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

The Red Sea Gateway Terminal. a major container terminal at Jeddah Islamic Port. Courtesy of Red Sea Gateway Terminal.

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.

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.