DP World and developer to build new Saudi port

In a somewhat perplexing development, Dubai Ports World and a Saudi-based developer have won a bid to build a huge new privately financed port in the Red Sea in Saudi Arabia.

The Gulf News reported Monday that DP World, one of the world's biggest terminal operators, will develop the port in the King Abdullah Economic City, which the Middle Eastern nation envisions as a becoming a major logistics hub in the region.

According to local news reports, a multipurpose cargo terminal is expected to begin operations in 2010, with a 1.6 million TEU capacity container terminal to open in 2011. Ultimately, the port could have capacity for 20 million TEUs and is envisioned as the biggest port on the Red Sea.

How this fits into the larger logistics and seaport picture in the Middle East isn't clear. DP World's flagship port, Jebel Ali in Dubai, has become one of the world抯 10 biggest ports on the back of its Jebel Ali Free Zone and growing trade through the region.

Meanwhile, ports in other Middle East nations are aiming to attract cargo of their own. Two ports in Sharjah, the emirate that neighbors Dubai, are expanding, as is the port in Abu Dhabi.

Development of a major new port in Saudi Arabia would also cast questions over expansion of the Saudi government-backed Port of Jeddah. It is the busiest port on the Red Sea and there are plans to expand its container capacity over the next few years, as a cross-country rail line linking the Red Sea to the Persian Gulf is built. DP World has been slowly building its portfolio of smaller terminals around the Middle East, but nothing on the scale of a port that could potentially challenge the supremacy of Jebel Ali.

There seems little need for more than one major hub in the region at present, and two at the most in the long term, Jonathan Beard, managing director in Hong Kong for port consultant GHK Consulting, told American Shipper in an interview last week. However, development of a such a hub on the Red Sea might be attractive to shipping lines wanting to avoid navigating through the Strait of Hormuz to load and unload cargo in the region, as is required when calling at Jebel Ali (more so if the future Saudi rail link could serve as a cost-effective means of distributing cargo from Red Sea services to Gulf nations).

Source: American Shipper