2004-ES-Ocean Transportation Study Update

Marketing Studies & Consultancy Division (MSCD)

Export Consultancy Unit (ECU) ______________________________________________________________

Export Study

(Part-A) Ocean Transportation Study

(Up-Date)

Rabi-I, 1425H (April, 2004G)

Ocean Transportation Part (A)

Table of ContentsE

1 Introduction..........................................................................................................................1 2 The ports of KSA ............................................................................................................... 2

2.1 Jeddah Islamic Port................................................................................................... 3 2.2 King Abdul Aziz Port, Dammam ............................................................................... 3 2.3 Yanbu Commercial Port.............................................................................................. 3 2.4 Jubail Commercial Port.............................................................................................. 4 2.5 Jizan Port ..................................................................................................................... 4 2.6 Dhiba Sea Port ............................................................................................................ 4 2.7 King Abdullah Economic City .................................................................................... 5

3 Statistics of exports through Saudi Ports .................................................................. 5 4 Type of ships ....................................................................................................................... 7

4.1 Dry cargo ship ............................................................................................................. 7 4.1.1 General-cargo ships.................................................................................................... 7 4.1.2 Reefer ships................................................................................................................. 8 4.1.3 Container ships ............................................................................................................ 8 4.1.4 Barge-carrying ships (lighter ships)....................................................................... 9 4.1.5 Ro-Ro ships................................................................................................................... 9 4.1.6 Bulk-carriers (bulkers: .............................................................................................. 9 4.2 Liquid cargo ships ..................................................................................................... 10

5 Type of containers ........................................................................................................... 10 5.1 Standard dry cargo containers (dc) 20' & 40'.................................................. 10

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5.2 HI-Cube dry cargo containers 40' x 8' x 9'6. ...................................................11 5.3 Open-top containers 20 & 40 ................................................................................11 5.4 Reefer (Refrigerated Containers 20' & 40'. .................................................... 12 5.5 Flat rack containers 20 & 40................................................................................ 13 5.6 Tank Containers: ....................................................................................................... 14

6 Types of the shipping Routes ........................................................................................ 14 7 The required Forwarding documents .......................................................................... 15 8 Charges of Saudi Ports collected from the consignee/shipper ............................ 15

8.1 Charges for port services for cargo exported: ................................................ 16 8.2 charges of bulk cargo .............................................................................................. 16 8.3 For Containers, flats & other types of trailers (including export charge)16 8.4 Additional service charges for container & trailers:....................................... 17 8.5 Storage charges: ...................................................................................................... 17 8.6 Additional services:.................................................................................................. 18

9 Insurance............................................................................................................................ 18 9.1 Insurance Companies working in KSA .................................................................. 18 9.2 Insurance Fees.......................................................................................................... 19

10 Freight rates .....................................................................................................................20 10.1 Cost Structure ..........................................................................................................20 10.2 Sample of Freight rates : ....................................................................................... 21

11 Major Global shipping companies: .................................................................................23 12 Conclusion ...........................................................................................................................23

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1 Introduction

Export is one of the influenced factors that can increase the economic growth rate. Clearly, exporting play a major role in the economic of the country. This is because:-

Exports increase the hard currency reserves of the country. It optimizes the unutilized production capacities in the country. It activates services sector in the country such as transportation, banking or

professional consultations. It develops local industry by motivating local producers to update their

production, management and marketing system.

Similarly, KSA is trying to diversify revenue resources by encouraging local manufactures to enter overseas markets and increase Saudi Non-Oil exports. Moreover, Saudi Non-Oil exports should establish a foothold in new markets for specific reasons, which include the following:-

To construct marketing facilities. To contact directly with customers and start adaptation process. To deliberate the nature of competition and determine the kind of competition

in which if it depends on price, access, or promotion efforts.

Exporting process has a number of critical parts that should be planned well to avoid unpredictable events, however, the transportation aspect is the corner stone of exporting process and can be considered by some potential exporters as one of the complicated part on the exports procedures and cost. Clearly, the transportation cost has a great impact on the profitability of the export transaction if the exporter doesnt deliberate the impact of added cost, transportation fees, and the competitors prices in such targeted market.

This report aims to give an up-date of our previous study in Ocean Transportation which includes estimating of the ocean freight and illustrating of procedures that have to be done by exporters when they want to transport their shipments by sea. Additionally, this up-date study has also focused in other important elements which include the following:-

Insurance Freight rates to important ports in the world.

It should be noted that although there is some information that does not change, however, an effort have been paid to reflect the updated information in each topic in

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the study .To accomplish the objectives of this report, we obtained information from various sources, which include the following sources.

Direct contacts with Government organizations e.g. Ministry of transportation. Direct interviews with selected transportation companies. Searches of information over various Internet websites on Ocean

transportation.

2 The Ports of KSA

The Kingdom of Saudi Arabia is the worlds main oil exporting country. It has the largest and most diversified economy in the Middle East with industrial exports that are internationally oriented. The Kingdom, therefore, has to have efficient, fully equipped ports that are capable of doing the job as it should be done. The Saudi ports used to be managed by different bodies with different rules, regulations and tariffs, for each port.

In 1976, the Saudi Government decided to create an independent Ports Authority, which was directly linked to the Prime Minister. The aim was to improve and develop all Saudi Ports and to run them in the most advanced and effective ways, in a unified manner. In its first six months; The Ports Authority was able to eliminate the problem of congestion. Later the Ports Authority proceeded to achieve its goal: to re-organize ports and to enhance their efficiency. Now the Saudi Ports have become major contributors to Saudi economy and a link between the national and international economy.

