Gulf turns to trucking to bypass Red Sea unrest

Reuters

• Growing demand for Gulf trucking
• Ships rerouting to avoid attacks 
• ‘Underdeveloped’ rail and roads

The Gulf trucking industry is preparing for a surge in business as companies seek alternatives to shipping goods while Red Sea risks persist.

Trukker, a UAE-based app that is touted as the Middle East’s Uber for land freight, told AGBI that enquiries from clients interested in using its truck booking and other freight forwarding services had doubled over the past month. 

Drivers registered on the platform are preparing for an influx of new business, anticipating that higher demand will translate into increased freight volumes over the coming weeks.

• Air cargo demand rises after Red Sea shipping disruption
• Red Sea crisis ‘will push up Middle East consumer prices’
• Cost of Red Sea shipping insurance rises 2,700%

Trukker facilitates about 25,000 “full truckload” movements across the Middle East and North Africa every month, has more than 6,000 drivers and serves around 800 clients, including Sabic, Neom and Rak Ceramics.  

“We’ve seen an uptick in clients seeking alternatives to shipping, given what’s going on,” said Amit Agarwal, Trukker’s chief financial officer. 

“This hasn’t yet translated into more movement of goods by land, perhaps because people have been hoping this was short-term and were not willing to change their supply chains overnight. 

“They seem to have come to the conclusion that the situation will continue and are ready to move from sea to road. Suppliers are gearing up to cater to that demand.”

Quoted prices have increased by up to 60 percent, Agarwal added. 

The Red Sea accounts for 12 percent of trade worldwide, including 30 percent of container traffic. But in November, Houthi rebels began attacking commercial ships there in what they claim is a show of support for Palestinians in the Israel-Hamas war.

Many vessels have been re-routing around Africa, adding approximately 10 to 15 days to their journey times and significant extra costs. 

Air cargo up

Middle East air cargo volumes rose in December, partly due to the Red Sea crisis, according to the International Air Transport Air Association.

Moving goods by land is emerging as another alternative to using high-risk sea routes, at least in the short term.

Keaton Fitzpatrick, operational risk analyst at BMI Research, said: “We believe there will be some uptick in demand for trucking services to transport goods across the Gulf, particularly between the UAE and Saudi Arabia.”

Some countries would benefit from new overland routes to capitalise on the opportunity, he added. 

“Even in Saudi Arabia, the region’s largest market, the internal road network east to west is not fully fleshed out. And rail is not an option, as it’s very underdeveloped in the GCC,” Fitzpatrick said. 

“There is little doubt that land freight volumes are increasing quickly, albeit from a very low base,” said John Manners-Bell, chief executive of UK-based consultancy Transport Intelligence.