Egypt's Prestigious Judicial System: Safeguarding Investments in the Transportation and Logistics Sector
Africa Focus
Hany MaamoonSenior Counsel,Transport & Insurance
Egypt's strategic location at the crossroads of ancient continents, Africa, Asia and Europe has bestowed upon its immense importance. Situated between the Red Sea and the Mediterranean Sea, and encompassing prominent waterways such as the Suez Canal, the Gulf of Suez, and the Gulf of Aqaba, Egypt acts as a vital link between Africa, Asia and Europe.
For decades, major transportation giants have recognized Egypt as an attractive investment destination due to its strategic location. Its African footprint and close proximity to global markets in Europe and the Middle East, coupled with a network of ports including Alexandria, Port Said, Damietta, Suez, Ras Shuqair, Safaga, Adabiya, and Ain Sukhna, have facilitated trade connections between African, Arab Gulf states and European Union countries.
The Suez Canal, a crucial artery at the heart of global trade, serves as a vital maritime passage and one of the world's most significant trade chokepoints. It plays a pivotal role in global supply chains, enabling the transportation of energy, commodities, consumer goods, and components from Asia and the Middle East to Europe. Additionally, the canal's strategic location positions it as a key regional hub for shipping oil and other hydrocarbons. Published data from 2020 reveals that the Suez Canal facilitates the transfer of approximately 7-10% of the world's oil and 8% of liquefied natural gas (these figures have significantly increased following the Russian-Ukrainian conflict), with around one million barrels of oil passing through it daily.
Since its inauguration in November 1869, the 194-kilometer Suez Canal remains the fastest and most direct maritime trade route between Asia and Europe. Approximately 12% of global trade, accounting for 30% of all global container traffic and over USD $1 trillion worth of goods per year, traverses the canal. On average, 50 ships per day undertake the journey between Suez and Port Said.
The transportation sector plays a vital role in Egypt's economic development and growth. Leveraging its unique geographic location and the presence of the Suez Canal, Egypt aims to become a global logistics hub in the coming years. To achieve this ambition, the Egyptian government has embarked on a series of mega transportation projects in its ports. It plans to triple the trade capacity of Egyptian ports by 2030, raising their capacity from 120 million tons to 370 million tons.
Several shipping-related projects have already been initiated and are either operational or scheduled for completion by 2024 and 2025.
To attract top transportation and logistics leaders, such as Maersk, CMA- CGM, Hapag-Lloyd, DB Schenker, Hutchison, DP World, and Abu Dhabi Ports, the Egyptian government has created numerous investment opportunities. These industry giants are injecting billions of dollars into mega projects that will transform Egypt into a major logistics hub in the region.
Several shipping-related projects have already been initiated and are either operational or scheduled for completion by 2024 and 2025. For instance, a new terminal is under construction in the port of Damietta, Egypt. A joint venture named "Damietta Alliance Container Terminal S.A.E." has been established to develop and operate this terminal, with core shareholders including Hapag-Lloyd Damietta GmbH (39%), Eurogate Damietta GmbH (29.5%), and Contship Damietta Srl (29.5%). The terminal is expected to commence operations in 2024 with a total capacity of approximately 3.5 million TEU, serving as Hapag-Lloyd's dedicated strategic transshipment hub in the East Mediterranean.
In June 2023, a new container terminal with a total capacity of 1.5 million TEU was officially opened in Alexandria through a joint venture between CMA-CGM Terminals and the Egyptian Government. Furthermore, Hutchison Ports and the Egyptian Navy signed an exclusive 38-year agreement for the development and operation of a new container terminal in Abu Qir, which boasts a total quay length of 1,200 meters and a handling capacity of 2.0 million TEU.
Other significant developments include the Suez Canal Container Terminal (SCCT) in Port Said East Port, operated by APM Terminals, which is strategically located at the mouth of the Suez Canal with a long quay of 2,400 meters. Another project in Port Said involves the establishment of the Suez Canal Automotive Terminal (SCAT), a dedicated RO-RO terminal developed in partnership with the General Authority for Suez Canal Economic Zone. The SCAT, a joint venture between Africa Global Logistics (MSC), Toyota Tsusho, and NYK, has a capacity of 10,000 vehicles.
In the Red Sea, DP World has expanded its operations in Sokhna Port by constructing a second dock that will double the port's capacity to 1.75 million TEU. Additionally, Hutchison Ports has obtained a concession to operate a new container terminal in Ain Sokhna Port, with CMA CGM and COSCO Shipping Ports joining the project, which will have a capacity of 1.7 million TEU.
Egypt's quest for growth and development extends beyond seaports. The opening of the OCTOBER DRY PORT SAE (ODP), the first dry port in Egypt under a Public Private Partnership, signifies the expansion into land ports. Developed by El Sewedy Electric SAE in partnership with DB Schenker Egypt, ODP spans over 400,000 square meters of customs bounded area and has a capacity of 450,000 TEU. It is connected to the Mediterranean Port of Alexandria and the Red Sea Port of Sokhna via rail lines.
The magnitude of these projects, the involvement of international players, and the speed of their implementation highlight Egypt's increasingly open approach to foreign investments. The selective partnership approach adopted by the Egyptian government ensures optimal utilization of these large-scale logistics projects. Consequently, the landscape of Egyptian ports is undergoing a drastic transformation, even reaching previously neglected ports such as Al-Arish in North Sinai and the port of Jarjoub near the Egyptian-Libyan borders.
The success of Egypt's ambitious endeavors in developing its transportation and logistics sector is inextricably linked to the country's prestigious judicial system. Egypt's judicial institutions, including the Egyptian Court of Cassation, the Council of State, and the Supreme Constitutional Court, play a vital role in upholding the rule of law, ensuring administrative justice, and safeguarding constitutional integrity.
These courts provide a robust legal framework that protects the rights of individuals and entities involved in the transportation and logistics industry, thereby fostering a conducive environment for foreign investments and encouraging the participation of international players. The fair and transparent adjudication of disputes, the annulment of unjust government decisions, and the validation of laws in line with the Constitution all contribute to creating a reliable and predictable legal landscape.
Moreover, the independence and integrity of Egypt's judicial system instills confidence in investors and stakeholders, assuring them that their interests will be safeguarded and that contractual obligations will be upheld. This judicial stability and commitment to upholding the rule of law form a cornerstone for the successful implementation of mega transportation projects and the transformation of Egypt into a major logistics hub.
As Egypt continues to embark on its ambitious development plans, the importance of its judicial system cannot be overstated. By maintaining a strong and impartial judiciary, Egypt not only ensures the protection of rights and the enforcement of contracts but also reinforces its standing as an attractive African and global destination for investment in the transportation and logistics sector.
For further information,please contact Hany Maamoon.
Published in August 2023
