Saudi Arabia’s aviation, logistics renovation plans could relieve regional airfreight congestion

Saudi Arabia recently issued tenders for new rail, logistics and airport construction projects as part of national plans to transform its aviation sector into a regional hub for air cargo and logistics.

Over the past month, the Saudi Arabian government has issued tenders for the construction of a new dry port and logistics zone, as well as transaction advisory services related to two railway projects – one connecting Yanbu, Industrial City and King Abdulla Port along the Red Sea, and the other linking the current Dammam-Riyadh line with the northern railway – according to Thomson Reuters Zawya. These tenders follow the government’s approval for construction of a new airport in Saudi Arabia’s Western port city, Al-Qunfudah, last month, which requires the country’s General Authority of Civil Aviation (GACA) issue tenders for the airport project by April.

The new Al-Qunfudah airport will be located on 2,400-hectare site 25 kilometers north of the city of Al-Qunfudah and will serve its seven surrounding governorates, according to the state-run news outlet, Saudi Press Agency. The airport will have capacity for 500,000 passengers annually and include a parking apron with space for five aircraft. Construction of the airport is set to be completed by 2020, although details related to space and capacity for cargo are yet to be determined.

Compared to other airports in the EMEA region, such as Abu Dhabi (AUH), Bahrain (BAH), Doha (DOH) and Dubai (DXB and DWC), the projected capacity for the airport is small. In 2017, AUH, DOH, DBX and DWC ranked among the world’s Top 50 airports and each handled between 700,000 to over 2.5 million tonnes of cargo. Plans for the refurbishment of DXB’s runway are also underway, which could exacerbate flight congestion at DWC.

The advantage the Al-Qunfudah airport presents for the region is an alternative to cargo providers experiencing the heavy flight congestion present at these other regional airports. In the International Air Transportation Association’s (IATA’s) 2019 airport flight slot congestion report, AUH, BAH and DIA were all designated as “level 2” congested airports, while both DWC and DXB were among the most congested worldwide at “level 3.”

Construction of a new airport and railways is intended to decongest current operations, while capturing a growing share of regional freight transit volumes as part of Saudi Arabia’s US$450 billion strategic National Industrial and Logistics Development Program (2018-2020) announced in January. Goals outlined in the program include expanding logistics infrastructure, streamlining and automating customs operations and procedures and increasing aviation and logistics industry service quality. The program acts as one facet of the country’s Vision 2030 plans to reform and diversify the country’s oil-dependent economy.

The efforts are also supported by national carriers, such as Saudia Cargo, which signed a joint agreement with King Abdullah Port to strengthen collaboration between air and sea by setting up a secure logistical operations zone, according to the Saudi Gazette. The move marks the beginning of efforts to strengthen Jeddah International Airport’s (JED’s) links to multi-modal transportation options. JED also currently serves cargo flights from carriers including Air France, DHL, Ethiopian Airlines Cargo, Lufthansa, Qatar Airways and Turkish Cargo.