Latest news with #DeanMikkelsen
The National
25-07-2025
- Business
- The National
Can Somaliland's Berbera Port anchor African trade security?
While Houthi attacks in the Red Sea pose a clear and present danger to the vital trade artery and the rising port congestion in the region throws another spanner in the works, Africa needs another trade hub. Could Somaliland's port city of Berbera be the answer? Analysts and officials see it as a feasible alternative to current trading hubs in Africa such as Djibouti, and say the port city is a buffer against regional and global supply chain disruptions. Recent investments from the UK and the UAE's DP World are reflective of that view. With mounting security concerns and congestion forcing longer docking waiting time in other regional ports, the flow of investments to Berbera is rising. DP World, one of the top global port operators in the world, alone has invested more than $400 million in Berbera's expansion since 2017. The port is located near the Bab Al Mandeb strait, which connects the Red Sea to the Gulf of Aden and is a choke point for global shipping. Nearly 10 per cent of global trade, including a significant share of oil and container traffic between Europe and Asia, passes through this corridor. The significance of this part of the region cannot be understated, as it accounts for up to 12 per cent of global oil transported by sea, according to data from the International Chamber of Shipping. However, Berbera currently accounts for only about 0.06 per cent of global container traffic, so it has handling capacity to offer more to shipping lines, the engine of global trade. Ethiopia's new trade lifeline With the rise in investments, Berbera has started to relieve some pressure in the strait. It has also given landlocked Ethiopia a second maritime gateway, reducing its dependence on Djibouti and providing the country with an alternative trade route to skirt disruptions in the Red Sea. Last year, Somaliland signed an agreement to lease a 20km stretch of coastline to its neighbour, a move that caused a diplomatic row and prompted Somalia to summon the Ethiopian ambassador in protest. Mogadishu does not recognise the breakaway Somaliland, which seceded amid a civil war in 1991. 'The vision of the Somaliland government and DP World is to make Berbera a regional marine trade and industrial hub,' Supachai Wattanaveerachai, chief executive for DP World's Horn of Africa operations, told a Somaliland-UAE investment conference in June. 'We know Ethiopians need multiple gateways to connect to world trade and for us, with Somaliland, we need to provide services.' Ethiopia currently relies on Djibouti for about 90 per cent of its maritime trade, paying more than $1.5 billion a year in port and transit fees alone. Berbera could slash this cost by up to 30 per cent, according to analysts. Dean Mikkelsen, an independent maritime and logistics analyst, said Berbera is 'increasingly seen as a viable option to Djibouti, particularly amid the instability' in the Red Sea. 'Its position near Bab Al Mandeb enables direct access to one of the world's busiest shipping corridors, while remaining just out of the immediate range of Houthi attacks,' he told The National. With its structural challenges, expensive pricing and geopolitical concentration Berbera is a better option than Djibouti in terms of trade resilience, 'even with Somaliland's uncertain political status', Mr Mikkelsen said. 'Djibouti's geopolitical congestion is a result of the fact that many foreign countries operate military bases from the US, China, France, Japan, Italy and Saudi Arabia and that it is located near conflict-scarred areas such as Yemen – a complex geopolitical environment that can impede the safe flow of goods and add operational risk. Djibouti, he said, still matters, but it certainly suffers from crowding. The country's overdependence on Chinese debt to fuel growth also makes it vulnerable to sudden shifts in economic fortunes, he explained. 'Berbera's growth under DP World has brought new deepwater berths and better container capacity, offering shippers a credible alternative that reduces exposure to geopolitical risks. Ironically, it is Djibouti's own limits that are pushing the change along.' Rise in western backing and security concerns Somaliland is also deepening its strategic defence co-operation with the US, which bodes well for its prospects of growth. 'This includes collaborations with US Africa Command to enhance security in the vital shipping lanes of the Gulf of Aden,' Mr Mikkelsen said. 'Somaliland has publicly offered to host an American military base, reinforcing its position as a stable and co-operative partner in the region.' Quoting data from British International Investment Projects, he said by 2035, the Port of Berbera will enable trade equivalent to about 27 per cent of Somaliland's gross domestic product and 8 per cent of Ethiopia's GDP. The development of Berbera port is becoming 'increasingly important' in the regional trade perspective, Saeed Al Zari, group vice president for government affairs at DP World, told The National. DP World is already working on bringing new infrastructure to Somaliland, including edible oil tanks in Berbera, a move that has led to the opening of the International Finance and Food Company's edible oil plant and the soon-to-be-launched Essa Al Ghurair plant, he said. The future plans aim to improve 'the quality of edible oil available in the region, reducing the price of this essential commodity and now supplying both Ethiopia and Puntland', he said. A rise with limits However, Berbera's emergence is not without limits. Somaliland's lack of international recognition presents legal ambiguity and curbs access to funding. But investors appear to be warming to the region. 