The capacity of the Saudi ports has increased from 31 berths to 183 mechanized and organized berths. Also Operating costs were reduced from U.S. $40/ton to less than U.S. $1.6/ton. Moreover 3.7 million containers are handled annually and 12,000 ships visit Saudi ports annually (one ship every 30 minutes).

The Ports Authority supervises the management and operation of the eight main seaports located on the Eastern and Western coasts of Saudi Arabia with a total of 183 Berths of which 137 in the six commercial ports and the other 46 are in the two industrial ports. These berths constitute the biggest port network in the Middle East .Moreover the KSA total trade activity (imports and exports) showed that about 95%

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the trade activities pass through the Kingdoms sea ports. 70% of the cargos handled are exports. Generally, there are 8 ports throughout Eastern and Western coasts. Two of them are industrial ports which are specialized to serve the factories in the both industrial cities Jubail and Yanbu. Other ports are commercial ports that are illustrated in the map above. In 2005, the government declared that a new sea port will be built within The King Abdullah Economic. In the following section a brief summary would be given about each port especially commercial ports. It should be noted that there is no new information in the regard of Saudi ports, however, an effort have been paid to reflect the updated information from ports authority.

2.1 Jeddah Islamic Port

Jeddah Islamic Port has an excellent location in the middle for the international shipping route between east and west. The port lies on the Red Sea coast at latitude 28 21' north and longitude 39 10' east. It is the kingdoms principal port serving the holy cities of Makkah and Madinah. The port serves the commercial centers through which 59% of the kingdoms imports by sea are being handled. The importance of Jeddah Islamic Port increased and reached its maximum limit when the Kingdom was developing into a modern and civilized country.

2.2 King Abdul Aziz Port, Dammam

King Abdul Aziz Port, Dammam, is the principal port of Saudi Arabia in the Gulf and is located approximately mid-way along the Eastern Coast at: Latitude 26 30 Longitude 50 12 King Abdul Aziz Port is the main gateway through which cargoes from all over the world enter the Eastern and Central Provinces of the Kingdom. It is strategically placed to service the requirements of the oil industry, the continuous development of Riyadh, the capital, and the major provincial cities in the Eastern and Central Provinces.

2.3 Yanbu Commercial Port

In Yanbu there are two ports. The first one is industrial port and other one is commercial port. Yanbu Industrial Port specializes to serve factories in the

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industrial city. Here the writer will concentrate on commercial port. Yanbu Commercial Port is located on the East coast of Red Sea approximately 460 nautical miles South of Suez Canal and 168 nautical miles North-West of Jeddah. It is a natural harbour sheltered by the mainland to the North and East and by coral reefs to the South and South-East. It is reached by a mile long channel.

2.4 Jubail Commercial Port

In Jubail there are two ports. The first one is industrial port and other one is commercial port. Yanbu Industrial Port specializes to serve factories in the industrial city. Jubail Commercial Port lies on Arabian Gulf in the Eastern Province of the Kingdom of Saudi Arabia. It is 80kg north of Dammam. Moreover, Jubail port is considered one of the biggest construction projects in the Kingdom, it has the most modern cargo handling, safety and fire fighting equipment. The port is on an area 50 km2 in the East and West of the Port there is a breakwater berth of ten kilometers. The economic importance of the Jubail Commercial Port is a vital economic utility because of its effective role in export and import policy in Eastern Region of Saudi Arabia. This is because that it is near to production centres, which could lead to low cost of material, coming to K.S.A. and material export to world markets. This Port has alleviated the burden of King Abdulaziz Port in Dammam with regard import & export.

2.5 Jizan Port

Jizan Port is ideally situated on the southern Red Sea coast and is very close to the main east/west sea-trade routes to Europe, the Far East and Arabian Gulf. Jizan Port is a modern, well-equipped, deep-water port with a highly skilled work force.

2.6 Dhiba Sea Port

Port of Dhiba is strategically located at the north end of the Red Sea coast of Saudi Arabia at Latitude 27 33' N, Longitude 35 31' E. It is a natural harbour protected on all three sides by hills. This port has vast hinterland on the inland frontier up to the Northeast coast of Saudi Arabia and extends up to the Mediterranean Sea on the maritime

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front. It is nearest Saudis port to the Suez Canal and other Egyptian ports.

2.7 King Abdullah Economic City

As it is released, the King Abdullah Economic City will contain a huge sea ports. This port is planned to be a hub port, which links between the continents of Europe, Asia and Africa. The port will be spread across 2.5 millions square meters and equipped by sophisticated and advanced craning system, as well as developed GIS and GPS data management network. The total handled capacity of the port is estimated to be millions TEUs annually.

3 Statistics of Exports Through Saudi Ports

The tables below show statistics of major Saudi ports during last four years. Table 1 illustrates statistics of exports on the basis of cargo type while Table 2 illustrates commodities exported (loaded) details for years between 2002 to 2005. Finally, Table 3 shows number of containers for both import and export during the last four years.

