Despite being helpful, the initiative of launching new rail freight services throughout Saudi Arabia will unlikely be enough to move significant volumes. First and foremost, freight trains cannot move all those volumes. Even in Saudi Arabia, where it is possible to stack two containers per wagon, convoys can move up to 400 units. The average capacity of container vessels is ten times that, with the largest ones able to handle 24,000 TEUs.

Ultimately, new rail infrastructure could help enable growth in key economic sectors, according to Saudi authorities. They highlight mining, manufacturing, and energy as branches that stand to profit from more rail.

Part of the plan is to build a railway between coastal cities Jeddah and Dammam on opposite sides of the Arabia peninsula. The “Saudi Landbridge” would also link up to capital city Riyadh. Investment plans also include enhancements along the North-South railway, which is important for the mining sector.

Alstom and local industry

In late 2024, the Saudi transport minister explained that the country seeks to establish its own rail industry. By doing so, Saudi Arabia hopes to reduce its reliance on foreign enterprises. Despite that, it will still depend on French company Alstom for the foreseeable future. In a deal valued at 80 million dollars, the Saudis secured technical support, spare parts and staff training for five years. The deal focuses on the Jeddah – Dammam railway.

At a rail-related event, the minister highlighted Saudi Arabia’s Haramain High-Speed Railway, which connects Mecca and Medina. The railway has managed to take no less than one million trucks off the road during the past year, according to the minister.

Local industry, international assistance

The minister also emphasised the country’s ambitions to create a local rail industry, reducing Saudi Arabia’s reliance on foreign enterprises for its rail logistics. Nevertheless, the country recently signed a cooperation agreement with French Alstom for technical rail support, the supply of spare parts and staff training. Alstom was already involved in aid to Saudi Arabia, but now the two parties have extended their partnership.

Alstom will now be assisting Saudi Arabia for five more years, in a deal valued at approximately 80 million dollars. The partnership focuses primarily on developing the east-west corridor, which connects the capital city Riyadh’s dry port with the Dammam and Jubail seaports.

“The condition for a sale remains that it must be economically advantageous for Deutsche Bahn”. Bahri was contacted as well, but no response was provided as of yet. A final decision for the sale of DB Schenker seems to be expected for the end of August. At the beginning of July, Danish shipping giant Maersk also withdrew its bid, claiming that such a move would not have been the right thing for business.

The sale of DB Schenker

DB Schenker was put on sale due to it being one of DB’s most profitable branches and the mother company needs to cover outstanding debts, estimated at around 34 billion euros. The sale of DB’s logistics arm was announced in December 2023 and was labelled as the largest logistics sale of the 21st century. It now remains to be seen which of the two final contestants will become the new owner of DB Schenker and what their plan for its future will be.

The first train was made up of 36 containers and entered Iran from Turkmenistan, via the Incheh Borun rail border crossing. The rail journey will end at the Iranian port of Bandar Abbas, and from there the cargo will be reloaded onto a ship and further reach the Red Sea, with the end destination being Jeddah in Saudi Arabia.

Reconnected via old services

​​Amir Asri, who works for the Iranian firm MAPNA Locomotive, shared with RailFreight.com that the main change brought by this new service is the reactivation of logistic services between Saudi Arabia and Iran. He explained that they were interrupted and limited due to geopolitical circumstances. “Previously, logistic relations came mostly relied on air transport services”, says Asri. Furthermore, the port connections between the two countries are mostly organised via third-country destinations such as Dubai and Abu Dhabi.

For example, the service between the port of Bandar Abbas in Iran and the port of Jeddah in Saudi Arabia was operative in the past but suspended due to the Iran-Saudi Arabia relation. The new intermodal service, on the other hand, takes a detour on the sea to reach Saudi Arabia since it “does not have a commercial port in the Persian Gulf”, Asri highlighted. The new agreement has thus allowed the two countries to reconnect their supply chain through this old service. However, since the cargo has not yet reached this service is “not operative yet,” Asri concludes.

Growing INSTC

The new service does not come out of the blue. Russia Railways met with Railways of the Islamic Republic of Iran in August 2023. One of the discussed agendas was to increase the transit of goods from Russia through the Iranian rail network. The new service also brings new intermodal options for trade between Russia and Saudi Arabia inside the International North-South Transport Corridor (INSTC). The INSTC strengthened its position with the addition of Turkmenistan in July this year, This addition offers Russia an alternative route on the eastern branch of the corridor that would bypass Azerbaijan.

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Hutchison Ports will operate the port under its joint venture with SPARK. The joint venture, known as Energy City Logistics Company (ECLC), will be the sole operator in SPARK, providing services such as handling containers, breakbulk and project cargo, as well as customer clearance and warehousing.

