establish significant
connections between the different parts of Europe. The Commission of the European
Communities (2001) issued a White Paper, which emphasized the need for
optimizing the transport system in order to meet the requirements of the development
and enlargement of the EU.
The commission found the improvement of the transport sector significant, because
of its economic impact representing 10% of GDP of the EU countries. The total
expenditure would run to 1000 billion euros and would create ten million jobs.
Therefore, the paper recognized this and projected two revision stages for the 1996
guidelines of developing the TEN-T. First in 2001, the focus was on the removal of
bottlenecks in the whole transport network, instead of emphasizing development
18
within transport corridors. In addition, priority was given to MT corridors by
increasing the capacity and improving the traffic control within the EU countries.
As a second stage, in 2004 a new revision was made to focus the concern of the
community on the concept of “motorways of the sea” to enhance the links between
EU ports with rail, road, and waterway connections. As a result, intra-Europe
shipping and railroad system improvements intended to alleviate bottlenecks that
were caused by congestion of roads within the EU. The White Paper presented the
needs of attracting the private sector in order to achieve an adapted infrastructure and
adequate facilities benefiting from their expertise as well as private capital
investments.
According to the European Commission (2005, p.7) it is projected by the EU that
By 2020, TEN-T will include 89500 km of roads and 94000 km of
railways, including around 20000 km of high-speed rail lines suitable for
speeds of at least 200 km/h. The inland waterway system will amount to
11250 km, including 210 inland ports, whilst there are a further 294
seaports and some 366 airports.
Obviously, this project requires big investment and budget provisions to be
allocated by the EU countries to support the proposed network. The European
Commission prioritized 30 axes to be completed and included in the project
funding with an estimated cost of EUR225 billion, whereas the total TNT-T
investment will exceed EUR 600 billion (INE, 2010).
Figure 3.3 shows the connections between different EU countries and various
modes of transport. The MT system in the EU reduces the transport cost for all
EU countries through the advantages of geographical location of several countries
and development. Therefore, the combined transport system in the Netherlands
serves most of the cargo imported by sea for Germany through the port of
19
Rotterdam by rail, roads, waterways and pipelines. Similarly, most of the cargo
unloaded in the port of Antwerp goes to France by rail, road and inland
waterways whereas the port of Marseille has been connecting the southern part of
France and neighboring countries. Moreover, the port of Hamburg is the hub port
for transshipped cargo to the Baltic Sea countries.
The objectives of the EU transport policy were not only for more efficiency and
lower cost but also for a sustainable and environmentally friendly network. Thanks
to the MT system, the air pollution and road accidents would be reduced through
applying strict European legislation and standards, which lead to significant
improvement in air quality of European cities.
Figure 3.3 Trans-European Transport Network (TEN-T)
Source: http://ec.europa.eu/transport/publication/doc
With regard to safety, the EU has adopted a comprehensive set of legislations
covering all the key factors affecting safety and specialized safety agencies have
20
been set up for rail transport (ERA), aviation (EASA) and Shipping (EMSA). On
the other hand, the regulations for driving and hours of rest for truck drivers,
encourage shippers to shift the mode from road transport to RORO vessels or
trains with their trucks. The integration of MT is often happening between the
Scandinavian countries, Germany and the Baltic Sea countries which link
Northern Europe with the South via Germany. Furthermore, rail wagons are
loaded in RORO vessels between the Port of Trelleborg in Sweden to Germany
and Poland to allow trains to move between EU countries for transport of
passengers as well as goods.
The inland waterways transport by barges is also playing a very considerable role
for the transport sector. Presently, this sector has grown to compete with other
means of transport such as railways and roads. It was reported by the port of
Antwerp that the proportion of its hinterland container traffic transported by rail
in 2009 had fallen from 11% to 10%, whereas the share of the waterway barges
had grown from 32.4% to 34.8%. Likewise, the railroad shares fell from 13% to
11% for transported containers from the port of Rotterdam, whilst the barge
shares increased from 30% to 33% (Containerization International, 12, July
2010). These facts were also presented by the port of Rotterdam and the port of
Antwerp during a field study of the Port Management student of World Maritime
University (WMU) in February 2010.
There are about 40 container terminals along the banks of the Rhine River
between Rotterdam/Antwerp and Basel in Switzerland, which is located about
870 km from the sea. This route facilitates the cargo movement by barges from
the Atlantic coast to the markets in Germany, France, and Switzerland with more
than one million containers being transported from Rotterdam and Antwerp.
Similarly, the Rhone River serves the inland waterways transport in France from
the Mediterranean Sea through Marseille, whereas the Seine River plays the same
role from the port of Le Havre. Some other rivers like Elbe and Weser are used
21
for similar purposes between Hamburg and Bremen in Germany and the Danube
from the Black Sea (UNESCAP, 2004). The attraction of the new English
Channel Tunnel for more traffic to transport goods and passengers between the
UK and the southern part of Europe can be seen as a land transport alternative for
coastal shipping (Ma, 2009).
The reliability of the MT system in the EU influenced the total supply chain and
the integration of the EU with neighboring regions in addition to the world
economy. Especially, the development of transport and communication
technology had notable impacts on the revolutionary increase in the globalization
trend. Therefore, many international companies benefited from such
developments in the transport sector by diversifying their activities among
different production and assembling centers. In other words, manufacturing of
some parts of a specific product can be produced in various countries due to the
expertise and cost advantages and all parts can be assembled in another country.
Basically, these changes of the market structure are challenges associated with
the needs of efficient transport, particularly after the implementation of JIT
systems by global producers. Transport has become a crucial logistics element to
control the inventory cost by offering a high service level to achieve significant
costumer satisfaction. In addition, the differences in the national economies of
countries have affected the market balance and the funding shares of transport
related project investments by different countries. Other challenges for the
transport sector have been noted by the European Commission (2008) as follows:
First, it is forecasted that the average age of the European population will be 65 or
more by 2060. In the past, people of such age traveled less than younger people
but recently they tend to travel more, which means an increase in the demand for
transport system improvement and capacity. Second, the migration to Europe
might increase the population by 56 million in the next 50 years creating pressure
on transport requirements. Likewise, the internal mobility of labor forces within
22
and between EU countries will increase due to the elimination of barriers. Third,
the impact of the transport sector on green house gas (GHG) emissions as the
most polluting sector urged it to mitigate its effect on the environment and to take
practical steps to achieve this aim. Finally, urbanization, which tends to be
European inhabitants’ preferred life style, increases dramatically, which will
demand more transport and cause congestion as well as GHG emissions.
Nevertheless, the MT system in EU is functioning as a successful player in the
economy and market flows of the EU countries due to several factors:
• The liberalization of trade adopted within the EU region has created a high
level of competition between the players within one mode of transport and
between different modes. Such competition, under the control of the EU
community, has improved the quality of transport services.
• The concern of all members of the EU to develop transport policy and the
legal framework to unify the different associated institutional, organizational
and social changes.
• The enlargement of the EU resulted in barriers coming down between the EU
countries which means the crossing of borders for passengers and goods
became simpler. Moreover, the Customs agreements in the EU region have
strongly influenced the cargo flows across borders of the EU countries.
• The contribution of technological evolvement and innovation has been
enhancing the transport sector safety and security to be reliable.
• The comprehensive planning system for long and short terms with regular
assessment of the plans.
• The adequate connections between different modes such as ports efficiency
and train stations.
• The permanent funding for transport network projects by different means of
financial support.
• The active partnership between the public and private sectors which involved
private capital and interest in the transport sector.
23
3.3 Trans Siberian Railway (TSR)
The trade between Europe and Asia in recent years has been growing steadily,
indicating a need for transport improvement and expansion. The TSR is the
longest transcontinental railway that originated in Moscow to link Europe and
Russia with the Far East via the Port of Vostochny in Vladivostok. Historically,
the TSR was used efficiently in the First World War to transport troops and arms
from the US via Vladivostok to Russia when the German submarines precluded
provision of arms through the Baltic Sea (Liliopoulou, Roe & Pasukeviciute,
2005).
The double-track railroad line is designed to transport about 130 million tons of
cargo annually including about 600000 containers. The distance to be covered by
the TSR is around 9,780 km, and it takes 15 days between Beijing and Hamburg,
whereas it takes around 35 days via the Suez Canal (Lukov, 2008). The different
distance between the sea transport via SC compared to the TSR shows a
considerable saving in favour of the TSR, which has lead to increased traffic from
Russia to 论文帮助/论文写作服务/负担得起我及时提交我最好的质量 – China as shown in Figure 3.4. Therefore, there are efforts and overall
positive indications that have been taken by the Russian Government and the
private operators of the TSR to achieve enduring efficient and competitive
railway services.

According to Tsuji (2010), the TSR development phases in the last 40 years
resulted from a number of reasons as follows:
• Between 1970 and the 1980s the utilization of the route was mostly for transit
movement from Japan to Europe and the Middle East. Because of the new set
of freight rates for transit cargo, 30% lower than sea transport, implemented
by the Soviet Union, the number of containers reached 110,000 TEU in 1983.
• In the 1990s, the route suffered a loss of its competitiveness with deep sea
shipping due to the unclear picture after the collapse of the Soviet Union.
24
• In 2000, the third phase started when the crude oil prices increased to
influence the demand for food consumption and electronics in Russia.
Therefore, the Russian trade with Korea and 论文帮助/论文写作服务/负担得起我及时提交我最好的质量 – China increased the use of TSR.
• In 2006, the Korean car manufactures started new production bases in Russia
because of the elimination of the rebates for transit cargo which lead to higher
prices for cargo transported to Russia. The production bases in Russia,
imports of production parts from Korea by the TSR increased to reach about
710,000 TEU in 2008. Mostly containers were transported as imports
(358,416 TEU) and exports (322,221 TEU) to and from Russia, whereas only
29,035 TEU was transit cargo (Containerization International, as cited in
Muller 2010).
• In 2009, the economic crisis affected the TSR transport because of the drop of
freight rates in the shipping sector which shows more flexibility than TSR.
Furthermore, the Russian economy was also influenced badly by the global
financial crisis, which caused a sharp decrease in transport demand.
Figure 3.4 Trans Siberian Railway TSR
Source: Russian Railways (2010) http://eng.rzd.ru/isvp/public
25
Pulling all phases together, the demand of transport using the TSR has been
fluctuating, especially for transit cargo because of the price inelasticity of supply
(railway services). In other words, when the demand for TSR services decreases,
the price of the services should also follow the same curve according to the law of
demand and supply (Ma, 2009). The changeable freight rates of sea transport have
a considerable impact on the competition between the two modes during the
downturn periods as shown in Figure 3.5. In addition, the numerous service
providers in deep sea shipping create a high level of competition to satisfy the
costumers. On the other hand, there are not many service providers for railway
transport, which creates practically a monopoly.
Even though the TSR services are relatively faster (11 days difference from Kobe,
Japan to Hamina in Finland) than sea transport, the advantage of economies of
scale originating from the vessels’ size compared to the railways’ capacity made
shipping more desirable than TSR, especially when the time factor is relatively
unimportant compared to transport cost for low value cargo such as coal.
In addition, the trade imbalances between eastbound and westbound cargoes due
to lack of cargo to be transported eastbound, resulted in large numbers of empty
containers having to be transported, which increases the transport cost for
shippers.

