By creating a massive land bridge linking the Jeddah Islamic Port on the Red Sea with Dammam and Jubail ports in Saudi Arabia’s eastern region, the Saudi government is pursuing what shipping circles describe as a “game-changing” plan.
According to Saudi sources, the east-west freight railway line linking Dammam on the Gulf with Jeddah Islamic Port on the Red Sea will be state-owned and financed by Saudi Arabia’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 the Arabian Consulting Engineering Centre, was awarded the design contract from the Saudi Railways Organization (SRO) for the land bridge 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 a current sea journey taking between five and seven days.
The main traffic is expected to be containers, but passenger trains running at speeds of up to 220 km/h would also cut the Riyadh-Jeddah travel time from 10 hours by bus to six hours by rail. The land bridge is scheduled to be completed in 2020.
The contract covers services such as completing preliminary and detailed design phases, 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.
Walid Al-Fares, the director of commercial contracts and properties at the King Abdulaziz Port of Dammam, said in an interview with Asia Cargo News at Munich’s Transport Logistic Fair that the port was being designed with the Saudi market in mind. “The port will facilitate transport and shipment of oil and gas, chemicals, containers, general cargo [and others],” he said. The Saudi Ports Authority has nine ports under its management.
Explaining the operational methodology, Al-Fares 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 land bridge 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 [Saudi Arabia].”
Saudi Arabia exports mainly oil and gas, besides petroleum-based products. It imports almost everything of daily necessity.
Volumes at the Red Sea Gateway Terminal (RSGT) at Jeddah Islamic Port grew 25% in the first quarter this year over the previous year, with local volume growing by 44% and transhipment by 2%, according to JIP officials.
RSGT is expected to handle around 1.6 million TEUs in 2015, compared to some 1.4 million TEUs last year. The company, 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 this year, the RSGT received one of the world’s largest container vessels, the 19,100 TEU CSCL Globe, demonstrating the terminal’s ability to handle mega-vessel calls.
The present annual capacity of 1.8 million TEUs is expected to grow to 2.6 million TEUs in 2016 with draught alongside of 18 million.
Saudi Arabia is keen to attract foreign investors; it also gives benefits to manufacturers wanting to set up manufacturing operations.
“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-Fares said.
Logistics experts see the land bridge project as a means to transform Saudi Arabia into a regional logistics hub, besides promoting economic growth and bolstering its strategic location.
Indeed, spending on Saudi Arabia’s port infrastructure – which is expected to reach up to US$10 billion in the next decade – is aimed at further enhancing the country’s status as the world’s principal oil-exporting country.
There are nine principal ports in Saudi Arabia, five of which – 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; 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 programme 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 square metres 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 10 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.
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.
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 ideally situated on the route between Colombo and Suez, located 300km north of Jeddah Islamic Port. 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.
Saudi authorities envisage strong growth at Saudi ports over the medium term and the construction of new facilities. Projects such as the Saudi land bridge, the east-west rail project and the North-South Railway are expected to give a strong impetus to freight traffic over the medium and long term.
By Manik Mehta
International Correspondent | New York
