Accelerating growth in the region via Sohar
The Middle East has embarked on its most ambitious rail network ever. Some US$250 billion has been allocated for the construction of 67,000 kilometres of railway lines. This includes the eagerly anticipated Gulf Railway, which will connect Bahrain, Kuwait, Qatar, UAE, Saudi Arabia, and Oman, over the course of the next three years. It is also one of the principle reasons why Oman’s logistics network is projected to grow beyond the US$12 billion mark by 2017, according to SOHAR Port and Freezone’s Edwin Lammers.
As one of the main driving forces behind a trade surplus of US$2 billion in Oman, SOHAR Port and Freezone is one of the world’s largest port development sites and has sustained double-digit growth for over a decade. Its position outside the Strait of Hormuz has made it an ideal transhipment centre between East and West, as well as an important gateway to over 3.5 billion consumers.
As SOHAR’s Executive Commercial Manager, Lammers says that plans to house a national food reserve alongside the port’s burgeoning petrochemical, and automotive, and logistics industries make it a clear choice for a rail freight terminal.
“This is an exciting time for the Middle East rail industry, and even more so here in Oman. Work has already begun on the first phase of a 2,244 kilometre freight and passenger rail infrastructure, and the plan is to connect port logistics with consumer markets in UAE and Saudi Arabia,” Lammers says.
“As this rail network grows, the value created by transporting cargo by rail will grow exponentially, and will power the national logistics market. This is already valued at US$8 billion. At the same time, rail links have the additional benefit of increasing efficiency and reliability, improving road traffic management, increasing transit volumes and cutting costs, and reducing the pressure placed on the environment.”
“This is good news for the economy, and for SOHAR, especially when you consider that we will soon be responsible for managing the country’s national food reserves and the first ever terminal dedicated to agricultural bulk commodities. Together with the steadily rising demand we have seen for rail services among freight forwarders and the other industries we support, the fact that Oman has placed a strong emphasis on developing demand-driven services, makes SOHAR an obvious choice for a rail terminal.”
In fact, growing demand for the expansion of inland freight services across Oman has prompted the government to set aside US$15 billion for the creation of the country’s first ever rail network. Having spent a considerable amount of his career at Port of Rotterdam, a world top ten port, Lammers says that one of the unique advantages that SOHAR has over other logistics hubs in the region, is its close relationship with the 600 year-old Dutch shipping juggernaut – its partner of 12 years.
“SOHAR has grown at a tremendous rate, and we owe much of our success to the exceptional vision of the Sultanate of Oman, but we have also benefitted from a close relationship with Port of Rotterdam that has allowed us to access global best practices on behalf of SOHAR and the country as a whole.”
“I am confident that this relationship will prove valuable once more, as Oman seeks to tap into a global rail freight industry that was valued at around US$210 billion only last year,” Lammers says.
In expanding on this point, Lammers says that Port of Rotterdam is currently in the process of expanding and modernizing its own freight rail infrastructure, and that this experience could prove pivotal in building a rail network from scratch. He also notes that building such a network will require more than simply installing the lines, and says Oman will need to develop new services and a skills-base.
“More than 250 freight trains start and finish in Rotterdam every week and are expanding the port’s reach, creating new cargo flows and revenue streams. But a modern rail network takes more than the physical infrastructure and must be accompanied by customer-focused and efficient rail services and well thought out coordination planning. This is where the unique experience we have in SOHAR will be most important in the Gulf.”
“Equally important will be the development of a skilled Omani labour force, complete with everything from train drivers, locomotive and railroad engineers, and station masters, to train dispatchers, foremen and signalmen. There is no doubt that we will have to work hard to achieve this, but it will be worth it in the long run, with businesses and consumers ultimately paying less at the checkout,” he concludes.