The TSR system can be developed more and would reach the highest level of
competition with existing sea routes by reducing the burden of documentation and
eliminating the border crossing obstacles to minimize the transit time of goods
while transported. On the other hand, the standardization of the railway gauge
with European railways would minimize the waste of time due to different
gauging. Theoretically, the railroad gauge can be standardized, but it is difficult to
implement due to high investments needed for construction of new railroads
either in Europe or Russia, which is not going to happen.
26
Figure 3.5. Price Fluctuation: TSR vs. Deep Sea transport
Source: Tsuji (January, 2010)
The switching of trains at Russian borders for the rail connection between
Duisburg in Germany and Moscow is evidence of time consuming work due to
gauge variation (International Containerization, 2010). Moreover, the cooperation
between the countries benefiting from the TSR in terms of economic and legal
aspects would lead to a participative transport policy to fulfill the requirement of
an efficient mode of transport. Ports also need to operate efficiently and to be cost
effective as part of the total supply chain on the TSR routes. There are many other
MT systems that can be mentioned, such as the land bridge from the Far East to
Europe via Central Asian countries (Kazakhstan, Kyrgyzstan, Tajikistan,
Turkmenistan and Uzbekistan). The land linkages of these countries with 论文帮助/论文写作服务/负担得起我及时提交我最好的质量 – China
and Mongolia in the east, the Russia Federation in the north and with Iran and
Pakistan in the south can play a significant role for transport between Asia and
Europe (UNCTAD, 2000). The combination of land transport from 论文帮助/论文写作服务/负担得起我及时提交我最好的质量 – China with
sea transport through the Caspian Sea is considered as MT competing to some
extent with the existing sea route as far as distances are concerned. Nevertheless,
the burdens of crossing borders and high transport cost due to lack of economies
of scale and port charges are still encouraging the shippers to move their cargo by
sea.
27
Chapter 4
4. Distance and Cost Comparison between the Suez Canal and New Routes
4.1 Distance
Transport cost is mainly determined by the fixed and operating cost for the mode that
is used for a specific route, such as the infrastructure and superstructure cost. On the
other hand, the distance of movement for goods and passengers has an impact on
both fixed cost for railway and road infrastructure and operating cost for all transport
modes. This dissertation attempts to analyze two multimodal options as alternatives
to existing routes. First, unloading the cargo that is shipped from the Far East and
South Asia to Europe in a hub port proposed to be located in the North of the
مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf (South of Basrah in Iraq) as shown in Figure (4.1).
Figure 4.1 First option of proposed routes.
Source: www.Maps.Google.com and author.
28
The unloaded cargo is to be loaded on trains and trucks and transported to the Port of
Tartous in Syria to be loaded and shipped to Europe via the Mediterranean and vice
versa for cargo from Europe to Asia.
Table 4.1 The distance comparison between existing route and new routes (via Iraq
and Syria)
Routes via
Suez canal Distance
NM.
Time1 Routes via Iraq
and Syria
Distance
NM2
Time3
%
ShanghaiRotterdam
10409
30 days
23
hours
ShanghaiRotterdam
10048 29 days
22 hours
96.5%
SingaporeMarseille
6506 19 days
9 hours
SingaporeMarseille
6221 18 days
12 hours
95.6%
DubaiRotterdam
6129 18 days
6 hours
Dubai-Rotterdam 4543 13 days
13 hours
74%
MumbaiRotterdam
6296
18 days
18
hours
MumbaiRotterdam
5590 16 days
16 hours
88.8%
AustraliaMarseille
9800 29 days
4 hours
AustraliaMarseille
9896 30 days
11 hours
101%
Source: www.searates.com
The distances and traveling time are shown in Table 4.1. The new routes have an
advantage for being shorter in terms of distance and time than the existing route
between Asia and Europe if the distances considered were the only determination
factors and the other factors were not taken into consideration. A voyage starting in
Shanghai transiting the Suez Canal to Rotterdam is 10,409 miles and takes about 31
days while using the new routes, so the distance would be 10,048 miles and takes

1
Vessel speed assumed 14 knots
2
The distances were taken in nautical miles both for sea and land distances to standardize
the measurement.
3
The traveling time between Um Qasr-Tartous is assumed to be 48 hours by train or truck
without taking cargo handling time into consideration.
29
about 30 days which is 361 miles shorter with one day difference. The differences in
distance and time for a voyage between Singapore and Marseille are similar. The
distance from Dubai through the SC to Rotterdam is 6,129 miles and takes about
18.25 days but for the new routes it would be 4,543 miles and takes about 13.5 days
in which the difference in distance is 1,586 miles and in time 5 days. Furthermore,
the distance from Mumbai to Rotterdam is 6,296 miles and takes 19 days through the
SC when the suggested route is 5,590 miles and takes about 17 days.
Obviously, the shorter distances for transport are preferable to carriers and shippers
due to the relationship with cost and time. Therefore, the transport between Asia and
Europe would be cheaper if the distance was the only factor of concern. In practice,
there are other factors, which have decisive impacts on the measurement of transport
system effectiveness and carriers decision of route selection.

Figure 4.2 Second Option of proposed routes
Source: www.maps.Google.com and author
A second option, instead of transporting the cargo via the Port of Tartous, is that
cargo would be moved via Turkey to Eastern Europe by crossing the Black Sea and
connecting this route with the Viking intermodal train which links Ukraine, Belarus,
30
and Lithuania. Moreover, the routes can be connected with central and western
Europe via Istanbul as shown in Figure 4.2.
Table 4.2 The distance comparison between existing route and new routes (via Iraq
and Turkey)
Route via Suez Canal
Distance1
miles
Route via Iraq and
Turkey
Distance
miles
%
1 Shanghai-Hamburg 12264 Shanghai-Hamburg 9435 77%
2 Shanghai-Klaipeda 12726 Shanghai-Klaipeda 9085 71.4%
3 Shanghai-GenovaMunich
10563 Shanghai-Munich 9181 87%
4 Shanghai-Rotterdam 11978 Shanghai-Rotterdam 9573 80%
Source: www.searates.com
The land bridge between the proposed hub port in the North of the مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf and
the port of Samsun on the coastline of the Black Sea has an advantage of being
shorter than existing routes as shown in Table 4.2.
Although the distance measurement is inaccurate due to the terrain differences for
the land, the distance from Shanghai to Hamburg via the SC is 12,264 miles and
through the new connections it is 9,435 miles, which is much shorter than the
existing route. Likewise, the distances from Asia to West Europe and the Baltic Sea
countries are shorter by using the proposed routes.
In fact, the Viking intermodal connection as shown in Figure 4.3 might support the
idea of the new model since it has been constructed and has been working properly
as an efficient mode of transport linking the Baltic Sea with the Black Sea. On the
other hand, crossing the borders and the number of ports influences the time of
transport especially with three different regions and countries if the cargo were
carried by the new land bridge. The joint railway with a distance of 1,734 km from

1
The distances were converted into miles and taken as straight lines between cities.
31
Odessa and Ilyichevsk ports in the Ukraine crossing Belarus to the port of Klaipeda
in Lithuania is functioning as a successful and attractive intermodal transport system
as shown in Figure 4.4. The journey of the Viking train takes 48 hours between the
mentioned ports and there are train departures twice a day (Kaminskas, 2008).
Figure 4.3 The Viking Intermodal Train Project
Source: www.hollandintermodal.com
Furthermore, the route between the Port of Odessa in Ukraine and the port of Samsun
in Turkey by RORO services, which is 394 nm and takes about 1 day by a ship, can
play an important role in connecting the Middle East with Eastern Europe and
Russia. Similarly, it could be connected between the proposed new port in Iraq and
port of Samsun by a land bridge with highways and railway with a distance of 897
miles which may take two days. Therefore, the transport time of cargo from
Shanghai to Klaipeda via the new routes will take approximately 23 days while using
the SC route takes about 32 days.
Nevertheless, even though the distances of the two proposed options as alternatives
for the SC, are shorter in terms of transport time, the assessment of the comparison
by using the distance factor is insufficient to convince the carriers of the cost
effectiveness of the new routes.
32
Figure 4.4 Increasing growth of transport by Viking train
Source: Source: www.hollandintermodal.com
.
4.2 Transport Cost and Freight Rate
4.2.1 Sea Transport Cost
In order to determine the total cost of a shipping company, it is necessary to have an
estimate and analysis of the cost components which affect the freight rates and ship
owners’ earnings. The freight rates have been volatile depending upon the market
fluctuations which have an impact on the shipping income and expenditure.
Moreover, the competitive market has a decisive influence on shipping companies to
behave as price takers or makers. Recently, the freight rates have been mostly
decided by the market which forced shipping companies to adjust their cost
accordingly.
According to Stopford (2009) the shipping total cost can be divided into five
categories:
1. The operating cost which includes ship’s expenses for daily operations such as
crew wages, stores, and daily maintenance. It also includes the insurance cost and
management expenses.
33
2. Periodic maintenance costs based on the requirements of periodic inspection by
maritime authorities and classification societies to ensure the condition of the
ship hull as well as the machinery. The periodic maintenance is mostly done by
dry-docking.
3. Voyage costs are related to specific voyage expenses which are considered
variable such as fuel consumed, port charges and canal dues.
4. Capital costs represent a significant portion of a shipping company’s cost and are
affected by the way of funding (loan with interest or using company’s liquidity)
to purchase ships and the ship status, new or second hand.
5. Cargo handling costs are related to loading, stowing and unloading the cargos
which are particularly important in liner services.

Figure 4.5 General Cost Classifications for Bulk Carriers
Source: Stopford, M. (2009, p.225).Maritime Economics (3rd Ed).Routledge.
Figure 4.5 shows the general cost classification for bulk carriers as an illustration of
the significant impact on voyage cost that changing the vessels’ routes may have.
34
Although the cargo handling cost can be affected by changing the routes and port of
call, the component of the mentioned total cost most affected is the voyage cost. The
crew wages, daily maintenance, capital cost and periodic maintenance of vessels are
relatively not strongly affected by a ship’s route. Marine insurance costs increases
significantly on some routes that have a threat accumulation such as piracy, wars,
and strikes causing high transport costs. For instance, the companies raised the
insurance premium for vessels proceeding to the مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf due to the Gulf war in
2003 and such increase still have an impact on the transport cost.
Shipping companies tend to control the total cost of operating their vessels through
reducing the manning costs using a minimum number of crew onboard ships.
Furthermore, the number of ports of call for bigger vessels in liner shipping is
reduced due to the time consumed in ports and high cost of port charges.
Nevertheless, the fuel consumption is the highest cost for operating a shipping
company representing 30.4%1
of the total cost for bulk carriers as shown in Figure
4.5. On the other hand, the port charges and canal dues are a considerable part
representing 10% of the total cost. The fuel consumption can be measured by the
efficiency of the vessel engine by indicating the age of engine and the technology
used for design, the ship’s configuration and the degree of hull fouling as ship design
related factors. Moreover, the sailing distance, speed of vessel, vessel’s state (laden
or ballast conditions) and weather conditions have corresponding external effects on
fuel consumption (Drewry, 2007).
Maritime freight rates reflect the shipping companies’ total cost, which vary from one
firm to another according to a company’s policy and efficiency. However, there are
other factors influencing the freight rate as suggested by Hoffmann (2010) as
follows: first, the distances that cargo has to be moved by vessels from production to
consumption areas. It is worth mentioning that doubling the sea transport distance
resulted in raising the transport cost by about 15-20%, which can be seen in Table

