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Hind Al Soulia - Riyadh - RIYADH — Ports capture up to 70 percent of the size of non-oil trade exchange in the Kingdom of Saudi Arabia. Situated in the midst of a trade focal point at the center of the three continents, the Saudi port ecosystem constitutes the throbbing vein of the Kingdom’s economy, besides being a key driver towards the realization of the goals of Saudi Vision 2030.
The Kingdom’s nine ports lining the coasts of the Arabian Gulf and the Red Sea, which accounts for more than 13 percent of international maritime trade, contribute a long way to boosting the economy’s competitiveness, diversifying revenue sources, and transforming the Kingdom into an attractive global logistics hub. Saudi ports are recognized for offering high-quality services and for embracing the latest advancements in maritime transport. Handling an annual average of 532 million tons, Saudi ports have made headway in the quality of services indicator of the Global Competitiveness Report 2019, rising by four notches from the previous year.
These multiple boons, coupled with the speedy transformation across the Kingdom’s other vital sectors and the enhanced business environment all prepare Saudi ports to break through the regional and global maritime trade arenas.
A Global Logistics Hub
The transformation of the Saudi port ecosystem is gaining more steam in view of the strategic importance the Kingdom’s leadership has granted the sector as part of its ambitious national plan to prop up logistics in aims to boost non-oil trade. The government has put forth a plan to develop the port ecosystem, raise its capacity, and modernize its operations in line with the latest international standards.
As an entity established to construct and manage Saudi ports, Saudi Ports Authority (Mawani) works to systematize the management of the Kingdom's ports with the highest-efficiency standards in mind. Under the umbrella of Saudi Vision 2030, Mawani’s strategic mission involves enabling the ports to execute various projects that would deliver an added value to the national economy, while supporting the investment environment and trade flow in the Kingdom.
Mawani is currently working to create a radical shift in port management approaches with a target to raise the level of operational performance and boost the productivity and competitiveness of Saudi ports. To achieve that purpose, it has set up an effective strategy based on three main pillars: developing the infrastructure of ports, raising their operational efficiency, and implementing regulatory reform. So far, Mawani has launched a number of initiatives and conceived work plans that include securing an efficient port ecosystem linked to other transportation networks in order to facilitate the flow of goods and connect the national economy to the global market. Another initiative involves designing and implementing adequate concessions and contracting schemes that would rationalize port expenses, promote innovative solutions to assist operational efficiency, and maintain a strong and sustainable financial performance. In parallel with these endeavors, Mawani encourages Saudi ports to enforce strict environmental control that would ensure the compliance of their operations with the best practices that could eliminate or minimize environmental impact and health hazards on surrounding communities.
Upgrading the performance of Saudi ports and improving their productivity and capacity, would support import and export activities and enhance logistics services which accounts for smoother trade flow and raises the ports’ competitiveness. To sustain this vital course, Mawani plans to create more investment opportunities and initiatives and forge partnerships with major international shipping companies. This would contribute to the realization of the national strategic goals through expanding the contribution of non-oil exports to GDP from 16 percent to 50 percent, and raising the Kingdom’s ranking in the Logistics Performance Index to join the top 25 economies worldwide.
SR9bn to develop Jeddah Islamic Port
In line with its proactive plan for upgrading Saudi ports, Mawani has recently signed BOT (Build, Operate and Transfer) concession contracts for Jeddah Islamic Port with each of leading international ports developer and operator DP World and Red Sea Gateway Terminal, a major national company for operating and developing ports locally and regionally. The concession contracts to develop and operate the container terminals at Jeddah Islamic Port – one of the Kingdom’s busiest maritime navigation trails where 65 percent of imports are handled- have been hailed as the biggest contracts in the history of Saudi ports and the leading recent privatization contracts with a long duration of 30 years and substantial investments amounting to nearly $2.4 billion (SR9 billion). The deals were conceived in collaboration with the Ministry of Transport and the National Center for Privatization to implement the MoUs that Mawani had signed in the presence of Crown Prince Muhammad Bin Salman, deputy premier and defense minister during the launching of the National Industrial Development and Logistics program last February.
The deals represent a tactical milestone for the evolving port ecosystem. Jeddah Islamic Port ranks first among the Red Sea ports in terms of traffic and constitutes a trade lifeline connecting the Far East to Europe. Additionally, it is the main portal that welcomes pilgrims from all over the world during the Hajj and Umrah seasons.
The deals will raise the container terminal capacity at the port by more than 60 percent, to over 12 million containers annually. Jeddah Islamic Port currently has a capacity of processing 130 million tons per year with its area of 12 sq km and its 63 berths.
From a macro-economic perspective, the contracts will help provide up to 4,000 jobs, increase the demand on local content, and elevate investment flow.
Solid Partnerships with the Private Sector
Mawani is looking to sign major agreements with leading local, regional, and global enterprises to increase the private sector’s share in the port industry to 70 percent in 2020, and to 90 percent by 2030. It intends to continue to strengthen the partnership with the private sector through long-term contracts in aims to promote the operational efficiency of infrastructure, optimize investment returns, and modernize operation methods in accordance with international standards. Mawani equally aims to recruit and foster skilled Saudi talents, which would enhance the efficiency and competitiveness of ports, consequently contributing to the Kingdom’s long-term economic growth.
Through its efforts to upgrade the performance of Saudi ports, Mawani is ferrying national logistics towards a promising expedition seeking advanced operational efficiencies, rewarding economic returns, and a prominent global ranking. — SG
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