MedaLogistics16 | Hussein Balaghi

Saudi Arabia Logistics & Transportation Sector

MENA BUSINESS INVEST. GROUP

Index

Saudí Arabia

Logistics & Transportation Sector

Rail

Ports

Airports

Road transportation

Business opportunities

Ongoing Rail projects MENA Region

How to invest in the Saudi market

Saudi Arabia

- Located strategically between 3 continents (Asia, Africa, and Europe).

- The Transport and Logistics (T&L) Sector in Saudi is supporting a population of 31.7 millions (2015), and within only 3 hours flying radius, the T&L sector can serve for both cargo and passengers more than 250 million habitants.

Saudi Arabia

- Government Mission is to position Saudi Arabia among the top ten most competitive nations through the creation of a pro-business environment, a Knowledge-based society, and by developing world-class “Economic Cities” and Free zones.

- KSA is planning to create alternatives for the Oil Incomes in order to don’t be dependent on Oil. A plan is going to be implemented starting on 2016 to achieve this target. This plan includes privatization of Hospitals, Airports, Ports, Highways, Universities, etc., and the creation of an institutional investment fund around 2 Billion USD to generate alternative incomes for KSA in addition to the Oil incomes.

Transport

- Saudi Arabia boasts a wide transport network with a particular strength in road and airport transportation.

- Road penetration, for example, is ~9,600km per 1,000 people, which is 70% higher than peer group (i.e. Turkey, Malaysia and Indonesia). Quality of infrastructure is also solid, with Saudi Arabia ranking 17th in the WEF infrastructure quality score. Driven by economic and population growth as well as rapid urbanization, the Kingdom is now investing into a massive expansion of its urban transport systems (metros and buses) as well as inter-urban (freight and high speed railways). In parallel, the Kingdom pursues a strategic goal of increasing infrastructure quality by 300% by 2024.

King Abdullah Economic City

(KEAC)

Prince AbdulAziz bin

Mousaed Economic City

(PABMEC)

Knowledge Economic City (KEC)

Jazan Economic City

(JEC)

Superficie: 168 Mn m2 156 Mn m2 4,8 Mn m2 100 Mn m2

Inversión: US$27 billion US$8 billion US$7 billion US$27 billion

Población: 2 Mn 300.000 150.000 300.000

Localización:

Beside Red Sea Between Meca And Medina

Region Center/north

Of Hail. Planned to be

the transportation

Hub.

At the east of Medina

60 km. At the North of Jizan

City

Economics Cities - Saudi

Saudi Arabia

- As a result of the economic growth and the development of ECs, annual cargo volumes will triple from 300 million tons in 2005 to around 900 million tons in 2020.

- 60% of the growth is due to basic demand growth, 30% due to the development of ECs, and 10% due to the successful leverage of launch pads on the Red Sea.

Saudi Arabia

- The international share of cargo movements will increase to more than 60% in 2020 with a shift to relatively more trade with Middle East and Africa. Domestic volumes will remain to be predominantly transported by Road and Rail, while international volumes will be transported mainly by sea.

Saudi Arabia - Vision

- The massive expansion of transport infrastructure has already begun with Metro and bus projects in Riyadh and Makkah, rail projects such as the High-speed Haramain Rail and a massive increase in school bus transport.

Transport - Vision

- Over the next 10 years (2015-2024), spend on rail, metro and bus projects will reach ~$141bn.

- Saudi Arabia is looking for investors and suppliers to develop its transport infrastructure in a long-term partnership approach. It aims to not only develop its infrastructure, but also its transport industry through value chain integration, attraction and training of skilled workers and coordination across the various projects.

Saudi Arabia

- An Attractive and Large Transportation & Logistics Market

Large market, with huge growth potential:

- Large Land Mass

- Strategic Location

- Rich with Natural Resources

- Fast Population Growth

- Large Consumer Market

- Commitment of the Saudi Government to develop the Transportation Sector.

- The Transportation Sector is one of the main focus areas of Saudi Arabia and it is believed to be the Kingdom’s second most added value sector after energy.

