A major part of Port Rashid, which was the lifeline of Dubai's foreign trade before Jebel Ali Port opened in 1979, may be closed late next year since it cannot accommodate large new-generation container ships. Industry sources say the port, located between the Palm Deira and The World cluster of man-made islands, has fallen out of favour with shipping companies, which prefer the region's biggest port, Jebel Ali, as their hub.

Two big shipping lines, Evergreen and Cosco, moved to Jebel Ali last March, affecting the port's container business. DP World, the operator of Dubai ports, has been planning to halt container operations at Port Rashid for some time as the port's location close to the city's populated areas creates logistics and traffic problems.

"They have been talking about it but could not do so because Dubai's cargo volume has been increasing every year and the ports have limited capacity.

"Now, with Jebel Ali's expansion, they can have all container operations in one port," said a shipping line official. Close to Jebel Ali, Abu Dhabi is developing the massive Khalifa Port that will have both container and general cargo operations. That port will also be operated by DP World.

Another person familiar with DP World's plans said the company could stop using Port Rashid for container traffic in either the third or fourth quarter of 2008.

"I cannot confirm that. It all depends on the growth in business, there is no decision yet," DP World UAE's commercial director Tariq Bin Khalifa told Gulf News.

When it officially opened in 1972, Port Rashid was able to accommodate the largest ships of that time, but now it cannot handle the giant new-generation ships.

Port Rashid has a draft of up to 13 metres, which is inadequate for vessels with a carrying capacity of more than 6,000 TEUs (twenty-foot equivalent units).

Jebel Ali, the port of choice in the region for most shipping companies, has increased its container handling capacity to 11.5 million TEUs under the ongoing $1.5-billion expansion work. The capacity is set to exceed 14 million TEUs next year.

The expansion of the port involves deepening of the channel up to 17 metres, enabling new generation vessels of 13,000-TEU capacity to call there.

The port's quay length will expand by 2.5 kilometres to 7.2 kilometres next year.

Port Rashid is likely to remain open to general cargo vessels and may have more cruise facilities. Dubai is planning a new cruise terminal in the area to support the existing one as the number of cruise tourists continues to rise each year.

Next to the port, the government is also developing Dubai Maritime City, a 227-hectare exclusive zone for companies involved all kinds of maritime business from ship repairs to legal services.

Together with Dubai Drydocks, these will create the region's largest maritime services hub.