Saudi Arabia aims to increase sea trade by building massive landbridge

Saudi Arabia aims to increase sea trade by building massive landbridge  Saudi Arabia is keen to increase its sea trade and shipping by building new infrastructure. A massive Landbridge, that will link the Jeddah Islamic Port on the Red Sea with Dammam and Jubai Ports in the country’s eastern region, is being described as the country’s infrastructure icon. Indeed, efforts are also being made to modernize and expand rail and road facilities aimed at propping up seaport traffic.  A massive east-west freight railway line will connect Dammam on the Gulf with Jeddah Islamic Port on the Red Sea; this facility will be state-owned and financed by the Kingdom’s Public Investment Fund, though the contract for the operations will be given to an outside company.   In April 2014, Italian railway consultancy Italferr, in conjunction with Arab Consulting Engineering Centre, was awarded the design contract from the Saudi Railway Organization (SRO) for the Landbridge railway project. The 950-km link will considerably shorten freight transportation time between Saudi’s Gulf and Red Sea ports. The US$7 billion project, on completion, will reduce freight transportation time to only 18 hours, compared to the presently long and protracted sea journey that takes between five and seven days.  Though the main traffic is expected to be containers, passenger trains will also be operated running at speed of up to 220 km/h and cutting the Riyadh-Jeddah travel time from 10 hours by bus to 6 hours by rail.  The contract covers services such as completing preliminary and detailed design phases, and track and structures, stations, freight facilities, signalling (ETCS Level 2) and telecommunications, and an environmental impact study.  It also encompasses studies on noise mitigation and managing the impact of the harsh desert environment on the railway. Waleed Faris Al-Faris, the director of Commercial Contracts and Properties at the King Abdulaziz Port of Dammam, recently interviewed by the American Journal of Transportation in Munich explained that the port was being designed to help transport large volumes of commodities. “The port will facilitate transport and shipment of oil and gas, chemicals, containers, general cargo, etc.,”  he said. The apex managing agency Saudi Port Authority has nine ports under its management.  

Explaining the operational methodology, Al-Faris said: “We own a port and give it to the private sector for operations and profit-sharing.  We deal only with seaports.  We are building the Landbridge connecting the vast region from Jeddah to Dammam port.  By connecting these two rail points, we save time and costs and also protect cargo and ships from acts of piracy that are possible in the southern part of the Kingdom.” Saudi Arabia exports, mainly, oil and gas, in addition to petroleum-based products. It imports almost everything of daily necessity. Volumes at Red Sea Gateway Terminal (RSGT) at Jeddah Islamic Port (JIP) have been growing at double-digit rates; though final data for 2015 was not available at the time of filing this story, RSGT is expected to handle around 1.6m TEUs in 2015, compared to some 1.4m TEUs the previous year.   The Riyadh-Jeddah Landbridge, linking Dammam to Jeddah by rail, according to the RSGT, should be completed by 2020, and will allow Jeddah to handle more cargo from the east of the country. The RSGT, which regularly handles mega-vessels with capacities of over 14,000 TEUs at the terminal, saw a total of 110 such calls in 2014. In March 2015, the RSGT received one of the world’s biggest container vessels, the 19,100-TEU CSCL Globe, demonstrating the terminal’s ability to handle mega-vessel calls,  The hitherto annual capacity of 1.8m TEUs is expected to grow to 2.6m TEUs in 2016. Saudi Arabia is keen to attract foreign investors; it also gives benefits to manufacturers wanting to set up manufacturing operations.  The Saudi government is encouraging the establishment of manufacturing facilities by foreign companies as a way to diversify from the kingdom’s oil and gas export economy. “Last year we passed a 20 year development bank report prepared by the World Bank to identify our weaknesses.  We have the lowest tariffs among the Gulf Cooperation Council (GCC) countries, making our ports more attractive,“ Al Faris said.  According to Saudi logistics experts, the Landbridge project has the potential to transform Saudi Arabia into a regional logistics hub, besides promoting economic growth and bolstering its strategic location. Indeed, expanding Saudi Arabia’s port infrastructure is aimed at further enhancing its status as the world’s principal oil-exporting country, which is expected to invest up to US$ 10 billion for developing its port infrastructure in the next decade.  There are nine principal ports in Saudi Arabia, of which five, Dhiba, Yanbu Commercial Port, Yanbu Industrial Port, Jeddah and Jazan are on the Red Sea coast, while the other four, Ras Al-Khair, Jubail Industrial Port, Jubail Commercial Port and Dammam, are on the Persian Gulf. More than half of Saudi Arabia’s sea traffic passes through Jeddah port; new port facilities at Yanbu Industrial City on the Red Sea have eased Jeddah’s load and improved the efficiency of petrochemical exports. Developing new ports is a major feature of the program for establishing four new Economic Cities, a key element in the country’s attempts to attract Foreign Direct Investment (FDI) to diversify the economy. New ports are being developed in King Abdullah Economic City (KAEC) and Jazan Economic City (JEC).  Development of the US$6 billion Millennium Seaport in KAEC is set to be completed by 2019.  Once completed, the new port will have capacity for about 20 million TEUs per year. The King Abdullah Port has a storage capacity of 300,000 sq m to accommodate more than 700,000 units. A landmark in the development of Saudi ports was the opening in early 2014 of the seaport at KAEC which, experts say, could become one of the world’s top ten ports and a major hub for Asian and European shipping lines. With its strategic location on the Red Sea and instant access to key cities within Saudi Arabia, the King Abdullah Port has the potential to become a hub for onward movement of goods to Europe, Africa, Asia, and beyond.  It will have an integrated transport system, with easy transfer from sea to rail, road and air, making it a gateway to the Central and Eastern Provinces as well as the entire Kingdom. King Abdulaziz Port, also known as Dammam Port, is undergoing expansion, with more than US$750 million being invested, including US$535 million for container terminal capacity expansion and US$213 million for other facilities. The new container terminal at KAP is expected to double the port’s capacity to three million TEUs.  This much needed capacity reflects the port’s strategic importance, as the only Saudi port with a rail link which connects the city and port’s docks directly to nearby industrial complexes. At Yanbu on the Red Sea coast, plans were unveiled in spring 2014 for the construction of a major new shipyard, as part of a major port expansion, set to be completed in 2018/19. This development at Yanbu, reflects a growing realization within Saudi Arabia of the importance of its strategic location and the significance of its Red Sea ports on the world’s main shipping lane. Like other Saudi Red Sea ports, Yanbu is situated on the route between Colombo and Suez, located 300km north of Jeddah Islamic Port, the Kingdom’s principal cargo gateway. Yanbu’s two ports have a total capacity of 190 million tonnes a year, with seven terminals with 24 berths, while the water depth allows the two ports to handle the largest vessels in the world to come alongside. The Saudi authorities envisage strong growth at Saudi ports over the medium term and the construction of new facilities.  Projects such as the Saudi Landbridge, the east-west rail project linking Riyadh with Jeddah Islamic Port, and the North-South Railway, are expected to be strong growth drivers for freight traffic over the medium and long term.