TODAY: PMI reports are in for UAE, KSA, and Egypt + Lots of diplo updates from the UAE

Good morning, folks. We have the latest PMI readings from the UAE, KSA, and Egypt this morning along with a generous helping of diplomacy updates from the Emirates. But first, crisis averted on the US eastern seaboard…

THE BIG STORY ABROAD- US port strikes suspended until further notice: US dockworkers agreed to end a three-day strike and returned to work on Friday as negotiators reached a tentative agreement until 15 January 2025. The agreement — between The International Longshoremen’s Association and the US Maritime Alliance — would see a possible 62% wage hike over six years, increasing average wages to USD 63 an hour from the previous USD 39 an hour over the life of the contract. “Effective immediately, all current job actions will cease and all work covered by the Master Contract will resume,” union and port operators said in a statement.

Ports are back in business: Vessel activity in the Port of New York and New Jersey resumed on Friday, as well as ports in Georgia’s Savannah and Brunswick. The Port of Virginia said it will take it 24 hours to restore operators and will offer weekend hours for cargo pickup and delivery. Dozens of ships carrying containers and auto could potentially arrive faster than they can be unloaded. As of Friday, over 30 container ships and car carriers were anchored off the coast of Texas, Georgia, South Carolina, Virginia, and New York.

Crisis averted, but impact lingers: Shares in several shipping firms dipped heavily across Europe and Asia on Friday after operators agreed to end the strike sooner than expected, with Maersk’s shares dropping 8.6%, while Hapag-Lloyd eased 14%, Reuters reported on Friday. “Investors who hoped for a short-term rebound in freight charges, which are in a downward trend, are selling as the strike ends,” Yang Ji-hwan told Reuters. Cargo blockage is likely to take over a month to clear, while port terminals will take a while to fully be operational again.

The story grabbed a lot of ink in the int’l press over the weekend: Reuters | AP | Bloomberg | The Wall Street Journal | The New York Times | Politico | CNN | BBC

HAPPENING THIS WEEK-

#1- Dubai International Chamber kicked off a trade mission to Serbia and Turkey yesterday that runs until 11 October, aiming to help UAE businesses identify and capitalize on potential investments in Serbia and Turkey. The program includes bilateral business meetings designed to foster cooperation, expansion, and the establishment of new trade and investment agreements between companies from the two countries.

#2- The Global Trade and Supply Chain Summit will open its doors tomorrow and wrap on Wednesday in Dubai. The event aims to address the evolving landscape of international trade and supply chains, focusing on overcoming challenges and leveraging solutions offered by new technologies.

#3- The Global Rail Transport Infrastructure Exhibition and Conference will kick off tomorrow and wrap on Thursday in Abu Dhabi. The event gathers leaders and specialists from the rail and transport industries from the region and beyond to discuss smart mobility, greentech, and automation.

WATCH THIS SPACE-

#1- Maersk expects charge on pollution by IMO in 2025: Shipping giant Maersk expects the UN’s International Maritime Organization (IMO) to approve a charge on ships’ greenhouse gas emissions in 2025, with implementations by 2027, Bloomberg reported on Friday. Proposed new rules from the IMO may also involve a gradual decrease in the greenhouse gas intensity of the energy used by ships. Ultimately, these regulations could significantly cut carbon emissions and potentially require the industry to pay bns of USD if it continues to emit at current levels.

The details: The IMO aims to finalize the new rules by next year, with plans for them to take effect in 2027. If a global mandatory pricing mechanism for greenhouse gas emissions is implemented, it would be the first of its kind, according to the World Bank. However, reaching a consensus among the more than 175 member states may be challenging.

#3- Egypt to reportedly import seven LNG shipments this month: Egypt’s Petroleum and Mineral Resources Ministry will reportedly import seven shipments of liquified natural gas (LNG) this October to meet the daily needs of the country’s gas network, Al Arabiya reported on Thursday, citing a government official familiar with the matter.

Details: Six of the shipments will reportedly be delivered to Ain Sokhna Port and offloaded onto a floating gasification vessel, while the seventh will arrive at Aqaba Port in Jordan where it will be gasified before being sent to Egypt, the source says. These upcoming shipments, worth USD 880-910 mn, are part of a contract for 20 LNG shipments set for delivery by 4Q 2024.

IN OTHER EGYPT NEWS- Egypt gives greenlight for Roubiki-Tenth of Ramadan-Belbeis railway line: The Egyptian cabinet has approved a draft presidential decree to establish a 63.5 km non-electric railway connecting Robeiky, Tenth of Ramadan, and Belbeis, according to a statement released on Wednesday. The project — in collaboration with the French Development Agency (AFD ) — aims to enhance freight transport efficiency, reduce road congestion, and strengthen local industry, the statement said. The railway is set to run on diesel and can expand to a double-track on the Roubiki-Tenth of Ramadan line if necessary. The Tenth of Ramadan-Belbeis line will have a double track from the jump.

