Saudi Arabia Freight Transport and Shipping Report Q2 2016
BMI View: We expect growth across all freight modes in 2016, with rail driven by the completion of largeprojects and outperforming. Road freight will lose market share over rail, however it will remain thedominant mode. Throughput volumes at Saudi Arabia's main ports will also increase, supported bysubstantial fuel exports and manufactured goods imports. Low oil prices poses a serious challenge to thecountry's economy, justifying our forecasts for restrained growth in freight and shipping for 2016; althoughthis will steadily improve over the medium term. The new oil price environment has decreased GDP growthrates and presents the risk of lowering domestic consumption and consequently imports. On the other handhowever, anticipated import growth for Saudi Arabia's main trade partners will maintain trade volumes.
Key Updates And Forecasts
Saudi Arabia faces increased competition following the re-emergence of Iran in the oil market, withinternational sanctions on the oil producing country recently lifted. China is a likely destination of Iranianoil, expected to replace shipments from producers such as Saudi Arabia.
The tendering process for the railway project to connect Abu Dhabi's Western Region with Abu Dhabi,Dubai and the Saudi Arabian and Omani borders was suspended in January 2016, a consequence ofspending cuts due to low oil prices.
The General Authority of Civil Aviation (GACA) has initiated the privatisation of Saudi Arabian airportswith the King Khaled International Airport in Riyadh first in line. King Abdulaziz International Airportin Jeddah and King Fahd International Airport in Dammam are planned to be privatised in 2017 in anattempt to support state finances.
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