DP World, one of the world's largest port operators, and the Saudi Ports Authority (Mawani) have signed an agreement to build a "port-centric" logistics park at the Jeddah Islamic Port with a total investment of more than 500 million Saudi riyals ($133.33m).
The agreement, which is valid for 30 years, aims to establish a logistics park spanning more than 415,000 square metres, with an in-land container depot capacity of about 250,000 TEUs (twenty-foot equivalent units). The park will also have warehousing storage space of 100,000 square metres at Jeddah port, DP World said in a statement on Sunday.
Future expansions could boost the storage space to 200,000 square metres at the port on the Red Sea coast.
“We are committed to enhancing the role and the status of Jeddah’s Islamic port, which is strategically located on the Red Sea and has historically played a pivotal role in facilitating the movement of trade between the East and the West,” Sultan bin Sulayem, group chairman and chief executive of DP World, said.
“Facilities like these will enable us to make deeper inroads into the kingdom, by extending our collaboration with leading logistical service providers."
Saudi Arabia, the Arab world’s largest economy, is focused on diversifying its economy away from oil as part of its Vision 2030 programme. The kingdom is developing projects across sectors including real estate, infrastructure, petrochemicals, transport and hospitality to attract investment and boost employment.
The kingdom is forecast to be a vital driver of global trade growth, with its exports projected to expand at an average annual rate of more than 7 per cent to $354 billion by 2030, Standard Chartered said earlier this year.
Metals and minerals, plastic and rubber, chemicals and pharmaceuticals will dominate the kingdom's exports over the next decade, with India, China and South Korea being the principal export markets, according to the lender.
“This partnership will connect the port's operations to the new logistics park to offer end-to-end logistics services with high efficiency,” Omar Hariri, president of the Saudi Ports Authority said.
“It will also help us expand our joint collaboration further with major logistics service providers, enhance the re-export operations and cut costs of the logistics services in order to provide the best-in-class services to stakeholders and investors.”
DP World signed a new concession agreement with Mawani in 2020 to continue operating and managing the South Container Terminal at the Jeddah Islamic Port for the next 30 years. This will involve an investment commitment of more than 3bn riyals to expand and modernise the terminal.
The project is set to be completed by 2024 with new infrastructure upgrades, including the broadening of draft depth and quay, and the installation of advanced equipment and technologies, automation and digitalisation programmes, in addition to decarbonisation initiatives.
When complete, the revamped terminal will double Jeddah Islamic Port’s container handling capacity to 4 million TEUs and "solidify" its standing as a major trade and logistics centre on the Red Sea coast, DP World said.
DP World is one of the world’s biggest operators of marine ports and inland cargo terminals, with gateways from London and Antwerp, as well as hubs in Africa, India, Russia and the Americas.
The Dubai-based company has been on an acquisition spree as it attempts to become a more diversified and integrated logistics company.
In February, it signed a preliminary agreement with the Angolan government to develop the country’s trade and logistics sector.
It also concluded its acquisition of South Africa’s Imperial Logistics for $890m to strengthen the ports operator's position in Africa.