We’ve been waiting for this: Egypt’s Railway Authority reportedly received offers back in September from four international and local consortiums for a USD 285 mn Robeiky-Tenth of Ramadan-Belbeis freight and passenger railway revamp project. The project is set to link the 10th of Ramadan Dry Port to Egypt’s main rail network and seaports, bypassing the Cairo railway junction, and is part of Egypt’s budding initiative to plug investments into seven key logistics corridors over the next three years. The move looks to streamline movements between the nation’s logistics channels by improving links between Egypt’s dry ports and sea ports.

ALSO- More freezones incoming: Egypt’s General Authority for Investment and Freezones (GAFI) will set up four new freezones and have two others go live next year, GAFI boss Hossam Heiba told Asharq Business (watch, runtime: 6:28).

#4- Ineco to expand Morocco’s railway network: A consortium of engineering firms formed by Spain’s Ineco and Morocco’s CID is set to work on a feasibility study for the urban railway service connecting the Moroccan cities of Tangier and Tetouan, according to a statement released last week. The feasibility study will cover expanding the Tanger-Melloussa line, connecting the south of Tangier with football stadiums and Tangier airport, and establishing a rail connection between Tetouan and Cherrafat, Atalayar reported last week. The project is part of Morocco’s Railway Strategy 2040 — a comprehensive long-term plan for the development of the national railway network.

Ineco has footprints in Morocco: Morocco’s National Airports Office commissioned Ineco back in March to draw up plans for improvements at Mohamed V Casablanca International Airport. Ineco will also consider the airport’s projected needs for road and rail connectivity and phased expansions.

DISRUPTION WATCH-

Flydubai and Etihad resume flights as Emirates and Air Arabia extend suspensions amid regional unrest: Budget airline flydubai resumed flights from Dubai to Iran, Iraq, Israel, and Jordan today, Khaleej Times reported on Thursday, citing a company spokesperson. Abu Dhabi-based Etihad Airways also resumed flights to Tel Aviv yesterday. The airline has suspended its flights to Beirut until 8 October, according to a network update.

Emirates extends flight suspensions: Emirates extended its suspension of flights to Basra, Baghdad, Tehran, and Amman until 5 October, and will not operate flights to Beirut until 8 October, due to regional unrest, Gulf News reported on Thursday. Meanwhile, Air Arabia’s flights between Sharjah and Beirut remain indefinitely suspended.

MARKET WATCH-

#1- Oil dips after steepest hikes last week: Oil prices fell in early morning trading after recording their highest weekly gains in over a year last week amid rising tensions in the Middle East potentially disrupting exports, Reuters reports. Brent crude futures fell USD 0.31 to USD 77.74 a barrel by 04.35 GMT, while US West Texas Intermediate (WTI) futures lost USD 0.20 to trade at USD 74.18 a barrel. Brent price spiked over 8% last week — the biggest weekly gain since January 2023 — while the WTI contract gained 9.1% week-on-week, the biggest advance since March 2023.

#2- Aramco raised the price of its flagship Arab Light Crude to Asian buyers by USD 0.90 to a premium of USD 2.2 / bbl against the regional benchmark, Bloomberg reported on Saturday. The move, which comes against a backdrop of rising geopolitical tensions, surprised traders and refiners who were expecting a less substantial USD 0.65 bump, according to a survey by the business news service. Meanwhile, the state owned oil giant slashed the price of all grades to the US and Europe.

IN CONTEXT- The price hike follows Iran’s missile strikes on Israel, which have shaken global oil markets. The ripple effects are being closely monitored, especially as OPEC+ delays output hikes until December.

#3- Oil market gains relatively muted despite geopolitical turbulence: Substantial spare capacity — estimated at some 6 mn bbl / d — that can come online when needed, as well as recent history that shows that conflicts in the Ukraine and the Middle East have not led to significant supply disruptions so far, Daan Struyven, co-head of global commodities research told CNBC in an interview on Thursday (watch, runtime: 3:29). At the same time, there is an uptick in activity in options markets as buyers look to hedge against future uncertainty.

#4- Oil prices could fall “marginally” in 2025 due to escalating geopolitical tensions in the region, First Abu Dhabi Bank chief economist Simon Ballard told CNBC on Thursday (watch, runtime, 2:05). Ballard’s remarks came in response to Opec+ dismissing a Wall Street Journal report citing the Saudi energy minister as saying that oil prices will fall from the current USD 70 per barrel to USD 50 if the oil cartel’s members fail to adhere to production cuts.

