How can the private sector increase the competitiveness of the logistics industry on the western coast?
MOHAMMED AL-MUDARRES Jeddah has been the leader for Saudi ports in terms of imports for many years. Since the adoption of our new strategy, the port has been a key sector for us. SISCO has been working on various projects to expand its footprint. In early 2019, we signed an MoU with Mawani to combine our existing contract at RSGT terminal with the North Container Terminal into one contract to establish a world-class container terminal. There is also a focus to improve transshipment. We want to make Jeddah one of the main transshipment hubs on the Red Sea for a number of international lines. In order to be an industrial leader, Saudi needs the infrastructure and state-of-the-art technology and networks as well as a high-performance logistics network. Once the infrastructure is laid out, for Saudi industry to penetrate global markets, local players need to focus on the quality of the product, have competitive prices, and a clear, feasible target market. Penetrating the European and North American markets will be challenging. For a Saudi product to compete there, it has to have certain qualifications and qualities.
FAROOQ SHEIKH The private sector has to actively play its part in realizing the objectives set forth by the government in its Vision 2030 plan. We will need to collaborate with and work extensively with all the stakeholders in the logistics industry including first and foremost the regulatory authorities, the shipping and logistics companies, the freight-forwarding industry, as well as the end-users including traders, manufacturers, and retailers. Our perspective is that everything can be pictured as a unified chain. We should not fixate on any one mode of transportation as long as everything is conducted with complete transparency, efficiency, reliability, and security. At the end of the day, we are in the business of moving goods; it does not matter whether we do it using sea, land, or air routes.
How will new technological developments impact the local logistics sector?
MAM Without a doubt, e-commerce is driving the economy. It moved from North America to Europe and Asia and now has a significant impact on Saudi Arabia and the Middle East. At present, 10-15% of trade is done through e-commerce. The implications for this are better infrastructure and logistics. Big businesses like to own their own facilities; however, SMEs will outsource this part of the business. We would like to see more of the larger companies outsourcing and focusing more on their core business lines.
FS Our customer composition will completely change in the next few years such that shipping lines will form the largest segment of our customers. Clients are keen to work with a single company that takes care of every step. As such, big industry players will become even larger, and smaller players will start working for large players because they cannot afford the technological transition. At the same time, many manufacturers and logistics companies are starting to use blockchain-powered tracking technologies, which all players will need to integrate into their supply chain system within two to three years, particularly as the shipping industry becomes more digitalized by the day.
What role do subcontractors have now in the broader infrastructure development ecosystem?
MAM There are opportunities for subcontractors, even though it has become a game for big players. Larger companies must take the lead now, but that does not mean SMEs will disappear. If big companies drive the economy, they will not be able to do everything alone. When the big companies get these projects, they will need suppliers and smaller contractors. Overall, the economy will benefit.
Are Jeddah's logistics solutions sophisticated enough to make it a regional hub?
FS Over the past decade, Jeddah has emerged as an increasingly sophisticated market vis-à-vis logistics solutions. It has to cover some ground before it can be amongst the world's most sophisticated logistics hubs, though it has two great enabling factors in its favor: technology and the vision and will of its leadership to transform not just Jeddah but also the Kingdom into a sophisticated market. Jeddah will take its rightful place alongside the world's logistics hubs via a commitment to innovation as well as collaborations with industry stakeholders.