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 & Portocabins).... 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 5
3.2 Trailers (for hauling Palletized & Non Palletized General Cargo & Portocabins). 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 found the most used truck in Type of used Vessels 1% exporting is 40 feet truck 2% (TRAILERS) with 70% and then 27% 45 feet truck (TRAILERS) with 27% and then 20 feet truck 70% (Louri) with 2% and finally Dinna (small truck) with 1%. The last two types are usually used for transportation within GCC states. In addition, the main market of Dinna Truck 45 feet Truck 40 feet Louri 20 feet 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% 20% 30% 40% 50% 60% 70% 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 20 Documents Certification fees from CCI* 2 Packing list 20 Documents Certification fees from CCI* 3 Certificate of origin 20 Documents Certification fees from CCI* 4 Way Bill - Issued by transportation Co. 5 Commercial Invoice 20 Documents Certification fees from CCI* 6 Health Certificate (some) 20 Documents Certification fees from CCI* 7 Insurance( Optional) - Issued by insurance Co. *Chamber of Commerce & Industry 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 10
7 Insurance In the pervious study, the percentage of exporters who insure their shipments were around 10% according to our sample. Nonetheless, this percentage has increased sharply in the last survey. As shown in the figure, 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 Do exporters make insurance on their goods? 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:- NO 32% YES 68% 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 12
8 Consolidate service This service aims to collect small Consolidates services shipments (less than 5 tons) for the 1 same destinations and load them in one 0. 8 0. 6 truck, in order to reduce the fees of 89% 0. 4 0. 2 transportation. According to tour 11% 0 1 findings, 89% of companies don t offer 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. The final formula is, the cost per Ton/KM C * L 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 neighborhoodestinations 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 Egypt Jordan Syria Turkey JED 3288 3225 3125 3713 2638 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 25000 20000 15000 SR 10000 5000 0 UAE Qatar Kuwait Oman Bahrain Y emen 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 thelocal 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. Cost Per 1KM/1Ton (Hallalh) UAE Qatar Kuwait Oman Bahrain Yemen Lebanon Iraq Egypt Jordan Syria Turkey 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 UAE Qatar Kuwait Oman Bahrain Yemen Lebanon Iraq Egypt* Jordan Syria Turkey 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 - 17
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%. 18