Marketing Studies & Consultancy

Division (MSCD)

Export Consultancy Unit (ECU)

______________________________________________________________

Export Study

Land Transportation
(Up-Date)

Dhu Al-Hijjah, 1426 H (January, 2006)

I
 Table of Contents

1 Introduction..........................................................................................................................1
2 Historical view of Land transportation in KSA ........................................................ 2
3 Land transportation agreement ...................................................................................... 3
3.1 Arab countries............................................................................................................. 3
3.2 Cooperation Council For The Arab States of The Gulf.................................... 4
3.3 Royal Decree ................................................................................................................ 4
4 Type of trucks used ........................................................................................................... 5
4.1 Tankers and Bulker ( for hauling Liquids in bulk - Petroleum products,
water, & chemicals etc.).......................................................................................... 5
4.2 Trailers (for hauling Palletized & Non Palletized General Cargo & Porto-
cabins). ........................................................................................................................ 6
4.3 Refrigerated Trucks:................................................................................................. 6
5 Truck used for Exporting ................................................................................................. 7
6 Required Documents ......................................................................................................... 8
7 Duties at Saudi and neighborhood countries:............................................................. 9
8 Insurance:............................................................................................................................ 11
8.1 Insurance services of land transportation.......................................................... 11
8.2 Required documents and Insurance fees ............................................................. 11
8.3 Insurance companies in KSA .................................................................................. 12
9 Consolidate service........................................................................................................... 13
10 Prices ................................................................................................................................... 13
10.1 Market prices ............................................................................................................ 14
10.2 Cost structure ........................................................................................................... 16
11 Competition environment ................................................................................................ 17
12 Trucks transportation companies in KSA ................................................................... 17
13 Conclusion ........................................................................................................................... 18

II
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 export’s procedures and cost. Clearly, the
transportation cost has a great impact on the profitability of the export
transaction if the exporter doesn’t deliberate the impact of added cost,
transportation fees, and the competitor’s prices in such targeted market.

This report aims to give an up-date of our previous study in Land Transportation
which includes estimate of the land transportation cost and illustrate procedures
that have to be done by exporters when they want to transport their shipments by
trucks. Additionally, this up-date study has also focused in other important
elements which include the following:-

 Insurance.
 Competition environment.

1
To accomplish the objectives of this report, we obtained information from various
sources, which include the following sources.

 Direct contact with Government organizations e.g. Ministry of

transportation.
 Direct interviews with major and selected transportation companies.
 Searches of information over various Internet websites on land
transportation.

Historical view of Land transportation in KSA

The roads infrastructure had been given considerable attention from Saudi
government, as it is believed that roads network is the fundamental factor for
economic growth. KSA has started developing transportation sector through the
development of infrastructure. These infrastructures have helped to facilitate the
access to each town and village. Furthermore, the government has also road
linkages that connected between KSA borders and neighbouring borders. According
to the recent statistics, the total causeway roads (outside cities) are estimated to
be around 45500 KM and around 1.9 million tons have been transported. However,
although the constructing of railway network in KSA has received noticeable
attention lately, roads transportation is expected to be the only alternative for
exporting to neighbouring countries in the coming years. Based on our direct
contact with the Ministry of Transportation, the table below illustrates the paved
roads between cities by KM during 10 years.
Year Completed during the year (KM) Total paved roads (KM)
1995 1595 36150
1996 431 36581
1997 802 37383
1998 639 38022
1999 911.2 38933.2
2000 1655.72 40588.92
2001 1846.7 42435.62
2002 0 42435.62
2003 504 42940
2004 1156.6 44096.6

The table presents the length of main roads that have been constructed between
Saudi cities and international roads, as well. As shown, there was a declining of
paved roads since 1996. In 1999, paved roads constructed started to grow
gradually to reach its peak. In contrary, there was a drop in 2002, as the Ministry
of Transportation did not construct new roads in that year. In recent years,
statistic shows sharp growth in paving and constructing new roads.