Transport & Logistic Sector

Rail

- The existing railway network of Saudi Arabia connects the port of Dammam to the capital Riyadh. This infrastructure of the current railway network comprises two mainlines and one branch line with a combined length of 1,018 km. The two mainlines 1 and 2 run in parallel between Hofuf and Dammam, but are operated as independent single lines.


Rail

- Saudi Arabia’s North-South Railway Project, a multibillion Saudi Riyals initiatives to develop a 2,300 kilometer north–south railway system that will link the northern mineral mines of Al Jalamid (phosphates) and Az Zabirah (bauxite) to processing facilities in Ras Al Khair on the Arabian Gulf. The railroad will also be extended to serve general freight and passenger along the line from Northern region to Riyadh through Hail City.

- The Saudi Government has established a 100% Government owned company with the intention of privatizing Operations and Maintenance.


Rail

- Saudi Landbridge Railway (Delayed): the project will involve construction and operation of 945 km of new standard-gauge track from Riyadh to Jeddah as well as a new 115-kilometre spur from Dammam port to the industrial city of Jubail. Expansion will transform the Kingdom's existing network into one of the world's most important strategic freight links connecting the port cities of Jeddah, Dammam and Jubail via Riyadh's inland dry port. Delivery time for containers tracked between Dammam and Jeddah will be less than 18-48 hours compared to up to eight days journey by sea around Ras AlMandab from the Red Sea to Arabian Gulf.


Rail

- The maintenance for urban transit and freight/passenger rail projects until 2024 will create an annual replacement demand for wheelsets of USD 140 million. The market could be even bigger if the wheelset manufacturer can also supply the local assembly of metro and regional trains. Opportunity: Manufacture of wheels and wheelsets. The steel capabilities of the local supplier base can be leveraged to form the manufacturing, but a JV with an established supplier, e.g. Bonatrans, is a prerequisite for technology transfer and the acquisition of relevant capabilities. The opportunity requires greenfield investment in dedicated facilities (e.g., for casting rail wheels) and can be realized in 2-3 years. Initial investment1: USD150-180 million.


Rail

- Haramain High Speed Rail (HHR): Saudi Railway Organization (SRO) is developing this project to connect the Two Holy cities of Makkah and Medina through Jeddah and King Abdullah conomic City (KAEC) in Rabigh. Project cost more than SR 28 BN. The route for HHR project and the locations for 5 stations in Makkah, Jeddah, Madinah and Rabigh have already been finalized. Phase 1 of project is under construction.The project is designed to operate passenger trains with a speed of over 300 km per hour, reducing travel time between Jeddah and Makkah to 30 minutes and between Jeddah and Madinah to two hours.


Rail Electrification System

- Saudi Arabia’s planned metro, light rail, mixed use and high-speed rail projects will require an estimated USD 1.8 billion investment into electrification. This includes poles and components of catenary systems both for mainline overhead and third-rail for metro projects: wires, third rail, surge arresters, capacitors, catenary, etc.


Rail Electrification System

- Opportunity: This is an opportunity for leading suppliers of catenary systems, such as ABB, AEG and APS Electronic, to establish a footprint in Saudi Arabia with export potential to the entire GCC region, as well as for local manufacturers of electric equipment through a JV with established players to step up and produce more valuable products. The opportunity will require greenfield investment and can be realized in a timeframe of 2-3 years. Profile: Leading suppliers of catenary systems. Initial investment: USD100-130 million


Rail – Concrete Sleepers and Slab Track

- The planned metro projects in Jeddah, Mecca, Medina and Dammam, as well as the Saudi-Bahrain railway, the Jeddah commuter rail, the Saudi Landbridge, and the GCC railway will create an estimated USD 3.7 billion opportunity for concrete sleepers and slab track.

