Interview: Faysal Elhajjami
In what ways can Saudi Arabia become more competitive as a trading and shipping centre?
FAYSAL ELHAJJAMI: Saudi Arabia is an inbound market: the express sector averages anything between six and 10 inbound shipments for every outbound shipment. More and more companies are looking at Saudi Arabia as an attractive market, but there are several areas that require some streamlining or alignment with the international standards that companies are used to elsewhere. Customs clearance processes have improved significantly over the years, which has allowed for the introduction of the just-in-time concept to the Saudi market. More collaborative work is also being done from a systems perspective to enhance shipment security and tracking capability through our “Clear in the Air” technology.
Beyond the GCC, further trade links with countries including the US and China are increasing. For example, we have witnessed volumes from the US increase by between 100% and 200%. The purchasing power of customers in Saudi Arabia is of great importance, and the use of online platforms has drawn shipments to Saudi Arabia. Customers now expect a product from the US to reach their door in three to seven days, depending on the nature of the commodity.
Regulations in general need to be tailored to today’s consumer demands. While the internet allows for borderless shopping, there is a gap in understanding regarding the nature and quantities of commodities permitted, and the relevant paperwork required for each shipment to facilitate cross-border clearance. This puts pressure on shipping companies to educate customers about what can and cannot be shipped to the region or the country.
How can you explain the slow development of e-commerce across the Gulf?
ELHAJJAMI: Though slow to develop at first, e-commerce is now exploding at a phenomenal rate, which is largely due to the Kingdom’s changing demographics. Over the last decade a large number of young Saudis have returned to Saudi Arabia from the US and Europe, and a large number continue to come back, having completed their education abroad.
In contrast, young people from Africa and Asia that travel to Europe and the US to study often remain there. When Saudis return, they come back with knowledge, know-how, technology and high-quality service. This translates into the huge growth we are now seeing in e-commerce, but I am not sure that the shipping and logistics industry has been prepared properly for this level of growth. Residential addresses in the Kingdom are unstructured in a way that makes it very challenging for parcel delivery, which adds cost to the shipment and delays transit time. Customs clearance and regulation, as well as the burden of security, are also areas where growth in e-commerce will put pressure on the system as volumes continue to increase.
Where might private sector participation assist in developing the Kingdom’s logistics capabilities?
ELHAJJAMI: There are significant and diverse opportunities for private sector participation in developing the Kingdom’s economy. In logistics and shipping, aviation stands out as an area that is primed for expansion. It used to be that for us, goods were all shipped to Bahrain and then sent by truck to their destination in Saudi Arabia. Now, however, they are shipped by cargo plane to regional airports across the Kingdom. This is a much more efficient method, and the change will need to be applied to the shipping model as volume increases. In addition, the road network is in need of some work, especially the causeway connecting Bahrain and Saudi Arabia. Improvements to infrastructure should also encourage more investment, and will be a key factor in achieving the vision laid out by Prince Mohammed bin Salman Al Saud.
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