Table 1 Shipments Statistics of exports (Tons) through Saudi Ports 2002 2003 2004 2005 Cargo Type

Ton % Ton % Ton % Ton % Bulk Cargo(liquid)* 50,115,643 74% 53,939,805 76% 56,945,484 74% 58,009,331 72%

Growth % - 8% 6% 2% Bulk Cargo(solid) 8,846,525 13% 6,277,602 9% 5,122,980 7% 5,676,193 7%

Growth % - -29% -18% 11% Ro-Ro& Vehicles 113,662 0.20% 115,647 0.0% 114,606 0.0% 177,173 0.0%

Growth % - 2% -1% 55% Containers (in tons) 7,538,629 11% 9,966,029 14% 13,577,157 18% 15,935,614 20%

Growth % - 32% 36% 17% General Cargo 1,009,066 1% 972,827 1% 735,465 1% 842,424 1% Growth % - -4% -24% 15% livestock 1,029 0.02% 0 0.0% 190 0.0% 0 0.0%

Growth % - -100% 190% -100% Total 67,624,554 100% 71,271,910 100% 76,495,882 100% 80,640,735 100%

Growth Rate 0 5% 7% 5% *Bulk cargo excluding crude oil. Source: Ports Authority

The table above categorize sea shipments based on type of cargo. The percentages of growth in each type and in 4 years have been illustrated. It is worth to mention that, in this up-date study, the statistics of bulk cargo (Liquid) is included, unlike the pervious one.

As can be seen, there is a slight growth in the total exports for the years between 2002 and 2005. The average annual growth is roughly 4.6% p.a. In the same context the bulk cargo (liquid) has the largest proportion of Saudi export by around 72% of total exports. This is due to the fact that Saudi Arabia is one of the biggest

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exporters of liquid petrochemicals such as Methanol and Polyethylene. In the case of containerized shipments, there is a growth by around 28% annually and it represents around 20% of the total sea export in 2005. Regarding Bulk Cargo (solid), the volume of shipments increased slightly by around 17%in 2005.

Table 2 Statistics of Non-Oil exports through Saudi Ports on the basis of commodity (tons) 2002 2003 2004 2005 Commodity

Ton % Ton % Ton % Ton % Refined Products 37,586,660 55.42% 41,675,854 58.47% 44,721,426 58.46% 44,966,981 55.76%

Growth % - 11% 7% 1% Liquefied Gas 2,333,438 3.44% 2,250,433 3.16% 2,392,931 3.13% 2,319,107 2.88%

Growth % - -4% 6% -3% Petrochemicals 18,999,607 28.02% 18,682,081 26.21% 18,963,298 24.79% 21,312,465 26.43%

Growth % - -2% 2% 12% Food & Foodstuffs 133,207 0.20% 257,729 0.36% 400,934 0.52% 403,223 0.50%

Growth % - 93% 56% 1% Industrial Products 5,367,496 7.91% 3,345,312 4.69% 2,035,127 2.66% 1,752,836 2.17%

Growth % - -38% -39% -14% Recycling Material 206,306 0.30% 291,252 0.41% 267,975 0.35% 236,947 0.29%

Growth % - 41% -8% -12% Empty Containers 896,643 1.32% 974,186 1.37% 1,113,157 1.46% 1,263,062 1.57%

Growth % - 9% 14% 13% Vehicles 103,170 0.15% 110,473 0.16% 107,153 0.14% 163,206 0.20% Growth % - 7% -3% 52%

Other Cargo Loaded 2,189,617 3.23% 3,684,590 5.17% 6,493,881 8.49% 8,222,908 10.20% Growth % - 68% 76% 27%

Total Cargo Loaded 67,816,144 100% 71,271,910 100% 76,495,882 100% 80,640,735 100% Growth % - 5% 7% 5%

Source: Ports Authority

Similarly, the statistics are categorized on the basis of commodity. The percentages of growth in each commodity and in 4 years have been illustrated. By looking at the structure of total export in 2005, it appears that refined products represent around 56% of total exports in 2005. Moreover, Petrochemicals represent around 27% of total exports and it grew markedly in 2005. Likewise, other cargo has increased by around 57% p.a. during 2002-2005. Regarding Food & foodstuff, although it represents minor proportion among other commodities, it has witnessed sharp increase during the last 3 years. In contrary, Industrial products has dropped considerably in the last three years.

Table 3 Number of containers handled by Saudi Ports Containers (TEU)* 2002 2003 2004 2005

Discharged (Imports) 975,253 1,227,258 1,595,065 1,880,337 % 49.87% 50.29% 50.07% 50.38%

Loaded (exports) 980,514 1,213,069 1,590,634 1,852,291 % 50.13% 49.71% 49.93% 49.62%

Total 1,955,767 2,440,327 3,185,699 3,732,628 * Twenty-foot equivalent unit. A unit of measurement equivalent to one

20-foot shipping container. Source: Ports Authority

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In the case of containers statistics, it has been noticed that imported containers seem to be well utilized in the process of export activities since the imported containers are almost matching with the exported one.

4 Type of Ships

This section intends to describe most types of ships by explaining their characteristic features and through the use of illustrations. It dwells mainly on troop ships because they constitute the world's merchant fleet and contribute largely to world trade and transportation. Basically, troop ships can be categorized on the basis of the nature of shipment itself. Hence, there are two types of ships. Firstly dry cargo ships and as the name suggests, they carry dry shipments such as general-cargo, containers and specialized ships (livestock ship and refrigerated ships (Reefer Ships). Secondly, liquid cargo ships that specialize on carrying liquid shipments such as crude oil, Petrochemical and Natural Gas. It is worth to notice that the writer does not find major changes in this section to be reflected in this up-date. In the following brief description for each type will be provided.

