Marketing Studies & Consultancy

Division (MSCD)
Export Consultancy Unit (ECU)
______________________________________________________________

Export Study

Land Transportation
(Up-Date)

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

Table of Contents
1
2
3

Introduction..........................................................................................................................1
Historical view of Land transportation in KSA ........................................................ 2
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

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 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.

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
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004

Completed during the year (KM)

1595
431
802
639
911.2
1655.72
1846.7
0
504
1156.6

Total paved roads (KM)

36150
36581
37383
38022
38933.2
40588.92
42435.62
42435.62
42940
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.

In addition, Saudi government has established 12 land ports which are spread
throughout KSAs 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
Al Hadethah
Al Drah
Halat Ammar
Turif
Jadedat Arar
Al Khafji

Ports
Al Ruqie
Slwaa
Al Batha
Al Tuwal
Al Khadra
Al Wadyah

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,

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

and Jordan) forbid Saudis 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.

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

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 C) while Ice
cream needs to be in (-26C) 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 C to 30 C according to type of goods.

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.

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%
27%
(TRAILERS) with 70% and then
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
28%
(34%). This drop could be
Export
attributed to the strong
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 %

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.

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 companys makes insurance on their

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)
1 Authorized letter
20
2 Packing list
20
3 Certificate of origin
20
4 Way Bill
5
Commercial Invoice
20
6 Health Certificate (some)
20
7 Insurance( Optional)
*Chamber of Commerce & Industry

Remarks
Documents Certification fees from CCI*
Documents Certification fees from CCI*
Documents Certification fees from CCI*
Issued by transportation Co.
Documents Certification fees from CCI*
Documents Certification fees from CCI*
Issued by insurance Co.

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 countrys 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
Causeway charges -IN
Causeway Charges -OUT
Clearing Agents Fees
Insurance for 3 days
Total

charges per truck (SR)

130
60
30
20
240

Kuwait
Type of Duties
Public Warehousing co.-weigh bridge
Clearing Agents Fees
Insurance for 3 days
Total

charges per truck (SR)

120
30
50
240

UAE
Type of Duties
Clearing agent fees-Saudi
Clearing agents fees -UAE
Border fees
Insurance for 3 days
Total

charges per truck (SR)

55
50
150
50
305

Oman
Type of Duties
Clearing agents fees Saudi
Transit seal charges
Clearing at UAE border
Visa (for 3 trips)
Total

Qatar
Type of Duties
Clearing Agents fees
Insurance for 3 days
Total

charges per truck (SR)

55
50
150
75
330

charges per truck (SR)

50
30
80

Jordan
Type of Duties
Customs clearance
Police escorting fees
Road charges
Transit charges for non-Jordanian trucks
Total

charges per truck (SR)

76-91
159
10-15
10-20
255-285

Lebanon
There is a no-tariff duty at the borders of Lebanon, but there is a
charge for customs clearance at Syrias 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
Customs clearance
Fuel Tax
Police escorting fees
Total

charges per truck (SR)

471-741
117-187
287-386
875-1314

Turkey
Type of Duties
Road Tax Fees
Truck insurance
Drivers Visa
Total

charges per truck (SR)

112.5
281.25
75
468.75

10

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
Basic Insurance
Comprehensive Insurance

Minimum
0.05%
0.10%

Maximum
0.20%
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)
Al Al-Ahlia Insurance
Assurance Saudi Fransi
Saudi Indian Insurance
Gulf Union Cooperative Insurance Company
Malath Insurance Company
Al Rajhi Company for Cooperative Insurance
Arabian Shield Insurance
SABB Takaful
The Mediterranean & Gulf Insurance & Reinsurance (MedGulf)
Sanad for Cooperative Insurance
Saudi Arabian Insurance Company (SAICO)
B- Western Region
Allied Cooperative Insurance Group
Al Alamiya Insurance
Tokio Marine & Nichido
BUPA Arabia
Al Ahli Takaful
AXA Cooperative Insurance
United Cooperative Assurance (UCA)
Arabian Malaysian Takaful Company
Arabia Insurance Cooperative Company
Saudi IAIC for Insurance
C- Eastern Region
Saudi United Cooperation Insurance (AMITY)
Trade Union Insurance Company
Al Sagr Company for Cooperative Insurance

