DAMMAM, 10 July 2003 — The transport sector, which is often seen as a barometer of economic development, is in total disarray. It has clearly not progressed in proportion to the industrial and commercial growth of the Kingdom.
For unexplained reasons, the transport industry has remained stagnant in some respects. Although the number of trucks, trailers and tankers has increased over the years, profitability, turnover and operations have fallen.
The quality of service has deteriorated, too, either due to bureaucracy or lack of funds and incentives. In the Eastern Province alone there are nearly 25,000 trucks, trailers and tankers catering to the needs of all sectors. But this in no way reflects the growth and development of the transport sector.
Tankers have been in great demand in the country ever since the days when they were the sole means of transporting oil within the Kingdom. The diversification of the national economy led to a need for other heavy vehicles, and within a short time the country saw transport companies proliferate. At present there are 72 large transport companies in the country in addition to a host of smaller ones.
“The rise in the number of transport companies led to very uneven competition within the industry, and that has hampered the development of this sector,” said Sabri Ramadan, general manager of Rashid Al-Rashid Transport Division.
Rashid Al-Rashid are among the leading transporters in the country and cater to the requirements of almost all sectors with a fleet of nearly 500 vehicles, including trucks, trailers and tankers.
Sabri lists unplanned growth, lack of definite policies and lack of coordination among the transporters as the main problems of this sector. “It is one of the most disorganized sectors in the country, and it has zero growth in terms of profitability,” Sabri said.
For years the transport industry has been neglected. While planners brought huge changes to other sectors to keep pace with the new economic and business environment, the transport industry remained untouched.
Over the past 10 years, there has been no increase in rates; rather, rates have in some cases come down despite the rise in fuel, spare parts and tire prices. Fluctuations in international currencies directly affect this industry, which is heavily dependent on imports for its existence. “This is an unhealthy sign, because the pricing structure of almost all sectors has changed drastically during the past 10 years. Only the transport industry has experienced complete stagnation,” Sabri said.
Things have become difficult for large transport companies which, with their high operation and maintenance cost, cannot compete with the rates of small companies. In other words, this is probably the only industry where small companies are eating up big companies.
Industry experts say that the transport sector has been suffering for a long time, as there is no flexibility in the regulations administering the day-to-day operation.
Syed Arshad Hussain Qazi, marketing and contracts manager, said under the rules permission has to be obtained to load oversized cargo or portables. This permission is registered to the number plate of the vehicle and not to the transport company. If the truck breaks down, cargo cannot be loaded on any other truck of the same company. He said permission should be given to the company and not the specific truck.
Insiders say that it is about time the sector was given some serious thought. They propose an umbrella body to regulate pricing and operations. Sabri advocated a merger of smaller companies into large companies so that the cut-throat competition is put to an end.
He also suggested that the chamber of commerce and industry should play a role in regulating the sector by coordinating with the transport companies. Many companies also complain about forced Saudization saying that this is another obstacle for the industry.