4.1 Dry Cargo Ship

As the name suggests, it caries dry shipment such as general-cargo, containers and specialized ships. In the following is brief illustration of most uses of dry cargo ships.

4.1.1 General-Cargo Ships

Once the most popular type, nowadays general-cargo ships are still built but in small quantities. Their carrying capacity is 4,000-6,000 ton on average and may reach 16,000 - 20,000 ton. General cargo includes items which are packed (boxes, barrels, bags, packages) or not packed (pipes, bricks, machinery, rolls of wire). They usually have spacious holds which occupy the larger part of the hull. Refrigerator chambers to keep perishable foods, tanks for carrying vegetable oils and air-conditioned systems for furs needing special care are being provided on modern vessels.

General-cargo ship

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4.1.2 Reefer Ships

They transport perishable foods such as fruit, vegetables, meat, fish and dairy, having a carrying capacity of 8,000 - 12,000 ton. They sail at a speed of 18-22 knots which is faster than that of the common general-cargo ships because these perishable goods require faster delivery. Foodstuffs are kept in holds with good heat and freezing insulation at a temperature varying from -25 C to +13 C depending on the type of cargo. Reefers are equipped to carry not only frozen stuff but also goods which first have to be refrigerated to a specific temperature for transportation.

4.1.3 Container Ships

Carrying capacity - 8,000-15,000 ton on average and 25,000-30,000 ton for big containerships. These ships are classified as unit-load ships because freight is carried in huge boxes of standard size (units), usually from 10 to 40 ton. Actually these are the same we see on trains and trucks proving one of the advantages of containerships and those boxes: the delivery can be transported to the recipient using the link wagon - car - ship with least damage of cargo. Containerships are said to have made a revolution in the history of water transport. The higher speed (of 20-26 knots) and shorter port stay are a few of their advantages over other types of ships. The boxes, also called containers, may carry anything - fruit and meat (in special refrigerator containers), chemicals and acids, textile, instruments and metals, TV sets, radios and computers. Containerships tend to have a large hatch on the deck just above the hold in order to avoid moving boxes horizontally along the deck to the hold to save time and effort. Due to this peculiar ship design and method of units, loading and unloading is done much faster. Usually, there is a pier that can load and discharge containers from ship.

Pier

Container ship

Reefer

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4.1.4 Barge-Carrying Ships (lighter ships)

This type of ships pertains to the category of containerships but the principle is slightly different. Cargo is carried in floating containers, also referred to as barges or lighters, each with a carrying capacity of 375 t - 1050 t. As these barges cannot sail on their own, they need to be tugged or towed to the ship. There, they can be loaded aboard in different ways depending on the type of lighter ship. From then on, another device carries the barge to its place. The "integrator" lighter ship has its hull divided into sections so that the tug can move the barge straight into its compartment. Unloading is done in the same way on the following principle - lighters are unloaded from the ship, let in the water and tugged to the pier. The advantage of this type of ships being that cargo can be carried in separate barges to and from smaller ports through a series of rivers and canals that is inaccessible for big ships.

4.1.5 Ro-Ro Ships

It is used for transporting motor vehicles and other wheeled equipment. Ro-Ro is short for roll-on roll-off ships and is thus called because cargo is carried on wheeled containers or trailers. Ro-Ro ships sail at an average speed of 22 knots. Roughly speaking, their shape is "boxy". Ro-Ro ships usually have 2-6 decks and look like huge parking lots with stern openings and lifting platforms to sort out trailers. Needless to say, loading and unloading is quite speedy. A common "representative" of Ro-Ro type is the car carrier (car-loading) which usually has cars directly loaded on the ship without putting them in containers. Modern car carriers are capable of carrying about 6,500 automobiles.

4.1.6 Bulk-Carriers (Bulkers)

It is designed to carry loose goods which constitute about 70% of all the shipments carried by sea; speed - 14 - 16 knots, carrying capacity - varies (there are ships with 30,000 ton and others with 150,000t), Bulkers are

Ro-Ro ships

Barge-carrying ships

Bulk-carriers(bulkers)

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usually one-decked, with an engine room in the stern and a deckhouse above it. The holds are constructed with longitudinal and cross walls (called "bulkheads") and the cargo is easily stowed according to them. Bulk-carriers do not have cargo-handling gear aboard and have their goods loaded/unloaded by means of port devices. That's why all the space before the deckhouse is vacant to make load operations easier. There is an exception for some bulkers that work on a self-unloading principle. Bulk cargo is a wide term. Heavy bulk-carriers usually transport ore, coal and coke, building materials, such as cement and gravel. Light bulkers carry grain, salt and sugar. Unfortunately, goods such as ores and grain cannot simply be dumped in the hold of the ship without taking any precautions. Any careless maintenance of this cargo may result in damage of the ship.

4.2 Liquid Cargo Ships

As the name suggests, it carries liquid shipment such as crude oil, petrochemical and vegetable oil. They are several types of the liquid cargo ships. Cargo ships transport chemicals such as sulfuric acid, phosphoric acid and ammonia. Some products require special conditions - for example, asphalt and liquid sulfur need to be warmed so as not to cool down during transportation. However, there are other types of liquid cargo that can carry water, vegetable oils, olive oils, etc.

5 Type of Containers

There are several types of containers and each type is required for significant product. Principally, there are six types of containers and they will be presenting in the following. Also it should be noted that no major changes need to be reflected in this section.