12

800-124-9990
01-4726666
01-4042222
01-4603402
01-4661830
01-4548404
01-4730477
01-4645943
01-4050677
01-4779229
01-4727535
01-4775263
02-6519995
02-6718851
02-6433334
02-6636936
02-6430555
02-2635566
02-6532881
02-6749166
02-6605945
02-6644035
03-8652200
03-8572222
03-8596124

Consolidate service

This service aims to collect small

Consolidates services
shipments (less than 5 tons) for the
same destinations and load them in one
truck, in order to reduce the fees of
89%
transportation. According to tour
11%
No
Yes
findings, 89% of companies dont offer
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.
1

0. 8
0. 6
0. 4
0. 2
0

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

Where:

C: total operation cost per one KM

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

13

C * L
A

The table below

transportation.

16

Distances
1-50 Km
1-100 KM
1-200 KM

shows

the

shipment

prices

First: for distances more than 200 KM

Causeway
Non-causeway
Hallalh per Ton/KM
17 Hallalh per Ton/KM
Second: for distances less than 200 KM
Causeway
Non-causeway
17.5 Hallalh per Ton/KM
15 Hallalh per Ton/KM
17 Hallalh per Ton/KM
14.5 Hallalh per Ton/KM
15.5 Hallalh per Ton/KM
13 Hallalh per Ton/KM

by

the

ministry

of

Irregular road
19 Hallalh per Ton/KM
Irregular road
14 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

SR

10000
8000
6000
4000
2000
0
RUH

UAE

Qatar

Kuwait

Oman

Bahrain

Yemen

Lebanon

Iraq

Egypt

Jordan

Syria

Turkey

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

SR

15000

10000

5000

0
JED

UAE

Qatar

Kuwait

Oman

Bahrain

Yemen

Lebanon

Iraq

Egy pt

Jordan

Syria

Turkey

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

SR

15 00 0

10 00 0

5 00 0

0
DHA

UAE

Qatar

Kuwait

Oman

Bahrai n

Y em en

Lebano n

I raq

E gypt

Jordan

S yria

T urkey

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
Previous Study
Current
% Change

Riyadh- Jeddah
1900
1700
-11%

Riyadh- Dammam
900
750
-17%

Jeddah- Dammam
2400
2200
-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.

Syria

Turkey

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

Jordan

Egypt

Iraq

Lebanon

Yemen

Bahrain

Oman

Qatar

UAE

Cost Per 1KM/1Ton

(Hallalh)

Kuwait

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 Consignees country to the
shippers country. The cost per 1KM/1Ton is illustrated below.

10.5

15.8

11.8

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.

Lebanon

Egypt*

Jordan

Syria

Turkey

1439

445

1388

1946

1116

2011

1656

1851

3000

1470

2386

1394

1108

1766

1869

1556

1476

1671

3262

942
421
407
1271
58
1783
1897
* A truck passes Red Sea over ferry which cost US $ 600.

896

2392

1607

1802

2951

DAM

Iraq

Yemen

627

1536

Oman

579

2057

Kuwait

1108

JED

Qatar

RUH

UAE

Bahrain

Destination

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

illustrated in the following:

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Where:

Cost Per 1Km/Ton

Distances B/W Cities( For example, from RUH to UAE)
Number of tons that exporter want to transport
Thus, following is calculated

= 8.2 Hallalh
=1,108 KM
=22 Ton

= (.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
Dallah transport

Riyadh

4794113

Yasir A Allehaidan

Vice president

www.mubarrad.com.sa

Jeddah

6171252

Abdul Jabbar Moosa Executive Director www.dallah.com

Zahid Heanor
GH Transport LTD.
Al Rashed Transportation

Jeddah

6201931

Prakash S. Mani

General Manager

Jeddah

6206600

Rizwan

Commercial General

Dammam

8211172

Syed Arshad

Marketing Manager www.alrashedtransport.com

Ali Al Dahnan Co.

Al -saif Co.

Dammam

8071100

Fakhry Al-Dahan

GM

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.
ECUs 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 exporters 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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