Maritime Developments in the Kingdom of Saudi Arabia

English

By: Khurram Ali, Partner, Ince

As a vast country with a maritime industry that straddles the Red Sea, the Arabian Gulf, three continents and countless shipping routes, the Kingdom of Saudi Arabia is swiftly becoming a leading global maritime hub.

On World Maritime Day last year, the Kingdom was ranked 20th globally in the maritime transport industry among the 174 member states of the IMO. The Kingdom’s government has recognised the critical role of the maritime industry in driving forward the country’s economy and achieving the goals set out in Vision 2030, a strategic roadmap that was drawn up by His Royal Highness the Crown Prince Mohammed Bin Salman. One of the key pillars of Vison 2030 is to make the Kingdom  a leading maritime and logistics hub in the region.

The Kingdom is focusing on sustainable maritime development, as it organises various international conventions and treaties regulating this industry and strengthens its partnerships with other distinguished states in the region.  Two authorities within the government framework are Mawani, the Saudi Ports Authority, which oversees the billion-dollar network of national ports, shipping companies, and logistics services; and the Transport General Authority, which has been tasked with regulating the industry.

Following the voting, which took place in December 2021, the Kingdom became a member of the IMO Executive Council under category C. The Council is the executive organ of the IMO which supervises the work of the organisation. This membership was regarded by the President of the Transport General Authority, Rumaih Mohammed Al-Rumaih, as a culmination of the efforts of the Kingdom’s leadership to drive and protect the maritime transportation sector, and develop international trade and transport laws.

In order for the wider maritime industry to flourish and grow, major maritime companies such as Aramco, Bahri, and IMI have joined together to explore mutual business opportunities and further the aims set out by the Kingdom’s government.

Major projects

One of the largest projects currently being undertaken is the King Salman International Complex for Maritime Industries and Services (IMI), a joint venture of Saudi Aramco, the National Shipping Company of Saudi Arabia (Bahri), Hyundai Heavy Industries, and Lamprell. The Complex will provide a combination of shipbuilding and maintenance, repair, and operations services. Its facilities will include dry docks for shipbuilding and ship repair, basins, piers, a ship-lift system, warehouses, utility services areas, offices, as well workers’ accommodation and recreational facilities. Once completed, this is expected to be the largest shipyard in the region (covering an area of approximately 4.5 km by 2.5 km) and is hoped to contribute around SAR 64 billion to the Kingdom’s GDP.

Last year, IMI delivered on-the-job training for more than 600 employees to improve the skillsets of the Kingdom’s youth and future maritime workforce and diversify the country’s economy as part of Vision 2030. The programme covers a range of areas: Design and Production Engineering; Health, Safety, Environment, and Quality; Procurement and Supply Chain Management; IT, Ships and Rigs Operation, as well as Shipbuilding Processes and Activities.

Investing in digitalisation

Investments are being directed towards introducing new technologies at the Kingdom’s Ports. Mawani signed a number of agreements with telecom operators and vendors for the provision of automation and 5G technology in the Kingdom’s ports, and the establishment of an integrated logistics park covering an area of 135,000 sq. m at Jeddah Islamic Port. In addition, customs clearance procedures have been digitalised, making the customs clearance procedure more straightforward and efficient. These aim to completely transform the process of operations and logistical support at the Kingdom’s ports to improve port capacity and increase the GDP share of non-oil exports from 16 per cent to 50 per cent. Huawei, Ericsson, DP World, Saudi Global Ports Company (SGP), and the Red Sea Gateway Terminal Company (RSGT) are key players in providing communications and IT services, infrastructure, cybersecurity, and cloud computing service development in the upcoming transformation of the Saudi ports.

Additionally, the Kingdom’s government has invested approximately USD 200 billion to improve the infrastructure of the Kingdom’s ports. Jeddah Islamic Port and King Abdulaziz Port Dammam are to expand their operations with a combined overall investment of approximately USD 4.5 billion. While King Abdullah Port at Rabigh is Kingdom’s first port to be owned, developed, and operated by the private sector and has potentially been earmarked to be the first ever fully integrated bonded free zone in the Kingdom with an overall investment of approximately USD 3.5 billion.

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