Why is Dubai building a new port outside the Strait of Hormuz?

Dubai-owned is preparing to advances plans to develop a new multipurpose port and container terminal in the emirate of Fujairah on the United Arab Emirates' eastern coastline, reported the Financial Times.

If completed, the project would fundamentally change how cargo enters and leaves the Gulf by allowing ships to avoid the Strait of Hormuz altogether.

The proposal comes after months of disruption caused by the regional conflict that erupted on February 28, when maritime traffic through one of the world's busiest shipping lanes became increasingly dangerous because of missile attacks, drones, naval mines and heightened military activity.

While Jebel Ali will remain the UAE's flagship logistics hub, the proposed Fujairah development represents a strategic effort to diversify the country's maritime infrastructure and reduce its dependence on a single geopolitical chokepoint.

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Why the UAE is looking beyond Jebel Ali

For decades, Jebel Ali Port has been at the heart of Dubai's transformation into a global trade and financial centre.

The port handled 15.6 million twenty-foot equivalent units (TEUs) last year and serves as one of the world's most important re-export hubs, linking manufacturers in Asia — including India and China — with markets across Africa, Europe and the rest of West Asia.

However, Jebel Ali's biggest strength has also become its greatest vulnerability.

Located inside the Persian Gulf, every vessel heading to or from the port must pass through the Strait of Hormuz, the narrow waterway separating Iran from Oman. Around one-fifth of the world's oil normally passes through the strait, making it one of the most strategically important maritime passages on the planet.

Following US-Israeli strikes on Iran on February 28, the waterway became increasingly unstable. Although an interim agreement briefly restored commercial navigation, disagreements over the interpretation of provisions relating to the strait triggered renewed tensions between Washington and Tehran, leading to another wave of attacks on shipping.

According to reports, Iran has fired nearly 3,000 drones and missiles at the UAE since the conflict began. Earlier in the war, debris from an Iranian missile reportedly struck the Jebel Ali area, sparking a fire.

As maritime risks mounted, container operations at Jebel Ali reportedly fell by between 90 and 95 per cent, while commercial shipping through the Strait of Hormuz dropped dramatically.

Before the conflict, roughly 135 vessels transited the waterway every day, but after hostilities resumed, daily traffic struggled to rise above about 40 ships even during periods when the strait was declared open.

DP World's Fujairah project aims to bypass Hormuz

Against this backdrop, DP World has entered advanced discussions to establish a new logistics gateway on the Gulf of Oman.

The company is negotiating plans to develop both a brand-new multipurpose port and a new container terminal at Fujairah's existing harbour. Because Fujairah lies outside the Strait of Hormuz, ships would no longer need to sail through the contested waterway before reaching the UAE.

Instead, vessels arriving directly from the Indian Ocean would unload containers at Fujairah, with cargo then transported overland by heavy-duty road networks — and eventually the Etihad Rail system — to Dubai, Abu Dhabi and neighbouring Gulf states, reported the Financial Times.

DP World is reportedly discussing a term sheet with government authorities, while the financing and ownership structure is still being finalised. Initial investment is expected to run into hundreds of millions of dollars, although spending could increase depending on future capacity requirements.

The company has not confirmed the specific details of the project but acknowledged that diversification plans are underway.

"We do have our own plan, and we've been very active in terms of looking at the eastern coast as far as DP World is concerned. It's defensive in case things go wrong," a senior company official told FT.

The same official also stressed that the eastern expansion is not intended to replace Dubai's flagship port. "Jebel Ali will continue to be Jebel Ali. It will never be downsized."

The proposed facilities could reportedly become operational within approximately 18 months if construction proceeds as planned.

A major shift in the UAE's economic strategy

Historically, each emirate developed specialised strengths. Dubai became the country's commercial, logistics and financial powerhouse through Jebel Ali, Abu Dhabi dominated the energy sector, while Fujairah built its reputation primarily around oil storage, bunkering and energy exports.

Moving significant container handling capacity to Fujairah represents one of the biggest shifts in the UAE's logistics network in decades.

Rather than concentrating nearly all container traffic inside Dubai, the country is beginning to spread critical infrastructure across multiple locations to reduce strategic risk.

The proposal also fits into a broader national effort to strengthen economic resilience against future regional crises. Until now, Gulf countries had largely focused on bypassing Hormuz for oil exports.

Abu Dhabi's Habshan-Fujairah pipeline already transports around 1.8 million barrels of crude oil per day directly to the Gulf of Oman, while ADNOC has accelerated plans for a new west-east pipeline aimed at increasing export capacity to around 5 million barrels per day.

Saudi Arabia has similarly relied on its East-West pipeline to move up to 7 million barrels of oil daily to ports on the Red Sea.

What remained exposed, however, was containerised trade. Unlike crude oil, consumer goods, food supplies, machinery, industrial equipment and manufacturing inputs continued to rely heavily on maritime access through Hormuz.

The Fujairah expansion is intended to close that gap by creating a parallel logistics network for non-oil cargo.

Conflict highlights the urgency

On July 14, the UAE Defence Ministry confirmed that two Emirati oil tankers — Mombasa and Al Bahiyah — were struck by Iranian cruise missiles in waters near the southern approach to the Strait of Hormuz. The attack killed one Indian crew member and injured eight others.

Separately, the UK Maritime Trade Operations reported that another tanker was hit by an Iranian missile approximately 13 nautical miles southeast of Limah, Oman, while travelling along the southern shipping route.

Iran's Revolutionary Guard later claimed responsibility for striking two "offending supertankers", alleging they had ignored warnings, switched off their navigation systems and attempted to transit through "a mined route".

The latest attacks followed weeks of heightened military activity around the strait and illustrate the continued risks facing commercial shipping despite intermittent diplomatic efforts.

US President Donald Trump also reinstated a blockade of Iranian shipping and proposed introducing a 20 per cent transit fee.

For major trading partners such as India — which depends heavily on Jebel Ali for re-export operations and has a large workforce employed across Gulf shipping and logistics sectors — the creation of a secure alternative cargo route could help stabilise supply chains while reducing risks to civilian mariners.

What next

The project is also likely to heat up competition along the UAE's eastern coast.

DP World's plans coincide with Sharjah-based port operator Gulftainer's announcement of a $2 billion investment programme to expand capacity at nearby Khor Fakkan, another major container terminal on the Gulf of Oman.

Since the conflict began, DP World has already diverted some cargo away from Jebel Ali to Fujairah and Khor Fakkan, resulting in heavy congestion at both ports.

Additional infrastructure could help distribute traffic more efficiently while strengthening the UAE's position as a regional logistics hub.

Industry observers believe the disruption could have lasting consequences. "The impact on Jebel Ali is likely going to be significant and permanent," Lars Jensen, chief executive of consultancy Vespucci Maritime told FT.

The economic effects are already becoming visible. Moody's estimates DP World's earnings could decline from $6.6 billion in 2025 to approximately $5.9 billion this year because of the conflict and the disruption to shipping.

Even so, Gulf officials maintain that Jebel Ali will continue to serve as the UAE's premier logistics centre, supported by its extensive free zone, warehousing complexes and industrial infrastructure.

Rather than replacing Dubai's flagship port, the proposed Fujairah development is designed to complement it by creating a second gateway capable of keeping trade moving during periods of instability.

With inputs from agencies