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Saudi Arabia Freight Transport Report Q1 2010Published by: Business Monitor International Published: Jan. 13, 2010 - 60 Pages Table of Contents
AbstractIn December, construction work was reported to have begun at Jazan Economic City (JEC), where MMC Saudi Arabia, a subsidiary of the Malaysian construction group, holds a major contract. JEC was said to have signed a range of contracts for the city since its launch in 2006, with the overall project valued at SAR100bn (US$26.7bn). Plans included construction of a refinery, a steel cluster, an iron ore trading hub, a palletising plant, and an aluminium smelter. Its location on the Red Sea, had been chosen to maximize import and export opportunities. The JEC is intended to be built over a 20-year period, but the authorities noted it had already attracted US$5bn worth of investments from China. The city would have its own deep sea port designed to handle ultra large vessels, up to 350,000 dead weight tonnes (DWT), capable of carrying dry bulk, liquid bulk, container, and break-bulk cargoes. Very large crude carriers (VLCCs) would supply the refinery. UK company, Halcrow Group had been contracted to deliver the engineering design of the deep sea port. The new city will cover 113 square kilometers and stretch for 12km along the Red Sea coast. Since our last report, we have again adjusted our macroeconomic forecasts for Saudi Arabia. For 2009, we edged down our GDP growth estimate to 0.4% (down from 0.5%), and are now a little more optimistic about the rebound in 2010. We see a recovery with 1.9% growth (up from 1.6%). We have also trimmed the outlook for 2011 to 2.7% (was 2.8%). As a result, we now believe that Saudi Arabian GDP growth over the 2010-2014 period will reach an annual average of 3.4%. This compares with an annual average of 3.6% in the preceding five-year period. So the total ‘GDP effect’ on our freight projections, comparing the next five-year period to the previous one, is on the negative side.With some slight changes, we maintain earlier adjustments to our forecasts of freight volume by transport mode (looking at what might be termed ‘non-GDP factors’). Briefly, we had raised our road and airfreight projections (relative to GDP) to reflect greater highway construction and the beginnings of a low-cost carrier boom, but have pulled that back in the light of the global economic downturn. We have reduced our maritime freight projections on the strength of a quieter oil market and lower demand; and, we are now linking these projections more explicitly to foreign trade movements. Pipeline throughput, mainly of crude oil, can be expected to grow at a slightly slower rate than the economy - as the government continues its role as the Organisation of the Petroleum Exporting Countries (OPEC)’s swing producer. The net effect of all these movements is that we now expect total freight tonnage volume across the main modes to increase by an annual average of 5.2% over the 2010-2014 forecast period - which will be ahead off GDP growth. According to our latest estimates, transport and communications GDP rose by 0.6% in 2009, ahead of overall GDP, which we estimate to have increased by 0.4%. For the 2010-2014 forecast period, we expect the transport and communications sector to continue outpacing the economy as a whole, but by a small margin. It will achieve average annual growth of 3.8%, versus 3.4% for overall GDP. The total value of transport and communications GDP, will rise to US$37.6bn in nominal terms by 2014, representing 5.7% of Saudi Arabia’s GDP. By transport mode, we expect the fastest-growing land-based one to be rail at 4.6%, with airfreight at 1.1%, road haulage at 0.9% pipeline throughput at 2.1%, and sea cargo at 2.1%. The slower growth of oil and gas pipeline throughput reflects the cooling of the oil price boom towards the end of the forecast period. Get Full Details About This Report >> |
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