1
The voyage cost 40% and (fuel oil + diesel oil 76%). (0.76*40=30.4%)
35
4.3. Although the correlation between the distance and cost is relatively low, distance
still has a notable impact on the transport freight rate when it is superimposed in time
cost. In other words, if goods are transported for the same distance but different in
duration, the transport cost will be different due to the factors involved to determine
transport cost such as fuel consumption and speed.
Table 4.3 Freight Rates of Carrying a FEU from Dalian in May 2010
Port of
Destination
Freight
Rates
$US
Port of
Destination
Freight
Rates
$US
Port of Destination
Freight
Rates
$US
Dubai/UAE 1200 Bahrain 1800 Tema/Ghana 4600
Colombo / Sri
Lanka
1300 Um Qasr /
Iraq
3000 Santos/Brazil 4800
B.Abbas/Iran 1300 Port Sudan 3300 Valparaiso/Chile 5200
Calcutta/India 1700 Rotterdam 3500
Source: Hoffmann, J. (2010).
Second, the vessel sizes have an impact on transport cost owing to economies of
scale advantages as shown in Table 4.4. Instead of transporting 100 tons, the
reduction of cost might reach about 40-50% when transporting 10,000 tons of cargo.
The shipping lines tend to build bigger ships to reduce transport cost and offer
cheaper services in order to compete with other companies and modes of transport.
Third, the trade imbalances actuate the freight rates due to the availability of goods to
be carried in both ports of origin and destination. The occurrence of imbalance for a
country’s import and export leads to receiving more cargo with loaded ships. On the
other hand, ships ought to find a cargo nearby otherwise they will sail in ballast
conditions without earning money. Therefore, the transport cost will increase,
especially when the demand for transport is high with shortage of supply. Fourth, the
value and type of cargo decide the freight rates and routes also due to the insurance
36
and time factor concerned in such goods. Therefore, increasing the value of goods by
1%, the insurance companies increase the insurance cost by 0.3-0.4%.
Table 4.4 Economies of Scale in Bulk Shipping (including bunkers)
Cargo
Capacity
DWT
Invest
ment
$M
Bunker
Cons
tons/day
Operating
Cost
$m p.a
Operatin
g Cost
$ / dwt
Bunker
Cost
$ / dwt
Capital
Cost
$ / dwt
Total
Cost
$/dwt
p.a
30,000 26 21 1.2 40.6 56.7 93.5 191
47,000 31 24 1.4 30.3 41.4 71.4 143
68,000 36 30 1.8 26.0 35.7 58.2 120
170,000 59 50 2.0 12.0 23.8 38.2 74
Source: Source: Stopford, M. (2009, p.225).Maritime Economics (3rd Ed).Routledge
Fifth, the competition level among shipping companies increases the options for
shippers to select lower freight rates with high service level depending on the market
shares of carriers. Finally, the port efficiency and characteristics have a direct impact
on ship turnaround time whereas efficient ports reduce time losses for vessels that
earn only while sailing.
Regarding cost comparison, the dissertation takes into consideration the operation
cost and fuel consumption as a voyage cost only for general routes as in Table 4.5.
On the other hand, the port dues and canal charges will be considered for the specific
route to illustrate the primary cost effectiveness for compared routes. Obviously, the
fuel consumption varies according to ship purpose and speed so that the container
vessels consume more fuel due to the high speed needed to maintain port calls
scheduled. Nevertheless, the value of cargo that is moved in containers is mostly
higher than cargo on other types of vessels which compensates the higher operating
and voyage costs.
On the other hand, the refrigerated cargo requires faster transport capability where
container vessels have to compete with other modes of transport. The operation cost
37
is calculated based on the manning cost, H&M Insurance, P&I Insurance, repairs and
maintenance, stores, spares and administration cost.
Table 4.5 The operation and bunker cost for three types of vessels.
Vessel
Type
Size
Operating
Cost
$/day1
Fuel Cons2
.
ton/day
Bunker
Costs3
$
Total Cost $/day
Container
Vessel
CV
4,048 teu 6,855 117 50,369 57,224
Bulk
Carrier
BC
Panamax
65-73,000
dwt
5,745 33 14,207 19, 952
General
Cargo
GC
17-20,000
dwt
4,055 24 10,332 14,387
Source: Drewry Shipping Consultant Ltd. (2007) and Second IMO Greenhouse Gas Study (2009).
The total cost of sea transport of different types of vessels calculated in Table 4.6
excludes the port dues in the port of origin (Shanghai) and port of destination
(Rotterdam) because they will be similar on both routes. Moreover, the capital cost
and cost of periodic maintenance were also counted out.
The total cost was calculated as follows:
Total Cost=Voyage duration*total daily cost+ SC charges.
Moreover, the vessel load was assumed to be 75% of its full load because of the trade
imbalances and different ports of call, especially for container vessels. In other
words, the total transport cost was distributed on 75% of the vessel’s full load for the
bulk carrier and container vessel. The attractive tariff of the Suez Canal tended to
encourage more traffic and bigger ships through the different pricing system

1
Operating cost estimated by Drewry for 2008 and assumed to be the same in 2010
2
As estimated by Stopford (2009).
3
The price of IFO380 in Fujairah $430.50 on 30th June 2010.BWI (Bunker World Index)
38
depending on vessel type and size. On the other hand, the compulsory escorting of
bigger ships by tug boats increases the transit charges in addition to waiting time for
entering the canal.
Table 4.6 Total Cost of Sea Transport via Suez Canal for Different Vessels.
Vessel
Type
Size
Route via
Suez
Canal SC
Vessel
Speed
Time
Days
Suez
Canal
charges1
$US
Total
Transport
Cost
$US
Transport
Cost2
Per unit
CV 4,048 teu
ShanghaiRotterdam
23
18
days
21
hours
248,298 1,564,450
515
$/teu
BC
Panamax
65-
73,000
dwt
ShanghaiRotterdam
14
30
days
23
hours
215,897 830,409
15
$/ton
GC
17-
20,000
dwt
ShanghaiRotterdam
12
36
days
3
hours
67,920 585,852
34
$/ton
Source: Suez Canal Authority (2010) and Author.
4.2.2 Inland Transport Cost
Essentially, an efficient transport system is important for cost reduction and customer
satisfaction to provide competitive services. The demand for such significant
transport systems has increased in the last decades which placed strong demand on
extra infrastructure and shifting of cargo between modes of transport. Although there

1
Only transit cost taken into consideration without any extra charges
2
Assumed the vessel loaded with 75% of its total capacity for Container and Bulk carriers.
39
are several factors affecting the transport mode selection, such as cost effectiveness,
economies of scale and environmental concerns, the accessibility to consumption
centers by trains and trucks secured the desirability of inland transport. The different
functions of transport modes together with logistics development imposed transport
integration. Such a transport network should have significant control on costs and
quality of services. On the other hand, the huge infrastructure needed obliged the
national governments to invest sufficiently because of the substantial role of
transport as the country’s backbone.
Similar to sea transport, inland transport costs are divided into: First, capital cost for
infrastructure construction for railroads as well as highways. The capital cost
includes train wagons, building railroad infrastructure, railway stations and all
facilities installed for operating the trains. On the other hand, inland trucking
transport includes the cost of trucks, pavement of roads and all junctions with other
modes of transport. Second, operation and maintenance costs such as fuel,
maintenance and manning for both railways and trucking transport (Blauwens,
DeBaere &Voorde, 2002). In addition, the congestion cost caused by the decline of
speed of traffic due to going beyond the capacity of infrastructure, which influences
the total cost.
The infrastructure cost is the crucial element of the total supply chain cost in addition
to malfunction cost resulting from road and rail accidents, which add extra costs on
transport. Therefore, the multiplicity of cost components and objectives of inland
transport systems resulted in complicated transport pricing. The impact of the
transport sector on the social life of people, environment and economy has promoted
the interest of developing the services and to look over the sustainability of an
efficient transport system. Owing to huge infrastructure needed for inland transport,
such as highways, railroads, bridges, piers, locks and tunnels, the inland transport is
considered to be more expensive but faster compared with sea transport (Muller,
2010). Moreover, the significant advantage of economies of scale that sea transport
40
benefits from resulted in cheaper services. On the other hand, the transport speed
factor assisted the inland transport to be preferable in situations where a particular
commodity ought to be handled within a short time.
Consequently, the high prices of transport services reflected the engagement of
several cost elements that require government subsidies to strike a balance between a
more equitable distribution of resources among people and the need for stimulating
an efficient transport system.
Regarding the new route, the inland transport efficiency and reliability are the key
factors of the prosperity of the route for being comparable with existing routes. Thus,
the cost comparison of cargo transport provides a thorough understanding of the
price differences of combined MT, as shown in Table 4.7.

Table 4.7 The Combined cost of Sea/Land transport
Vessel
Type
Route via
Iraq and
Syria
Sea
Transport
Cost
Land
Transport
Cost $US
(Truck)
Land
Transport
Cost $US
(Rail)
Cargo
Handling
Cost
And Port
Dues
$US
Total
Cost1
$US Transport
Cost per
Unit
CV ShanghaiRotterdam
972,808 2,621,849 1,376,471 575,972 2,925,251
923
$/teu
BC ShanghaiRotterdam
558,656 4,096,639 2,150,735 509,670 3,219,061
55
$/ton
GC ShanghaiRotterdam
467,577 1,071,429 750,000 173,319 1,390,896
69.5
$/ton
Source: Iraqi Inland Transport Company (2009), GCPI (2010) and Author.
Interpreting the cost calculations in both tables (4.6 and 4.7) illustrates the cost
effectiveness of existing routes when taking the cost in separation from other

1
Port Dues, land transport cost considered the same in Iraq and Syria
41
influential factors. The existing route’s total sea transport cost for different kinds of
cargo gives a logical appearance of low transport cost compared to the proposed
routes. The transport cost of transporting one TEU via the Suez Canal is $515 taking
into consideration only the operating cost and voyage cost and leaving aside the
capital cost in order to seek a comparison. On the other hand, the cost of moving one
TEU through the new route would be $923, which exhibits the additional cost of
transport in the current situation and price comparison. However, the numbers are
not 100% accurate due to the unavailability of information about current Syrian
inland transport costs, port dues and other cost elements. The scenario applies to the
variation of transport cost for bulk cargo between the existing route and the proposed
new one. However, the calculations primarily show a deviation of inland transport
for bulk cargo that is a greater cost than inland transport for containers. The total cost
considered was the railway transport cost for the inland part of cargo movements as
part of the total transport chain from 论文帮助/论文写作服务/负担得起我及时提交我最好的质量 – China to the Netherlands for the suggested route
cost calculations.

Table 4.8 Cost Comparison for cargo transport through two route options
Total Time
days
Cost via Suez
Canal
Total Cost via new
Vessel route
Type
Route
Via
SC
New
Route
Total
Per
unit
Total
Per
unit
CV
DubaiRotterdam
11 8 877,762 289 2,410,235 756
BC
DubaiRotterdam
18 12.5 575,033 10.4 2,909,805 51.4
GC
DubaiRotterdam
21 14.5 370,047 18.5 1,131,930 56.6
Source: Suez Canal Authority (2010), Iraqi Inland Transport Company (2009), GCPI (2010) and
Author
42
For regional transport, the cost analysis of transporting different kinds of goods from
Dubai in the UAE to Europe demonstrated the higher cost of MT using the new
routes. Although the new route has an advantage of saving time, which affects the
total sea transport cost, the expensive inland transport increases the total cost and
reduces the benefits of saving time for the integrated transport system (Table 4.8).
Obviously, the second option of the new suggested route via Turkey to the eastern
part of Europe will be even more expensive than the first option due to longer inland
transport distances for cargo. As mentioned earlier, the cost is not the only decisive
factor of route selection, though it is the most important one, especially for shippers’
and carriers’ concerns, but many clients would like to pay more for the time factor,
reliability, and service level. Therefore, other factors have to be discussed in this
dissertation to provide comprehensive recommendations for carriers whether or not
the new route is beneficial for them and the total transport system.
4.3 Crude Oil Transport
The major product of the Middle East region is mainly crude oil, which can be
transported by different modes of transport depending on transport distance. Oil
tankers are a desirable means of transport for crude oil between continents because it
is considered as a cheaper mode of transport for such long distances. On the other
hand, pipelines are the most significant transport mode between countries such as the
European inter-continental transport of oil by pipelines. Obviously, crude oil carriers
have been getting bigger to carry more cargo and taking advantages of economies of
scale. Therefore, the serious pressure on the Suez Canal and the Panama Canal to
extend their capability of allowing bigger ships has lead to investing huge amounts of
money for such extensions.
Regarding oil transport, the new route has advantages to compete with the existing
Suez Canal route if the crude oil is transported by pipelines from Iraq to Europe via
Syria. The long distance of sailing from the مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf through the Suez Canal
43
contributes in higher costs of transport, whereas the new route would shorten the
distance. Moreover, the added cost of Canal dues for transiting the Suez Canal
cannot be seen in the case of the new route, which would make it more preferable as
a cost effective corridor. In the current situation, Iraq exports its oil from northern oil
fields by pipelines to the Mediterranean via the port of Ceyhan in Turkey. There are
two pipelines between Kirkuk in Iraq and the port of Ceyhan in distance of 600
miles1
, designed to transport about 1.1 million barrels of crude oil per day (Kumins,
2006). These pipelines are playing a crucial role for an efficient mode of transport
and economically beneficial for both countries (Iraq and Turkey). The distance
between Kirkuk and Tartous in Syria is about 480 miles, which is shorter compared
with existing pipeline routes, but the political disputes between Iraq and Syria in the
past impeded the cooperation to construct pipelines. The situation in Iraq will
probably lead to more understanding for developing crude oil transport between Iraq
and Syria, which serves the economy of both countries. For exporting crude oil from
southern oil fields, the oil terminals in the Gulf are loading about 80% of total
exports to different markets (IOM, 2010).
Pipelines transport is considered to be cost effective in terms of transport cost and
operation because usually the maintenance cost is very low as well as the operation
costs. Moreover, the time of transport is relatively constant in normal conditions
when the pumping system is well maintained and operated. The investment of
building the infrastructure and superstructure for pipelines transport is relatively low
compared to other modes. In comparison with other modes, pipelines are not
suffering from problems of delays for the transit of cargoes across borders in addition
to the documentation procedures of customs clearances. Moreover, crude oil can be
transported by pipelines from the fields to the refineries without the need to go
through ports or terminals.