2
In addition, Saudi government has established 12 land ports which are spread
throughout KSA’s borders .This big network of roads are supposed to facilitate
the flow of goods through the borders’ of the neighbouring countries .Table below
and map illustrate land ports in KSA.

Land Ports
Al Hadethah Al Ruqie
Al Drah Slwaa
Halat Ammar Al Batha
Turif Al Tuwal
Jadedat Arar Al Khadra
Al Khafji Al Wadyah

2 Land transportation agreements

The International relationship between countries should be formed in agreements

that cover several International aspects. Similarity, the transportation and transit
aspects should be formed in an agreement or at least implicated within commercial
and economic agreements. In practice, KSA has so far signed seven transportation
agreements, 5 of them are bilateral agreements while the others are multilateral
agreements. With regard to bilateral agreements, Saudi Arabia had signed with
Egypt, Jordan, Syria, Yemen and Morocco. The content of all bilateral agreements
are relatively similar, as they forbid any unreasonable duties and charges at
members’ borders and facilitate the procedures of entering foreign trucks to
National land.

In the case of multilateral agreements, there are two agreements deal with land
transportation sector. First one is under the umbrella of The League of Arab state
and it is signed by most of the Arab countries. Second one is implicated within the
economic agreement of GCC. In the same context, there was a royal decree to
regulate foreign refrigerated trucks. A brief overview will be giving in the
following sub-sections.

2.1 Arab countries

In the frame of the Arab cooperation, the following countries are the members of
Arab transportation countries (20 countries): Kingdom of Saudi Arabia, Jordan,

3
The United Arab Emirates, Bahrain, Algeria, Tunisia, Sudan, Syrian, Somalia, Iraq,
Oman, Qatar, Kuwait, Lebanon, Libya, Egypt, Morocco, Palestine, Mauritania and
Yemen. Such countries have signed a transition agreement, which facilitates the
transition of goods among Arabian countries.

In general, the agreement includes many articles; the most important terms are as
follows:-

 The transited goods should not be charged any taxes or fees except
transition fees or road maintenance fees or other government services
fee but, the overall fees must not exceed .04% of the value of goods.
 Each country should develop and maintain roads to be valid for
transportation.
 There are three conditions related to the transit transportation which
are as follows:-
o Limitation of the transit period for 3 days.
o In each country the need to identify the route to be taken by the
truck to cross that country i.e. route to be taken from border
entry point to its border exit point.
o In each country, transiting trucks are ‘sealed’ by respective
Customs authority while they cross the country – to ensure that
the goods are not downloaded in that particular country but reach
their destination country.

2.2 Cooperation Council for the Arab States of the Gulf

According to GCC economic agreements, the article No.18 contains facilitation of

trucks transportation between the members’ borders.

 ARTICLE 18.

Member States shall accord passenger and cargo transportation belonging to

citizens of the other Member States, when transiting or entering its territory, the
same treatment they accord to the means of passenger and cargo transportation
belonging to their own citizens, including exemption from all duties and taxes,
whatsoever. However, local means of transportation are excluded.

2.3 Royal Decree:

In 1996, Council of Ministers issued a decision forbidding foreign refrigerated

trucks to enter KSA except GCC trucks. Similarity, other countries (Syria, Lebanon

4
and Jordan) forbid Saudi’s refrigerated trucks to pass their borders .Also Yemen
forbid Saudi trucks to pass Al-Hudaydah City .Particularly, Saudi refrigerated
trucks can not enter Jordan, Syria and Lebanon ,but they can be reloaded in
other foreign trucks at the borders. However, As a result of joining WTO, land
transportation sector should be liberalized to allow foreign companies and foreign
trucks to enter KSA. Hence in 2005, this low has been cancelled as a step to
liberalize land transportation sector and then meet WTO requirements.

