JEDDAH, 22 February 2007 — The Kingdom’s first bonded re-export zone at Jeddah Islamic Port will make a significant contribution, not only to the efficiency of importing goods into the country and transshipping others but also on the rising volume of plastics exported. The infrastructure, designed to increase both the capacity and the handling capability of the port dovetails neatly into the beginning of the economic boom the Kingdom is experiencing. “Export at the heart of the scheme,” said Aamer Alireza, CEO of Saudi Export and Trade Development Co. (Tusdeer). “SA is at the center of the world plastics manufacturing industry. The demand is so high that Saudi has to import empty containers to be able to export plastics.”
The new facility is to be built by Tusdeer, granted a 40-year BOT license in 1991 and with the design and formalities virtually completed, the new facility is expected to be operational in three years. The cost is expected to be in the region of SR1.66 billion.
Since Saudi ports were privatized in 2000, annual growth has rocketed from 5 percent per annum to 20 percent. “This is due directly to competition,” said Alireza, “We are probably the first port sector in the Middle East and in the region to have true competition — where the government has completely exited the businesses of running ports.” Tusdeer is the first in the whole Middle East, 100 percent privately owned from the ground up. Dubai is government owned and Salalah has a 20 percent government stake. Throughput in Jeddah port rose from 1 million twenty-foot equivalent units (TEU) to 2.5 million in 2006.
There has been a transformation in the character of the business in the port. It went from being purely a gateway port in 1995 — to 50-50 transshipment port which, thought Alireza, makes it a very attractive proposition. Moreover, the ports have been deregulated allowing foreign direct investment. Tusdeer has a Malaysian partner SMS that developed the port of Tanjung Pelepas and which holds 20 percent equity. “This is an area that the government has allowed to flourish,” commented Alireza, “that has benefited the ports and as a result downstream it will benefit everyone else.”
The current Jeddah port is coming very close to operational capacity. The Tusdeer terminal, built as it will be on reclaimed ground, will add another 45 percent capacity to the existing port and hugely increase the handling increase capability — up to 2 million TEUs per year. This should ensure that Jeddah port maintains its position as leading import facility; currently 75 percent of all imports to the Kingdom come through Jeddah.
Alireza identified the key elements of the new facility as building capacity, building capability, true intermodal connectivity, integrated logistic hub and state of the art infrastructure and processes. Increased capability allows the port to handle all existing container ships and the next generation in planning. Jeddah and Jebel Ali will be the only two ports in the region able to handle this traffic. Links to road and rail give the port true intermodal connectivity — road and rail terminals will stand inside the terminal allowing swift access to cities across the Kingdom. Extensive use of technology, automated handling systems and significant advances in screening containers and refrigerated goods all contribute to the overall efficiency of the facility and faster throughput.
“This has a multiplier effect in terms of benefit to the community,” said Alireza. “The faster the service and the larger the ships, the greater the savings on costs.” That he felt would be reflected in reduced costs for merchants and end users and opined that the US and Europe had grown largely underpinned by the efficiency of their infrastructure.