5.1 Standard Dry Cargo Containers (dc) 20' & 40'

Standard Dry Cargo containers are designed for the carriage of general dry freight cargo. Moreover, there are 40 and 20 foot container .In the following there is detailed information about the specifications of 40 and 20 foot containers. The definitions of some terms used in the tables are as follows:-

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Tare weight:- The weight of container itself L:- Length Payload:- The net weight of shipment W:- Wide CBM:- Cubic metre H:- High CFT:- Cubic foot 20:- 20 foot container Lbs:- Pounds (imperial measure) 40:- 40 foot container

Table 4

20' Dry Freight Containers

Interior Dimensions Door Opening Max. Gross Weight Tare Weight Payload Cubic Capacity

L: 5898mm W: 2340mm 30480 KG 2300 KG 28180 KG 33.2 CBM

W: 2352mm H: 2280mm 67200 LBS 5071 LBS 62129 LBS 1173 CFT

Table 5 40 Dry Freight Containers



W: 2352mm H: 2280mm 67200 LBS 8465 LBS 58735 LBS 2390 CFT

5.2 HI-Cube Dry Cargo Containers 40' x 8' x 9'6. With the additional one foot height of the Hi-Cube Containers, shipper and consignees have 12.5 percent more space than in a standard 40' Container. In addition, it is especially for light-weight, voluminous cargo. The table below shows the specifications of this container.

Table 6 40' High-Cube Dry Containers



W: 2352mm, H: 2698mm H: 2585mm 67200 LBS 8795 LBS 58405 LBS 2698 CFT

5.3 Open-top Containers 20 & 40

Open-top containers are designed to offer unrestricted overhead and door loading/discharge facilities. A strong tarpaulin cover, also referred to as a tilt', ensures that cargo is adequately protected in transit and that cargo, which is over-height, can be loaded and secured without difficulty. All Open-top containers are provided with floor and sidewall lashing points. In addition, it is especially for excessively high cargo. For loading from above or from the door with door header swung out. The table below shows the specifications of this container.

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Table 7 20' Open Top Containers




Table 8 40' Open Top Containers


L: 12024mm W: 2338mm 30480 KG 4000 KG 26480 KG 67 CBM


5.4 Reefer (Refrigerated Containers 20' & 40')

Reefer containers are used to ship perishable food or products that needs for constant temperature. The Reefer container contains temperatures control unit at the front of the container and it is closely monitored throughout the shipment cycle by staff of ship. At the consignees port, the containers are transferred to specific place that is equipped by generator of electricity to maintain the temperature of container that is suitable of the contents of container. The tables below show the specifications of this container.

Table 9 20' Reefer Containers




Table 10

40' Reefer Containers




Table 11 40' High-Cube Reefer Containers




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5.5 Flat Rack Containers 20 & 40

The Flat rack unit has neither roof nor sidewalls. Strengthened lashing points are located on both sides along the floor and accessory side posts can be readily fitted as required. With the side posts removed, large out-of-gauge pieces of cargo can be easily loaded and secured.

Shipment possibilities include:-

With the full height, solid end walls in the upright position, it is an ISO flat rack.

With both end walls down, the unit is converted to a platform flat.

With one end wall up and the other down, the unit can be used on road and rail when forward bulkhead regulations apply.

Often the 40' Flat rack is used in place of the 40' Open top unit due to the added flat rack advantage of much heavier cargo payload.

In all modes, the Flat rack has full cargo carrying capacity over its entire length, including the collapsed end walls. Slim profile end walls ensure minimum loss of platform area when used as a flat rack. When in the Platform mode, the end walls are fixed by failsafe catches to ensure maximum safety in transit. For empty positioning, end walls are folded down and units interlocked into 8'6" modules, allowing seven 20' units or four 40' units per module Also, there is Flat container that is used specially for heavy cargo and excessively wide cargo. The tables below show the specifications of this container.

Table 12 20' Flat Rack Platform Containers Interior Dimensions Max. Gross Weight Tare Weight Payload

L: 6038mm 30480 KG 2600 KG 27880 KG

W: 2208mm, H: 2233mm 67200 LBS 4730 LBS 61460 LBS

Table 13 40' Flat Rack Platform Containers Interior Dimensions Max. Gross Weight Tare Weight Payload

L: 12172mm 45000 KG 4900 KG 40100 KG

W: 2380mm, H: 1955mm 99210 LBS 10800 LBS 88410 LBS

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5.6 Tank Containers:

There is also a container that specializes to store liquid shipment such as petrochemical liquids. The size of this container varies from company to other. The table below shows the specifications of one type of this container.

Table 14 Size and type 20 x 8 x 86 20 x 8 x 86 Dimension and type code 22TD 22TD

External dimensions Length (mm) l1 Width (mm) w1 Height (mm) h1

6.058 2.438 2.591

Internal capacity Liters

Cubic meters 20.000 19.13 26.000

Maximum gross mass (kg) 24.000 36.000 Average tare (kg) 3.550 3.550 Maximum payload (kg) 20.450 32.450 max. operating pressure (bar) 1.75 -

6 Types of the Shipping Routes

In general, there are two types of shipping methods .The first one is by Conference Lines and the other by tramp shipping.

Tramp Shipping: usually operated by smaller companies which have few small ships. This kind of shipping is non-scheduled routes or lines and transport to any ports overall the world according to their customers, moreover, their freight rate is relatively cheaper than Conference Lines Shipping. The big disadvantage of this kind of shipping is there is a big probability for piracy problems, therefore, it is not advisable alternative.

