Saudi Arabia is emerging not just as a port destination but increasingly a logistics hub despite the dangers of the increasingly unstable region.

The Kingdom ranks 15th globally, with three of the country’s ports among the busiest 100 container ports in the world, according to information on the Mawani, Saudi Ports Authority, website. Last year the country was ranked 16th.

Red Sea ports led the way. Jeddah Islamic Port jumped to 32nd place globally, from 41st, moving 5,59 million TEUs in 2023 compared to 4,96 million TEUs in 2022, a 12.6% increase, whilst King Abdullah Port moved up one to 70th place, registering 2,93 million TEUs in 2023.

Late August also saw the opening of the Maersk Logistics Park at Jeddah Islamic Port (JIP). The 225,000-square-metre facility, built at the cost of some US$250 million, is the largest single-site logistics and services facility in the Middle East, according to Maersk. It’s also a milestone for the Danish shipping and logistics group being its largest facility in the world so far.

The logistic park’s big selling point is not so much its size – although it is big – but it can provide integrated logistics and multi-modal solutions under one roof and in a strategic location where it can leverage nicely off other adjacent facilities.

“The Maersk Logistics Park is located at the Jeddah Islamic Port, facilitating direct connection to ocean transportation. For air cargo movements, the facility will rely on Jeddah’s King Abdulaziz International Airport, which is within a 30-km range of the facility,” Mohammad Shihab, managing director, Maersk Saudi Arabia, told Asia Cargo News.

On the ocean-side, Jeddah Islamic Port is also a good placed to be based. It is on or near global shipping lines connecting three continents, which helps make it the Red Sea’s top port with around 5,000 vessels received annually. It also has 62 berths, a bonded logistics zone and a number of specialist terminals including two for containers with a combined capacity of 7.5 million TEUs and two for general cargo terminals.

Maersk’s facility is a supplement to this scale with warehousing for B2B and ecommerce requirements, temperature-controlled facilities and a customs-bonded setup. Also on offer are distribution solutions for first- and last-mile deliveries as well as customs clearance, visibility solutions and a control tower. This creates a lot of opportunities.

“The Maersk Logistics Park is designed to serve a wide range of industries and verticals, including FMCG, frozen food, automotive, retail and lifestyle, petrochemicals, electronics and pharmaceuticals,” Shihab said.

Maersk is cautious about what comes next, saying only it is interested in pursuing opportunities in both Saudi Arabia and the region but that “currently, our top priority would be to onboard our customers into this facility and let them exploit the full potential that we are offering,” Shihab added.

Nor is it the only offering on the Red Sea Coast. Some 130 km (or an hour-and-a-quarter’s drive) away is King Abdullah Port (KAP), recognized as the most efficient port worldwide in the World Bank’s 2022 Report.

KAP in August 2023 welcomed the MSC Irina, the world’s joint-largest cargo ship with a capacity of 24,346 TEUs.

KAP it has a strategic location, state-of-the-art infrastructure and an 18-meter draft. The privately-owned port, once completed, will be able to handle 25 million TEUs, 25 million tons of bulk cargo, as well as 1.5 million car-equivalent units (CEUs) annually, according to the port’s master development plan.

Not only do the two face off against each other, but they then both face the Red Sea region’s risks and geopolitical problems.

“KAP will compete directly with JIP,” acknowledged Steve Wray, head of maritime advisory at Infrata, an infrastructure investment consultancy group recently acquired by DSS+, “but [the] latter is unable to expand further and so new capacity is needed on the Red Sea coast to ensure demand is covered.

The Saudi land bridge will offer a solution via Dammam from [sometime around] 2040, but will increase transit times – and there remain uncertainties surrounding rail capacity for this alternative.”

In the interim, MSC investment in KAP will ensure the terminal will be full, said Wray, noting that container volumes are 85% MSC and 10% Maersk, with the remainder coming from other lines. The expectation is that Jeddah Islamic Port will be full by 2027 and that there will be a need for more capacity from then onwards to meet Saudi demand – meaning there is little risk of too many ports.

One potential problem, and it’s a large one, is the very thing that makes these ports so well-placed – their location.

Both are on the Red Sea, where the Houthi rebel movement is taking ships hostage at the southern end and a war near the northern end between Israel and Gaza might spill over into a much broader conflict. All this is happening in one of the world’s busiest shipping routes.

KAP has raised its game with increased security in the port. Safety at sea is a matter for shipping lines, who do have armed guards on vessels to deter pirates but are keener to avoid the area.

“The Houthi rebels have been active around the Bab-al-Mandeb Strait, towards the southernmost part of the Red Sea. The operations around Jeddah have not experienced any direct threats. The safety and security of our facilities, people, and customers’ cargo always take top priority in our operations and procedures,” said Maersk’s Shihab.

Not denying the dangers, Wray gives shipping lines from some countries more hope or chance than others.

“It seems that Chinese and Russian vessels are able to pass through unaffected. Reduction of about 60% of volumes has been assumed, but it has to be believed that a solution and resolution of the conflict can be reached soon and any port developments not delayed because of a relatively short term, albeit severe challenge,” he told Asia Cargo News.

By Michael Mackey

Correspondent | Birmingham