The UAE has taken pioneering steps to support and protect the maritime shipping sector.


The international commodity carrier sector is growing at a rate of 2.8% annually until 2026


Ethra Invest Company confirmed that investing in the maritime shipping sector provides promising opportunities in light of the accelerating growth of the international commodity carrier sector at a compound annual growth rate of 2.8 per year until 2026 due to increasing industrialization and urbanization in Asia after the industry achieved a growth of 2.1% between... Years 2015 and 2019.


Saeed bin Saleh Al Marri, CEO of Ithra Investment Company, said that the UAE has made tremendous contributions to enhancing the growth of trade and the shipping sector globally and has taken pioneering steps to support and protect the maritime shipping sector. Therefore, it tops many global competitiveness indicators in the marine industry, as it ranked third in the world in facilitating seaborne trade and supplying ships with fuel, in fifth place among the most important international maritime centers, and 13th place in the world in the index of port services and performance efficiency. During a press conference in Dubai, he pointed out that the country’s ports were ranked among the top ten global ports regarding container handling volume. More than 27,000 maritime companies operate in the UAE, and the country’s ports are among the best in the world.


Growth of the shipping sector


The CEO of Ithra Investment Company stated that the maritime sector’s contribution to the UAE’s gross domestic product amounted to more than 90 billion dirhams. More than 15 million containers were handled through the country’s ports in 2020, and more than 25,000 commercial ships arrived. Emirates in the same year, and the tonnage of the state’s ships exceeded 21 million tons, while the size of the Emirates fleet reached 970 boats in 2020.


He added that the UAE's re-election to the IMO Council for the third time in a row highlights the country's efforts to advance the global maritime sector by achieving safety, security, and efficiency of marine transport and that the UAE continues to reaffirm the leading position it holds as a global maritime center. He explained that the dry goods trade constituted approximately 48% of the total international maritime trade in 2019, pointing out that studies expect the international marine trade of dry goods to grow at a significant rate and that the profits of ships that are defined as carriers of international goods will increase by the size of ( Pana Max (Handy Max or Handy Size) means that investors benefit from regular and stable cash flows arising from efficient staffing and current ship positioning.


Commodity carriers


Al-Marri pointed out that the demand for investment in ships that are defined as carriers of international goods is increasing significantly, especially since this type of ship is less risky and is not targeted in times of war and conflict because it transports food, unlike oil tankers, which are characterized by relatively higher risk, noting that The idea of investing in the maritime shipping sector is that individual investors, companies, and institutions enter into projects to purchase and lease ships in the field of transporting international goods through specialized companies. The annual return on invested capital is no less than 10%, while the net income return ranges between 10% and 12%. % annually and is distributed every month. As an investment example, if an investor invests $100,000, the annual profits will be around $10,000, and the monthly distributions will be $830. The return on capital (capital gains upon final liquidation of the portfolio) will be about $10,000.


Cash flows


Al-Marri stated that investors in the maritime shipping sector benefit from regular and stable cash flows resulting from the effective employment of investment, as specialized international companies undertake these ships' commercial and technical management. Several specialized companies act as advisors to the fund, including legal advisors, financial feasibility advisors, and an auditor for the fund.
He said that the investment is made through specialized companies to purchase a single-deck bulk cargo ship or ships or other similar ships for trade in international goods, with technical management through shipping experts managed by a specialized shipping company with a well-known reputation.
He added that the investment strategy is based on two parts, the first of which is achieving a “fixed return” through leasing contracts for the ships invested in, as leasing prices currently reach $11,000 per day and can reach $35,000 per day, indicating that the second part is capital growth. By focusing on the acquisition and disposal of ships promptly based on risk and return criteria and analysis of the primary sector, stressing at the same time the need for those wishing to invest to ensure the reputation of the company and verify the administrative officer and technical director of the ship as well as the commercial director and auditor of the investment fund, while ensuring that... An approved certificate of the investment value and a quarterly report on performance and returns.


Investment risks


In response to a question about the risks of investing in the maritime shipping sector, Al Marri replied that the risks of investing in marine shipping could mostly be reduced in several ways, such as using various hedging techniques to minimize the risks to a minimum, and fully insuring ships by international companies against sinking and piracy. And natural disasters. He said that multiple levels of insurance could be put in place to reduce risks, such as war risks, lease contracts, insurance on the ship’s hull and machinery, in addition to protection and compensation, freight and delay fines, pointing out that all ship contracts are usually semi-annual or annual to ensure stable returns and avoid market fluctuations. Investors receive quarterly performance reports on their investments and can also track the ships in which they have been invested when needed.