2013-02-22 14:09:37 - New Transportation market report from Business Monitor International: "Saudi Arabia Freight Transport Report Q1 2013"

The outlook for the Saudi Arabian freight transport sector is sanguine indeed. The government stimulus package continues to make itself felt through increased consumer confidence which is driving up container volumes at the Kingdom's ports. This in turn will boost road haulage volumes. Total tonnage volumes at Saudi ports are also undergoing strong growth, and will be supported over the medium term by the massive house-building programme that is getting underway. The country is well supported by a growing fleet of dry and liquid bulk tankers which continues to expand through company mergers and vessel acquisitions, and the national air carrier, Saudia, has been generating strong revenue and volume growth. Specific investments in expanding the Kingdom's maritime facilities, and in

projects such as the Saudi Landbridge and the North-South railway, coupled with strong economic growth on the back of large oil receipts, will further boost freight volumes.


Full Report Details at
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Headline Industry Data

* Total Saudi Arabian trade set to increase 2.7% in 2013 in real terms, with imports growing 5.0% and exports by 0.4%. Real trade growth will average 2.3% to 2017.
* Air freight volumes set to grow 14.5% in 2013, to reach 756,450 tonnes. Growth to 2017 to average 9.3% per annum.
* 2013 Jeddah Islamic Port total tonnage throughput growth forecast 8.8%, and to average 8.0% per annum to 2017.
* 2013 rail freight volumes forecast to grow by 8.8% in 2013 and to average 9.1% over our forecast period.

Key Industry Trends

Logistics Yard To Support Dammam Growth: BMI believes that a new logistics terminal newly opened at the Saudi Arabian port of Dammam, located on the Gulf, offers upside potential to the long-term container throughput growth of the port, as the facility will help facilitate Dammam's development as a logistics hub while supporting its already high growth levels.

Saudia Continues Africa Push: BMI believes that Saudia, the cargo wing of Saudi Airlines, will continue to cement its role as one of the Middle East's largest cargo carrier through its focus on expanding into Africa. The continent is, along with the Middle East, one of the fastest-growing in the world in terms of both air freight and passenger volumes, providing ample opportunities for companies. These are heightened by the generally sorry state of domestic African airlines, many of which are struggling with financing and safety issues.

Strong Growth Outlook For Bahri: BMI believes that the Saudi Arabian shipping company Bahri, known as the National Shipping Company of Saudi Arabia (NSCSA) until a change of name in April 2012, has a strong growth outlook over the coming years. The recent launch of its dry bulk arm, Bahri Dry Bulk (BDB) and the upcoming absorption of fellow Saudi oil tanker operator Vela will help the firm maintain profit growth like that achieved in the most recent quarter, ended September 30.

Key Risks To Outlook

A sharper-than-expected downturn in the global economy, if it was to translate into a substantial decline in oil prices, would pose significant downside risks to our forecasts for Saudi Arabia's fiscal and current account position, which in turn would affect our freight transport forecasts, though it remains highly unlikely that either account will fall into the red in the near term.

Iran is the source of another threat to our outlook: if the pariah state were to go through with its threats to try and close the Strait of Hormuz it would impact Gulf ports such as the Port of Dammam. Equally, were Israel to unilaterally strike against the Islamic Republic it could greatly increase regional instability which would affect volumes through Saudi ports.

Risks to the upside for our forecasts come from Saudi Arabia's significant infrastructure investment programme, the Landbridge in particular. This offers upside to our forecasts for the Jeddah and Dammam ports. Jeddah's application to be a metals hub for the London Metals Exchange also offers upside potential to the facility's tonnage throughput. More immediately, the North-South presents considerable upside risk to our rail freight forecasts for Saudi Arabia.

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