'A big investment has already been made in Somaliland,' said Abdirahman Hassan Nur, Somaliland's Minister of Trade and Tourism. 'DP World is an example. I believe many other investors are already in the pipeline.' Mr Wattanaveerachai said that when DP World took over the port, it could handle less than 100,000, but the capacity has risen to 500,000. 'Today, we have transformed the Berbera port, not just in capacity but in efficiency. All run by locals – Somaliland people,' he said. The vision of Somaliland is to develop Berbera as a hub of economic development where companies can open offices without being physically located in Berbera, he added. The UAE-Somaliland investment conference in June brought together regional stakeholders including Dubai Chambers and Al Marzooqi Group of Companies. The aim was to attract more investment and highlight Berbera's potential. 'Despite the lack of international recognition, Somaliland has demonstrated the ability to manage critical infrastructure and ensure a level of operational stability. The Somaliland Port Authority, as the governing authority of Somaliland ports, manages the interaction with the security forces responsible for security in Berbera,' Mr Al Zari said. 'Berbera is revolutionising the logistics network in the Horn of Africa and reducing the cost of importation for some of the poorest people in the world.' Analysts urge caution Carl Sykes, group managing director of Neptune P2P Group, however, cautioned against hopes of Berbera attaining total regional dominance. 'Berbera port is emerging as a viable alternative to Djibouti, but it remains modest in scale at under 500,000 twenty-foot equivalent unit annually, compared to Djibouti's multimillion-TEU capacity,' he told The National. 'While Berbera has made impressive gains in efficiency and cargo growth, it lacks the regional security guarantees enjoyed by Djibouti, which is protected by multiple international military bases.' He said Berbera had the potential to serve as a modest buffer in regional supply chains but said its affect on global supply chain shocks was 'likely to remain limited given its relatively small scale, emerging infrastructure and geopolitical sensitivities'. Mr Mikkelsen, however, argued that the second phase of Berbera Port's expansion will begin once 75 per cent of current capacity is utilised, with plans to boost throughput to 2 million TEUs annually, following DP World's completion of the first phase that increased capacity to 500,000 TEUs. 'Djibouti's restraints are forcing the push for alternatives. Berbera's location and continual improvements are meeting this need,' he said. 'At a time when supply chain resilience is a global imperative, Berbera is well-placed to be a powerful trade facilitator between Africa and the Middle East.' In addition, international recognition of the region or a stable deal with Somalia would allow Berbera to realise its full potential as a central hub for regional trade, he said.
The National
13-06-2025
- Business
- The National
Israel-Iran conflict delivers double hit to airlines on security fears and fuel costs
Israel's attack on Iran is the latest in a series of global conflicts that are ratcheting airlines' security concerns, while weighing on their operations and profitability. An increasing number of conflict zones around the world means airlines are forced to take longer and costlier routes – impacting fuel, emissions and passengers. For passengers, this means flight cancellations and delays or longer journeys as jets are diverted away from conflict areas. Airlines are grappling with more airspace closures, threats from missiles or drones and GPS jamming. Israel's attack on Friday is part of a broader trend of escalating geopolitical tensions that are 'directly impacting global aviation', following the situations in Ukraine and the Red Sea, according to independent security, aviation, maritime and energy analyst Dean Mikkelsen. 'We're witnessing a growing patchwork of restricted airspace and this is putting considerable pressure on airlines and passengers alike,' he told The National. For travellers, the most immediate impact will be on fares as aviation disruption results in longer flight times due to rerouting. In this case, routes need to be adapted around Iranian, Syrian and at times even Iraqi airspace, Mr Mikkelsen said. Fuel consumption is expected to rise significantly. Jet fuel already makes up around 30 per cent of an airline's operating costs and that burden only grows when 30 to 90 minutes of extra flight time is needed. Mr Mikkelsen estimates that routes from Asia to Europe or the Gulf to North America could translate to a 7 per cent to 15 per cent increase in fares, particularly on long-haul itineraries, especially as the peak summer season approaches. Other knock-on effects are those on crew hours, insurance premiums and scheduling complexity, all of which erode profitability, he noted. 