Saudi Arabia Freight Transport Industry Update Quarter 3 2012

  • July 2014
  • -
  • Business Monitor International
  • -
  • 108 pages

The outlook for Saudi Arabia is currently a strong one. The country benefited from elevated oil prices through 2011 and the government, influenced by the Arab Spring which has toppled regimes in other regional countries and destabilised others, is pumping some of the surplus from this into a massive stimulus package. The infrastructure investment and higher disposable incomes this will cause will help growth continue at the country's maritime ports, and in air, rail and road freight. Specific investments in grow ing these maritime facilities, and in projects such as the Saudi Landbridge and the North-South railway, will further boost volumes.

Headline Market Data
- Total Saudi Arabian trade set to increase 2.8% in 2012 in real terms, with imports growing 6.0% but exports projection to contract by 0.4%. Real trade growth will average 2.7% to 2016. - Air freight volumes set to grow 4.8% in 2012, to reach 639,664 tonnes. Growth to 2016 to average 3.6% per year . - 2012 Jeddah Islamic Port total tonnage throughput growth projection 12.5%, and to average 3.9% per year to 2016. - 2012 rail freight volumes projection to grow by 6.3% in 2012 and to average 2.7% over our projection period. Key Market Trends North-South Railway To Commence Operations In July Saudi Arabia's North-South Railway, developed by state-owned Saudi Arabian Railway Firms, is scheduled to commence mineral operations in July 2012. The 2,400 kilometre (km) railway will be entirely operational in July 2013, with passenger services to commence in July 2014. Saudia Focuses On Africa Saudi Airlines Cargo (Saudia) has continued its Africa expansion, this time increasing its connections to Chad. BMI believes that Saudia, and Middle East carriers in general, will focus their 2012 expansion plans on the region. It remains relatively niche and so lacks the high level of competition that plagues other routes.

Africa's air freight segment continues to grow, and it is one of the safe haven industry s for the market . The region is also relatively close to the Middle East carriers' hubs. JIP Seeks Metals Hub Status BMI believes that if the Saudi Arabian Jeddah Islamic Port (JIP) lists itself as a delivery point for the London Metal Exchange (LME), there could be serious upside risk to our projections for the facility. Furthermore, Jeddah could turn into a key metals hub. Key Risks To Outlook A major risk to our outlook would come from a major downturn in the West. We are already projecting an economic contraction of 0.5% in the eurozone in 2012. If this intensified and the demand for oil was reduced, it would hit our macroeconomic projections for Saudi Arabia. However, we currently expect high oil prices to continue in 2012, not least from sanctions against Iran which preclude the EU and US from importing Iranian crude, increasing demand for Saudi volumes. Iran is the source of another threat to our outlook: if the pariah state were to go through with its threats to try and close the Strait of Hormuz it would impact Gulf ports such as the Port of Dammam. Equally, were Israel to unilaterally strike against the Islamic Republic it could greatly increase regional instability which would affect volumes through Saudi ports. Risks to the upside for our projections come from Saudi Arabia's significant infrastructure investment programme, the Landbridge in particular. This offers upside to our projections for the Jeddah and Dammam ports. Jeddah's application to be a metals hub for the London Metals Exchange also offers upside potential to the facility's tonnage throughput. More immediately, if the North-South railway begins freight operations in July, as is scheduled, then it will present considerable upside risk to our rail freight projections for Saudi Arabia.

Table Of Contents

Executive Summary 5
Industry SWOT Analysis 7
Saudi Arabia Freight Transport Industry Environment and Risk Analysis .. 7
Saudi Arabia Political Environment and Risk Analysis ... 7
Saudi Arabia Economic Environment and Risk Analysis . 8
Saudi Arabia Business Environment SWOT .. 8
Industry Trends And Developments .. 9
Road And Logistics 9
Rail 9
Air 10
Maritime .. 11

Industry Analysis 13

Market Projection .. 17

Macroeconomic Data . 17
Air Freight .. 18
Data : Air Freight, from 2008 to 2016 19
Rail Freight 19
Data : Rail Freight, from 2008 to 2016 .. 20
Maritime Freight 20
Data : Maritime Freight - Throughput, from 2008 to 2016 ('000 tonnes) 21
Trade .. 22
Data : Trade Overview, from 2008 to 2016 22
Data : Key Trade Indicators, from 2008 to 2016 (US$mn) . 23
Data : Saudi Arabia's Main Import Partners, from 2002 to 2009 (US$mn) . 24
Data : Saudi Arabia's Main Export Partners, from 2002 to 2009 (US$mn) . 24
World Oil Products Price Outlook ... 25
Data : BMI's Refined Products Projections, from 2010 to 2016 25
Political Outlook 33
Domestic Politics 33
Long-Term Political Outlook .. 35

Macroeconomic Data ... 40
Saudi Arabia - Gdp By Expenditure, Real Growth %, from 2008 to 2016 ... 42
Company Profiles .. 43
Bahri ... 43
Saudi Airlines Cargo (Saudia) 48
United Arab Shipping Firms (UASC) 52
Vela International Marine (Vela) 56
Country Snapshot: Saudi Arabia Demographic Data . 58
Data : Saudi Arabia's Population By Age Group, 1990-2020 ('000) ... 59
Data : Saudi Arabia's Population By Age Group, 1990-2020 (% of total)... 60
Data : Saudi Arabia's Key Population Ratios, 1990-2020 .. 61
Data : Saudi Arabia's Rural And Urban Population, 1990-2020 . 61
BMI Methodology .. 62
How We Generate Our Market Projections . 62
Saudi Arabia Freight Transport Report Q3 2012
© Business Monitor International Ltd Page 4
Transport Market .. 62
Sources ... 63

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