3 Type of trucks used

The truck used in the transportation is based on the nature of transported

product. In the case of dry products, they could be transported in containers or
over pallets. Moreover, some types of dry products require special trucks such as
Cement, which are transported by using a bulker truck. With regard to liquid
products, they also require specific kind of truck such as tankers. Further, three
are other kinds of products which need specific conditions while they are
transported. For example, a petrochemical product especially that is in liquid
state, needs a bulk truck. Also most food products especially perishable goods need
a refrigerated truck in order to maintain a certain temperature, and so on. In the
following sub- sections, there are short profiles and specifications for most of the
trucks used.

3.1 Tankers and Bulker (for hauling Liquids in bulk - Petroleum products, water &
chemicals, etc.)

 Tanker Capacity
o 4,500 US Gallons
o 6,000 US Gallons
 Diesel Tankers
 Petrol Tankers
 Chemical Tankers
 Water Tankers ( Potable & Non Potable)
 Cement Bulker

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3.2 Trailers (for hauling Palletized & Non Palletized General Cargo & Porto-
cabins).

 Sizes
o 40 Feet ( 12 Mtrs)
o 50 Feet ( 15 Mtrs)
o 53 Feet ( 16 Mtrs)
 Flat Bed Trailers
 Flat Bed with Side Rack Trailers
 Curtain Side Trailers
 Low-bed Trailers - 70 Ton capacity.

In the case of weight, the maximum weight of shipment locally and internationally
is 22 tons. However, some trucks could be loaded up to 28 tons by reducing the
weight of truck itself. It is to be noted here that the total allowed maximum
weight of a truck is 42 tons.

3.3 Refrigerated Trucks

This type of truck is mainly used for the perishable goods that need a specific
degree of temperature. For example, Cheese needs to be in (+3.0 º C) while Ice
cream needs to be in (-26ºC) point. The design of refrigerated trucks is different
than other trucks, for instance, inside of the trailer, the walls should be designed
to protect specific degree of humidity. The main important part in the
refrigerated trailer is temperature control unit which usually has a flexibility to
adjust temperature between +30 º C to –30 º C according to type of goods.

6
Generally speaking, the shipping cost by refrigerated trucks is higher than normal
trucks (Trailer) by approximately 35%. In the case of tanker and bulker, they are
higher than normal trucks (Trailer) by approximately 25%. The increase of cost in
refrigerated, bulk, tank trucks, could be interpreted as they rarely get load back
from a destination.

4 Trucks used for Exporting

As per our direct contact, we Type of used Vessels

found the most used truck in 1%
exporting is 40 feet truck 2%
(TRAILERS) with 70% and then 27%

45 feet truck (TRAILERS) with 70%

27% and then 20 feet truck
(Louri) with 2% and finally Dinna
(small truck) with 1%. The last
two types are usually used for
transportation within GCC states. Dinna Truck 45 feet Truck 40 feet Louri 20 feet
In addition, the main market of
the Saudi trucks companies is the local market because most companies direct 72
% for local market, and the remaining 28 % for export markets. It is worth to
mention that, the percentage of
export was higher in the Main market
previous study, which was
(34%). This drop could be 28%

attributed to the strong Export

competition from foreign

trucks, as they aggressively cut
72%
the prices in order to get load Local
back. According to our recent
survey, foreign trucks could cut
0% 10% 2 0% 30 % 4 0% 50 % 60% 7 0% 80 %

7
around 30% of Saudi transporters prices.

Under these circumstances, Saudi transporters found transporting out side KSA is
not feasible. Alternatively, Saudi exporters start to operate their trucks locally
and to hire foreign trucks to transport out side KSA. Also, there is a noticeable
trend among land transportation companies to operate their fleets outside KSA as
a result of current losses, increase cost and strong competition from foreign and
individual trucks.

