JEDDAH: Saudi Arabia should develop a trade corridor through the Indian Ocean to reduce its dependence on the region’s two maritime chokepoints, Folk Maritime’s CEO said on Wednesday.
“We need, as a Kingdom, to be independent of either of the two straits. This is a lesson we have all learned,” Poul Hestbaek told the Saudi Maritime and Logistics Congress in Jeddah.
Speaking during the opening panel, “Fragmentation: Navigating the New Geopolitics,” he said: “How are we going to do it? Who is going to do it? I don’t know. This is way above my pay grade. But I think it is clear to everybody that we need to do this to feel protected in the future.”
His remarks highlighted the challenges facing shipping companies as they seek to maintain services, protect crews and secure supplies amid regional disruption.
Hestbaek described conditions in the Gulf as fragile. With traffic through the Strait of Hormuz back to about 75 percent of normal levels, he said, a single incident could reverse that recovery.
“It takes one missile hitting the right place, and they’re all gone. That’s how it works. It is so fragile, and to operate in that environment, you need a very agile organization.”
Crew safety comes before all other considerations, he said. When risks escalate, Folk Maritime makes participation voluntary, covers the costs of seafarers who choose to leave a vessel and offers them employment on other ships in its fleet.
“So, it is very clear that they are all on board because they want to be,” he said.
The company also increases external support, including intelligence, during periods of heightened risk.
As a company owned by the Public Investment Fund, Folk Maritime also prioritizes supply security for the Kingdom when making commercial decisions, Hestbaek said.
“The first and foremost requirement for getting on board our ships is: ‘Do you bring supply security to the Kingdom?’ That is number one.”
Insurance premiums in some trades had risen 24-fold within days, he said, with the additional costs passed on to customers. However, those costs remained secondary to crew safety, vessel safety and supply security.
Akshay Anand, group CEO of ABSA Al-Barrak Group, said that trade adapts to disruption rather than stops.
“Here in Saudi Arabia, we have been at the center of the Silk Road and trade routes for centuries. The essence of that arrangement is still the same. The modes have changed,” he said, pointing to cargo reaching the Kingdom from Turkiye through Syria.
Asked whether road freight could replace shipping, he said: “Can trucking replace ships? No. Very simply, no.”
Nevertheless, pressure on the wider transport industry was “massive,” he added.
“I, for one, am extremely proud of how we have endured the past couple of years. I think any other country in our situation would have buckled. We have remained strong. We have remained resilient.”
Speaking to Arab News after the panel, Anand said operators could no longer rely solely on established corridors.
“In the current scenario, you should not rely solely on traditional trade routes. You have fragmentation … when that happens, you have to find alternatives.”
The route through Syria was one of several options being used, he said, alongside other land routes, Saudi Arabia’s western ports and connections through Oman and the UAE.
Anand also called for greater cooperation in sharing the costs of disruption.
“I mean shared responsibility in the collective sense, rather than the legal sense: For cargo to flow effectively, everyone is responsible. It is not a case of one person’s responsibility beginning where another person’s ends.”
Costs “should not be imposed on the weakest party,” he added, calling for updates to legal frameworks, contractual terms and arbitration arrangements to support a more collaborative approach.
The panel also featured Essam M. Al-Ammari, deputy for maritime transport at the Transport General Authority. It was moderated by Valeria Ramundo Orlando, co-founder and managing partner of Equilibrium Climate Capital and GreenSquare Ventures.
A second session, “Competing for Cargo: What Shipping Lines Want and How Ports Win It,” examined what persuades shipping lines and cargo owners to commit business to a port.
Jay New, CEO of King Abdullah Port, identified three deciding factors: control, capabilities and connectivity.
Shipping lines increasingly seek ownership or operational control rather than relying entirely on independent terminals, he said.
“For a shipping line, relying on a third-party, independent port that it does not own carries an element of risk.”
Such partnerships increasingly involve commitments spanning “two, three or perhaps even more decades,” he added.
New said King Abdullah Port has 17 sq. km of land and capacity for 26 million twenty-foot equivalent units.
He also highlighted that disruption to regional shipping predates recent developments in the Gulf, pointing to pressure on Red Sea operations since late 2023.
“We think the disruption is all in the Strait of Hormuz, but this started a long time ago,” he said.
Over the past six to seven months, he had seen “substantial volume growth in the Red Sea, with cargo now coming into Saudi Arabia and moving across the Kingdom.”
That growth had prompted a review of connections between port stakeholders, including customs, the Border Guard, freight forwarders and inspection agencies.
Cargo owners may accept some delays, he said, but still need clear information about their shipments.
“Where is my container? Where is it? When will I get it?”
Efficiency depends on the performance of the entire chain, New added.
“You are only ever as efficient as your weakest link.”
Mohammed Badawy, chief operating officer of Folk Maritime Services, said liner and feeder operators assess cargo demand at both ends of a route, terminal reliability and the strength of partnerships before introducing a service.
“We need a terminal or port that understands our business and our needs, and is willing and able to work with us — not only when things are business as usual, but also when things go wrong.”
A delay of four to six hours can cause cargo to miss a connection and remain at a terminal for several days, he said.
“So communication, communication, communication — it is extremely important.”
Karim Omran, vice president, group commercial, at Red Sea Gateway Terminal, highlighted the continuing importance of price alongside connectivity and service quality.
Despite the wider advantages a port can offer, shipping lines often return to a direct commercial equation, he said, asking the question: “I don’t care about all this. How much discount can you give me?”
The session was moderated by technology journalist and broadcaster Lucy Hedges.
The day’s closing panel examined shipping fuels and the investment decisions facing operators ordering vessels that could still be trading in 2045, as the industry works toward net-zero emissions by 2050.
Yasser Towairgi, manager of the marine projects and engineering division at Aramco, highlighted the company’s experience using biofuels in its fleet, reporting carbon emissions reductions of up to 20 percent.
“The biofuel proved really good performance in terms of reducing carbon emissions, up to 20 percent reduction in carbon emissions, and it’s available locally,” he said.
Biofuels could be introduced without major investment in onboard propulsion systems, he added — a consideration for operators assessing alternative fuels that are not yet available at commercial scale.
Towairgi was joined by Samer Agha, industry manager at Zahid Tractor, which represents Caterpillar Power and Energy Systems. Ramundo Orlando moderated the discussion.
The congress also featured the signing of a professional partnership agreement between Bahri and the University of Jeddah. The organizations were represented by Hisham Al-Khaldi, Bahri’s chief support officer, and Noura Omair Al-Shahri, CEO of the Applied College.
The congress continues on Thursday with sessions on national logistics delivery, the offshore economy and maritime security, alongside a fireside discussion on the Red Sea’s coastal tourism potential and marine environmental protection.