Conference Lines Shipping: This kind of shipping is frequently used by most of exporters overall the world. It is scheduled route and time and has a specific line that passes by particular ports in a specific date. However,

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launching or closing shipping lines depends on the profitability that could be gain by shipper. Hence, if a transporter believes that one of his shipping line is no more profitable he would close it and vice versa. Each company has a number of shipping lines and schedules its ship to pass with particular ports in certain time. For example, the map shows the North America line of National Shipping Company of Saudi Arabia (NSCSA) and ports those are passed by ships.

7 The Required Forwarding Documents

Each shipment should raise the requirement documents for the destination country. In general, these documents include the following:-

Certificate of Origin - that proves the origin of goods. Bill of Lading - a document supplied to the exporter by the shipping company

that is transporting the goods to their foreign destination, listing, item by item, the goods being shipped. It serves three basic purpose:

o To acknowledge receipt by the carrier of the exporter's goods. o To indicate the carrier's contractual obligation to transport the goods to

their destination in exchange for payment. o To record transfer of title (or ownership) from the seller to the buyer

when payment for the goods takes place. Commercial Invoice: it shows the value of shipments for custom estimation

purposes. Some companies as a good service issue this document instead of exporter.

Authorization letter: authorize customs clearance office to deal with all custom clearance procedures.

Backing list: it contains the number of the containers, the number of each container, number of leaden seal and finally the contents of each container.

Insurance Policy: It is an insurance certificate for the shipment. It is, however, an optional document. More details about such policy are in the insurance section.

8 Charges of Saudi Ports Collected from the Consignee/Shipper

Saudi Ports Authority imposes charges for handling imports and exports. The handling consists of discharging and loading from ships, then, inspections and storing of shipments. After joining WTO, Ports authority stop giving Saudi exports any exception in terms of ports charges. As known, one of the main principles of WTO is to equal between export and imports in terms of treatments and charges. However,

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there are few exemptions for Saudi exports such as storage period exemption for exports and container charges. Regarding to containers charges, the Ports authority collect all charges of handling and storage of container from importer and that allows exporter to export its shipments in the same containers without charges. The following table shows the charges of Saudi ports that collected from exporter. Also, it is worth to mention that no recent changes have been made toward charges of ports services

8.1 Charges of Port Services for Cargos Exported:

Table 15 Description Rate (SR)*

General cargo** 35 Vehicles and equipment 35 Bagged cargo& foodstuff 20 Bagged cement 10

* Per ton or part thereof. ** General cargo includes all types of cargo excluding vehicles, self-

powered equipment, livestock, bulk cargo and cargo loaded on containers, flats or trailers.

Port services charges, as shown above, are collected for transporting cargo after discharging from ship to transit storage areas, sorting, stacking and transportation to the customs hall for inspection and then loading onto the consignees means of transport and vice versa in the case of export whether all or part of the service is provided.

8.2 Charges of Bulk Cargo


Bulk cargo (including foodstuff, bulk cargo handled at the cement silos, grains, oils or similar) excluding crude oil, gas and liquid petroleum products. 6

Exported bulk cement and clinker. 3

* Per ton or part thereof. Source: Saudi Ports Tariff (Ports Authority)

8.3 For Containers, Flats & Other Types of Trailers (including Export Charge)


20 feet long or less 270 Over 20 feet up to 40 feet 415

Over 40 feet 415 * Per ton or part thereof. Source: Saudi Ports Tariff (Ports Authority)

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Port service charges, as in table above, are collected for transporting containers, flats and other types of trailers after discharging from the ship to the import storage area, stacking and then loading onto the consignees means of transport for delivery. The charges in the export situation are exempted.

8.4 Additional Service Charges for Container & Trailers:

Table 18 Description Rate (SR) Unit

Every additional movement. 60 Per unit. Stripping of container/trailer contents. 120 Per unit. Re-stuffing of cargo into container/trailer. 120 Per unit. Refrigerated containers/ trailers for any period in excess of three days after discharging day. 100 Per unit/day or part thereof.

Transfer of overdue containers to the unclaimed cargo yard. 200 Per unit. Failure by the consignee to attend the mutually agreed appointment for customs inspection of containerized goods will result in the return of the container to the import stack. the new appointment will require payment of:

120 Per each operation.

Transfer of contents of a container/trailer to another container/trailer plus stacking and restuffing (for other than customs purposes):

Un refrigerated: Refrigerated:

200 400 Per 20 feet or part thereof

Source: Saudi Ports Tariff (Ports Authority)

In addition to the charges stated in the second and third row above, an amount of SR. 350 will be collected for each 20 feet container or less. Also, SR.750 for each container longer than 20 feet would be collected if the contents of the container were stowed in a way that cannot be handled by mechanical cargo handling equipment.

Charges of Refrigeration Services for Refrigerated & Frozen Cargo


For any period during the first three days. 20 With effect from the fourth day 20

* Per ton or part thereof. Source: Saudi Ports Tariff (Ports Authority)

It is worth to mention that, the above charges will be collected in addition to the storage charges shown in table (20).

8.5 Storage Charges:

Table 20 Description Rate (SR) Unit

Storage charges 20 Per ton per day or parts thereof until the date of clearing the cargo outside the port. Source: Saudi Ports Tariff (Ports Authority)

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Storage charges will be collected on export cargoes delivered to the port after ten (10) days from the day after entering customs premises. The two Eid holidays are to be excluded from that period.

