To the credit of the aviation sector, December’s deadly crash of the Union des Transports Africains plane appears not to have damaged consumer confidence in the region’s leading airlines. Established carriers and Arab niche operators all agreed that they are in a different league to a company like UTA and Flash and have nothing to fear. “From my perspective, the incident barely dented the customer confidence of Middle East travelers,” said Horm Irani, general manager of ExecuJet Middle East. “There are a number of new carriers establishing themselves in the region and doing well by all accounts. Current carriers such as Emirates, Qatar Airways and MEA continue to flourish and grow and certainly demand for our services continues to remain strong.” The disaster could have some negative bearing on commercial aviation in Lebanon, at least in the short term. Sector companies, until now, were commonly full of praise for the supportiveness of Lebanon’s government and aviation authorities. But following the back-to-back crashes, industry sources said the government is likely to be extra careful in scrutinizing applications for charter licenses. These measures, while frustrating for those companies eager to do business, can only lead to increased consumer confidence in the long-term. The UTA crash, or more likely the public accusations and rumor mongering about alleged culpability of local aviation officials, seem to have forced public servants to hunker down. “The civil aviation is becoming more restrictive,” observed Fadi Saab, chairman of Lebanon’s cargo airline, TMA. “I hope that fear of responsibility and blame will not become an obstacle for developing the role of Beirut Airport.” Of course, in every tragedy there is a lesson of human responsibility to be learnt, and fulfillment of this responsibility can never be emphasized enough. This lesson applies especially to those who do things the “Lebanese way,” meaning that congenial ability for making impromptu arrangements and circumventing obstacles, even if they are essential operating rules and safety procedures. In plain words, application of standards is a permanent need, and stakeholders in land and sea transportation here have still much to accomplish in that respect. Enforcement of vehicular safety standards in land transportation, for instance, this year in the infancy of its implementation, remains under-appreciated. Opposition to moderate requirements on technical and environmental soundness of vehicles used in public transport is a disturbing symptom of immaturity, lacking awareness and missing education. Working hour regulations for truckers and the safety and environmental inspections of their heavy vehicles, which is commonplace in developed countries, have yet to be implemented. From taxi drivers to enforcement officials and role models – including politicians, schoolteachers, driving instructors and reporters – patterns of demonstrating awareness and setting examples are rarely seen.

In the goings and comings at Beirut Port, observers also have spotted lingering disrespect of proper standards. As far as crooked inspectors closing their eyes to certain problems on safety inspection lists, “corruption still exists in the port,” said Ian Wilson, a consultant and resident expert on maritime safety. He and other insiders knew tales of unsound, leaking and creaking equipment, hushed-up incidents, problems with inexperienced pilots, and criminal attempts to alter an accident scene after a ship fire.

Lately, the safety awareness and compliance among Lebanese ship owners has been progressing, Wilson said, with the ministry of transport and port authorities making efforts to improve the enforcement of standards, by stepping up scrutiny of ship certifications and seafarer certifications. According to the expert, this positive development is further helped along by increasingly tighter international requirements for maritime safety, the latest increment being impending measures aiming to safeguard ships against use in terrorist attacks. Overall, however, in context of ambitions to assume a stronger role for Lebanon’s shipping and transportation industry, domestic safety issues and regulatory standards deserve still increasing consideration from all public and private sector participants. It would be of even greater advantage, if these standards could be implemented in conjunction with a regional regulatory framework also involving harmonization of customs procedures and transit standards. As far as these frameworks for borderless transportation within the Levant are concerned, the present situation is rife with problems. Industry members frequently don’t like to speak up about the issue but there is no mistaking the reality of protectionist and self-serving behavior of governments in the Levant that hinder competition and evolution of both trade and transportation. Lebanon is no exception to the practice but, as the realm’s smallest country, it suffers the largest disadvantages from the situation. “Syrian traders are forbidden from using Lebanese ports to import or export goods, because their government wants to make money at its ports,” lamented a shipping manager. The complaint is as common in the industry as the request to not be identified for making it. Latest developments in the area of customs harmonization promise some but not total relief. About half a year ago, Syria unified its tax and documentation requirements and reduced the levies on transit cargo. Lebanese freight forwarders uniformly lauded this development as very beneficial. Only last month, in response to increased cargo traffic caused by the growth of trade and aid shipments to Iraq, Jordan decided to temporarily suspend restrictions on transiting containers shipped through ports other than Aqaba. The Jordanian, Syrian and Lebanese ministers of transport have furthermore conferred about more permanent measures to improve the regulations for overland transit shipping involving the three countries. The negotiations would not mean that protectionism will vanish in the foreseeable future – Syrian traders will still be prohibited from using Lebanese ports for their imports and exports – but they could create a viable regulatory environment to give Lebanon’s ports, shipping agents and freight forwarders a decent share of the cargo business to Iraq. According to Abdel Hafeez Kayssi, director general for sea and land transport at the ministry of transport and public works, the work on better regulations is progressing. “We are expecting a Memorandum of Understanding to be signed by March,” he said, “in preparation for further steps.” While they are waiting for better regulations, Lebanese forwarders simply remain applying “the Lebanese way.” As Syria requires payment of a cargo tax for all goods entering the country, one explains, “truckers cross the border with two sets of invoices. He hands one to Syrian customs; the other stays in the driver’s cabin and is for the customer in Iraq.”