1
British mile= 1.609 km
44
The mentioned limitations of draught in the Suez Canal, forced the ULCC tankers to
sail via the Cape of Good Hope and also the security instability in the Gulf of Aden
encouraged smaller tankers to change their routes. The suggested new route can be a
viable alternative for the transport of مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf countries’ oil to Europe and the
US. Oil can be transported from Iraq by pipelines via Syria to be loaded in oil tankers
in the Mediterranean to be moved to final destinations. Of course, the efficiency and
capacity of the loading terminal together with pipelines will have a considerable
impact on the competitiveness of the new route with the Suez Canal.
In addition, pipeline transport is considered to be friendlier to the environment
compared to other modes of transport, such as sea, road, and railway transport, which
gives an advantage and competitiveness with other modes as well as the Suez Canal.
4.4 Suez Canal Capacity and Efficiency
Together with the Panama Canal, the Suez Canal plays a crucial role in global
maritime transport. The Canal served the shipping industry by connecting the
European markets with Asia, which assisted the ship owners to take benefit of a
shorter route compared with sailing around the Cape of Good Hope. Moreover, the
geographical location of the Suez Canal, which connects the Indian Ocean with the
Atlantic Ocean through the Red Sea and Mediterranean respectively, distinguished it
to be economically significant.
The development of vessel sizes encouraged the enlargement of the Suez Canal
accordingly. The largest ships able to pass through the Canal when it was opened in
1869 were of 5000 tons. Today, ships of 240,000 DWT and draught of 22 meters can
pass through the canal properly. The total length of the SC is 193.3 km, and it takes
about 12-16 hours to transit the Canal. Due to the limitation of the Canal’s width, the
Suez Canal navigation rules impose a convoy system to manage vessels’ sailing.
There are three convoys for ships passing the Canal, two southbound convoys from
45
Port Said at 00:00 hours and 07:00 hours and one northbound from Suez at 06:00
hours (Suez Canal Authority, 2010).
For such limitations, the SC is limited to receiving 81 vessels per day, which can be
considered as an opportunity for the new route to share the extra traffic in case of
exceeding the Suez Canal capacity. Although the figure in Suez Canal reports shows
that the traffic has not reached this limit, the trade and maritime industry are always
changeable to reshape a new market and demand which might increase the number of
vessels that wish to pass through the Canal. Moreover, the waiting time for vessels
that have arrived after the convoy departure time adds extra cost on transport, which
was not taken into account in the total cost calculations, because it is variable.
Nevertheless, the current situation of the Suez Canal is that it is considered to be
more desirable due to the cost effectiveness compared to other routes.

4.5 Regional Integration and Crossing Borders
Due to the Iraqi location, the suggested route has to pass through the borders with
Syria for both southbound and northbound transit of cargo connecting the
Mediterranean with the مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf. On the other hand, Iraq has a border with
Turkey to be transited when moving cargo between Europe and Asia via Iraq and
Turkey. The increasing stability of the region will presumably result in redirection of
existing international trade flows toward more convenient routes, which up to now
have been barred for political reasons or threats of wars.
Currently, the security situation is deeply affecting the border crossing processes,
which increases time spent at borders for cargo inspections, resulting in high
transport costs. Despite that, the future improvement of the security situation and
reforming regional cooperation can probably lead to development of smooth transit
of goods. Historically, Iraq was an inland transit route from the مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf to
Europe and from Saudi مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabia to Turkey (IMOP, 2008). The project of new routes
requires involvement of regional governments in planning, design, execution,
46
maintenance, and operation in the transport sector to overcome the current
bottlenecks.
It is worth mentioning that during previous wars between Iraq and Iran, goods were
mostly imported through Jordan and Turkey by inland transport. Moreover, the
Syrian approach was used to transport cargo to Iraq during the embargo. In other
words, the regional governments have been cooperating to redirect the transport
flows according to their needs. Likewise, such cooperation resulted in producing a
sort of standardization of railway gauging between Iraq and Syria. On the other hand,
the existing inland transport infrastructure is insufficient to cope with the proposed
volume of traffic. For an efficient transport system, the necessity of smooth cargo
flows requires eliminating constraints in order to have a developed multimodal
transport network. Consequently, identified essential requirements for trade
facilitation are the need for deregulating the integrated regional transport system and
implementing a common transport policy that has to be agreed by these countries.
According to Hoffmann (2010), the standardization of cargo movement processes,
procedures, documents and information will improve the cargo flows at the countries
borders. This can be achieved through harmonizing the national procedures and
processes with international standards and regulations. Moreover, developing
transport procedures and simultaneously simplifying them anticipates the elimination
of excessive elements and duplications of formalities. In addition, travel time
reduction is a crucial element in transport costs, which includes the time for crossing
the borders to exchange the documents and security checks.
Accomplishing a reduction of the time factor is a significant issue in a contemporary
multimodal transport system. Also, the practices of different authorities at borders
might be the constraints that are impeding the cargo flows from delivering
impeccable on time services to the clients. In such circumstances, the transport and
logistics costs will increase and also create unreliability of service scheduling by
47
carriers. Previously, the calculations of land transport considered one day for the
transit time of cargo from Basra (Iraq) to Tartous (Syria) assuming crossing the
borders would run without stoppage. On the contrary, there is currently border
congestion due to the mentioned situation so that the transit time could be more than
one day, which will increase the total inland cost.

For the suggested routes, easy crossing of the borders would make a fundamental
contribution to the competitive transport network. In addition, the smooth and
prompt proceeding of goods across borders gives the suggested routes comparative
added value and also increases the costumers’ satisfaction level. It is obvious that the
railways transport can play an important role for minimizing transit time, if there is a
cooperative operation and control by the two governments (Iraq, Syria). Both
countries are getting economic and social advantages from developing a cooperative
multimodal system so they have to emphasize on evolving transport related matters
with similar concern. As a matter of fact, the Customs system can play a discrete
function to facilitate the cargo movement through the borders by having sufficient
cooperation between customs authorities in all countries which take part in such MT.
For instance, the intelligence customs system is considered to be the prosperity
feature of multimodal transport in the European Union. The customs activities and
procedures might cause delays for cargo flows such as bottlenecks, yet they may
effectively leverage transport clients by using developed technology and information
interchange.

Coherent regional trade encounters the need for well developed transport facilitation
for international movement of cargo. Moreover, the need for trade liberalization and
free trade among regional countries urges the regulators and decision makers to take
running and operating the business jointly into consideration. Therefore, there are
several dialogs between regional countries (Iraq, Syria and Turkey), which started
recently to develop a free trade region and the MT system.
48
4.6 Port Efficiency and Cargo Handling
Port throughput and efficiency have a distinct impact on transit time of goods and
total transport cost. Although the geographical location of a port has a significant
effect on its attractiveness, the efficiency of cargo handling services of ports that are
connected to efficient hinterland connections became the interest of shippers and
carriers (UNCTAD, 1999). For the suggested routes, ports are crucial elements to be
considered for analyzing the total transport cost and transit time. Shipping companies
tend to minimize the number of port calls to reduce transport cost and time that is
consumed for cargo handling. In particular, the selection of hub ports by container
vessels mostly depends on the cost effectiveness of a port and its productivity. Of
course, such challenge for the new route will affect the carriers’ choices whether they
will continue to use the existing Suez Canal route or not. Unless the port operators in
both countries, Iraq and Syria, prove with evidence that cargo flows will run
smoothly, ports are perceived to be bottlenecks for the new MT.
In Table 4.1, the transit time differences between the Suez Canal route and new route
were about two days in favour of the new route without taking the cargo handling
and ships berthing/unberthing time into account. If the vessel spends one day for
unloading the cargo in the suggested new port in Iraq and one day for loading the
cargo again in the port of Tartous, the transit time is going to be the same for the new
and existing routes. On the other hand, for transporting goods to Europe via Turkey
by inland transport there will be one cargo handling activity taking place in the port
in Iraq, which leads to reduced transit time. In such case, the port performance and
productivity are assumed to be extremely good by port operators through the latest
developed cargo handling equipment to minimize the transit time as much as
possible. Moreover, the partnership between the public and private sectors has an
important influencing impact on major port investment and operation. The
dissertation is going to discuss the current situation of Iraqi ports in detail in the
upcoming chapter.

49
4.7 Factors influencing the competition with the Suez Canal
4.7.1 Security Concern
Recently, piracy in the Gulf of Aden and along the Somalia coastline has widened an
alarming deterioration of the security situation for vessels passing through the Suez
Canal as shown in Figure 4.6. Consequently, the international trade is directly
affected by increasing international transport costs, which have become more
expensive due to the serious increase of insurance cost. In addition, the employment
of security guards onboard ships and paying ransoms have added extra voyage cost
in order to avoid the piratical attacks. The number of successful vessel attacks and
attempts has risen over the last years due to the instability of the political situation.
The impact of such a threat may encourage the carriers to find other alternatives, as
IMO (2008, p.2) stated, ” without adequate and coordinated protection for shipping,
the current situation of Somalia might cause ship operators to avoid transiting
through the Gulf of Aden, using the Cape of Good Hope instead”
Figure 4.6 The number of Piracy attacks divided by regions in 2009
Source: IMB’s annual report (2010, January)
50
In addition, the piracy attacks endangered innocent seafarers from different parts of
the world, which may also lead to increasing the insurance cost for personnel as well
as their salaries. Generally, the global trade will be affected if the piracy
phenomenon continues. Obviously, the alteration of sailing routes via the Cape of
Good Hope will increase transport time and cost. In such a situation, the new
suggested route may play an important role for cargo movement between the Far
East and Europe. On the other hand, the current situation in the region, particularly in
Iraq, is facing several difficulties which can act as obstacles for the transport system.
As mentioned earlier in Table 4.3, the high freight rates for moving cargo to Iraq
resulted from the risks associated with the security situation, which caused insurance
companies to claim higher insurance premium to compensate for unforeseen losses.
Other most frequently expected problems are the damage or loss of cargo during its
inland movement, which might add extra costs. Hence, the competitiveness of the
new route with the Suez Canal depends on the improvement of the security situation
to reduce additional transport cost and introducing a developed and efficient MT
system in the region.
Regarding security, both routes have competitive pros and cons. The existing route is
threatened by piracy attacks and hijacking of ships sailing in the Gulf of Aden in
spite of the international efforts to enforce international laws and regulations.
However, the success of the new route depends on the stability of the security
situation in the region.
4.7.2 Environmental Concern and Air Pollution
Gases that are emitted from ships’ engines can be categorized into three main
polluting substances: Nitrogen Oxides (NOx), Sulphur Oxides (SOx), and Carbon
Dioxide (CO2) (Alexandersson, 1991). Maritime accidents may cause huge damage
to the environment, which affects the ecosystem due to oil spills resulting from
vessel collisions and grounding and gas emission from ships. Heretofore, the
shipping industry has reasonably been considered as the least polluting mode of
51
transport in terms of air pollution (IMO, 2008). Emissions from ships can be caused
by emission of exhaust gases, cargo emissions, emissions of refrigerants and other
emissions (IMO, 2009).The quality of fuel used for the propulsion system and
generating electivity has an impact on the air quality and gas emissions. Therefore, a
number of countries have insisted that shipping companies use high quality fuel with
low sulphur contents, such as the Sulpher Emission Control Area (SECA) in the
Baltic Sea. The dissertation attempts to evaluate the environmental impact of the new
route on air quality to estimate the significance of the suggested MT.
A significant potential for reducing the CO2 emission is attainable through a
combined transport system. From Table 4.9 it is obvious that the new route has an
advantage of being more environmentally friendly in terms of CO2 emissions for
integrated sea and rail transport compared with road transport
Table 4.9 CO2 emission comparison between existing and new routes
Transport
mode
Unit
Volume
of CO2
g/t.km1
Distance
ShanghaiRotterdam
Via SC
km2
CO2
emission
kg/ton
Distance
ShanghaiRotterdam
Via new
route km
CO2 emission
kg/ton
shipping3 38 19277 732.5 17359 660
Railroad 120 1250 150
Truck 180 1250 225
Ship+ hip+ S
rail trucks
Total
CO2
em s ission
732.5
810 885
Source: IMO (2009). Second IMO GHG Study. Marine Environment Protection Com e.
terland
connections without suffering from traffic congestion as in road transport. However,

