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Jeddah Islamic Port to retender terminal concessions expiring in 2019

Jeddah Islamic Port to retender terminal concessions expiring in 2019
The Saudi Ports Authority's flagship facility, Jeddah Islamic Port (JIP), will retender concessions to its north and south terminals in around 2017, its top official tells Seatrade Global.

Sahir Tahlawi, dg JIP, said existing concessionaires needed to discharge their obligations and "do a good job, otherwise [they] would lose [them]."

DP World, the incumbent at the South Terminal, saw volumes plummet to 800,000 teu last year after MSC pulled out in May in favour of King Abdullah Port at Rabigh, some 140km north of Jeddah.

Ahmed Al-Amoudi, ceo DP World Jeddah, said current JIP South capacity is 2.4m teu and that DP World head office was looking for major lines to replace MSC.

DP World today pays JIP 65% of its revenues in a 20-year concession set to expire in 2019 in return for the right to operate the south terminal today, Al Amoudi said.

“Competition has increased because [the lines going to KAP] are not giving a penny to the government,” Al Amoudi told Seatrade Global.

Saudi Arabia’s first privately owned and funded port, KAP is owned by Ports Development Co., the landlord at Rabigh, which in turn is owned by Emaar Economic City, developer of King Abdullah Economic City, and Saudi bin Laden Group.

KAP’s website said capacity was due to hit 2.7m teu at the end of 2014. “KAP lies directly on the main Asia Europe trunk line. It can reduce East-West transhipment times by five to seven days,” it said.  

Only one concession has been awarded at KAP, to National Container Terminal (NCT), a Saudi company associated with International Port Managers (IPM), and National Port Services (NPS), part of Nesma Holding Group.

It is unclear when new terminal space at KAP will become available for other potential lessees.

Al Amoudi said the Dubai-based company would be keen to regain rights to JIP South, but did not comment on potential interest from DP World in future concessions at KAP.

Gulftainer, also of the UAE, acquired 51% of Gulf Stevedoring, operator of Jeddah North, in 2013, but has not revealed any details about recent performance. Maersk Line is also understood to have pulled out of JIP North in favour of KAP.

Tahlawi said Gulftainer was paying JIP 48% of its revenues for its concession at Jeddah North.

Red Sea Gateway Terminal owners, who along with sister company Tusdeer, operator of a bonded and re-export terminal at JIP, are understood to be only five years into a 25-year concession, will not be part of the Jeddah retender process.

JIP South Terminal became the first international terminal in DP World's portfolio in 1999, when the then Dubai Port Authority entered in to a JV with local partner Siyanco. DP World bought out its local Saudi partner in 2007.

KAP is understood to be handling between 1-1.5m teu per annum today.

The danger for JIP is that as KAP adds further capacity, more members of the world’s two major alliances, 2M and Ocean 3, could all move to KAP, leaving it handling only business relating to CHYKE and G6, but informed sources tell Seatrade Global this could be only a temporary bargaining tactic, as Jeddah's central location is more favourable to the lines long-term.

Informed industry participants expect operations on the Saudi Landbridge, the rail link from Jeddah to Riyadh, which will open the overland route to Dammam, the kingdom's major east coast facility, to open in 2020. However, a spur to Rabigh could also be planned.

Saudi Arabia-based port officials say they expect the landbridge to ultimately reduce Jeddah-Dammam transit times by seven-eight days.

Tahlawi said DP World would want to renew its concession in 2019. “They want to stay here because of the prestige it confers. It was their first project outside the UAE. They also want to maintain exposure to the Saudi market,” he said.

Saudi Arabia's west coast is seeing growing cargo interest, with a new port at Al Lith, 210 km south of Jeddah, planned for general cargo, livestock and ro-ro, while Yanbu's commercial and industrial ports are expanding, a new megaport at Jizan is also on the drawing board.

With the vast majority of its onshore and offshore oil fields concentrated on the much smaller east coast, Saudi Arabia’s west coast, ideally situated on the world’s main shipping trunk route, is becoming the focus for container, general cargo, bulk and ro-ro.