By under-declaring the value of the cargo, the forwarders found a way to pay minimal transit tax to Syria, presumably with some support from WASTA-appreciating control personnel. And since the freight does not remain in the country, it does not trouble the waters. The system has worked well for the past six months of Iraqi reconstruction, as customs and import taxes on the Iraqi border were suspended. The UTA crash was a veritable catastrophe. Apart from devastating hundreds of families, it led to an official investigation of the disaster and caused an avalanche of wild accusations in the media aimed at any political opponent they alleged to be linked to the plane and who violated their responsibilities by allowing it near Lebanese airspace. However, cool reflection will win out and there is unlikely to be any indictment – legal or moral – that this accident was a symptom of any flaws in Lebanese air safety practices. Lebanon is a signatory of the International Civil Aviation Organization (ICAO) rules and if the country is to be blamed for allowing the plane to land in Beirut, then similar culpability must be leveled at Dubai, where the plane frequently landed. As one aviation expert put it, “much worse planes are out there flying and if this plane had not been overloaded it would still be flying today.” Human responsibility for the catastrophe of UTA flight 141 clearly existed. All indicators, however, suggest that, morally and legally, this guilt rests with the pilot and with the airline, which sanctioned the take-off even though the plane was overloaded. Take-off crashes due to overloading of passenger jets are rare. The Aviation Safety Network, which maintains a global data-base of all reported accidents and occurrences involving loss of aircraft since 1945, lists only nine overload crashes, two of them with a higher casualty count than the UTA crash. Things are seldom as clear-cut as they appear to be in this case. When the first takeoff attempt had to be aborted, the plane’s owner had no right to interfere with the flight management. As sole authority in the cockpit, the pilot would have had the legal obligation to dismiss the owner’s crazed demand. Furthermore, any control tower worth its salt would have intervened after the first aborted take-off.

The two men with the burden of not preventing the crash both survived. Each will have to be held accountable, and each will have to bear the knowledge of their blame for causing loss of lives. To the large rest of air travelers, a lesson of this disaster suggests that individually, one should never dismiss common sense. If you see a row of folding chairs added at the back of a passenger jet, just refuse to buckle up and get off, even if it means re-bribing the authorities to allow millions of dollars of hard currency to walk out of their country.

The matter of greatest obvious concern for stakeholders in sea and overland transportation is the new container terminal at Beirut Port. Idle since its completion some three years ago, the $200 million project’s commencement of operations depends on two factors: contracting an operator and installation of essential equipment, like the so-called gantry cranes.

Three of these giant cranes, capable of lifting containers between cargo vessels and shore-side facilities, have been manufactured in China at a cost of $27 million. The contract also includes six smaller, mobile gantry cranes and other equipment. Representatives of Lebanon’s shipping industry are eagerly awaiting the arrival of the cranes. “They were scheduled to arrive here in February or March but an agreement between the Port of Beirut and the supplier has been made to postpone delivery until May,” said Elie Zakhour, president of the International Chamber of Navigation in Lebanon.

Sector companies are nervous about any sign of delays in delivery of the cranes, as it highlights the fact that the tender for an operator contract is overdue and is reminiscent of the derailment of the container terminal’s start in 2001. At that time, the Dubai Port Authority (DPA) bowed out of a contract to operate the terminal, and shipping insiders believe that a key factor in the cancellation was problems between the port and a group of contractors who hitherto have been entrusted with handling cargo movements.

These operators are independent firms, which the Lebanese government invited at the end of the war to provide stevedore services when the authorities needed to bring the port back to life in the fastest and least costly manner available. The contractors were rewarded for their commitment by receiving a 30% share of the cargo fees collected by the port. This, said Zakhour, “provided the equipment owners with a total revenue of $15 million over the past 13 years” – but port and operators never signed a formal contract that would regulate their status and cover questions of canceling their services. Almost unavoidably, the current matter of contention is compensations. It was over this issue that stevedore companies last month staged a one-day walkout that paralyzed cargo movements at Beirut Port. Observers contend that similar disputes between the port and the same operators – whom some industry insiders call “the Mafia” – played heavily into the fact that DPA stepped out of its contract. And they are asking whether the interests of this smaller group again could, by using their alleged ‘pipelines of influence,’ prevail over the common good. Following the DPA withdrawal, cargo handling at Beirut Port continued in a fashion that made visiting specialists gasp at how well the operation was working – but only given that the work is done by using the methods of a bygone shipping era. The problem is, the system is simply unsuited for large ships. “No shipping line is interested to come to Beirut as long as there is no container terminal,” said Zakhour. “When we have the terminal, Beirut will have a chance to become a transshipment hub.” Completion of the container terminal will boost capacity of Beirut Port to be able to handle 500,000 twenty-foot-equivalent units (TEU), a theoretical increase of about 70% over its 2003 cargo volume that was in the magnitude of 300,000 TEU. But more important than this increase in capacity would be improvements in service quality and reduction in turnaround times for big vessels. Undoubtedly, even the best imaginable boom of Lebanese domestic consumption and exports could not provide Beirut port with the volumes and turnover of a major hub. To some operators, the facts that the port generates income and operates with some degree of efficiency thus serve as arguments to justify the current situation as acceptable. In the eyes of others, repeated postponements spell another lost chance for each day that the terminal remains idle. There is but one way to test whether Beirut would be able to succeed in competing for sea-to-sea transshipment business, and that is offering the services of a functional terminal.

