PRIVATE PORTS

Saudi Arabia 2017 | TRANSPORT | B2B

Combined with the recent expansion of the Suez Canal, the Kingdom's proximity as a critical transshipment hub makes the expansion of Saudi's private port all the more lucrative.

Abdullah Hameedadin
ABDULLAH HAMEEDADIN
Managing Director
King Abdullah Port (KAP)
Micheal Wubbens
MICHEAL WUBBENS
Managing Director
Huta Marine

What are your expansion plans?

ABDULLAH HAMEEDADIN When it comes to the container side, by the end of 2016 our infrastructural capacity was roughly 4 million TEUs, even though our volume is still 1.4. We are looking to the port to be the hub for the entire region so we need to expand to other businesses, which includes Ro-Ro and bulk shipments. We will open the first terminal this year where our Ro-Ro operations will have a capacity of up to 300,000 cars and bulk for up to 3 million tons. The advantage we have is that the whole masterplan was created from scratch; we had the ability to properly plan and implement things learned from around the world in the port. Needless to say, it is in a strategic location on the Red Sea connecting Southeast Asia and Europe. With the Suez Canal expanding to include a second lane, the opportunities are endless. With King Abdullah Port located between Mecca and Medina, Saudi Arabia has spent a large amount of money in the last few years to improve infrastructure in the region. Jeddah Airport is being expanded by building a new terminal, and the Medina-Mecca passenger railway system, which passes through King Abdullah City, will also be operational in 2018. We are working with the Ministry of Transportation to eventually link up with the land bridge freight railway that will connect eastern Saudi Arabia with the western region and completely change the shipping line movement. A vessel will be able to load its containers at KAP and be in the eastern province in less than 24 hours, thereby avoiding the Strait of Hormuz, which has higher insurance premiums.

MICHEAL WUBBENS We foresee an expansion of the port that will continue for the next couple of years. Today we have more than 3km of berths that are completed, and we plan to have about 15km in total by the end of the project. So, we have a few years yet ahead of us. The ultimate development period depends on finance, economy, demand, political issues, and more. However, we see a continuous increase in demand, because of the superiority of KAP's infrastructure, its superior efficiency, and its strategic positioning. The port is in the proximity of Yanbu, and considering that Vision 2030 includes the expansion of the petrochemical industry, it is an excellent place to be because these exports all go to KAP. Yanbu does not have adequate port facilities for the export of commercial cargo like containerized petrochemical products—it is an industrial port, not a commercial one. The commercial port of Yanbu was not designed as a container port and does not have international connectivity. So, it needs KAP.

What are some of the major ongoing trends in the shipping business?

AH One key advantage that Saudi Arabia has is the crucial proximity of the Arabian Peninsula between Europe and Asia. With our strategic location on the Red Sea, we have emerged as a prime transshipment hub without losing our focus on import/export capabilities. That is how we attract global logistics leaders: by inviting them to come load their transshipments here where there is so much available land, not to mention an abundance of imports/exports apart from crude oil. Previously, these companies would offload their transshipment and leave with an empty load, but the development of Saudi Arabia's exports means this is no longer the case. We are next to the Yanbu industrial area and very close to Petro Rabigh, while also adjacent to the Industrial Valley at King Abdullah Economic City, which helps many of these shippers avoid that double call. That is one of the key advantages we have in being able to attract these large shipping lines to Saudi Arabia.

MW In the global shipping industry, small shipping lines are going out of business, and there is a great deal of consolidation going on. The remaining lines have forged four “alliances,” which are capacity-sharing agreements, similar to what airlines are doing. There are just four alliances remaining now, namely 2M, Ocean 3, G7, and CKYHE. The alliances are part of an effort to optimize the use of existing capacities. The use of large ships triggers economies of scale. Big ports like ours that can accommodate this trend will be more important. In short, cargo is being driven onto larger and larger ships, and only ports like ours that can accommodate such vessels will remain competitive internationally.