Etihad Rail to boost freight sector: top official

Rashed Khalaf Al Otaiba says 1,200km line will help diversify economy

NEWS, Projects, Etihad Rail

The $10.9bn Etihad Rail project will provide a stimulus to the UAE’s freight sector, a senior government official has been quoted as saying.

Rashed Khalaf Al Otaiba, the chairman of the Department of Transport, told consultancy firm Oxford Business Group (OBG), that developing freight will help the country move away from a reliance on oil.

“The global crisis highlighted a need for economic diversification and the development of non-oil sectors to fully achieve sustainable economic growth. Realising the vital role that the freight sector plays in achieving this goal, the government of Abu Dhabi has focused its efforts on improving the overall performance of the sector,” said Al Otaiba.

Once finished, the 1,200-km project will stretch from Al Ghweifat on the Saudi border to Ruwais, Liwa, Shah, Dubai, Al Ain, Fujairah, Ras Al Khaimah and Khor Fakkan. Eight of the 13 main transport centres along the network will be located in Abu Dhabi. According to Etihad Rail officials, the project is expected to add AED3.5bn ($952.65m) to GDP by 2030.

Work is already underway to complete the first of the project’s three stages, a freight line running from the port of Ruwais to Habshan and Shah, which will enhance transport of oil and gas resources to ports on the Arabian Gulf coast.

Phase one is expected to wrap up in 2014, with phase two, connecting Abu Dhabi to Dubai, currently in the tendering process. Rail chiefs recently secured $1.28bn of project financing for phase one from a group of local and international banks.

However, delays in scheduled passenger services will keep commuters on the highways for the next several years. They are not scheduled to access the rail service until the end of the project’s third and final phase in 2016.

Abu Dhabi’s Surface Transport Master Plan outlines a metro supported by tram and bus feeder services on approximately 131 km of high-speed track, though that project will also not be completed until 2016, says OBG.

Etihad Rail has also signed a number of customer agreements with logistics and raw materials firms ahead of its launch. The most recent of these, with courier network Aramex, offers the latter a 'strategic advantage", according to Srinath Manda of consultancy firm Frost & Sullivan.

"First movers in any new market segment have witnessed greater success and control as the market evolves," said Manda. "Further, consumers across developing markets are increasingly demanding for multimodal transport solutions from their logistics providers, and Aramex is definitely set to gain from this trend when the UAE Rail Network is ready.

"Apart from that, addition of this multimodal transport capability is likely to contribute to transforming majority consumer perception about Aramex from an express cargo service provider, into a complete logistics provider."

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