5 Required Documents

As commonly, each shipment needs to have specific documents whether it is

imported or exported. Therefore, when an exporter wants to transport shipments
to any country by truck, he should obtain various documents which are illustrated
below.

 Authorization letter: authorize customs clearance office to deal with all

custom clearance procedures.
 Packing list: contains a description about shipment.
 Certificate of Origin: proves the origin of goods. Recently, GCC has
announced that goods that are produced in any one of GCC states do not
need to get certificate of origin.
 Way Bill: A document supplied to the exporter by some shipping companies
(well organized shipping companies) that is transporting the goods to their
foreign destination, listing, item by item, the goods being transported. 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: shows the value of shipments for custom estimation

purposes. Some companies, as a good service, issue this document instead of
exporter.
 Health Certificate: confirm that the shipment is cleared from diseases or
infections. Some countries require this document such as Lebanon.
 Insurance Policy: An insurance certificate for the shipment is optional
document. Some land transportation company’s makes insurance on their

8
 trucks and that will cover am a maximum of S.R.200,000 of goods value.
However, if the value of goods exceeds S.R. 200,000, an exporter has to
provide an insurance policy covering the cost of goods shipped. The table
below shows the cost of each document.

NO. Document type Cost ( S.R) Remarks

1 Authorized letter
2 Packing list
3 Certificate of origin
4 Way Bill
5 Commercial Invoice
6 Health Certificate (some)
7 Insurance( Optional)
*Chamber of Commerce & Industry
20 Documents Certification fees from CCI*
20 Documents Certification fees from CCI*
20 Documents Certification fees from CCI*
- Issued by transportation Co.
20 Documents Certification fees from CCI*
20 Documents Certification fees from CCI*
- Issued by insurance Co.

6 Duties at Saudi and neighbouring countries

Although, KSA has agreements with most of neighbouring countries which forbid
any duties and charges, there are several charges and fees at the borders of those
countries. The duties at Saudi and neighbouring country’s borders remain static as
they had been listed in the pervious study. Moreover, recently, we have obtained
the duties at Turkey borders. Tables below show the fees that are charged
against Saudi trucks.

 Bahrain
Type of Duties charges per truck (SR)
Causeway charges -IN 130
Causeway Charges -OUT 60
Clearing Agents Fees 30
Insurance for 3 days 20
Total 240

 Kuwait
Type of Duties charges per truck (SR)
Public Warehousing co.-weigh bridge 120
Clearing Agents Fees 30
Insurance for 3 days 50
Total 240

 UAE
Type of Duties charges per truck (SR)
Clearing agent fees-Saudi 55
Clearing agents fees -UAE 50
Border fees 150
Insurance for 3 days 50
Total 305

9
 Oman
Type of Duties charges per truck (SR)
Clearing agents fees Saudi 55
Transit seal charges 50
Clearing at UAE border 150
Visa (for 3 trips) 75
Total 330

 Qatar
Type of Duties charges per truck (SR)
Clearing Agents fees 50
Insurance for 3 days 30
Total 80

 Jordan
Type of Duties charges per truck (SR)
Customs clearance 76-91
Police escorting fees 159
Road charges 10-15
Transit charges for non-Jordanian trucks 10-20
Total 255-285

 Lebanon

There is a no-tariff duty at the borders of Lebanon, but there is a

charge for customs clearance at Syria’s borders with Lebanon,. It
is around SR1,316 per one truck plus $5 for radiational checkup. It
is worth to notice that charges of customs clearance would be
reduced according to number of trucks.

 Syria
Type of Duties charges per truck (SR)
Customs clearance 471-741
Fuel Tax 117-187
Police escorting fees 287-386
Total 875-1314

 Turkey
Type of Duties charges per truck (SR)
Road Tax Fees 112.5
Truck insurance 281.25
Drivers Visa 75
Total 468.75

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7 Insurance

In the pervious study, the Do exporters make insurance on their goods?

percentage of exporters who
insure their shipments were around
10% according to our sample.
NO
Nonetheless, this percentage has
32%
increased sharply in the last
YES
survey. As shown in the figure, 68%
68% of exporters insure their
goods. In practice, it seems that
insurance on truck load is getting
common in KSA than before. In some transportation companies, although, they
insure on their trucks, an exporter is obligated to make insurance on their
shipments.