mitte
. Railway transport is mostly desirable because of its accessibility to hin
1
g/t.km=grams of CO2 per ton of cargo transported on kilometer. 2
Distance is converted from nautical miles to km.
3
CO2 emission from Container vessels.
52
the gas emissions caused by cargo handling operations and maneuvering operations
with tug assistance have not been measured, which will increase the quantity of CO2
emissions. On the contrary, trucking transport combined with sea transport causes
greater amounts of CO2 emissions, which are undesirable for green transporters and
international concerns due to its effect on global warming and climate changes. In
general, the CO2 emissions from ships transiting through SC are less than new route,
which gives competitive advantage for the existing route. However, road transport is
making considerable efforts to reduce the GHG emission comparing with sea
transport due to the lifespan of trucks being much shorter than ships and the
possibility of applying latest technology happening with road transport (Cariou,
2010a). Developing the MT system for the new route would introduce a competitive
transport system to serve moving goods by greener modes of transport. The
calculations of CO2 emissions based on container vessels, which are the highest
emitting type of vessels compared to others like tankers and bulk carriers.
Consequently, the transport of goods by those ships will produce less emission than
carrying goods by container vessels giving more advantages to the existing route in
terms of CO2 emissions.
Furthermore, ports can play an important role in eliminating the impact of GHG
emissions through a decent environmental policy and strict legal instruments. For
example, cold ironing might be provided for vessels to reduce exhaust gases
generated from auxiliary engines for generating electricity when ships are berthed.
Nevertheless, the shore power supply price is double or more compared with the
price of electricity generated by ships auxiliary engines (Helsinki Commission,
2005). In addition, the مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf region is rich in oil resources, which enables
them to offer high quality fuel with appropriate prices to attract more traffic and
reduce gas emissions. An efficient port can ensure effective ship turnaround time by
minimizing waiting time, cargo handling time and time for delivery of goods. For the
land side, the smooth flows of goods through ports contribute to protecting the
53
environment from damage caused by road congestion, which increases fuel
consumption and gas emissions.
On the other hand, the usage of the Suez Canal is playing a significant function in the
ted
f global warming, melting of the ice in the Arctic Ocean has been
3 Economies of Scale
dvantage of increasing the transport mechanism in the
shipping industry to be cheaper than other modes taking advantage of economy of
sense of shortening sailing distances and fuel consumption to reduce transport cost as
well as gas emissions compared with old routes. The estimation of gas emissions is
difficult due to the uncertainty of transit time on both routes and also the waiting
time in the Suez Canal and new route. Moreover, the engine efficiencies and speed of
ships and railways can have a strong effect on the quantity of air polluting gases.
For competition, both the Suez Canal authority and the operators of the sugges
new route can initiate a green tariff with an environmentally friendly pricing system
in order to contribute to eliminating air pollution and become more environmentally
competitive.
As a result o
intriguing shipping lines to pass through the northeastern passage. This route will
shorten the sailing distance between European ports and northern Asia by up to 50%
compared to the Suez and Panama Canal routes, taking only 15 days (Peresypkin and
Vasilyev, 2009). In this regard, the usage of that route will threaten the Suez Canal
traffic as well as the new suggested route due to the time saving and cost
effectiveness of the northeastern routes. However, this situation cannot be seen in the
near future, because that route is still unsafe for ship navigation due to the presence
of ice and its hidden risks. Therefore, the Suez Canal remains the most beneficial
choice compared with other sea routes due to its comparative advantages mentioned
earlier.

4.7.
As mentioned before, the a
economy of scale proved by lower transport cost per unit was shown in Table 4.4.
Moving cargo by sea transport with bigger vessels afforded preference for the
54
scale. In particular, transfer of goods between continents and over long distances is
mostly accomplished by ocean going vessels especially for low value cargo. This
illustrates that the usage of the Suez Canal is cost effective in the sense of economy
of scale for shipping. However, the limited capacity of rails and trucks could have
confined the ability of inland transport to transfer all amounts of goods transported
by ships. Even if a new MT system successfully managed to compete with the Suez
Canal route, it could not be a complete substitute due to the limited capacity of
inland transport. Of course, it can be expanded to the extent of higher capacity to
share some traffic with the Suez Canal, yet it would be impossible to convey about
335 million tons of cargo that passed through the Suez Canal in 2009 by inland
transport (Suez Canal Authority, 2010).
4.7.4 Bunker prices
Bunker price is obviously the most crucial element of transport cost, as discussed
previously. For a country like Iraq, which is one of the most oil-rich countries, the
Government can take practical measures to support the transport sector, particularly
the MT system in the country, through the reduction of fuel prices. This would
reduce transport costs in general and give the status of competitiveness with other
routes.
It is natural that high fuel prices directly benefit the country, but long-term projects
such as sustainable transport are also considered beneficial for job creation for
citizens which are admirable investments compared with incomes derived from oil.
There should be an in-depth study on the impact of lowering oil prices in the sense of
attracting ship owners through the provision of coherent evidence that these
measures will reduce transport costs for them. Iraq can do that even in the
Mediterranean Sea through transferring fuel by pipelines to Syria and providing
bunkers for ships loading and/or unloading the cargo there. Therefore, Government
subsidization of bunker prices can act as a key factor of the competitiveness of the
new route.
55
Chapter 5
Analysis of the Significance for Iraq of the New Route
5.1 Transport Cost for Trade between Iraq and Europe
The European countries and the United States are the biggest trading partners of Iraq,
where most goods are exported to and imported from these countries. Apart from
crude oil exported to these trading partners, the manufactured productions,
humanitarian needs, medication and raw materials for the rehabilitation of Iraq were
imported from these countries. Table 5.1 shows the volume of trade exchange taking
place among these partners, which clearly demonstrates the need for different means
of transport.

Table 5.1 Iraq’s top 10 Export and Import Trading Partners, 2003
Source: International Monetary Fund (2003). As cited in Vivian, C. (2004). Iraq’s Trade with the
World: Data and Analysis.
Nevertheless, the trade with the Far East countries such as Japan, 论文帮助/论文写作服务/负担得起我及时提交我最好的质量 – China and the
Republic of Korea has been growing due to the market changes and price of
manufactured goods. Turkey became the most important trade partner for import and
export cargo produced in Turkey as well as cargo produced in European countries.
The transport of goods from Europe and American countries carried by ships would
be transited through the Suez Canal or moved by land transport via Syria, Turkey and
56
Jordan. The assessment and analys
transporters f tries to Iraq.
yria, Turkey and Jordan
can be committed by traders via Iraq.
is of cost comparison might give incentives to
or using a new route to move goods from European coun
Likewise, for transporting goods from Asian countries to S
Table 5.2 Transport Cost Comparison for Trade between Iraq and Europe
Vessel
Type
Size
Route via
SC
Transport
Cost per
unit
Route via
New Route
Transport
Cost
CV
Rotterdam- 1151 Rotterdam- 1125
4,084
Baghdad $/teu Baghdad $/teu
BC
dwt Baghdad $/ton
–
Baghdad
34
$/ton
65-73,000 Rotterdam- 38 Rotterdam
GC
17-20,000
dwt
RotterdamBaghdad
49
$/ton
RotterdamBaghdad
40
$/ton
Source: Iraqi Inland Transport Company (2009), Suez Canal Authority and Author.
Taking into account the transport cost calculations in Table 5.2, the shift of transport
direction for cargo imported from and exported to European countries is giving
advantages for the new route being more cost effective compared with the Suez
Canal route. The same applies for the trade between Syria, Jordan and Turkey with
Asian countries using the suggested corridor. The analysis of the redirection of
existing international transport flows toward more convenient routes might be
y.
. For cargo transported from Rotterdam to Baghdad via Syria
beneficial for global trade and transport econom
Transport costs are calculated for the two routes as follows:
1. For cargo transported from Rotterdam to Baghdad via Suez Canal
Transport cost= (days at sea*daily cost+ SC dues+ Land Transport1
)/ no. of
units
2
Transport cost= (days at sea* daily cost+ Land Transport) / no. of units

1
From new suggested port to the City of Baghdad.
57
The port dues in both ports (port of Tartous and port of Basrah) are not including
total cost determinations and the same tariff is considered to be applied due to
unavailability of data from Syrian ports. Obviously, redirecting the cargo flows in the
Middle East region might create a new market due to the competitiveness of the new
ute with the currently used one. Table 5.2 shows that the transport cost per unit for
he City of
Baghdad is less when using Syrian ports and land transport network compared with
proceeding to the port of Basrah. Of c
Syria can represent a bottleneck for smooth flows between the two countries, which
should be facilitated by suffi tion n th for go
transport would also be about four days shorter compared with the existing route if
the port perform o rations efficiently. Meanwhile, it has to be
rema sport network can redirect the carriage of
goods for the re tri ve the ntial f growt
boundaries of
cilities are situated at river or river estuary locations and according to JBIC
rths for
general cargo, container handling, grain and other bulk cargoes, with a designed
ro
moving one TEU from the port of Rotterdam to the final destination in t
ourse, crossing the border between Iraq and
cient coopera betwee em. The time the car
ed the carg handling ope
rked that an efficient integrated tran
gional coun es, which ha pote or economic h.
5.2 Current situation of Iraqi ports and approaches
The topography of Iraq can be divided into three major areas, namely the Highland
Area of the northern region (about 20%), the Alluvial Plain Area created by the
Tigris and Euphrates rivers in the central region (30%), and the Desert Plateau Area
of the western region (40%). About 70% of the whole area is characterized as a
tropical desert type climate with annual precipitation of 50-200mm, whilst the
northern area is categorized as Mediterranean climate, which would have annual
precipitation of 400-1000mm.
Iraq has a short coastline of about 48 km lying between the national
Iran and Kuwait, with all its ports situated within the Al Basrah province. Almost all
port fa
(2006) can be territorially divided into four major areas:
1. The Um Qasr Area is Iraq’s biggest sea port facility consisting of 22 be
58
water depth of 12.5 m. The port is located on the Khor Abdullah Channel at a
distance of 56 nm from its entrance.
2. The Khor Al Zubair Area is situated 20 km north of the port of Um Qasr; the
Khor Al Zubair Port facility was constructed as a Free Economic Zone (FEZ)
and industrial port with 12 berths of 12.5 m designed depth. The port was
constructed between the years of 1975 and 1980 and is designed to handle
general cargo and specialized bulk materials, such as fertilizer, phosphate,
petrochemicals and export scrap iron together with iron ore imports.
3. The Al Faw Area is on the western bank of the lower Shatt Al مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arab Channel.
Port facilities in this area consist mainly of oil unloading jetties and are utilized
to refuel the Iraqi fishing fleet.
4. The Al Maqal (Basrah) and Abu Flus Area is located on the western bank of the
upper Shatt Al مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arab Channel. The port of Abu Flus contains 3 berths with
maximum draft of 5.2 m at the river bar handling traditional general cargo and
RORO, whilst Al Maqal Port contains 14 berths but its traffic is very limited
because the access to the port is cut off by a pontoon bridge down river.
Figure 5.1 Locations of Major Ports in Iraq
Source: JBIC, 2006
59
In a
and e Gulf for exporting crude oil as shown in
Wit
Ara
The
whi handle the
Qas
orig of an urgent dredging project by the UNDP in
leve
the
bas
sec
In the past, the operational efficiencies of Um Qasr and Khor Al Zubair ports fell
well below their potential capabilities because the channel and berth depths were too
shallow to accommodate large, deep draught vessels. Moreover, the difficulties of
channel accessibility because the wrecks of ships sunk during the previous
successive wars impeded ships’ safe navigation when entering the ports. In addition,
the lack of cargo handling equipment caused by the embargo resulted in a decrease in
the efficiency of the ports. As a result, major cargoes required for the northern part of
Iraq and the capital region of Baghdad have to be imported through Aqaba Port in
Jordan and large vessel shipments for the southern part of Iraq via neighboring
Kuwait. Transport distances for imported goods are, consequently, longer and with
ce of trucks at the borders. The high
transport costs resulting from importing goods through neighboring countries are
then passed on to the Iraqi inhabitants in higher prices for imported commodities.
ddition to the ports described above, there are also two oil terminals (Al Basrah
Al Amaya) located in the north of th
Figure 5.1.
h the exception of the port of Abu Flus, the capabilities of ports in the Shatt Al
b Channel were seriously hindered following the Iran-Iraq War of 1980 to 1988.
majority of trade was transferred to the ports of Um Qasr and Khor Al Zubair
ch remained relatively undamaged during that conflict. In order to
large volume of essential goods needed for the Iraqi reconstruction, these ports (Um
r and Khor Al Zubair) have recently been rehabilitated to be restored to their
inal capacity. Since completion
2003, 50,000 dwt size vessels have been able to enter Um Qasr Port at the high tide
l and the function of the port has been recovered to a limited extent. However,
required water depth was not achieved for the whole area of the channel and port
in, and consequently, the utilization of cargo handling is only 50% of the port
tor’s former capability (JBIC, 2006).
delays for inspection and customs clearan
60
In response to the urgent need for transport system improvement, it has been decided
by the Iraqi Government that extraordinary efforts must be made for the purpose of
developing the transport sector. This was illustrated by examining possible ways for
eveloping port approaches, ports and inland transport connections. The Government
ractical steps which were demonstrated by
creased traffic and income. Nevertheless, the ports and transport system still need
ire
deeper water. Shipping companies and ship masters are concerned about the safety
d
has realized that the transport sector needs significant resources and policy changes
in order to cope with regionally and internationally evolving standards to enable Iraq
to leapfrog over rivals in this sector by adopting the latest technology and a desirable
business environment through adopting a proper policy and regulatory framework
(IMOP, 2008). Consequently, the capital and maintenance dredging activities
continue ongoing in order to deepen the berths and channels to enhance the ability of
accommodating bigger vessels taking advantages of economies of scale. Moreover,
most of the wrecks have been removed, particularly from the Um Qasr and Khor Al
Zubair channel, which were functioning as obstacles for navigation (GCPI, 2010).
It is worth mentioning that tangible results have been noted for the capacity building
of the transport system due to these p
in
to be developed in an appropriate and effective manner in order to confirm their
technical, economical, and environmental soundness. An identification of bottlenecks
impairing the transport functions would result in restoring the ability to attract cargo.
Therefore, this dissertation attempts to identify and analyze the bottlenecks in order
to have a clear idea about the need for improving the existing transport system or
investing in the new route.
5.3 Identification of Bottleneck for Iraqi Transport System
5.3.1 Port Accessibility and Safe Navigation
Keeping approaches and berths in appropriate depth is necessary to improve the
ability of ports to receive several sizes of ships due to the tendency of building
bigger ships, especially oil tankers, container ships and bulk carriers, which requ
61
of their ships and environmental damage because of groundings in shallow water,
which will have an impact upon the hull in addition to engine problems and the
environment.
If ship owners expect that problems would occur to their vessels while carrying
cargo proceeding to ports, they will certainly change the destinations to protect ships
from any danger. As a normal result, a port would lose its clients, who will attempt
to find other ports that offer good facilities. However, for monopolistic services,
shipping companies are obliged to use smaller ships with shallower drafts to avoid
grounding in port approaches, but they will lose the benefits of economies of scale as
shown in Table 5.3. This would lead to high freight rates and expensive transport
services paid by the consumers. However, the port dues depend on ships’ gross
tonnage (GT) so that the port income will decrease and suffer from economic failure.
For example, a bulk carrier with an 11m draft can carry about 57,000 tons of grain.
Reducing draft to 10m, the cargo will be reduced to 48,000 tons, which results in
loss of 9,000tons of cargo of the ship’s carrying capacity.
Table 5.3 Maximum and Average ship sizes called Port of Um Qasr in 2004 and
2005
Source: JBIC, 2006
In general, the Iraqi waterways and port approaches are in urgent need of capital and
maintenance dredging because of extensive sedimentation. The main commercial
port constitutes an important infrastructure link for the economic revival of Iraq, and
the sedimentation problem is creating a serious obstruction to efficient and cost
62
effective port operations. It has been estimated that it will require capital dredging in
the order of 24million.m3
and a yearly maintenance dredging of around 11million.m3
to re-establish the design depths for all of the Iraqi major ports (Hassan, Abild &
n to land washing before
ultivating it; then the drain water returns back into the rivers with sediments
period as mentioned before. This periodic problem of deterioration of the
channel and port depths is considered to be a big challenge for the performance and
efficiency of the ports. Therefore, the need for a deep-sea port urged the decision
makers to meditate seriously how to overcome such challenges.
Previously, the poor condition of navigation aids, the presence of wrecks and
siltation of the channel presented major hazards to shipping and limited the
operational capabilities of the ports due to the restricted sizes of vessels that are able
s. Moreover, such conditions of unsafe navigation discouraged the
Jorgensen, 2006).
As a result of the natural shaping of the seabed in the north of the مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf,
which is like a soft mud in addition to dust that comes from the desert, and because
of the high speed currents (4-5knots), the sediments will be solicited and carried by
these currents during the high tide period toward ports. When the water loaded with
sediments reaches the port area, the currents start to slow down in the slack water
period; consequently, the heavy molecules of sediments will fall down on the river
bed and thus day by day the river depth decreases. The second reason is due to the
connection between the Tigris and Afloat rivers, which spring from Turkey and
Syria respectively. They run across from the north of Iraq down to the north of the
مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf. They irrigate the arable lands in additio
c
proceeding to port approaches and falling down in the port area during the slack
water
to access Iraqi port
carriers from calling these ports and encouraged them to change the destination to
neighboring ports. Today, the situation is improving due to the efforts of the Iraqi
Government by investing in different projects. Many wrecks have been removed
from the channel and port areas as well as the rehabilitation of tender vessel for
63
maintaining the channels and providing proper navigational aids. However, the long
distance of ports approaches requires continuous dredging and channel maintenance,
which needs large amounts of money. In this respect, the need for making the
channel shorter is also significant by constructing a deep-sea port in the north of the
rabian Gulf, which would be more accessible.
dways are generally
onnected with international highways crossing the borders with Kuwait, Jordan,
A

