By: Amr Adel
Dubai – Mubasher: The National Shipping Company of Saudi Arabia’s (Bahri) new joint ventures are expected to start operation in Dubai and Riyadh by the beginning of 2018, acting CEO Ali Al-Harbi said in an interview with Mubasher on Thursday.
The transportation and logistics services company has completed the regulatory and legal procedures of its new joint venture, as well as the formation of the company’s staff, Al-Harbi added.
The new company's staff will oversee the transportation of imported and exported bulk goods between the Middle East and other countries all over the world, he highlighted.
In October, Bahri had announced establishing a Dubai-based firm in partnership with Netherland’s Koninklijke Bunge with a capital of SAR 18.7 million ($5 million).
The new company’s first operations include shipping grains from Europe and Brazil to Saudi Arabia, as well as some of the GCC states, he remarked.
He also noted that the operations include transporting bulk cargo from Saudi Arabia and the surrounding region to Europe, the US, and East Asia.
On the other hand, Bahri Bolloré Logistics, is still in the final phase of formation and is set to start operation in Riyadh early 2018, Al-Harbi said.
Bahri plans to receive eight large oil tankers (VLCCs) in 2018, Al-Harbi said during the interview, on the sidelines of the Bahri Big Data Forum held in Dubai.
The company listed on the Saudi Stock Exchange (Tadawul) has received five carriers in 2017, Al-Harbi added, revealing that there are five others under construction which will be received next year as part of the company’s growth and expansion plan.
Bahri Oil’s VLCC fleet amounts to 41 tankers, which makes it the world’s largest owner and operator of oil tankers, he indicated.
Meanwhile, the company’s total fleet, including oil tankers, reaches 88 carriers of various types, such as petrochemicals, dry bulk, among others, he added.
Oil prices still represent 60% of the company’s revenues despite the notable progress in bolstering the performance of the logistics services and dry bulk sectors, he noted.
The firm targets expansion in the bulk cargos transportation over the coming three years, he said, unveiling that it will add four new carriers in this field by 2020 to reach a total of nine carriers.
Al-Harbi stressed that Bahri will focus its investments mainly on the logistics services as part of Saudi Vision 2030 to turn the kingdom into a global logistics hub.
Diversification of business
Bahri aims at diversifying its activities to overcome the challenges, Al-Harbi, who holds a master's degree in accounting from the University of Colorado, said.
He further noted that the Saudi company does not consider expansion outside the maritime transport sector, but focuses on some of the complementary aspects of this sector.
He indicated that in spite of the increase in crude oil prices, demand for crude oil is still high, anticipating this increase to continue, which will support the company’s operations.
On the other hand, increased oil prices impact the increase in the cost of the required fuel for shipping, which represents 40% of total cost of ships, Bahri’s acting CEO added.
He explained that this increase in oil prices raises operating expenses, but the company is already used to deal with such increases.
The logistics sector in Saudi Arabia and the region is affected by the volume of international trade and the mega projects in the region, he remarked, adding that the decrease in oil prices would cause a decline in government projects and affect the transportation sector.
The maritime transport and logistics services are still among the best sectors for the company despite lower government spending in the GCC region, he said, forecasting these sectors to grow as part of the expansions and major projects in the kingdom.
Al-Harbi stressed that Bahri has the opportunity to play an important role in the logistics sector through Vision 2030.
He further noted that the company does not consider any new acquisitions at the moment.
The Saudi Public Investment Fund (PIF), the kingdom’s sovereign wealth fund, owns 22.5% of Bahri.
Translated by: Mai Ezz El-Din