- This opportunity represents ~ 1/3 of the overall rail systems opportunity and a large share could be captured locally. Existing local suppliers of concrete products include Bina Precast, PCM Strescon, and Al Mobty


Rail – Concrete Sleepers and Slab Track

- Opportunity: Supply pre-fabricated concrete slab tracks and pre-stressed concrete sleepers to a contractor. A strategic JV with an established multinational manufacturer may be required to unlock value by vertically integrating the local supply base.

- This opportunity has been identified as a high-potential opportunity for the first wave of projects. Profile: Pre-fabricated element manufacturers demonstrating excellent quality and precision. Initial investment: USD 670-820 million.


Rail Track Construction

- The planned metro projects in Jeddah, Medina, Mecca and Dammam and additional commuter and mixed-use rail infrastructures will create a rail track construction opportunity of USD 2.2 billion. About 75% of this market value could be captured locally. Existing local supplier include Al Ayuni Investment & Contracting, Al Arrab Contracting and Al Rajhi Construction.


Rail Track Construction

- Opportunity: Provide ballasted and ballastless configurations (including earthworks), rent required machinery, and conduct track-related works, such as laying down, tamping and gridding the tracks, throughout the railway track construction phase.

- Invest in and build the capabilities of local construction companies, particularly with regard to specific technical requirements, such as metro and high-speed line projects. Initial investment: USD 70-90 million.


Sea Transport and Port Sector:

- Saudi Arabia has the largest port network in the Middle East. Saudi Ports Authority supervises development, management and operation of the eight major seaports located on the two coasts of Saudi Arabia. These ports have together 183 berths, 137 of them in the six commercial ports and 46 in the two industrial ports.



- The eight ports are:

1. Jeddah Islamic Port (JIP)

2. King Abdul Aziz Port Dammam

3. King Fahd Industrial Port Jubail

4. Jubail Commercial Port

5. King Fahd Industrial Port Yanbu

6. Yanbu Commercial Port

7. Jizan Port

8. Dhiba Port



- Currently, 3 ports are under development is Saudi Arabia, Ras Al Kair on the Gulf and two other ports inside the Economic Cities; King Abdullah and Jazan Economic Cities. Saudi Ports have become major contributors to Saudi economy (95% of cargo trade are through Ports) and a link between the national and international economy.


Air Transport Sector:

- Currently, 27 airports are being operated by the General Authority of Civil Aviation (GACA), 23 domestic airports, and four International Airports (King Khaled International Airport Riyadh, King Abdulaziz International Airport Jeddah, King Fahd International Airport Dammam, and Prince Mohammed International Airport in Medina. Jeddah & Riyadh Airports account for ~ 75% of traffic.



- GACA has introduced the Public Private Partnership (PPP) model to the newly developed airports within the country; the First Private International Airport is currently being developed in Prince Abdulaziz Bin Musaed Economic City (PABMEC) in Hail province; while the second project is the development of Prince Mohammed International Airport in Medina and the new airport in Riyadh.



- Major air aviation developments are taking place; air operators are sought to drive expansions to KSA’s air transport infrastructure.

- For example, significant upgrades are currently underway at Medina Airport, a new Cargo Village is being planned for Dammam airport. As part of promoting the private sector, the first planned private airport is currently in progress in Prince Abdul Aziz bin Musa’ed Economic City.


Road Transport Sector:

- The KSA is served by an extensive road network with a total length of 97,000 km. The network consists of two components. The first comprises the inter-city roads whose lengths is more than 55,000 km of paved roads under authority of the Ministry of Transport, with expressways and main roads connecting most populated nodes in the network.

- The other component covers the urban roads which are 42,000 km long and are under the authority of the Ministry of Municipal and Rural Affairs. The inter-city roads constitute 55% of the entire road network, while urban roads constitute 45%.


Bus Transport

- Urban and inter-urban bus transit projects until 2024 create a bus service operation and maintenance opportunity of USD 1.9 billion. Existing bus operators include Hafil and Saptco.

- Other passenger transportation companies, such as Saudi Airlines, and car/track maintenance companies, including leading bus OEM dealer networks, can be employed to explore potential synergies.


