Saudi Arabia Maritime Shipping Market Report

25 Sep 2019

The Saudi Vision 2030 plan envisages major change to the maritime sector. This report summarises the key trends shaping the Saudia Arabia shipping market.

The Saudi Vision 2030 plan launched in 2016 envisages major change in all sectors of the economy, and maritime is no exception. To date, great progress has been made on the development of port facilities in Jeddah, Dammam and Jubail, and a transhipment facility in King Abdullah Economic City has already achieved great strides for the kingdom’s west coast less than six years after it opened.

In 2018, port throughput jumped 7.5 per cent, largely on the success that King Abdullah Port (KAP), and, increasingly, Red Sea Gateway Terminal (RSGT), the biggest player at Jeddah Islamic Port (JIP), have enjoyed in driving transhipment volumes on Saudi Arabia’s west coast, the natural location for a major global transhipment hub based in the Middle East- Red Sea region.

Vision 2030 aims to achieve a thorough and comprehensive overview of the current state of the maritime industry in the kingdom, with a focus on the improvement of landside logistics and a consolidation of port operations at major trade entry points, with RSGT now looking extremely likely to take over the management of Jeddah Islamic Port’s North Container Terminal.

Arguably the most important measure taken of late by the Saudi authorities to facilitate trade is the promise of a 24-hour Customs clearance for incoming cargo, a process that used to take anything from ten to 14 days, and result in uncertainty and angst for both shippers and consignees.

Fasah, the electronic national system for import and export that was launched last year as a joint effort of 25 government entities, has achieved a positive outcome in clearance procedures, by enabling companies to track and complete their clearance procedures electronically, and decreasing the number of clearance documents required.

Infrastructure is also undergoing a major strategic shift, with the development of International Maritime Industries (IMI), a joint venture of Saudi Aramco, UAE-based Lamprell, Hyundai Heavy Industries of South Korea, and the National Shipping Company of Saudi Arabia (Bahri), the owner of the world’s largest VLCC fleet. It is located in the Arabian Gulf on Saudi Arabia’s north-east coast, at Ras Al Khair, and is initially envisaged as a ship repair yard before ultimately moving into ship building from 2022.

IMI is the anchor facility at King Salman International Complex for Maritime Industries and Services, and is expected, in terms of GDP contribution, to generate around USD18 billion in investment by 2030. Through localisation, and recruitment of Saudis to a new industry, up to 80,000 people could be employed there by the end of the next decade.

The fleet of the National Shipping Company of Saudi Arabia (Bahri) currently stands at 92 vessels including 36 chemical and product tankers, six multipurpose vessels, five dry bulk carriers and 45 VLCCs, making it the largest owner of supertankers in the world. The privatisation of Saudi Aramco, which appears to be on hold for the time being, will undoubtedly make Bahri only more profitable, as CEO, Eng. Abdullah Al Dubaikhi, becomes a more seasoned operator.

Education and training is at the forefront of the effort to improve the attractiveness and feasibility of a maritime career for Saudi nationals, at a time when growing unemployment is a national concern. Several academic institutions across the kingdom are increasing allocation of resources to training directly related to aspects of the maritime sector, to answer the call to man deck and quay.

“Air, maritime, and other transport operators will be encouraged to make the most of their capacity: achieving durable links between existing trade hubs, as well as opening new trade routes... will reinforce our position as a distinctive logistical gateway to the three continents [of Asia, Europe and Africa]", the official Vision 2030 reference document says.

SAUDI ARABIA INVESTING IN LOGISTICS AND LANDSIDE INFRASTRUCTURE

Saudi Arabia is working to improve its land-side transportation, especially rail infrastructure, as it looks to exploit existing logistics and maritime development, the Kingdom’s Transport Minister revealed.

“We’re open for business, like we haven’t been in the past. The Kingdom has relied on the fact that it was, is and will remain the largest economy in the region. We probably did not focus on the importance of efficiency in the past,” Transport Minister Nabil Al Amoudi told Seatrade Maritime News on the sidelines of the Saudi Maritime Congress (SMC).

“We are now are focusing... heavily on efficiencies, especially in import-export processes, digitalisation, and ensuring that the infrastructure that we’ve already installed is being utilised properly,” he said. “Besides maritime, we’re working on land transport as well and are going to be expanding our rail network as well. And in the near future we will announce major projects.

“The Kingdom is looking to logistics as a key enabler of growth in its economy. All of this requires private sector participation, especially under the auspices of Saudi Aramco. There’s the King Salman International Complex for Maritime Industries and Services being constructed as we speak. I think that shows the commitment of the Kingdom to delve deeply into this sector and invest.”

