RIYADH, 20 March 2005 — Deputy Minister of Transport Dr. Abdulaziz Al-Ohaly has said the United Arab Shipping Co. (UASC) has gone through a restructuring program en route to its privatization.
He also announced the company has signed a contract for building eight container ships with a capacity of 6,500 containers per ship. The total deal is worth about $840 million for the ships, the first of which will be delivered by early 2008. “Over 85 to 90 percent of our trade is via ships. We, therefore, bought eight ships from Hyundai, the Korean shipping giant, as part of our expansion program.”
The deputy minister, who is also a board member, was speaking at a get-together with the company’s shipping agents to thank them for their support. Hassan Al-Ghamdi, general manager of United Arab Shipping Agencies Co., and Ali A.Al-Khalaf, deputy general manager of UASC, were among those present.
Dr. Al-Ohaly said “it is no secret that the shareholding countries are currently studying the idea, for which certain programs have already been drawn up to qualify the company for future privatization. One of the measures adopted was the successful restructuring of the company.”
UASC is owned by six countries-Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar and the UAE. Saudi Arabia owns a little less than 20 percent of its capital. The chairman, Dhiyaa Habeeb F. Al-Khayoun, is from Iraq, the majority shareholder.
The company, which has an authorized capital of $1.77 billion (of which $991 million has been subscribed), was incorporated on July 1, 1976 as a joint stock company. Since then, it has been forging ahead with an annual turnover of more than $750 million and total assets of about $1 billion.
Dr. Al-Ohaly said the company, which focuses on shipping containers, links the Arabian Gulf region with the world’s leading trading countries in Europe, Americas and Southeast Asia. UASC, he pointed out, achieved a profit of $125 million last year.
He said the Kingdom’s strong economy, together with high liquidity in the market, had encouraged investors to boldly enter the market. Asked whether in the light of the strong performance of the shipping sector UASC will consider increasing its capital and conclude new strategic alliances, Dr. Al-Ohaly said the company does not intend to do so as it presently enjoys a strong financial position. It concentrates on the shipping containers industry and is one of the largest companies of its kind in the region. The expansion program would, therefore, be in terms of acquiring larger ships, increasing frequencies and adding new lines.
As for financing loans needed for the expansion program, the deputy minister said the company was expecting to reach 150 percent financing capability with loans from national commercial banks and the share-holding countries.
Asked whether the Saudi seaports are fit for the growth of the shipping industry, he said the Kingdom has many major seaports that serve the international shipping lines. They are all fit and provide outstanding logistic services to ships in transit.
“Additionally, we have a variety of both commercial and industrial seaports in Jubail, Yanbu, Jizan and other places. They all meet international requirements,” he said, adding that the shipping procedures and facilities are constantly reviewed, streamlined and updated by the Saudi Seaports Authority.
According to Hassan Al-Ghamdi, general manager of United Arab Shipping Agencies co., the first ship will be handed over by March 2008. He said these ships would be joining the UASC fleet of 25 vessels at a time when the Kingdom’s volume of trade has increased, while there is an acute shortage in terms of the handling capacity. “The acquisition of these eight ships would enable the agents to extend good service to UASC customers.”
Al-Ghamdi said there was a time when containers offloaded at Saudi ports used to return empty on their return voyage. “Now there is a lot of export from Saudi Arabia where there are not enough containers,” he observed.