The SPARK itself is a mega-industrial hub designed for global energy goods transportation, with an expected worth of 400 million US dollars. The hub is located in Dammam and Al-Ahsa in eastern Saudi Arabia, making it accessible to the railways currently in operation. SPARK is currently under construction and is expected to be completed in 2035, with future potential to transport energy goods via the much anticipated Gulf Railway (GCC) to the nearby Gulf states.

Oman’s big plans for a national railway

In order to create a national railway network, the Omany Ministry of Transport founded Oman Rail in June 2014. The intentions of this initiative are to have Oman join the so-called Gulf Railway, which aims at connecting all six Gulf Cooperation Council member states. The six countries are Bahrain, Kuwait, United Arab Emirates (UAE), Saudi Arabia, Qatar, and Oman.

One of the first projects proposed by Oman Rail is to create a link the port of Sohar, on the Omani northern coast to Al Buraimi, on the border with the UAE. This new line will therefore create a connection between Oman and Abu Dhabi. For this project, the two countries created a new entity, the Oman-Etihad Railway at the end of September 2022. The expected cost for this project is estimated at 3 billion euros.

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The facilities are part of Stage 2 of the national rail network and will be built in Industrial City of Abu Dhabi, Khalifa Port, Dubai Industrial City, Jebel Ali Port, Al Ghayl, Siji and Fujairah Port. Once they are built, the emirates of Fujairah and Khorfakkan on the east coast are successfully connected to the border with Saudi Arabian at Ghuweifat.

Contract

The contract was signed on 29 January, when Chairman of Etihad Rail Sheikh Theyab bin Mohamed bin Zayed Al Nahyan formally launched construction of Stage 2 Package A, which covers the 139km section of the line connecting Stage 1 at Ruwais with Ghuweifat.

“We are witnessing a remarkable day for Etihad Rail as we witness the transition from planning and design to actual implementation of the project on the ground, following in the footsteps of our founding fathers as we implement one of the nation’s most strategic projects, one that contributes to the economic development of the country by providing a safe, reliable and integrated alternative mode of transport”, he said.

Etihad Rail

The national railway network should eventually expand over 1,200 kilometres. The first part is already operative, comprising of 264 kilometre of railway from Shah and Habshan near Abu Dhabi to Ruwais. Here, granulated sulphur from the Abu Dhabi National Oil Company is transported for export.

In the next phase, the northern emirates will be linked with Dubai Central, Port Saqr and Khor Fakkan, adding another 250 kilometre of railway to the country.

The line is used by the Argentinian company Ster Beef, which exports its product to Saudi Arabia through the Port of Bahia Blanca. This country imports huge amounts of alfalfa because it cannot produce natural grass for its cattle due to its water scarcity.

Empty returns

The first train, which departed last month, carried 18 wagons of alfalfa, covering 700 kilometres. The new rail freight service returned to San Luis with empty wagons. Diego Pajaro, development manager of the Logistic Area of San Luis noted: “We must try hard to fill the train to San Luis in order to optimise the logistic cost.”

San Luis is an inland and unpopulated province where agriculture is the main economic engine. Its government has been working for many decades to develop transport projects to export its products through the Atlantic ports. However, the business is only developing slowly. San Luis has carried out several civil works in the last few years to repair its rail network and upgrade Villa Mercedes station, having invested around 21,8 million Euros.

It has also negotiated a price reduction for services of several rail freight companies such as Ferro Expreso Pampeano and Belgrano Cargas. Currently, it is looking into an option to combine trains with products from San Luis, Patagonia and Pampa provinces to increase rain traffics to Bahia Blanca.

In addition, two new rail freight services were launched this year. In May, SAR started transporting molten sulphur from the eastern city of Waset to Wa’ad Al-Shamal in the north, after it had connected this station to its network. A month later, it started transporting commercial phosphoric acid from Wa’ad Al-Shamal to Ma’aden’s refinery in Ras Al Khair. Ma’aden is an important partner of SAR.

Mining freight line

Bashar Bin Khaled Al Malik, CEO at SAR explained that additional capacity was generated by raising the operational level of its mining freight line. “Mineral trains transported a total of 23,683,134 tonnes of phosphate, bauxite, molten sulfur and commercial phosphoric acid between May 2011 and June 2017”, he said in the Saudi Gazette.

SAR freight trains carry about 16,000 tonnes of freight per trip. They consist of three locomotives and more than 160 wagons, often equipped with the latest safety measures such as thermal insulation systems and safety valves to prevent combustion during transportation as well as heating systems in each vehicle.

SAR projects

The railway company was founded in 2006 with the vital task of implementing a railway project linking the north of the country with both its eastern and central regions. The first 1,392 kilometer of the corridor opened in 2011, resulting in a final railway of 2,750 kilometer.

Since its founding, SAR has implemented strategically important railway projects that transport minerals and heavy haulage all over the country. It is also responsible for the construction of the 950 kilometer Saudi Landbridge, a rail project linking Riyadh with Jeddah on the Red Sea coast. This project has been stalled for many years due to uncertainty over funding.