Bus Transport

- Opportunity: Provide bus maintenance services, passenger operations (including training transport professionals, e.g. bus drivers) and other passenger services, (including bus terminal and operations management, catering).

- Most of these opportunities can be captured by the existing local bus service providers and bus maintenance companies/workshops. This has been identified as a high-potential opportunity for the first wave of projects.

Business/Investment Opportunities

Investment Opportunities in the Railway Sector

1. Saudi Land-bridge Build, Operation and Management (Delayed).

2. Haramain High Speed Rail - Operation and Management.

3. North-South Project Operation and Management.

4. Riyadh Dammam High speed rail.


Investment Opportunities in Public Mass Transit:

1. Riyadh Light Rail

2. Makkah Light Rail

3. Jeddah Light Rail

4. Madinah Light Rail

5. Dammam Light Rail


Investment Opportunities in Maritime Transport Sector

Saudi Ports Authority (SPA)

1. Developing and Administration of a Logistics Park Adjacent Yanbu Commercial Port

2. Operation of the Passenger Terminal in Yanbu Commercial Port

3. BOT of a 2nd Container Terminal in Jubail Commercial Port

4. BOT of a 4th Container Terminal in Jeddah Islamic Port

5. Upgrade and Operation of the Jeddah Shipyard

6. Operation of the Passenger Terminal in Jeddah Islamic Port

7. BOT of a 2nd Container Terminal in King Abdulaziz Port Dammam

8. Upgrade and Operation of the Dammam Shipyard

9. Development and Administration of 3 Logistics Parks adjacent King Abdulaziz Port Dammam


Investment Opportunities in the Air Transport Sector

1. Domestic Low Cost Carrier (LCC)

2. Hajj Charter carrier

3. Logistics Cargo Distribution Hub (e.g. at DMM airport)

4. Recreational Facilities at Int’l Airports

5. Commercial Retailers at Major Airports

6. Privatization of Dammam Airport (KFIA)

7. Privatization of Saudi's Catering Unit

8. Fuel Farm Operator

9. Aircraft Leasing Company

10. Internationalization of Madinah Airport

11. Privatization of Hail Airport (HAS)

12. Airport City projects.


Investment Opportunities in Logistical Services

1. Set of warehouses & Bulk storage Facilities

2. Packaging and Construction Material Distribution Service Providers

3. Logistics and Transportation Centers

4. Manufacturing & Distribution of Vehicle Spare Parts & Tires.

5. Logistics Management Consulting Firm

6. Specialized Logistics Vehicle Maintenance Services Firm

7. Perishable Warehousing and Logistics Services


Investment Opportunities in Economic Cities:

1. Intermodal transport Terminals and Transit Systems.

2. Implementation of modern logistics Centers and Service facilities.

3. Developing Aerospace Manufacturing and Distribution Facilities.

4. Industrial and Logistical Park Development and Operations in KAEC & JEC.

5. Develop & Operate Training Academies in Rail Operations, Bus Systems, Aerospace Managerial, Industrial, Technical fields, Port Operations.


King Abdullah Port (KAP) inside King Abdullah Economic City (KAEC)

1. Shipyard / Ship Repair

2. Bunkering

3. Emergency Response

4. Insurance / Reinsurance

5. Nautical / Institute


Jazan Economic City (JEC) Port

1. Third Party Logistics Services

2. Maritime Training Institute

3. Container Terminal

4. General Cargo / Dry Bulk Terminal

5. Maritime Services

6. Ship Repair / Construction / Recycling

7. Tank Farm and Bunkering

8. Warehousing / Regional Distribution Centers

9. Container Depot

10. Container Freight Station

Major rail projects underway in the Mena Region

Project Country Value($m) Main contractors Due

Riyadh Metro: Lines and 2 Saudi Arabia 9,450 Bechtel/Siemens/Almabani/CCC JV 2020

Harmain high-Speed rail netwaork: phase 2 Saudi Arabia 8,396 OHL/Adif/Renfe/Talgo/Indra/Dimetronic/Cobra/Inabensa/Capasa/Imathia/Consultrans/Ineco/Sho

ula/Rosan JV 2018

Riyadh Metro: Lines 4,5 and 6 Saudi Arabia 7,820 FCC/Freyssinet/Alstom/Samsung/Strukton/Setec/