In the case of exports of national industries, the period of exemption will be thirteen (13) days.

Exported bulk cargo in silos such as cement, grains, oils, chemicals, etc. and on the project berths at the industrial ports will be exempted from the storage charges.

8.6 Additional Services:

Any other additional services will be charged at the rate of actual cost plus 10 %, the customer requesting the service must provide the materials used. actual cost will be computed as follows:

Charges for using additional equipment for lifting or other purpose. Charges for labour are SR. 10 per hour or part thereof. Charges for skilled labour or technician are SR. 20 per hour or part thereof. Charges for engineer or supervisor are SR. 30 per hour or part thereof.

9 Insurance

9.1 Insurance Companies Working in KSA Insurance services become common in business environment in general, and in transportation activities in particular. According to SAMA, there are 25 insurance companies currently in operation in KSA. One of them which is NCCI has SAMA licence, whereas the rest of companies are in the process to get their licenses. The name, location and contact number of insurance companies currently working in KSA are listed below:

Company-Head Office Telephone Number A- Central Region

National Company for Cooperative Insurance (NCCI) 800-124-9990 Al Al-Ahlia Insurance 01-4726666 Assurance Saudi Fransi 01-4042222 Saudi Indian Insurance 01-4603402 Gulf Union Cooperative Insurance Company 01-4661830 Malath Insurance Company 01-4548404 Al Rajhi Company for Cooperative Insurance 01-4730477 Arabian Shield Insurance 01-4645943 SABB Takaful 01-4050677 The Mediterranean & Gulf Insurance & Reinsurance (MedGulf) 01-4779229 Sanad for Cooperative Insurance 01-4727535 Saudi Arabian Insurance Company (SAICO) 01-4775263

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B- Western Region Allied Cooperative Insurance Group 02-6519995 Al Alamiya Insurance 02-6718851 Tokio Marine & Nichido 02-6433334 BUPA Arabia 02-6636936 Al Ahli Takaful 02-6430555 AXA Cooperative Insurance 02-2635566 United Cooperative Assurance (UCA) 02-6532881 Arabian Malaysian Takaful Company 02-6749166 Arabia Insurance Cooperative Company 02-6605945 Saudi IAIC for Insurance 02-6644035

C- Eastern Region Saudi United Cooperation Insurance (AMITY) 03-8652200 Trade Union Insurance Company 03-8572222 Al Sagr Company for Cooperative Insurance 03-8596124

9.2 Insurance Fees

Generally speaking, the insurance fees would be determined based on several elements, 1) value of shipment, 2) type of packaging (containerized or non-containerized), 3) nature of shipment and the destination country. Moreover, the nature of goods play major role in determining the kind of insurance. For instance, no insurance company would give comprehensive insurance if the goods are fragile or perishable such as eggs or vegetable.

In the marine sector, there are three insurance services offered for sea transportation, namely Cover A, Cover B and Cover C. All of them are illustrated as follows:

Institute Cargo Clauses A: ICC A (Cover A):

In this service, the insurance covers all risks for a shipment from door to door. This insurance covers all risks of loss or damage. The range of insurance fees are a percentage of the total value of the shipment.

Type of insurance Minimum Maximum ICC A All Risks 0.16% 0.20%

Institute Cargo Clauses B: ICC B (Cover B) This insurance covers basic risk such as fire, explosion, sinking, earthquakes, volcanic disturbance or lightening. The range of insurance fees are a percentages of the total value of the shipment.

Type of insurance Minimum Maximum ICC B Basic risks 0.12% 0.15%

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Institute Cargo Clauses C: ICC C (Cover C)

This insurance is for limited risk. For example, if a client wants to make insurance against specific risk such as sinking or fire. The range of insurance fees are a percentages of the total value of the shipment.

Type of insurance Minimum Maximum ICC C Limited insurance 0.08% 0.1%

Additional Risk:

Beside the fees of insurance, there are additional fees to cover the risk of war and terror. The fees of such risk are unified in all insurance companies and change from time to time.

Additional fees Plus insurance fees War and Terror risk 0.05%

It is worth to mention that, there are two types of insurance policies namely, Certificate of Marine Insurance and Poly of Marine Insurance. The first one is for regular clients who have an annual contract with an insurance company, while the other one is for irregular clients who insure rarely.

10 Freight rates

10.1 Cost Structure

The cost of freight is consisting of a number of elements that determine the freight rate. Hence, any change in these elements would be reflected on the freight rate. The main elements are as follows:

Freight rate (20 foot): the cost of shipping from port to port. For example the freight rate in the North America line is $400 TEU, twenty-foot equivalent unit, which includes depreciation of ship, tax of transit, maintenance, container maintenance, etc.

Terminal and Handling Charges (THC): Charge payable to a shipping line either for receiving a full container load at the container terminal, storing it, and delivering it to the ship at the load port or for receiving it from the ship at the discharge port, storing it and delivering it to the consignee.

Bunker Adjust Factor (BAF), also known as fuel adjustment factor (FAF) or surcharge. Extra charge applied by shipping lines, or set by liner conferences on behalf of their members, to reflect fluctuations in the cost of bunkers. This

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surcharge is expressed either as an amount per freight ton or as a percentage of the freight.

War Risk surcharge (WR): this element is the main reason for fluctuation in the freight rate. During period of instability in area where there is a risk of war. For example 10 years ago the war risk in some countries was around US$500/20 foot container. So, an exporter should consider the war risk fees in each country and match it with his pricing strategy.