'Carriers already operating on tight post-pandemic margins will feel this sharply,' he added. The Israel-Iran conflict throws the region's aviation industry into question, especially with the uncertainty about how long the hostility will last. Airspaces should always remain neutral and accessible when it is safe to do so, according to the International Air Travel Association. Closures, in addition to using them in retaliatory ways, 'fragment global connectivity, disrupt operations and hurt passengers and economies', the Geneva-based Iata said. Conflict zones substantially add to the disruption risks: in 2024, geopolitical conflicts led to significant airspace restrictions, affecting a substantial portion of long-haul routes, according to Iata data. For instance, the Russia-Ukraine conflict, now in its fourth year, forced the rerouting of about 1,100 daily flights, leading to longer flight times and increased operational challenges, it said. Fuel and emissions have also surged. Detours around conflict zones can lead to an average fuel consumption increase of 13 per cent on affected routes, Iata added. When British Airways had to suspend flights to Beijing because it needed to avoid Russian airspace, the flight time was almost three hours longer and fuel costs increased by a fifth. In October 2024 alone, multiple flights encountered Iranian missiles aimed at Israel, leading to diversions and emergency manoeuvres, Iata said. The effect that conflict zones have on airspaces is also reflected in the shift of activity to other areas. For instance, countries like Egypt, with many rerouted flights passing through its airspace, would result in increased overflight fees and greater regional air traffic. 'The Cairo Flight Information Region is becoming a crucial alternative corridor, alongside Jordan and Saudi Arabia,' Mr Mikkelsen said. Airlines across the region have delayed and cancelled flights following Israel's early morning attack on Iran. Ben Gurion Airport in Tel Aviv has shut down until further notice, Iran has declared its airspace closed and Iraq has temporarily suspended civilian operations at all its airports. In the UAE, Etihad Airways cancelled its services to and from Tel Aviv, as Israel placed its air defence systems on high alert in anticipation of possible retaliation. Other major airlines, including Emirates, Lufthansa and Air India, rerouted services mid-flight on Friday. An Emirates flight from Manchester was diverted to Istanbul, while an Air India flight from New York to Delhi was diverted to Sharjah.
The National
15-05-2025
- Business
- The National
'A flying White House': What it will take to turn Qatar's 747 into Air Force One
Live updates: Follow the latest on Trump's Gulf trip US President Donald Trump accepted Qatar's offer of a luxury Boeing 747 but the plane would need to be retrofitted to standards that the Air Force One currently maintains, and this is no mean feat. Turning the 747 into the plane reserved for use by the America's leader, essentially a flying White House, could cost about $1 billion and take up to three years, an analyst said. 'If this goes ahead, what we're looking at is a fit-out cost somewhere between $800 million and $1.2 billion to bring the Qatari royal family's 747 up to the level of Air Force One,' Dean Mikkelsen, an independent security, aviation, maritime and energy analyst, told The National. That includes stripping out the gold-plated luxury interiors and replacing them with a secure communications systems, EMP shielding, missile defence, and even aerial refuelling capability. 'You'd also need to add a secure command suite, medical bay, and facilities for the president's team, military aides and press corps – essentially turning it into a flying White House,' Mr Mikkelsen said. That will be a time-consuming job. 'Realistically, you're looking at two to three years to fully convert and certify it to US Air Force standards,' he said. US plane maker Boeing is already in the midst of efforts to convert two 747s to replace current Air Force One planes, which it expects to complete by 2027. A new commercial Boeing 747-8 costs about $400 million, making the retrofit bill twice as expensive. The Qatar plane – 89 seats and an opulent French-designed interior – will need major refurbishments to meet the required standard. Turning the Qatari jetliner into Air Force One would cost billions of dollars and take years to accomplish, Richard Aboulafia, managing director of Washington-based aviation consultancy AeroDynamic Advisory, told The National. 'The aircraft would need to be completely stripped down and reassembled, with advanced mission equipment and capabilities integrated inside. It would be a new aircraft, effectively,' he said. 'Starting over again with the Qatar plane wouldn't produce a usable Air Force One until 2030 or later.' The 'flying Oval Office' has 4,000 square feet of interior floor space, according to Boeing's website. Among its accommodations are a conference/dining room, quarters for the president and the first lady, an office area for senior staff members, an office that turns into a medical facility when needed, two galleys that can provide 100 meals at one sitting and multi-frequency radios for air-to-air, air-to-ground and satellite communications. The main differences between Air Force One and the standard Boeing 747 include navigation, electronic and communications equipment and its interior configuration and furnishings, among other features. Meanwhile, Qatari Prime Minister and Minister of Foreign Affairs Sheikh Mohammed bin Abdulrahman Al Thani said on Wednesday that the Gulf nation's offer to donate a luxury plane to the US was not a personal gift. 'It is a government-to-government transaction. It has nothing to do with personnel, whether it's on the US side or on the Qatari side, it's the Ministry of Defence and Department of Defence,' he said in an interview with CNN on Wednesday, dismissing claims that Qatar was using it as a way of influencing Mr Trump. He added that ultimately, if the US needs something and it's legal, the Qataris will help, but not because they seek anything in return.