REMEMBER- Opec+ kept its policy unchanged on its planned oil production target, including plans to phase out supply cuts by December, putting it on course for a 180k barrels per day (bbl / d) hike by the end of the year.

#5- Baltic index takes a dip: The Baltic Exchange’s dry bulk sea freight index — which tracks rates for the capesize, panamax, and supramax vessel segments — fell 0.7% to 1,928 points on Friday, registering their lowest since 18 September. The capesize index was down by 1.7% to 3,243 points, while the panamax index gained two points at 1,388 points. The smaller supramax dipped two points at 1,258.

#6- The Drewry World Container Index fell by 5% to USD 3,489 per 40-ft container on Thursday, according to the latest index readings. Spot rates for 40-ft containers are now 66% below the previous pandemic peak of USD 10.4k in September 2021, but remains 146% above the pre-pandemic rate of USD 1.4k. The average composite index YTD is USD 4,097 per 40ft container, which is USD 1,269 higher than the 10-year average rate of USD 2,828.

DATA POINTS-

#1- Global air cargo volumes record August gains: Global demand for air freight measured in cargo tonne-kilometers (CTK) rose 11.4% y-o-y in August, surpassing a peak registered in 2021, according to an International Air Transport Association (IATA) statement released on Thursday. Capacity, which is measured in available cargo tonne-kilometers (ACTK), climbed by 6.2% y-o-y, attributable to expansions in international belly capacity.

#2- Trade between GCC countries hit USD 2.2 tn in 2023, up from USD 1.5 tn in 2022, Saleh bin Hamad Al Sharqi, secretary general of the Federation of Chambers of the GCC, told CNBC Arabia (watch, runtime: 5:49). GCC intra-trade is poised for further growth in 2024 through partnerships and trade pacts, Al Sharqi added.

#3- UAE food trade grew by 20% y-o-y in 1H, with imports up 23% y-o-y and exports rising 19% y-o-y, Al Khaleej reports, citing data from the Economy Ministry. The country imported AED 84.4 bn (USD 23 bn) in food in 2023, while food exports reached AED 24.24 bn (USD 6.6 bn).

The country aims to kick up the food sector’s contribution to GDP to USD 10 bn by 2030, while slashing food imports from 90% to 50% by 2050, Economy Minister Abdullah bin Touq Al Marri said at the Future Food summit earlier this week, Wam reported.

#4- Qatar’s Mwani sees surge in port performance: Qatar Ports Management Company (Mwani) saw an increase in transhipment volumes by 30% y-o-y during the first nine months of 2024 (January to September), according to a statement released last week. Vessels carried 1.3 mn tons of general bulk and cargo, 1.1 mn TEUs were handled during the first nine months, and 522k transshipment containers went through Hamad Port. Ro-Ro units registered a 49% increase to 89.3k units, while heads of livestock grew by 25% to 431k and 206k tons of building materials were transported. The total number of vessels at Mwani ports exceeded 2k.

#5- Morocco was the largest car exporter in Africa in 2023, importing 6.4 bn, Asharq Business reported on Sunday. Tunisia held the sixth position at 13.6 mn, while Egypt stood at ninth position at 6 mn.

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CIRCLE YOUR CALENDAR-

Bahrain will host the Routes World forum from Sunday, 6 October to Tuesday, 8 October. The event will bring together VPs and network planning heads from some 250 carriers to discuss global air route networks.

Saudi Arabia will host the Global Logistics Forum from Saturday, 12 October to Monday, 14 October in Riyadh. The forum will gather key industry players, government officials, and industry experts to discuss optimizing operations and driving growth in the logistics sector. The event will take a specific look at how the sector can adapt with regards to global climate change and incorporate sustainability into their supply-chain operations.

Saudi Arabia will host the Global Airport & Aviation Forum from Wednesday, 16 October to Thursday, 17 October in Jeddah. The forum will bring together aviation leaders and experts to discuss future projects in the aviation industry, including new airport developments, capacity upgrades and expansions, new aircraft orders, and important airport services.

Saudi Arabia will host the Smart Ports & Logistics Transformation Summit on Monday, 21 October and Tuesday, 22 October in Riyadh. The two-day conference aims to discuss strategies, innovation, and technologies in line with Saudi Arabia’s Vision 2030, which aims to position KSA as a logistics hub in the MENA region.

The UAE will host the International Conference on Tourism, Transport, and Logistics on Saturday, 26 October and Sunday, 27 October in Dubai. The event will gather scientists, scholars, and engineers from around the world to discuss new ideas and research development projects in the industry.

Check out our full calendar at the bottom of this email for a comprehensive listing of upcoming news events and news triggers.