Typsa JV 2020

Riyadh Metro : Line 3 Saudi Arabia 5,942 Ansaldo STS/Impregilo/Larsen &

Toubro/Nesma&Partners/Bombardier JV 2020

Tehran Metro : Line 6 Iran 4,000 Ahab Construction Company 2017

Tehran Metro : Line 7 Iran 4,000 Sepasad Engineering Company 2016

Doha Metro: Gold Line (Tunneling Works) Qatar 3,300 Aktor/Yapi Merkezi/Larsen&Toubro/STFA/Al-

Jaber Engineering JV 2018


Harmain high-speed rail network; phase 1 , package 1 (civil works)

Saudi Arabia 2,871 Al-Rajhi Holding Group 2018

Lusail LightRail: phase 2 Qatar 2,722 Aistom/Qatar Diar VINCI Construction

(QDVC) JV 2019

Doha Metro: Green Line (tunneling and main stations works)

Qatar 2,520 Saudi Binladin Group/HBK Contracting

Company/Porr Solutions JV 2018

Red Line North (tunneling works) Qatar 2,184 Impregilo/SK

Engineering&Construction/Galfar al-Misnad Engineering&Contracting JV

2016

Oued Tlelat to Akid Abbes:phase 1 Algeria 1,815 Rizzani de Eccher/Societa Italiana

perCondotte d'Accqua JV 2016


Oued Tlelat to akid Abbes: Phase 2 Algeria 1,633 Groupe ETRHB Haddad/FCC JV 2016

Baghdad Monorail: Phase 1 Iraq 1,500 Alstom 2019

Doha Metro : Red Line South (tunneling works)

Qatar 1,500 QDVC/GS Engineering&Construction/Al-

Darwish Engineering JV 2018

Arak to Kermanashah to khosravi Iran 1,500 Iran Ministry of Roads&Urban Development 2017

Haramain high-speed rail network: phase 1,package 2 (contract 1)

Saudi Arabia 1,300 Groupe ETRHB Haddad/FCC JV 2018

Harmain high-speed rail network:phase 1, package 2 (contract 1)

Saudi Arabia 1,287 Saudi Binladin Group/Yapi Merrkezi JV 2018

Harmain high-speed rail network:phase 1, package 2 (contract 2)

Saudi Arabia 1,267 Saudi Oger/El-Seif JV 2018


Lusail Light Rail: Phase 1 Qatar 1,200 QDVC

Tehran to Mashad rail electrification Iran 1,112 Mapna Group/China General Technology

(Group) Holding/SU Power JV 2017

Doha Metro: Msheireb station Qatar 1,100 Samsung C&T/OHL/Qatar Building Company

JV 2019

Laghouat to Djelfa railway Algeria 1,100 Cosider Groupe 2016

Education City station Qatar 1,100 Samsung C&T/OHL/Qatar Building Company

JV 2019

Djelfa to Boughezoul railway Algeria 800 Cosider/SAPTA JV 2017

Touggourt to Haoud el-Hamra railway Algeria 700 GCB 2016

Al-Sufouh tramway 2 (Phase 1) UAE 682 Astom/Basix JV, Serco

How to invest in KSA

1- Analyze the local market and the potential business opportunity

2- Define the implementation strategy

3- Define the services / products to develop in the Gulf Area

4- Define the country where to start

5- Find the correct local partner. Not a must but is important to be synergy with the sector.

6- Dedicate team with experience, knowledge and know how in order to execute the implementation of the project

Contact

Hussein Balaghi

General Manager

Mobile: +34 639 30 37 29

Saudi Mobile: +966 500110208

Email: [email protected]

MENA Business Investment Group, S.L.

Address: Street Felipe de Paz, nº39, 1º, 08028, Barcelona, Spain

Tel: +34 93 449 71 11

www.mena-big.com

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