Digital Transformation of Maritime Sector in Saudi Arabia

As demand for sustainable cost-effective connectivity solutions soars, the maritime and logistics sectors in the Kingdom of Saudi Arabia are expanding towards an impressive paradigm-shifting era of digitalisation. With economic diversification, policy reforms, and foreign direct investments over the next five years, Saudi Arabia is gearing up to be the world’s premier maritime hub.

With its strategic location at the crossroads of three continents, the country is investing heavily to modernise its seaport infrastructure, in the range of $8 billion. According to the Container Port Performance Index, three ports have earned exceptional scores to reflect outstanding port performance within the maritime transport sector in Saudi Arabia. King Abdullah Port ranks #1 out of 370 global ports, Jeddah Islamic Port ranks #8, and King Abdul Aziz Port ranks #14. This is most definitely the outcome of Saudi Arabia’s diversification strategy as part of its Vision 2030 goals.

One of the leading maritime projects in Saudi Arabia is the King Salman International Complex for Maritime Industries and Services, expected to contribute $17 billion to Saudi Arabia’s GDP, create 80,000+ jobs by 2030, and become the largest integrated maritime yards in the region in terms of capacity and scale. As of 2020, a BCG report estimated the value of the non-oil maritime sector in Saudi Arabia at $3.5 billion.

Reflecting Saudi Arabia’s commitment to developing its maritime trade, expanding into new economic cities, and the digitalisation of vessel operations, Saudi Arabia scored the highest regional progress in the Maritime Connectivity Index in 2021 and is ranked 20th globally in the maritime transport industry. In fact, its maritime sector has doubled in the past decade with 53,000 ships operating within it that are registered in 150+ countries and carry 11 billion tonnes of cargo annually.

Being connected today is synonymous to staying competitive and future-ready. Vessels need to stay online to fully benefit from such digital transformation initiatives. Having one or two L-band lines as a fall-back option, when VSAT is down, has become common place. Yet, having a back-up is no longer a guarantee of business continuity. As maritime operations digitalise at a fast pace, it is essential to make sure that chosen applications can remain operational in high and low bandwidth environments. A recent analysis by Accenture showed that a digitally reinvented vessel can reduce operating costs by up to 20% in five years while increasing revenue by up to 15%.

Countries that are willing to embrace this change guarantee themselves a competitive edge and the Kingdom of Saudi Arabia’s vision is setting an example.

Nabil Ben Soussia

The availability of a digital infrastructure empowers the maritime industry to streamline their operations and remotely monitor, maintain, and secure their assets. Ship-to-shore communications have been permanently transformed with digitalisation, and today, seafarers can easily collaborate with an extended team onshore without any interruption in the navigation schedule. Troubleshooting, crew training, and even health check-ups can be now carried out remotely via a wide range of specialised applications. As such, digitally-enabled operational measures allow vessels to avoid unnecessary detours and achieve 10-20% greater energy efficiency. Such state-of-the-art satcom technology is aligned with the targets set by the International Maritime Organisation (IMO) for the shipping industry to reduce its carbon emissions by 40% by 2030.

Decarbonisation efforts by early adopters are resulting in emission savings of 18% and more in some cases as reported by Inmarsat. In fact, digital optimisation of conventional assets is expected to achieve up to 38% reduction in GHG emissions by 2050. As part of a partnership between IMO and Saudi Arabia, three agreements with a funding of $509,000 have been allocated to reduce emissions and manage biofouling by ships. Projects such as OXAGON, the world’s largest floating sustainable industrial district, and the recent blockchain-backed structured shipping documentation technology, where Saudi Customs teamed up with TradeLens to monitor a shipment between Dammam and Rotterdam, are underscoring the sustainability goals of the global maritime industry.

As the maritime sector’s digital landscape evolves, it is expected that satcom will become a commodity where seafarers do not subscribe just for connectivity, but rather the services that digitalisation enables them to carry out at sea. With an increasing number of satcom players in the market, an oversupply of satellite services is inevitable. According to Euroconsult, this will lead to a decline in airtime prices, with an ARPU fall of 21% between 2022 and 2028.

Further, the workers of tomorrow – Generation Z and those to follow – expect to be connected anytime, anywhere. Ships unable to recognise this trend, in the short-run, will be unable to attract new talent or retain existing crew. The competition for tomorrow’s workforce is fierce. The crew crisis resulting from COVID-19 forced many seafarers to find alternative employment – and some simply did not return to sea. With work-life balance at the forefront of many workers’ minds, a life working at sea may seem less attractive to new crew members. In fact, the International Chamber of Shipping’s BIMCO Seafarer Workforce Report predicts a crew shortage by 2026. Despite this gloomy forecast, there is hope that the industry will catch up before it is too late.

The Maritime Trends Report 2021, by recruitment firm Fast Stream, registered an increase in requests for staff that has experience in digitalisation and new technologies. As ship operators look to future-proof their recruitment pipelines, digitally driven opportunities are helping to make seafaring an attractive proposition to the coming generations.

The move towards vessel automation, coupled with high expectations for opportunities unlocked via the Metaverse, paints a bright future for the maritime sector. Countries that are willing to embrace this change guarantee themselves a competitive edge and the Kingdom of Saudi Arabia’s vision is setting an example.

• Nabil Ben Soussia, Group CCO of IEC Telecom