Al Amoudi said it was a mistake to see the oversight of the Saudi Port Authority, which he earlier headed, as implying that Saudi ports were a public sector asset. The west coast’s King Abdullah Port (KAP) is the only privately-owned facility in Saudi Arabia, but not the only one that is privately-operated.

agreements. We have DP World, Hutchison Ports, and PSA International under a joint venture with [Saudi sovereign wealth fund] the Public Investment Fund [all operating in Saudi Arabia]. All of that has been [driven by] PPP [public-private partnership] relationships for over 20 years.

“We have Build-Operate-Transfer (BOT) relationships in Dammam and Jeddah. Saudi Global Ports and PSA International are [in relationships] with local companies. The private sector has invested in ports for a long time now in the kingdom. This is not a new thing. What’s different is the amount of investment, but KAP is not the only privately-operated port in the kingdom.”

He agreed that the Kingdom’s logistics center of gravity was moving to the west coast, given the increasing competition between KAP and Jeddah Islamic Port. “On the west coast, we see a lot more imports and transhipment, given the location. We see the transhipment specifically increasing quite a bit. That is due to the natural geographic location, as well as centers of consumption and centers of industry and development.”

Al Amoudi said he foresaw progress on the Saudi Landbridge, the railway linking Jeddah to Dammam, via Riyadh, that has been on the drawing board for almost a decade. “That’s going to be a key project for us to execute on the next few years. We signed an MOU with China Civil Engineering Corporation, a unit of China Railways Construction Corporation and a Saudi company, to look at how to develop that.”

Saudi port performance 2016-2018


The strong performance of transhipment in the Western Province is the story that emerges from Saudi Ports Authority throughput data for 2016-18. Even though
the Eastern Province share of transhipment cargo was slightly up in 2018 from that posted in 2016, the Western Province still accounted for over 99 per cent of total cargo transhipped through Saudi Arabia in 2018. In 2016, transhipment stood at 33 per cent of total Saudi throughput, while in 2018, the share had risen to 46 per cent, a figure that is only going to increase in future, as the kingdom’s logistics planners further develop their blueprints.

Countrywide, total throughput stood at 8.67 million teu in 2018, an increase of 7.5 per cent on the year earlier figure. However, total import and export levels fell in both 2017 and 2018, and it was the boost from transhipment that lent the overall figures a strong respectability. As a result, the Western Province’s share of total throughput rose to 74 per cent in 2018, a share that has been growing steadily since 2016, when it was just under 71 per cent. Both kingdom wide imports and exports share of the total fell from 33 per cent in 2016 to 27 per cent each in 2018.

The best-performing facility in the kingdom in 2018 was King Abdullah Port (KAP), with throughput of 2.26 million teu. The facility to come second was Red Sea Gateway Terminal (RSGT) with 1.52 million teu, while DP World’s South Container Terminal ranked third, capping impressive two-year growth which saw throughput at the facility double, to 1.40 million teu.

Throughput at KAP has been rising at a gallop, up 29 per cent CAGR in 2016-18. Throughput rose an impressive 37 per cent last year. However, operators at Jeddah Islamic Port (JIP) have a tendency to attribute KAP’s success to operating off a low base, as operations did not begin at the latter until 2013.

Jeddah Islamic Port—which comprises the operations of RSGT, Gulf Stevedoring and Contracting Co.’s North Container Terminal (NCT) and SCT under ‘one roof’—can still claim to be the kingdom’s largest gateway, with throughput of 4.14 million teu in 2018. Furthermore, transhipment at JIP, at 2.10 million teu in 2018, was larger than the comparable figure for KAP
of 1.85 million teu. The question is which of the two ports will ultimately win out in the race to handle the transhipment cargos that the kingdom will undoubtedly continue to attract in ever larger numbers in the future.

In contrast to Western Province, which grew over 10 per cent in 2018, Eastern Province performance fell in the last two years to 2.27 million teu, exceeding by only a whisker total KAP performance last year. If Gulf Stevedoring and Contracting Co., owned by the UAE’s Gulftainer, does lose its concession to RSGT, it will be able to focus its efforts on Jubail, which handled only 730,000 boxes last year.

Connecting Saudi's shipping and logistic sectors


The Saudi Maritime Congress offers an opportunity for international and regional shipping, ports, logistics, ship construction and offshore marine companies to network, do business, strengthen and nurture new partnerships and agreements.

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