5.3.2 Land Transport Network System
The transport network system used at major ports comprises both rail and road for
cargo moved by ships. In general, rails are serving as passenger carriers and freight
services in most countries. A single-track main line link operated by the Iraqi
Republic Railways (IRR) is located within the transport corridor connecting the port
of Um Qasr with Al Basrah and other northern cities (IRR, 2009). The Iraqi railway
system is connected with other neighboring countries such as Syria and Turkey for
transporting goods. The rail network does not function effectively at present due to
serious deterioration and damage to the tracks and rolling stock. However, many
attempts have been carried out by relevant authorities to enhance the network system
in order to get over the incompetence embarrassment and to cope with the increasing
demand for proper transport services.
The major ports are connected with the northwest of Al Basrah city and other
population centers all over the country by road links. The roa
c
Syria and Turkey. These roads are used to transport all types of cargo, utilizing
various types of privately operated trucks. During the recent reconnaissance surveys
made by the JBIC (2006), it was reported that most of the road network linking the
ports with the main network needs overlay and also a new layer due to the pavement
layer being missing in the original design. The condition of the pavement layer of
these roads is partially damaged, with many cracks evident on the road surface due to
repetitive use and overloading. A road maintenance programme to repair the cracks
followed by overlay is taking place, but it would be insufficient to handle the
64
forecasted traffic increase, which means that new roads have to be constructed. As a
result of the uncertainty of availability of trucks for several reasons, the transport of
goods by trucks from major ports to all cities threatens the port productivity because
of the practice of direct delivery operations of goods. The commodities are mostly
food imported by the Ministry of Commerce to be distributed to all provinces
g to a plan set by this Ministry. The plan compels trucking companies to
ich is probably unsafe due to the security
s
e
As the city of Basrah expanded in the 1960s, the need for building a new port to
accordin
move the goods to a specific province, wh
ituation. As a counteraction, the trucking companies refuse to carry these cargoes,
which would remain onboard ships or in port sheds. This situation is probably not
permanent because it depends upon the improvement of the current conditions,
which is hoped to be changed.
In parallel to the need for access channel and berth rehabilitation and increasing their
capacity, the hinterland transport network would become a bottleneck unless the
development of this sector is progressed and paid sufficient attention to decision
makers in the country.
5.3.3 Ports Capacity and Performanc
accommodate larger ships with deep draught urged the decision makers to introduce
new ports. Um Qasr Port was chosen to be the future commercial port in Iraq with a
maximum capacity of 13.6 million tons per year (GCPI, 2010). The major Iraqi ports
(Um Qasr and Khor Al Zubair) are chosen to be assessed in order to present the
current capacity and performance level.
The majority of quayside cranes in the port of Um Qasr are over 20 years old and
many, particularly at the south berths are not functioning properly. The total number
of cranes is 55 distributed as 38 rail mounted cranes at the north berths and 17 cranes
at the south berths. In general, the cranes are of the level luffing portal jib crane
design with capacities of 3 tons to 15 tons, although there are also 2 gantry cranes of
65
40 tons capacity for handling containers at berth 20 and 2 older gantry cranes at berth
5. The two gantry cranes at berth 20 are relatively new, supplied by ZPMC in 2001
and working efficiently, but there are break downs due to lack of spare parts. The
port is also equipped with two Liebher 100 ton mobile container cranes, which have
been installed and are now operational. The have almost doubled the port’s ship-toshore container capability (JBIC, 2006).
There are 10 reach stackers operable with insufficient efficiency because four of
them are more than 9 years old, the lack of original spare parts and the tropical
weather, which affects the function of the engines as well as other types of
equipment. Moreover, there is an insufficient number of trailers and container
rminal tractors to facilitate the transport of containers within the port. Similarly, the
two lever lifting cranes. The port does not have a specialized
ontainer terminal nor container handling equipment.
0 ton/hour. Nonetheless, the ports located
long the Shat Al مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arab are facing the challenge of shallow water in the river
te
cargo handling equipment in Khor Al Zubair Port can be described as quayside
cranes which are over 25 years old and a number of them are non functional. The
port has 17 rail mounted cranes with capacities of 5, 8 and 15 tons which are not
working efficiently and
c
As mentioned earlier, the port is designed for industrial purposes. Consequently, the
port has specialized bulk handling machines and equipment installed but none of
them are currently working. There are 4 ship loaders for export of urea (fertilizer)
with a capacity of 1500 ton/hour, 2 ship unloading and one for the raw iron, one
stacker in raw iron stockyard of 300 ton/hour capacity and one stacker of 600
ton/hour capacity with reclaimer of 150
a
entrance, which limits the size of vessels that can call the ports. Thus, the ports have
limited capacity and are used for importing goods and vegetables by RORO ships,
container ships and small wooden dhows, which have shallower draughts.
66
In general, Iraq is suffering from the lack of electrical power supplies due to the
absence of electricity sector development during the last three decades and also
because of the increased demand for electricity due to population growth and
economy. Consequently, the ports are also experiencing difficulties in availability of
electricity provided by the national network. To enable the ports to operate, diesel
generators are needed because they depend on diesel generators, which are intended
r emergency use only. To such an extent, these emergency generators are
cilities to deal with vessels
isposals, such as garbage, sewage and oily bilge water as a requirement of the
during the
st three wars that Iraq has faced since 1980, which has had an impact on port
performance and capacity. These reasons have become a challenge for the
fo
insufficient to operate all port equipment such as gantry cranes, and also it is more
expensive compared with the main electricity due to the use of expensive fuel.
Considering other port facilities, in previous years, the fresh water to the port stations
was supplied through pipelines from the Al Maqal pumping station in the city of
Basrah, but this source is no longer available. Piped water, which is brackish and
unsuitable for drinking or washing, is supplied from local wells but even these run
dry after two hours of pumping. Fresh water is currently delivered to the ports and
visiting ships by tankers for the consumption of port workers as well as ships.
Currently, there are no developed port reception fa
d
implementation of the IMO regulations such as MARPOL73/78.
The port performance and operational capability have to be analyzed in order to
understand the current level of operation, identifying the bottlenecks in the ports as
well as the potential areas for development. In general, Iraqi ports are considered
feeder ports receiving cargo mainly from Dubai ports for private shippers. Goods
imported by ministries like the Ministry of Commerce are moved directly from
production centers to Iraqi ports. The ports can be identified as second generation
according to the UNCTAD classification of ports, which are used for cargo handling
and storage operations. Moreover, the ports have suffered from neglect
la
67
development of port productivity to be able to handle increasing traffic caused by the
rebuilding of the country and increased demand for goods.
Considering the facts of the service time of cargo handling, the ports performance
indicates more than two days for loading and unloading a container vessel of 600
TEUs. Hence, the ship turnover time would be more than adequate and affordable for
shipping lines, which are usually concerned about the time consumed in ports.
Further, a bulk carrier of 50,000 dwt might spend at least seven days for unloading
the grain. Such low productivity resulted from the unavailability of sufficient cargo
handling equipment in addition to the absence of modern operational techniques.
lthough it has been noted that some of the old pieces of equipment are workable,
e for data exchange
mong departments of the ports and with other authorities such as customs, and this
A
they are in need of major maintenance or replacement. Even the equipment that is
currently working may have a limited life due to inadequate maintenance resulting
from unavailability of spares, particularly for the older equipment. Therefore, the
ports have not reached the designed capacity, which gives a greater opportunity for
enhancement of current port productivity in terms of increasing the cargo handling
capacity and accommodating more calling vessels.
Obviously, time is an influential factor for port selection by shippers and carriers as
discussed earlier. The ports are mostly using bureaucratic routin
a
routine is considered as one of the ports’ bottlenecks. The application of electronic
data interchange (EDI) in the transport network would assist the improvement of
cargo flows and satisfy the customers to some extent by eliminating red-tape
processes, which take plenty of time. In addition, the use of such new technology
reduces labor costs, which would lead to reducing the total transport cost.
5.3.4 The current security situation
It is understood that the most significant problem affecting the country’s trade and
the transport system to operate in a commercially viable manner is the lack of
security due to the presence of terrorism, compounded by the foreign intervention on
68
the decision making in Iraq. As mentioned before, this resulted in high freight rates
for transporting goods to Iraq, which contributed to high prices of commodities to be
important sector to develop the
ansport system. This dissertation assumed that the current security situation would
rocedures
ave been implemented as anti-corruption tools to secure the government system,
d is time consuming. By trade facilitation, the
paid by the citizens. Such situation has a notable impact on the transport system,
particularly in ports and on borders. For example, in the ports all containers have to
be inspected to ensure that there are no explosive materials that can be used for
bombs and to prevent illegal smuggling. Even though this procedure is considered
rational for a country suffering from such conditions, the delay of cargo transiting the
port would lead to accumulating cargoes in the port’s yard, which reduces the
possibility of utilization of the ports.
It is worth mentioning that there are great efforts and practical steps being made by
GCPI to apply the requirements of the International Ship and Port Security Code
(ISPS code) commencing from 2006. Donations have been made by several countries
to establish an advanced security operations center and train the security officers in
World Maritime University and Japan. The magnitude of the challenge facing the
country led to the extraordinary support for this
tr
improve in the near future.
5.3.5 Red Tape Procedure and Corruption
According to Global Integrity Commons (2008), Iraq is one of the countries that is
suffering serious challenges of corruption in most of its organizations and ministries.
This is affecting the performance of all sectors including the transport network as a
bottleneck for public interest. Hence, many investors are scared away from investing
in different fields as mentioned earlier. As a result, complicated red tape p
h
which has led to more obstructions an
transport sector will be improved through introducing advanced EDI systems for
operations control, automated payment and electronic documents taking the expertise
of developed countries. Further, replacing the bureaucratic procedure by a
69
computerized system contributes to providing a market oriented system and creates a
high level of customer satisfaction and also by using a single window experience for
trade (Hoffmann, 2010). Therefore, extraordinary effort has to be stretched in order
to introduce preventive anti-corruption procedures to assist the smooth flow of
goods.
5.4 Increasing Demand for Transport
Essentially, oil is a major contributing factor to Iraq’s GDP, influencing the economic
growth and the country’s development. It is reported that crude oil exports had
chieved 3.5 million barrels per day in 1979, which was the highest level ever
, the country’s economy would affirm a quantum leap
ading to over press the transport system in order to move all the country’s
an needs when the personal income
a
reached (Kumins, 2006). Currently, the country is exporting about 1.82 million
barrels a day due to the destruction of oil fields resulting from successive wars and
the long embargo (IOM, 2010). Therefore, this sector has suffered from lack of
advanced technology and investments.
The Iraqi Government has contracted big companies like BP, Shell, Chevron and
Total to increase the capacity of production to 4.5 million barrels per day within the
next 5 years. Consequently
le
rebuilding materials, household and other hum
would increase. Moreover, the equipment and machinery that will be needed for
developing the oil fields under the mentioned contracts increase the demand for
sophisticated transport systems that could provide reliable services.
Most of the fields that are contracted to help boost the output of crude oil are located
in the southern part of the country nearby the port areas, which would definitely
increase the traffic and cargo transiting through the Iraqi ports. Further, the oil export
operations would mainly be taking place through the oil terminals in the Gulf
focusing on evolvement of pipeline systems. The demand for carriage of goods by
more than one mode of transport may lead to introducing the MT system in Iraq.
70
Without a proper national port system, future expansion of the commercial relations
will be restrained by the existing port capacity or will be using facilities in other
countries. However, transshipment via other ports is not a suitable measure since it
can only increase delivery time and costs (C.I.I.T.I, 2008).
Table 5.4 Iraq’s GDP Growth Estimates
il GDP GDP Oil GDP Non-oil
116,223 7.3 2.2 11.0
127,845 6.6 1.6 10.0
2018 219,794 80,443 139,351 5.9 1.0 9.0
2019 231,956 80,900 151,057 5.5 0.6 8.4
Year US$ 2006) (Million US$
2006)
(Million US$
2006)
growth
(%) growth (%) growth
(%)
2007 65,270 40,913 24,358 26.5 22.0 35.0
2008 79,898 47,868 32,031 22.4 17.0 31.5
2009 95,090 54,090 40,999 19.0 13.0 28.0
2010 110,543 59,499 51,044 16.3 10.0 24.5
2011 126,023 64,259 61,763 14.0 8.0 21.0
2012 140,687 68,115 72,572 11.6 6.0 17.5
2013 154,252 71,521 82,732 9.6 5.0 14.0
2014 167,898 74,411 93,487 8.8 4.0 13.0
2015 181,365 76,659 104,705 8.0 3.0 12.0
2016 194,593 78,371
2017 207,459 79,614
Oil GDP Non-o GDP (Million
2020 243,861 81,022 162,839 5.1 0.2 7.8
Source: C.I.I.T.I (2006).
Table 5.4 presents the GDP growth estimation for Iraq by explaining the division of
crude oil and non oil activities contribution. The relationship between transport flows
and economic aggregates supported by GDP growth can contribute to mutual
benefits due to the high correlation of generating an attraction for transport clients.
Further, the relationship between transport flows and socio-economic variables
create attraction for passengers and freights. In most situations, the local passenger
transport is contingent on the national income per capita and the technological
development in the economy along with institutional structure and stability.
The international movement of passengers very likely depends upon the business
areas for investors and attractive locations for tourism. Table 5.5 shows the
forecasted growth of domestic transport among Iraqi cities. This estimation of
71
passengers flows are based on the normal conditions of the country, which can be
debatable due to uncertainty of the stability of the country.
Table 5.5 Estimated Total Passenger Flows at Governorate level (Number of
assengers per day)

