Saudi Arabia Transportation Profile 2012

25/11/2010 Infrastructure upgrades are the order of the day, with the government of Saudi Arabia giving its full financial backing to big-ticket transport projects in a bid to ensure that passengers and cargo can move about the Kingdom more quickly, efficiently and affordably.

One of the largest projects under way is a significant expansion of railway services. Construction is steadily progressing on a 2400-km cargo link known as the North-South Railway (NSR). Once completed, the NSR will link Al Haditha on the Jordanian border to the capital, Riyadh. A branch off the main line will also reach industrial areas on the Gulf.

The NSR is being developed by the Saudi Railway Company (SAR) in three phases. The first phase is a 1486-km stretch linking the Saudi Arabian Mining Company’s (Ma’aden) phosphate mine at Al Jalamid and its bauxite mine at Az Zabirah with processing facilities located at Ras Az Zawr on the Gulf coast.

“We have completed 1050 km of railway track out of a total of 1486 km,” SAR’s Fawaz Al Magati told local media last month. The first phase is expected to be operational by the end of 2010.

The second phase of the NSR will focus on general freight traffic in conventional and intermodal service while a 200-km-per-hour high-speed passenger service will be developed in the third phase.

Passenger service is the focus on the Kingdom’s western coast with significant progress being made on two projects: the Haramain High-Speed Rail Project (HHR) and the Mashair Metro, also known as the “Mecca metro”.

The 450-km HHR, being overseen by the Saudi Railways Organization (SRO), will connect the Holy Cities of Mecca and Medina with additional stops at King Abdullah Economic City, King Abdulaziz International Airport and central Jeddah. It is expected to carry more than 3m passengers annually upon completion.

Earlier this month, the SRO announced it had received two bids for the $1.4bn second stage of the HHR, which includes the contracts to lay the tracks, install signals and perform operations and maintenance. The two bidders who submitted contracts were consortiums led by the Al Rajhi Group and the Al Shoula Group. The winning bidder will be required to operate and maintain the infrastructure for a period of 12 years.

“Completing the high-speed train between Mecca and Medina will reduce transportation time between the two Holy Cities, making the situation for pilgrims much easier,” Osama Al Bar, the mayor of Mecca, told OBG.

The metro project will also ease transport for pilgrims visiting Mecca. “The 20-km line from Arafat to the Holy Shrine will have a fully operational capacity of 70,000 passengers per hour. This year we hope to start operations with a capacity of around 30,000 passengers per hour,” said Al Bar.

The Chinese Railways Company is carrying out the construction of the SAR6.7bn ($1.8bn) project along with France’s Thales and domestic firms. A test run has been scheduled for August 1, according to the project’s director-general.

Shipping Report Q4 2010

Liquid bulk continues to dominate Saudi Arabia's shipping sector, but diversification has seen container vessels enter the mix as the country's consumer demand has increased. Dry bulk shipping looks set to develop a role in the country's shipping sector, driven by the country's move from grain producer to grain importer.

The National Shipping Company of Saudi Arabia (NSCSA) has developed to cater for the kingdom's trade needs, first offering tankers for oil transport, followed by ro-ro and container vessels as the country's consumer power grew. Now the line looks set to expand into the dry bulk sector.

• - Decrease of grain production opens up shipping opportunities for grain export.
• - NSCSA continues to cater for the kingdom's trade needs and is expected to develop a dry bulk arm.
• - Grain terminals exist but expansion and the development of new facilities is likely.
• - Iron ore deposits also offer long-term dry bulk shipping opportunities.

While the authors are bullish about the dry bulk sector in Saudi Arabia, which has a number of opportunities, the country is exposed to global shocks. The country had to seek other grain-import avenues when one of its grain partners, Russia, imposed a grain-export ban. The country's exposure to the volatility of the dry bulk charter market will be somewhat diluted by NSCSA's plans to operate a dry bulk shipping arm.

• - 'China effect' in reverse, causing demand for shipping to fall.
• - Supply-demand imbalance to widen, with excess supply.
• - Thermal coal demand offers some support, but no panacea.
• - Vertical integration of mining firms a discomfort to dry bulkers.

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