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Saudi Arabia Freight Transport Report Q2 2009
Market |
Logistics |
Report Type |
Market Research |
Country |
Saudi Arabia |
Published |
26 May 2009 |
Number of Pages |
61 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
The Saudi North-South Railway is set to begin freight operations in 2010. The project is part of the country's plan to increase its railway network. The railway will cater for the transport of freight and will service the country's northern mining initiatives. The 2,400km railway was prioritised by the Saudi Government, according to the Arab News, due to its importance to the country's industrial development.
The railway will serve as a vital link between planned mining projects in the north of the kingdom and processing plants and ports on Saudi's Gulf coast. Geographical surveys have shown that on top of its considerable oil wealth, Saudi Arabia also boasts mineral reserves. Deposits of bauxite, phosphorus, copper, gold and iron have been located. The North-South railway will stretch from Haditha in the north of Saudi Arabia, near the country's border with Jordan, south to Riyadh, where it will join up with the existing Dammam-Riyadh railway, offering connections to the sea port of Dammam. It will feature two branches: one to Jalamid, the site of considerable phosphate deposits, and one to Ras Azoor via Zabirah, the location of bauxite deposits. The North-South railway is just one of the railway projects currently underway in Saudi Arabia, as the country expands its railway network.
In our latest Saudi Freight Transport Report, BMI concludes that the country’s freight tonnage traffic, across all modes, is likely to grow by an annual average of 3.3% over the next five years. Various factors underpin our prediction. We now think that Saudi GDP growth in 2009-2013 will reach an annual average of 3.2% (lower than the 4.3% achieved over the preceding five years). Albeit at a reduced rate, oil and gas exports will be the drivers of foreign trade. Although the pace of trade growth will ease, tanker exports will remain dynamic. Big infrastructure projects will also help to expand transport capacity and boost demand for cargo.
By transport mode, we expect the fastest growing to be sea cargo at an annual average of 4.8%, followed by rail at 4.3%, airfreight at 4.0%, road haulage at 3.4%, and pipeline throughput at 2.2%. The slower growth of oil and gas pipeline throughput will reflect the current cooling of the oil price boom. Saudi Arabia scores in a moderate range in terms of its growth forecast for freight transport across all modes through to 2013, with an annual average of 3.3%. However, with its petrodollar revenues, the country has shown recent commitment to reforming and improving its transport sector, and the current policy agenda (including greater private sector involvement) should bring results. Saudi Arabia’s overall freight rating at 57.7 out of 100 is a little below the average for the Middle East and Africa (MEA) region. It scores well in terms of its economic outlook because of its abundant natural resources, principally oil and gas.
However, it does less well in terms of its freight-transport growth projections over the 2009-2013 period and its current regulatory environment.
For the 2009-2013 forecast period, we expect the transport and communications sector to continue outpacing the economy as a whole in GDP growth terms. It will achieve average annual growth of 3.7%, versus 3.2% for overall GDP. The total value of transport and communications GDP will rise to US$29bn in nominal terms by 2013, representing 5.7% of Saudi Arabia’s GDP.
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