Saudi Arabia investing in logistics and landside infrastructure

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

“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,” Minister Nabil Al Amoudi said, speaking exclusively to 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 a Saudi Aramco. There's the King Salman International Complex for Maritime Industries and Services being constructed as we speak [in Ras Al Khair]. And 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 up, as implying that ports were a public sector asset in the Kingdom. 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.

“No, that's a misconception. Operations in the ports in the kingdom have been privatized for over 20 years. There have been long-term concession agreements. We have DP World, Hutchison Ports, and PSA International under a joint venture with [Saudi sovereign wealth fund] the Public Investment Fund. All of that has been [driven by] PPP relationships for over 20 years.

“We have Build-Operate-Transfer (BOT) relationships in Dammam and Jeddah. Saudi Global Ports and PSA International are 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.

“In the eastern province, obviously there are a lot of exports through Jubail, while 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 rail project 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 Construction Corporation, a unit of China Railways Corporation and a Saudi company, to look at how to develop that.”

Posted 11 March 2019

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Peter Shaw-Smith

Peter Shaw-Smith

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