The Kingdom’s long-term development plan, Saudi Vision 2030, gives a special place to the transport and logistics sector, aiming to leverage the country’s unique location on global shipping routes to make the maritime industry a cornerstone of national development. This means a much greater focus on domestic ports, with many projects already under way that should see major harbour-side progress in the years ahead.
However, port development requires a range of soft infrastructure advances, as well. Therefore, there is a current focus on the integration of systems and procedures, and a major effort to streamline services. While 2016 was a year of planning, 2017 proved to be a year of transition and implementation. Success with these initiatives should not only help boost maritime’s economic contribution, but also the global reputation of Saudi Arabia’s wide range of port facilities.
Individual port totals submitted to the Saudi Ports Authority show that 2017 was a good year for cargoes, although slightly down on the year before. A total of 270.3m tonnes were handled in the year to November 2017, while the year to November 2016 saw 272.3m tonnes. Both figures show a healthy increase over the last five years, with the year to November total for 2012 standing at 187.7m tonnes.
The SPA administers nine ports: Jeddah Islamic Port (JIP); King Abdulaziz Port Dammam; King Fahad Industrial Port Yanbu; King Fahad Industrial Port Jubail; Yanbu Commercial Port; Jubail Commercial Port; Jizan Port; Dhiba Port; and Ras Al Khair Port. The last is principally a mining port, while the two industrial ports are oriented towards the oil industry, with Yanbu on the Red Sea coast and Jubail on the Gulf coast. The other facilities work with a range of bulk and container cargoes. JIP handled 50.46m tonnes in the year to November 2017; King Abdulaziz Port Dammam, 27.17m tonnes; Jubail Commercial Port, 10.9m tonnes; Yanbu Commercial Port, 2.58m tonnes; Dhiba Port, 2.12m tonnes; and Jizan Port, 1.44m tonnes. Jizan Port dominates in passenger travel, handling 468,278 passengers in the 11-month period, while Dhiba Port transported 447,346 people, JIP moved 269,257 and Yanbu Commercial Port, 46,521.
JIP is the largest port on the Red Sea, with the Jeddah Development and Regeneration Company looking to expand its capacity further with an inland dry port. This will likely be located along the future Jeddah-Riyadh-Dammam land bridge, allowing processing of goods away from the port itself to work around any capacity constraints and delays at harbour.
The SPA engages a range of companies to operate facilities at its ports, including DP World, which operates the Southern Containers Station at Jeddah; Sianco, which runs the goods and passenger station at Dhiba; and Red Sea Marine Services, which is also at Dhiba and King Fahad Industrial Port Yanbu.
In addition to the SPA-operated ports, the Kingdom is also home to the private King Abdullah Port (KAP), owned by the Ports Development Company, a joint venture between Emaar The Economic City and the Bin Laden Group. Also located on the Red Sea coast and next to the King Abdullah Economic City’s (KAEC) Industrial Valley, it reported a good performance in 2017 as well, announcing that the first six months reflected throughput growth of 14% year-on-year. National Container Terminals handles industrial cargo, and AM steel was contracted in October 2017 to operate the port’s first bulk and general cargo terminal. With an annual capacity of some 3m tonnes, this terminal is expected to start operations in the second quarter of 2018.
Besides being located on trade routes that serve large swathes of the globe, Saudi Arabia is a significant market in itself, with a population of 32.3m in 2016, according to the World Bank – far larger than any of its GCC neighbours. Vision 2030 can thus capitalise on natural advantages to achieve its goal of positioning the country as a “global logistics hub”. This aim is broken down into two parts: improving the performance of logistics facilities, and improving the local, regional and international connectivity of trade and transport networks. Focusing on the first of these, 2017 has seen some major steps forward in terms of improving the performance of existing logistics systems.
One key area is in electronic integration of all import and export information between air, land and sea Customs at both public and private entry and exit points. The IT arm of the Saudi Customs service, Tabadul, has the objective of not only speeding up Customs operations, but also standardising specifications across public and private air, land and sea services. Permissions, manifest reconciliation, container and other goods check-outs can all be brought under one unified system this way, and the Kingdom’s ports are now starting to be brought into the fold. KAP, the first port to do so, announced the completion of phase one of the integration in October 2017.
Another area of improved integration is the development of a 24-hour Customs clearing period, with a range of initiatives under way that aim to cut bureaucracy and speed up wait periods. In the past, containers arriving at JIP, for example, had to be emptied and repacked for Customs officials to inspect individually. This is now changing, with streamlined, more technology-based systems shortening the process and allowing digitisation of push-pull data to eliminate paper procedures. KAP was the first to offer 24-hour clearance services, too, as container manifests are now being uploaded and reviewed five days prior to a ship’s arrival.
Also being rolled out is a Public Transport Authority master plan, which includes a roadmap for further integration and strategic planning. This is particularly relevant for the ports, as connecting them with the national transport system is vital for the development of logistical services. KAP, for example, is a multi-modal terminal, with the KAEC linked to the port and Rabigh airport, and a bonded connection to Jeddah airport so cargo does not have to spend time clearing Customs if it is simply transiting the Kingdom. “Logistics is the sector that has the greatest potential in Saudi Arabia right now. We are situated at the centre of the highway of global trade and need to capitalise on this,” Rayan Qutub, CEO of the KAEC Industrial Valley, told OBG.
Along The Chain
Wider implementation of digital systems at every step of the logistics supply chain will boost the Kingdom’s reputation and help it compete with some highly successful regional rivals. While Saudi Arabia is currently in the beginning stages of a digital overhaul, the future may see speedier implementation. “Now that labour costs are rising, investing in automated solutions is likely to see much more thoughtful consideration in the coming years,” Abdulaziz Al Subaie, CEO of Warehousing Projects and Logistics, told OBG.
This, combined with initiatives to improve the integration of Customs information and the streamlining of services, should see heightened efficiency at the Kingdom’s ports in the years ahead. Given their position along key trade routes, this could be a game changer.
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