1,616,380 2,203,447 2,806,693 3,424,763 4,063,676 4,730,481 5,011,992
p
Gvt 2007 2013 2018 2023 2028 2033 2038 2040
Duhok 22,583 35,427 48,295 61,517 75,063 89,067 103,682 109,852
Ninewa 116,761 183,173 249,701 318,062 388,104 460,507 536,071 567,973
Sulaimaniya 39,995 62,744 85,532 108,948 132,940 157,741 183,625 194,552
Ta’meen 50,031 78,487 106,994 136,286 166,298 197,322 229,700 243,369
Arbil 39,342 61,719 84,135 107,169 130,769 155,165 180,626 191,375
Diala 49,529 77,699 105,920 134,918 164,628 195,341 227,394 240,926
Anbar 53,091 83,289 113,539 144,623 176,471 209,393 243,752 258,258
Baghdad 260,022 407,917 556,072 708,309 864,288 1,025,527 1,193,805 1,264,849
Babil 42,974 67,417 91,903 117,063 142,842 169,490 197,302 209,043
Karbala 34,086 53,474 72,896 92,852 113,300 134,437 156,496 165,809
Wasit 43,590 68,384 93,220 118,742 144,890 171,920 200,131 212,041
Salah Al Dieen 52,912 83,007 113,155 144,134 175,874 208,684 242,927 257,384
Najaf 37,519 58,858 80,236 102,202 124,708 147,974 172,254 182,505
Qadisiya 37,846 59,373 80,937 103,095 125,798 149,266 173,759 184,100
Muthanna 27,409 42,999 58,615 74,663 91,105 108,101 125,839 133,328
Dhi Qar 41,445 65,018 88,633 112,898 137,760 163,460 190,281 201,605
Maysan 30,713 48,183 65,683 83,665 102,089 121,134 141,011 149,403
Basrah 50,494 79,213 107,984 137,547 167,836 199,147 231,825 245,621
Total attraction 1,030,342
Yearly average
growth rates 7.79 6.39 4.96 4.06 3.48 3.09 1.16
Source: C.I.I.T.I (2006).
Iraq’s cultural endowment and cultural heritage can have a considerable impact on
the cultural tourism that may attract tourists to explore the historical inheritance
stretching back thousands of years. On the other hand, the presence of many holy
places may attract the religious tourism as distinctive poles of attraction. The
potential of passenger transport growth is shown in Table 5.6.
The World Tourism Organization WTO (2003) forecasted that the inbound rate of
might reach 3.25 million of passengers traveling from Iraq per year in 2015.
passenger growth for the period 1995-2020 would be 7.1% per annum and for the
period of 2010-2020, the annual growth estimated was 6.7% per year. The outbound
passenger transport forecasted to be 50% of the inbound rate of transport, which
72
Regardless of the accuracy of the percentage of the inbound and outbound rate of
growth as well as the domestic transport rate, the current transport system is
sufficient to be costumer focused services to mobilize the increasing demand for
Table 5.6 Distribution of forecasted inbound passenger flows in 2015
Total Religious Tourism Business
in
passenger transport.
Macro
Area
No. % No. % No. % No. %
Middle
East &
North
Africa
929,340 14.3 47,938 5.0 454,017 15.9 426,485 15.9
Europe 2,134,610 32.8 – 0.0 1,101,734 38.5 1,032,876 38.5
Rest of
Africa
34,980 0.5 – 0.0 18,054 0.6 16,926 0.6
America 564,202 8.7 – 0.0 291,201 10.2 273,001 10.2
Iran 1,027,657 15.8 910,813 95.0 60,307 2.1 56,538 2.1
Asia &
Pacific
1,809,211 27.8 – 0.0 933,786 32.6 875,424 32.6
Total 6,500,000 100.0 958,750 100 2,860,000 100 2,681,250 100
Source: C.I.I.T.I (2006).
Obviously, the outcome of the improvement of the country’s economy would affect
oods and crude oil within 30 years.
the freight transport sector. Such development increases the import and export of
goods due to the recovery of financial ability of the citizens, increasing the
purchasing power of consumer goods. Therefore, it is expected that the export of
goods and crude oil would intensify in the forthcoming years if the security situation
improves as shown in Table 5.7, which shows the estimated growth for export of
g
73
Table 5.7 Estimated Growth of cargo export from Iraq to different regions (ton/year)
Year Middle
East, Iran,
Libya an
Rest of
Africa
Europe Rest of
Asia
America Total
d
Egypt
2004 1,470,375 550,052 2,872,862 4,549,253 6,376,692 15,819,234
2010 835,556 675,035 3,248,989 4,966,307 7,024,750 16,750,636
20 8,627 32,883 5,91 ,022,482 41 15 63 8 3,886,109 7,840 8 19,297,9
2020 474,243 969,712 4,465,431 6,773,772 8,930,113 21,613,270
2025 545,38 1,116,815 5,222,140 7,801,204 31,58 ,717 1 10,0 3 24 ,123
2 7,559 1,301,521 6,222,775 9,075,384 11,771,219 29,008,458 030 63
20 8,501 1,503,060 7,331,456 10,467,787 13,674,428 33,715,231 35 73
Source: .T.I
The forecast of imports and exports shown in tables 5.7 and 5.8 was very optimistic,
which can be inferred from the performance of the total volume of cargo imported
and exported to Iraq during the last five y w s a r
Moreover, the downturn of markets gen due glo inancial crisis was
unexpected and not taken into consideration when anticipating the import and export
vo on prop infra ctu T tie e
trans sys u d of t th hey lize
cou c e e.
Des nc u v t at ie
her natural resources, the security instability has scared away
C.I.I (2006).
ears, hich show only slight inc ease.
in eral to the bal f
lume. The introducti of a er stru re and M facili s into th Iraqi
port tem is an rgent emand in view the fac at t symbo the
ntry’s ba kbone in th futur
pite co erns over contin ed invol emen of foreign priv e compan s in
developing oil and ot
most foreign investors from participating in developing the country and bringing in
new technology for other sectors such as transport. The oil fields are mostly far away
from the cities in the desert, and there is not much interaction between inhabitants
and investors, which are secure from danger. Further, the oil market is considered as
beneficent for investors due to the high and consistent demand for oil generating
more profit.
74
Table 5.8 Estimated growth of cargo import to Iraq from different regions (ton/year)
Y le
t
ear Midd
East, Iran,
Libya and
Egyp
Rest of
Africa
Europe Rest of
Asia
America Total
2004 9,008 1,184 3,032 2,403 496 16,123
2010 322 1,633m 441,133 692,897 690,924 164,530 3,622,806
2015 2,813,189 4 1,012,26 1,368,092 1,481,690 340,103 7,015,339
2020 4,721,169 5 2,079,88 2,570,132 2,928,184 637,103 12,936,473
2025 7,604,300 3,467,258 4,228,388 4,890,323 967,041 21,166,310
2030 ,717 11,294 5,321,692 6,417,125 7,516,918 1,383,805 31,934,257
2035 ,388 15,614 7,595,765 9,067,924 10,742,043 1,831,793 44,851,863
Source: C.I.I.T.I (2006).
The transport sector is a service based activity directly connected to the daily life of
its costumers. Therefore, the investors ought to be engaged in developing the
transport sector implementing the advanced technology for operating an efficient
transport system by direct control. The biggest foreign investors in the transport
sector are aware of this fact of uncertain and unsecured business, which has impeded
them from being highly involved. The continued process of normalizing the county
may provide extensive means of persuasion to investors in order to promote their
participation in the development process and introducing new efficient MT systems
the country and probably expanded to cover the entire region.
ition, the preoccupation about the county’s security and the stability of
e current situation take precedence for the decision makers over all sectors, which
in
Similarly, the growth of the economy in the country would lead to increasing the
GDP. Consequently, the GDP growth per capita will increase leading to raising the
demand for importing more cargo. Therefore, the expected growth for trade is
interrelated with import growth as shown in Table 5.8.
Again, it can be said that the estimate was very optimistic for the reasons mentioned
before. In add
th
75
has led to delayed development of the infrastructure of the country, and this in turn
affected the on ity i in
imported ca
The location of Iraq in a highly populated region might play a notable role in
cs and globa . The bor co ht attr lobal pr to
ish reg c dis cen anufactured goods, which
bly w la ap ed nufactured goods in the
y of o o r lv l t an
und re d vi e T , li
ope, to f al f d
provisi
rgo.
of additional capac to accommodate the ncrease
logisti trade lization low la st mig act g oducers
establ ional produ tion and tribution ters for m
proba ould be re tively che er compar with ma
countr rigin due t the transpo t cost invo ement, low abor cos d low cost
of gro nt. Such in ustrial acti ties requir a reliable M network ke the one
in Eur serve the movement o raw materi s as well as inished pro uction.
76
Chapter 6
Conclusions and Recommendations
6.1 Conclusions
ic.
oreover, the connectivity between different modes and nodes of transport
supplement the backbone for a number of developed countries like the US, the EU
countries and Japan. The removal of constraints for the evolvement of transport
systems enabled these countries to best utilize the available resources and implement
the latest transport technology. Consider
more desirable compared with air, rail and road transport, but the efficiency and
reliability of other modes of transport for the mentioned countries have given
competitive advantages to be prosperous in different regions.
The multimodal transport concept has e the setting up of door-to-door
transport of goods by combining different means of transport. This dissertation has
been analyzing the combination of sea transport with rail and road transport as an
alternative multimodal transport system f r the Suez Canal route. Several criteria
have been used to assess the competitiveness of such multimodal transport system
since it is possible to be a rival for maritime transport. Regarding the distance
comparison, the new route has the advantage of being shorter than the Suez Canal
route in the case of European trade with Asian countries and مساعدة التعيين – خدمة كتابة المقالات من قبل كبار الكتاب العرب, Arabian Gulf countries.
However, the time of transporting goods would be longer due to the cargo handling
operations in two ports for loading and unloading. Further, crossing the borders may
reate delays due to documentation processes and customs clearance. The savings in
This dissertation attempted to analyze the possibility of introducing a new corridor in
order to adduce more options for the competitive shipping market. Basically, it has to
take into account several factors other than the transport bottlenecks that have a
significant impact on trade direction. The transport cost, time of transport, the
reliability of the mode of transport and the service level are the most decisive factors
influencing the selection of routes by carriers and shippers. However, the market
concentration and the demand for transport also contribute to attracting more traff
M
ing transport costs only, sea transport is
becom
o
c
77
distance is not significant compared sport costs because the distance of
the new route represen st the cost is 179% for
transporting one TEU from Shanghai to Rotterdam.
sent Iraqi and Syrian
ansport systems would be a relevant bottleneck for cargo transshipment for
with the tran
ts 96.5% of the Suez Canal route, whil
Due to the economic crisis, most shipping lines are applying slow steaming to
minimize the operating costs by reducing the fuel consumption and deploying more
vessels since the demand was decreased. Therefore, the time factor for cargo delivery
might be flexible in a number of cases and for some types of commodities. Thus, the
cost of transport is the most influential factor for the competitiveness between the