Bill of Lading fees: it is issuance fees of Bill of Lading and it is fixed amount and cost $25.

Currency Adjustment Factor (CAF): surcharge applied to freight rates by shipping lines or set by liner conferences on behalf of their members. It is to ensure that the revenue of the shipping lines is unaffected by movements in the currencies in which transactions are carried out by the lines in relation to the tariff currency. It is normally expressed as a percentage of the freight and may be negative as well as positive.

Ocean Freight: it consists of the total of all fees and surcharges plus the container rate.

Finally, an exporter can apply the formula below to get the ocean freight of 20 foot container.

Ocean Freight = freight rate + [freight rate x (CAF)] + THC + BAF +WR.

10.2 Sample of Freight Rates:

Having freight rates of all countries is difficult due to sharp fluctuation of freight rate from time to time and as well as the huge number of destinations. Hence, all transporters change their freight rate every month to reflect changes in the related elements. However, some freight rates of shipments from KSA to selected countries will be given in this report .Moreover, an exporter can obtain freight rates of various destinations by visiting the website of major shipping company. For instance, Maersk Sealand Co.s websites (www.maersksealand.com) offers to its customers freight rates service that gives updated freight rates over the Internet (See section 11).

Generally speaking, it is recommended for an exporter to build a relationship with one of the shipping agents in order to up-date him by latest frigate rates for his targeted market. The following table illustrates ocean rates of shipments from KSA (Dammam and Jeddah ports) to some destinations in the world continents, namely USA, Europe, Africa, and South East, which are obtained from the National Shipping Company of

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Saudi Arabia (NSCSA). It should be noted that theses rates are valid up to 1Q, 2006 and are subject to change up or down in the future.

Table 21 Ocean rate from KSA to USA To USA USD$ Ports

20 Foot 40 Foot New York 2400 3400 Baltimore 2400 3400 Savannah 2400 3400

New Orleans 2400 3400 Wilmington 2400 3400

From / Jeddah & Dammam

Halifax 2400 3400

Table 22 Ocean rate from KSA to Europe To Europe USD$ Ports

20 Foot 40 Foot Hamburg 850 1100 Rotterdam 850 1100 Le Haver 850 1100

From / Jeddah

Southampton 850 1100 Hamburg 1050 1400 Rotterdam 1050 1400 Le Haver 1050 1400

From / Dammam

Southampton 1050 1400

Table 23 Ocean rate from KSA to Africa To Africa USD$ Ports

20 Foot 40 Foot Port Sudan 850 1400 Mogadiscio 1500 1900

From / Jeddah

Cotonou 3500 4500

Table 24 Ocean rate from KSA to India Semi continent To ISC (India Semi continent) USD$ Ports

20 Foot 40 Foot Mumbai 425 650 Karachi 425 650

From / Dammam

Colombo 700 1050

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Table 25 Ocean rate from KSA to China, Malaysia, Indonesia and S. Korea .

To China& South Asia USD$ Ports 20 Foot 40 Foot

Shanghai 650 950 Hong Kong 650 950 Yantian 650 950 Chiwan 650 950 Xiamen 750 1100

Port Klang 600 950 Jakarta 550 900

From / Dammam

Pusan 550 900

11 Major Global Shipping Companies:

The following are major Sea transportation companies in the main cities of KSA. Commonly, each company has branches in such cities. Also, in attachment No. 8 a list of names, addresses and telephone numbers of most shipping companies and agents are provided.

NO. Company Nationality Websites 1 Maersk Sealand Danish www.maersksealand.com 2 P&o Containers U.K www.ponl.com 3 CMA-Algosibi French www.cma-cgm.com 4 Mediterranean Shipping Switzerland www.mscgva.ch 5 Globe Marine Multinational www.globemarine.com.sa 6 Ever Green Taiwan www.evergreen-marine.com.sg 7 Cosco Chinese www.cosco.com/en/index.jsp 8 APL/NOL Singapore www.apl.com 9 United Arab Shipping Arabic www.uasc.com.kw 10 NSCSA Saudi www.nscsa.com

12 Conclusion

In conclusion, the transportation issue is one of the most critical parts in the exporting process. ECUs objective in this report is to provide up-dated information about ocean shipping market and analyze the market prices in order to help and guide KSA potential exporters to understand the current procedures & cost structure of various available transportation facilities exist in the Kingdom. Moreover, this primary report will form a base to assess and measure the impact of transportation cost on the prices of Saudi products in overseas markets. However, it should be noted that all freight rates provided in this study are subject to change in the future. Hence, it is strongly recommended for an exporter to build a relationship with one of the shipping agents in order to up-date him with the latest freight rates for his targeted markets.

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From observation of the transportation market, the potential exporters are advised to:

Look for broker companies (forwarding company which has a contact with all shipping companies) that are capable to look for lowest prices in the market for exporters shipments and guarantee delivering of shipments.

Due to the fact that ocean freight rates fluctuate sharply, an exporter should watch out the effect of transportation cost on his pricing strategy in each targeted counties.

There are number of pricing strategies that could play with price elements in order to avoid transportation effect in overseas markets. One of the common strategies is allocating total fixed cost on products that selling in local market.

An exporter is strongly recommended to draw an appropriate shipment plan of his yearly exports in order to enable forwarder (shipping agent) to make bookings and export arrangements ahead of time. This could reduce the shipping costs by approximately 7% - 15%.

2004-ES-Ocean Transportation Study Update

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