Due to the above reasons, an expansion has been made in this aspect to cover
related issues to land transportation sector.

7.1 Insurance services of land transportation

Basically, there are two kinds of insurance services offered to land transportation,
namely, basic and comprehensive insurance. The former is against loss of or damage
to the subject matter insured directly caused by fir, collision, overturning or
derailment of the carrying conveyance, whereas the latter covers all risks of loss
of or damage to the subject matter insured (with any exceptions provided).
However, 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

7.2 Required documents and Insurance fees

The fees of both insurance services are based on the value of shipment. Hence, an
exporter should submit number of documents to determine the insurance fees and
issue insurance policy. These documents are as follows:-

 Cargo insurance proposal

 Invoice (Value of the goods)
 Way bill
 Packaging list

11
Regarding insurance fees, determining of the fees depends on three factors: (1)
value of shipment, (2) type of packaging, and (3) reputation of carrier company.
Hence, the exporter would get the minimum fees if he could prove that the carrier
has insured his trucks and the shipment has packaged properly. The range of fees
for basic insurance is between 0.05% and 0.20% from the value of shipment. In the
case of comprehensive insurance, the range of fees is between 0.10% and 0.50%
from the value of shipment.
Type of insurance Minimum Maximum
Basic Insurance 0.05% 0.20%
Comprehensive Insurance 0.10% 0.50%

7.3 Insurance companies in KSA

According to SAMA, there are 25 insurance companies currently in operation in

KSA. One of them is NCCI, which has SAMA license, 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
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

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8 Consolidate service

This service aims to collect small Consolidates services

shipments (less than 5 tons) for the
same destinations and load them in one 1

0. 8

truck, in order to reduce the fees of 89%

0. 6

0. 4

transportation. According to tour 11%

0. 2

findings, 89% of companies don’t offer 1

Yes No

this service because the difficulties

Yes No
that associated with this type of
service for example each shipment need separate documents. On the other hand,
11% of companies offer this service, but relatively in return of high fee. Generally
speaking, although, consolidate services is profitable business, it is difficult to be
handled by traditional transportation companies. However, there are some
companies that have established an independent business unit for such service. For
instance, Mubarrad and GH Express have established Express services unit to fill
this gap in land transportation sector. Moreover, there are professional companies
such as DHL (Logistic services) and TNT (Logistic services) have started to
penetrate the Saudi market of consolidate services.

9 Prices

The Ministry of Transportation has made a study for analyzing the cost elements.
In fact, the purpose of that study was to determine the maximum level of prices
for truck distribution. However, the scope of that study covers the local market
(domestic truck transportation). In the following, elements of cost and shipment
prices, according to the study, will be highlighted.

 Elements of costs: the elements of cost have been computed on the basis of
the value of truck, daily operation hours, average of speed, monthly
operating days, load bake parameters, the average of net load by weight or
volume, return of investment (ROI) and commission of forwarding offices.


C * L
The final formula is, the cost per Ton/KM A

Where: C: total operation cost per one KM

L: load bake parameter
A: average net weight of truck.

13
  The table below shows the shipment prices by the ministry of
transportation.
First: for distances more than 200 KM
Causeway Non-causeway Irregular road
16 Hallalh per Ton/KM 17 Hallalh per Ton/KM 19 Hallalh per Ton/KM
Second: for distances less than 200 KM
Distances Causeway Non-causeway Irregular road
1-50 Km 17.5 Hallalh per Ton/KM 15 Hallalh per Ton/KM 14 Hallalh per Ton/KM
1-100 KM 17 Hallalh per Ton/KM 14.5 Hallalh per Ton/KM 13 Hallalh per Ton/KM
1-200 KM 15.5 Hallalh per Ton/KM 13 Hallalh per Ton/KM 12 Hallalh per Ton/KM

Although, the ministry has unified the prices, 68% of companies determine their
prices less than unified prices and the rest companies determine their prices more
than the unified prices (Dr. Osamah Ibrahim, Ministry of Transportation).

