At the second Saudi Maritime Congress held in Riyadh, Saudi’s government has expressed its intention to make the country a regional logistics hub to drive forward economic diversification and create new job opportunities. The event highlighted major projects and strategic opportunities aiming at attracting investments and ventures into Saudi Arabia, promising the sector to receive a significant boost.
Saudi Arabia is considered a key player in the Red Sea, and its maritime assets have grown significantly in recent years. Saudi’s significance to global shipping lines has increased as it is situated in a strategic location on the section of the shipping trunk route between Colombo and Suez. The government’s budget for 2019 has allocated 8.8 billion USD to the energy, mineral and logistics sectors, a prosperous figure that will further drive Saudi maritime sector. Substantial government spending is in line with its Vision 2030, the country’s vigorous diversification path to drive sustainable growth and development.
Port development is advancing at a significant pace in the region. Over the past five years, projects such as Dammam and King Abdullah Economic City were launched, aimed at further boosting the Kingdom’s import, export and transhipment potential. The latter has recently received 28 new cranes that will expand its container terminals. King Abdullah Port is the region’s first port to be fully owned and managed by the private sector. The port throughput has increased from 1.7 million TEU in 2017 to 2.3 million TEU in 2018, and it was ranked as the second fastest growing port in the world.
One of the largest projects in the sector is the King Salman Global Maritime Industries Complex. The shipyard will be located in Ras-Al-Khair and it is expected to be the largest facility in the region, both in terms of production capacity and scale. According to Jadwa Investment, the project is expected to complete by 2022.
The project is a joint venture of Saudi Aramco, Hyundai heavy Industries, the National Shipping Company of Saudi Arabia, and Lamparell. The entire project is expected to contribute around $17 bln to Saudi GDP, boost import substitution by $12 billion, and create more than 80.000 jobs by 2030.
The Kingdom of Saudi Arabia’s commitment to the development of the maritime and logistics sector, and the overall maritime industry has been set since the first Saudi Maritime Congress, which was held in Dammam back in 2014. Gulf Cooperation Council economies were faced with challenging 2018 as net container movements at Saudi’s port facilities decreased. The International Monetary Fund expects close to 2 percent growth for Saudi’s economy this year.
The Kingdom is pursuing an aggressive diversification strategy and the logistics industry is part of its blueprint for growth titled Vision 2030. The 2019 budget showed how important the logistics sector is for the Kingdom’s strategy. Saudi’s economy is transforming, and the logistics and maritime sectors are experiencing massive changes with the country currently consolidating its role as a major industry player and as a global logistics hub.
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