two routes. The determination of transport cost per unit proved that the existing route
is the most desirable one in terms of cost effectiveness and time saving. The high
cost of the proposed integrated transport system resulting from the current
incompetence and old transport network caused a higher set of prices.
Sea transport is getting benefits from the size of vessels, which has a direct impact on
transport cost per unit due to the economies of scale. Hence, the suggested corridor
does not have the ability to be the exclusive alternative for cargo transit unless a
reliable multimodal transport system is developed in order to be cost effective like
the MT systems in developed countries. Actually, the pre
tr
hinterland connections. Because of the higher transport costs, the new multimodal
transport is deemed to be unqualified to compete with full maritime routes
circumnavigating Africa or using the Suez Canal. Considering a unique base
condition can be misleading because of the particular situation. The transport system
can be renewed or reconstructed since the budgetary allocation is available to invest
in such a modern network. The regional countries should make strong modifications
of the transport system. However, with high transport cost and low costumer service
level it is hard to convince the carriers and shippers to use the suggested route.
78
The existing route has a limitation for the number of vessels that can transit through
the Suez Canal as convoys. This may be used as an opportunity for developing a
regional transport system between Iraq and Syria from one side and Iraq with Turkey
n the other side if the traffic is increasing and market starts booming again. The
as temporary
onditions, which make the comparison difficult in terms of security for both routes.
ment.
urther, applying strict rules and regulations can assist in reducing GHG emissions
from ships, but it can affect the competition level between the two routes. Another
o
market share of the new route can be increased by sufficient regional cooperation and
investing huge amounts of money to rebuild the connected transport network and
reducing bureaucratic routine. Pirate attacks on ships transiting the Suez Canal are
another challenge to the traffic, which is an opportunity for the new corridor to
increase its market share.
Obviously, the current situation in Iraq is also threatened by terrorism attacks, which
have led to instability of the region’s security, but it can be said that the situation will
probably improve. Likewise, the pirate attacks can be considered
c
Nevertheless, the Suez Canal has been closed twice for security and political reasons,
which enraged the shipping companies since they had to cover longer distances.
However, Iraq has suffered three wars within 30 years, which affected the entire
transport system, particularly the sea transport and port approaches. Again the
security situation for both options is unpredictable and can be aggravated anytime
due to piracy and political instability of the region. Relatively, the existing route is
more desirable despite the high insurance and the ransoms to be paid for pirates as
well as the danger to the lives of seafarers.
An assessment of the environmental impact and gas emissions has been carried out in
this dissertation by calculating the CO2 emission from ships, rails and trucks. The
outcome of these calculations demonstrated the preference of using the existing route
in terms of CO2 emissions, but the new route has a potential to perform greener
transport services through modernizing rails, trucks and cargo handling equip
F
79
technique would be possible to protect the environment by using a green pricing
system and giving incentives to shipping companies if they make an effort to reduce
GHG emissions. Iraqi ports and Syrian ports can provide ships with purified bunker
to reduce the GHG emissions and also offer port reception facilities in order to be
attractive for shipping lines by reducing their costs and being environmentally
friendly.
The competitiveness credibility of the new routes can be given to crude oil transport
by pipelines from the Gulf countries to Europe and the US. This dissertation has
und that exporting crude oil through a dedicated oil terminal in the Mediterranean
ity of ports, which created bottlenecks for
ooth flows of cargo. As a matter of fact, this dissertation has highlighted, among
fo
can potentially interest oil exporters in the region. The time saving, cost effectiveness
and environmental friendliness of a new transport system via Syria would solve
piracy problems for oil tankers and reduce the total transport cost.
At present, the growth of Iraq’s GDP and economy due to the contribution of a
gradual increase of crude oil exports caused the urgent need to improve all areas
related to services. Special attention ought to be given to transport systems to serve
the movement of raw materials needed for such development and to provide
significant logistics as part of the total supply chain. The demand for transport and
ship calls have been increasing in the previous five years and also cargo volumes
have increased. However, the transport network is insufficient to cope with such
increasing demand due to the limited capac
sm
the areas for which a more thorough analysis was needed, both a study of a new
configuration of the multimodal transport system as a consequence of the
introduction of a new deep sea port and for international connections.
The establishment of a new deep-sea port connected with efficient hinterland
connections requires a reorganized multimodal transport system with specific
objectives for better function of the country. A continuous sediment problem
80
affecting the depth of ports and their approaches is requiring a continuous
maintenance dredging in order to sustain appropriate depth for safe ships’ sailing.
The maintenance dredging requires an allocation and disbursement of huge amounts
of money leading to increasing the port tariffs and entire transport cost. The
construction of a new deep- sea port implies rail and road connections with the
domestic network. This network can be linked to regional transport systems in order
gain mutual benefits for all countries participating in the project. European
ment of goods to
urkey, Syria, Lebanon and Jordan from Asian countries is price effective through
l route will be
ffected and the carriers may be convinced to redirect their routes.
to
countries and the American countries are trade partners to Iraq because most of the
crude oil is exported to these countries and a big part of the imported materials and
goods come from them. However, the transport costs make up a considerable part of
the total cost of goods due to lack of efficiency in the transport system. In spite of
that, transporting goods from Europe and the US to Iraq via Syria and Turkey is
cheaper compared with using the Suez Canal route. Similarly, ship
T
the suggested route. The cost comparison illustrated that the new route is more
expensive for international flow of goods than the Suez Canal whereas it is cheaper
for goods transport to remain in the Middle East.
As a result of the critical analysis undertaken by the author, the development of the
regional transport system can be initiated with reasonable capacity to serve the
movement of goods within the region since the economy is growing. Further, the
final destinations for goods imported and exported have not changed for shippers and
carriers. Therefore, the new integrated transport system would improve the service
level to satisfy the clients and reduce the costs, which would attract more traffic.
Once the suggested transport system has illustrated its reliability and cost
effectiveness in the region, the competition level with the Suez Cana
a
Obviously, more choices for shipping lines will eliminate the monopolistic status of
the Suez Canal to have exclusive control on the price of transit through the Canal. In
81
the long term, the competition between the two routes may lead to transport cost
reduction and provide an alternative in case of the Canal closure. The success of the
new route depends on its ability to provide certain services to a high standard with
smooth process of formalities and high efficiency.
6.2 Recommendations
• Since the current transport system has not reached its designed capacity, special
attention should be paid to enhancing the capability of the present network in
order to accommodate increasing traffic as medium term planning. This will
improve the overall system of transport as well as the country’s economy and
social benefits. Without having developed an internal network of transport, the
introduction of a new MT system as an alternative for the existing Suez Canal
route will be impossible.
• The arrangement of regional cooperation is required to be investigated before
investing in this regional multimodal transport system in addition to the
cooperation between governmental authorities involved. A legal framework has
to be agreed upon in order to facilitate cargo transit through different countries.
countries. Further, the risk analysis system at the borders can be applied by
Moreover, decisions need to be taken regarding the investment contributions by
the regional countries. Private sector involvement would lead to improvement of
the commercial outcomes of the new route similar to those existing in the US and
Europe.
• The pricing system for transport by railway and roads needs to be reassessed for
transited cargo and port tariffs can be reduced in order to attract more traffic.
However, there is a need for an agreement between the regional countries about
free customs dues for transited cargo similar to the system that applies in the EU
Customs instead of inspecting all containers and trucks.
82
• A special initiative for oil transport is required by Iraq and Syria to build a
pipeline from the oil fields to the Mediterranean in order to encourage oil tankers
to change their routes. This will contribute towards transport cost reduction and
will be profitable for both countries.
• A practical cost determination and analysis of other transport factors can be
transport infrastructure. Passenger transport may also
be evaluated by similar methodology because of the special feature of
•

performed by the Iraqi and Syrian authorities concerned since there is a railway
connection between the two countries similar to the attempt that was carried out
by TSR between Duisburg in Germany and Moscow. By doing so, the exact
situation will be clearly addressed and real figures of transport cost will be
provided, which is the main concern for carriers and shippers. Likewise, it can be
done for the transport connection with Turkey to evaluate the feasibility of
investing in a multimodal
transporting people, who are mostly concerned about the service level, time and
transport cost.
Due to unavailability of sufficient data related to the transport system and
transport cost in Syria, further research is recommended for estimating the real
transport cost in order to present comprehensive data for the new route users as
well as the decision makers in both countries.

83
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