9.1 Market prices

For this report we have update information about the average prices of
transportation from the main cities of KSA (Riyadh, Dammam and Jeddah) to
several destinations. The charts below illustrates the prices form the main cities
to several destinations for 40 feet trucks. These prices include clearance charges
& Saudi borders fess.. It is worth to mention that, the refrigerated truck price is
more than regular truck by 35%, in other word, the price of refrigerated truck is
135% of price of regular truck (Trailer). In the case of bulker and tanker, they are
higher than normal trucks (Trailer) by approximately 25%.

Average prices of truck transportation from Riyadh to various neighborhood

destinations

16000

14000

12000

10000
SR

8000

6000

4000

2000

0
UAE Qatar Kuwait Oman Bahrain Yemen Lebanon Iraq Egypt Jordan Syria Turkey
RUH 2167 2300 2333 2989 1806 4063 6050 13667 7125 3281 5250 8000

* The increase on the Iraq transportation cost due to increase of war risk fees.

14
 Average prices of truck transportation from Jeddah to neighborhood destinations

25000

20000

15000
SR

10000

5000

0
UAE Qatar Kuwait Oman Bahrain Yemen Lebanon Iraq Egy pt Jordan Syria Turkey

JED 3288 3225 3125 3713 263 8 3500 6750 20000 8000 3750 5750 8500

 The increase on the Iraq transportation cost due to increase of war risk fees.

Average prices of truck transportation from Dammam to various neigborhood destinations

25 00 0

20 00 0

15 00 0
SR

10 00 0

5 00 0

0
UAE Qatar Kuwait Oman Bahrai n Y em en Lebano n I raq E gypt Jordan S yria T urkey

DHA 1750 1633 1808 2642 1100 4000 6750 20000 8775 3600 6250 7500

*The increase on the Iraq transportation cost due to increase of war risk fees.

Regarding the transportation prices between main cities, the table below present
the average prices for a truck (trailer) of capacity of 22 tons in 2003 &2005:-
Destination Riyadh- Jeddah Riyadh- Dammam Jeddah- Dammam
Previous Study 1900 900 2400
Current 1700 750 2200
% Change -11% -17% -8%

As can be seen, there is decline on the local prices by around 12%. This could be
attributed to the situation of competition environment, as it is discussed in
competition environment (section-11).

15
 9.2 Cost structure

One of the objectives of this report is to compute the cost structure of truck
transportation, therefore, we have analyzed the given prices from truck
transportations companies and prices from exporters and the Ministry of
Transportation to compute average cost per 1KM/1Ton.

 Cost of Travel: it encompasses of cost of fuel, driver, depreciation and

other fixed or variable cost. However, there is another element effects
the cost of transportation and it is load back. In other word, if the Truck
will load back another shipment from the Consignee’s country to the
shipper’s country. The cost per 1KM/1Ton is illustrated below.

Lebanon
Bahrain

Jordan

Turkey
Kuwait

Yemen
Qatar

Egypt
Oman

Syria
Iraq
UAE

Cost Per 1KM/1Ton

(Hallalh)

8.2 14 16.5 8.7 38.8 12.1 16.4 77.2 19.7 10.5 15.8 11.8
* The rate is reasonable and with market prices for all destinations except from Dhahran to Bahrain.

