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Saudi Arabia Shipping Report Q4 2011
Business Monitor International, Sep 2011, Pages: 95
The primary story in the Saudi Arabian shipping sector continues to be the rapid expansion of the country's ports, with the port of Dammam in particular earmarked for big investments with the awarding of its new container terminal concession. Year-on-year growth in tonnage through the country's ports has not been seen in most ports however, despite the government stimulus and infrastructure spending. Container throughputs have seen gains as consumer spending rises.
On a global level BMI continues to be concerned by the state of the shipping industry. Container shipping companies are struggling to push through rate increases, and liquid and dry-bulk operators are contending with some of the lowest daily returns in years. The cause is overcapacity, which looks unlikely to ameliorate anytime soon. There are fresh challenges on the way, including the fleets of mega-vessels being built by Vale and Maersk Line.
Headline Industry Data
- 2011 Jeddah Islamic Port total tonnage throughput growth forecast 0.1%, and to average 0.9% per annum to 2015.
- 2011 Jeddah Islamic Port container throughput growth forecast 4.6%, and to average 2.9% per annum to 2015.
- 2011 total trade real growth forecast at 5.8%, and to average 3.0% over the mid term.
Key Industry Trends
- PSA Awarded Dammam Concession As Regional Ports Vie For Transhipment Trade
Singapore-based international ports operator PSA International, the second-largest container terminals operator in the world in terms of box throughput, announced in July that it has been awarded the concession to develop, operate and manage the second container terminal at the Saudi port of Dammam as part of the Saudi Ports Global joint venture (JV). The new terminal, which is expected to open in 2014, will provide upside risk to BMI's throughput forecast for the port. However, given the number of new facilities in the region being developed with an eye to becoming a transhipment hub, BMI wonders which will be success stories and which will be left with surplus capacity.
Saudi Arabian Stimulus Plan Hastens Need For Ports Expansion In June
Saudi Arabia reiterated its commitment to its ports expansion programme in a press conference held by the country's transport minister. BMI believes this is necessary for the Kingdom as new industries are established and private consumption grows in the country. BMI is not, however, convinced by the plan to establish transhipment hubs in the region, given the numerous transhipment projects under way in other Gulf states.
Mega Vessel Berths At Jeddah In Demonstration Of Port's Capabilities
The Jeddah Islamic Port, Saudi Arabia's biggest container port in terms of box-handling, located on its Red Sea coast, received in June one of the world's largest container vessels, the CSCL Star. BMI notes that the arrival of the ship emphasises what a leading container port Jeddah has become; it is believed that it will continue to develop as Saudi Arabian imports grow.
Key Risks To Outlook
Although the forecasts for Saudi Arabia's fiscal position take into account much higher oil prices than the country's own projections, the recent spike in Brent crude oil price this year could pose significant upside risks to the BMI Country Risk team's forecasts. These could have a knock-on effect on the throughput at Saudi Arabian ports, as could the influx of cash from the Saudi stimulus plan.
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