Maersk to set up $136m logistics centre at Jeddah port to boost exports

AP Moller-Maersk, the world’s largest container carrier, will invest $136 million over a 25-year period on an integrated logistics park at the Jeddah Islamic Port in Saudi Arabia to help the country to boost exports.

The project, spread over an area of 20.5 hectares, will serve as a centre for trans-shipments and air freight, with a number of warehouses, distribution centres and cold storage units, according to Maersk.

The project will be “a remarkable milestone in strengthening the kingdom’s position regionally and globally and will contribute to transforming the kingdom into a leading global centre in the field of transportation and logistics services,” Saleh Al Jasser, Saudi Arabia’s Minister of Transport and chairman of the board of directors of the Saudi Ports Authority, said.

Saudi Arabia is investing heavily to boost its infrastructure as it seeks to diversify its economy away from oil.

It is building new airports, various tourism-related projects and nurturing a home-grown manufacturing industry, as part of its Vision 2030 programme.

Saudi Arabia’s Jeddah Islamic Port sits strategically on the Red Sea coast. It connects the East and the West and is the largest port in Saudi Arabia and second largest in the GCC region in terms of volume and cargo-handling capacity, according to Maersk.

“The strategic partnership between the authority and Maersk is an important step to achieve our ambition for Jeddah Islamic Port to become among the top ten ports in the world by 2030, with the volume of container handling reaching 18 million TEUs [twenty-foot equivalent units],” said Omar Hariri, president of the Saudi Ports Authority.

First Integrated Logistics Park at Jeddah Islamic Port. Photo: Maersk Saudi Arabia

The Integrated Logistics Park will be able to handle annual volumes close to 200,000 TEUs.

Maersk will also invest heavily in renewable energy to power the logistics park and eventually achieve carbon neutrality. The project is expected to create more than 2,500 direct and indirect jobs in the kingdom.

Maersk’s Saudi subsidiary is also setting up a logistics centre for petrochemical exporters at King Abdullah Port.

Saudi Arabia has made a strong recovery from the coronavirus-induced slowdown that tipped the global economy into its deepest recession last year since the 1930s.

The kingdom's economy is expected to grow 2.8 per cent this year, driven by higher oil prices and investment from its sovereign wealth fund, according to the International Monetary Fund.

Investments in Saudi Arabia’s industrial sector jumped 281 per cent over the past year to 20.5 billion riyals ($5.47bn), fuelling higher demand for warehouses and other units, according to consultancy Knight Frank.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

More on Yemen's civil war

Saeed Al Batati: How the war played a role in Africa's locust swarm

National Editorial: Thanking the UAE troops for protecting the country

National Editorial: Riyadh deal paves the way for peace in Yemen

National Editorial: The UAE a leader in giving humanitarian aid

Moral education needed in a 'rapidly changing world'

Moral education lessons for young people is needed in a rapidly changing world, the head of the programme said.

Alanood Al Kaabi, head of programmes at the Education Affairs Office of the Crown Price Court - Abu Dhabi, said: "The Crown Price Court is fully behind this initiative and have already seen the curriculum succeed in empowering young people and providing them with the necessary tools to succeed in building the future of the nation at all levels.

"Moral education touches on every aspect and subject that children engage in.

"It is not just limited to science or maths but it is involved in all subjects and it is helping children to adapt to integral moral practises.

"The moral education programme has been designed to develop children holistically in a world being rapidly transformed by technology and globalisation."