What adds further spice to the situation is the recent upturn in cargo movements to Iraq. “Sea to land transshipment has much improved,” Zakhour said. “When the US/UK-led coalition made war on Iraq, we were afraid that impact on shipping would be disastrous, but it is now better than before the war. Under Saddam, everything in Iraq was state controlled whereas today, private importers rule the scene.”

Although much of the increase in deliveries to Iraq last year was in shipping cars, members of the industry view growth of container forwarding in 2004 as a sure thing. The main reason for the optimism is based on the situation in other ports, mainly the Jordanian Aqaba. It is the primary gateway for shipments into Iraq and favored as an ally by the Americans, but traffic at the port has become so intense that carriers have been leveling high congestion charges for sailing to Aqaba.

From the Syrian ports, Latakia and Tartous, shipments to Iraq have similar overland transit times as from Lebanon. But in these ports congestion reportedly is also becoming an issue, thus opening new prospects for Beirut and Lebanon’s second port of call, Tripoli, which also saw cargo business pick up in the second half of 2003. (Like Tartous, Tripoli Port is undergoing extension and modernization, financed by a development loan from the European Investment Bank.)

Trucking a container from Beirut to Baghdad currently costs between $1,200 and $1,800, depending on the circumstances, said Nabil Sakr, managing director of DAS Express, a firm with experience in overland forwarding to Iraq. He estimated shipping costs via Tartous to be about 25% lower, but claimed greater speed and expertise in Beirut could make up the difference for shippers. DAS management expects an increase of Iraq-bound container shipments via Beirut by 500% to 600% for this year alone. But even after such an increase, other ports would still be far ahead in their throughput of Iraq cargo. “What we are getting is almost peanuts,” Sakr said. Based on the reasoning that Beirut can equalize its higher port fees by already offering a faster turnaround time to ships and better service than the bureaucracy-heavy Syrian ports, Lebanon’s premier port could push its advantages further by offering lower rates and achieving additional improvements on service quality and speed – tasks for which a well-run, spanking new container terminal would come in more than handy.

A third industry concern and opportunity for developing the Lebanese shipping location is as a logistics hub. The crux of such an operation lies in the ability to provide large international manufacturing companies with a regional distribution base, from where adjacent markets are supplied and serviced.

International express shipping and logistics company DHL has already taken steps that could assist Beirut in assuming a stronger role in its regional network: it has set up new overland routes and their Lebanon operation has just received approval for expanding its facilities at Beirut International Airport by 3,000 square meters. The expansion involves a capital expenditure of $2 million and the hiring of some 40 new staff over the next three years, country manager John Chedid told EXECUTIVE.

He attributed much of Lebanon’s growth potential in providing logistics to improvements in the regulatory and customs environment. “When you have facilities and good customs practices, you start attracting transit material,” he said. “New procedures in customs have made everything clearer and much more transparent. If I dare make a prediction, 2004 will see further progress towards a much better regulatory environment.” One crucial improvement in operating conditions for international and domestic logistics firms is definitely in the making. Exploiting the geographical and skilled labor advantages of Beirut for providing logistics services to any of the big names in manufacturing requires a free zone environment that permits repackaging and distribution of shipments – which previously had not been possible under Lebanese regulations. However, EXECUTIVE learned the rulebooks for Lebanon’s free zones have just been rewritten. The revised rules, allowing freight forwarders to establish facilities in the free zones and implement regional distribution activities, are in the final approval phase at time of writing this article.

Joseph Harb, president of Beirut Cargo Center, told EXECUTIVE the new regulations will open tremendous opportunities for logistics providers not only for his company, but also for the economy at large. “If you want a big manufacturer like Addidas or Siemens to open an office in Lebanon, allow freight forwarders into the free zones,” he said. Additionally, the move would serve to promote Beirut Port internationally, Harb enthused. “Ports and customs authorities do not promote the free zones,” he said, “the freight forwarders are the ones to promote them.”