 Duties at Saudi and neighbouring countries which were mentioned above in

separated topic.
 War risk: it is considered as a tax that is added to the basic cost during the
war period to compensate the risks associated with travel. This tax
fluctuates according to the market and it is determined by the large trucks
transportation companies. For example, the war risk in the travel to Iraq is
60 Hallalh per 1KM/1Ton.
 The table below shows the distances between main cities in the KSA and the
neighbouring countries in Km.
Destination

Lebanon
Bahrain

Jordan

Turkey
Egypt*
Kuwait

Yemen
Qatar

Oman

Syria
Iraq
UAE

RUH 1108 579 627 1439 445 1388 1946 1116 2011 1656 1851 3000
JED 2057 1536 1470 2386 1394 1108 1766 1869 1556 1476 1671 3262
DAM 942 421 407 1271 58 1783 1897 896 2392 1607 1802 2951
* A truck passes Red Sea over ferry which cost US $ 600.

 To summarize the cost of transportation , the price cost formula can be

illustrated in the following:

16
 Where: Cost Per 1Km/Ton = 8.2 Hallalh
Distances B/W Cities( For example, from RUH to UAE) =1,108 KM
Number of tons that exporter want to transport =22 Ton

Thus, following is calculated = (.082*1108)*22= SR1,999

10 Competition environment

Currently, there is a strong competition in the land transportation as foreign

trucks cut the prices in order to get load back. According to our findings, the
competition from foreign trucks is getting strong, as they could cut around 30% of
Saudi transporters prices. However, the risks associated with hiring foreign trucks
push some exporters to transport via national transporters. As a matter of fact,
the fixed cost in land transportation sector is estimated to be 80% from the total
cost. Under this situation, the efficient managing of truck fleet is the key success
factor in this sector. Nonetheless, In the interest of security in the KSA, new
regulations have been issued by Traffic police and Ministry of Transportation,
which has reduced the flexibility of companies to manage their fleet. For example,
each truck should have a fixed driver and the company cannot replace another
driver for a truck without permission from the Traffic police. Generally speaking,
there is a noticeable trend among land transportation companies to operate their
fleets outside KSA as a result of current losses, increase cost and strong
competition from foreign and individual trucks.

11 Trucks transportation companies in KSA

The following are major trucks transportation companies in the main cities of KSA.
Commonly, each company has branches in the main KSA cities (Riyadh, Jeddah and
Dammam)

Name of Co. Location Phone NO. Contact Name Position Website

GLOBE MARINE Services Co. Dammam 8184691 Khalid Javaid Operations Manager www.globeksa.com
Continental Freight(Almajdouie) Riyadh 4723779 Zafar Ul-Haq Branch Manager www.almajdouie.com
Mubarrad Riyadh 4794113 Yasir A Allehaidan Vice president www.mubarrad.com.sa
Dallah transport Jeddah 6171252 Abdul Jabbar Moosa Executive Director www.dallah.com
Zahid Heanor Jeddah 6201931 Prakash S. Mani General Manager -
GH Transport LTD. Jeddah 6206600 Rizwan Commercial General -
Al Rashed Transportation Dammam 8211172 Syed Arshad Marketing Manager www.alrashedtransport.com
Ali Al Dahnan Co. Dammam 8071100 Fakhry Al-Dahan GM -
Al -saif Co. Dammam 8590000 Khalid Al-Saif G.M -

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12 Conclusion

The transportation issue is one of the most critical parts in the exporting process.
ECU’s objective in this report is to provide information about trucks 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 reasonable base, to assess and measure the impact of transportation cost
on the prices of Saudi products in overseas markets.

From observation of transportation market, the potential exporters are advised

to:-

 Look for a broker companies (forwarding company which has a contact

with all trucks companies) that are capable to look for lowest prices in
the market for exporter’s shipment and guarantee delivering of
shipments.
 The exporter should draw an appropriate shipment plan of his yearly
exports and then submit the plan to the forwarder in order to make
bookings and export arrangements. From other side, this could decrease
the shipping prices nearly by 7-15%.

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