The Port of Beirut, pictured prior to the devastating explosion on Aug. 4, 2020. (Credit: Joseph Barrak/AFP)
BEIRUT – French company CMA CGM, the third-largest container shipping firm in the world, on Thursday won a contract to manage, operate and maintain the container terminal in the Port of Beirut, following two years of delays over the fate of the key infrastructure.
On Thursday, CMA CGM said in a press release that it would start its 10-year contract in March 2022, while Transport Minister Ali Hamiyeh told Reuters that the company, which is owned by the Saadés, a family with roots and business interests in Lebanon, had won the contract.
In its statement, CMA CGM announced a $33 million investment plan to renovate the terminal, $19 million of which will be spent in the next two years. The company said the “ambitious investment plant” will see updates to port equipment, the construction of a hangar for stocking spare parts and the implementation of digital tools, among other elements.
"The contract includes $33 million that will be paid by CMA CGM to develop the work inside the port,” Hamiyeh – who also holds French citizenship – told Reuters, without going into further detail.
In March 2021, CMA CGM announced that it had acquired all of the shares of Gulftainer Lebanon, the company that has been operating the container terminal at the Port of Tripoli, the second-largest maritime facility in Lebanon. In 2004 the French company lost its bid for managing the Port of Beirut’s container terminal.
The Saadé-owned Merit Corporation, CMA CGM’s parent company, owns 4.38 percent of Bank of Beirut, among other investments in the country. Amid collapse in Lebanon, the Saadés re-registered Merit Corporation, moving it from Lebanon to France in early 2021.
CMA CGM bested Emirati-headquartered Gulftainer for the right to manage and operate the Port of Beirut’s container terminal. Only two bids had been placed for the terminal, which has been in crisis, after the tender process was opened in November 2021.
Lebanon’s crippling economic and financial crises slowed business traffic at the Beirut port, which was further beset by the devastating Aug. 4, 2020, explosion. Traffic of containers, the backbone of international shipping, at the port has plunged from highs of 1.3 million containers in 2017-2018 down to 772,871 in 2020 and 614,994 last year. CMA CGM says that it ships 55 percent of the traffic at the container terminal.
The French company said that it would aim to boost traffic at the port to 1.4 million containers annually in the coming decade, which would mark an all-time high for the facility if achieved.
The announcement capped off two years of delays in rolling out a new management contract for the container terminal, a key facility which in past years has generated about 75 percent of the Beirut port’s revenues.
The Beirut Container Terminal Consortium (BCTC) won the contract to operate the Beirut port’s container terminal in 2004 after years of false starts and political jockeying over the development and management of the facility. BCTC’s contract came to an end in early 2020, and since then the firm has limped along in its role with rolling contract renewals.
“In order to carry out its entire development project for the terminal, CMA CGM will rely on its expertise and that of the teams of the outgoing operator,” the company said in its press release.
BCTC, a consortium comprised of a UK port operating company and Lebanese businessmen, was formed with the backing of Al-Mawarid Bank chairman Marwan Kheireddine. The consortium had defeated CMA CGM at the final hurdle of a heated bidding battle in July 2004 for the right to operate the container terminal.
In August 2005, a Panama-registered firm linked to an executive from the Mediterranean Shipping Company (MSC) – one of the world’s largest shipping companies – acquired an indirect stake in BCTC, before transferring its shares to a Geneva-based banker who held them on behalf of unnamed beneficiaries. This tranche of shares would go on to change hands before being acquired by Kheireddine in October 2019.