SATS is first foreign cargo handler in Saudi Arabia with S$40m facility

GATEWAY services and food solutions provider SATS has become the first international cargo handler to operate in Saudi Arabia.

It announced on Monday after trading closed that its subsidiary, SATS Saudi Arabia LLC, has obtained a cargo-handling concession for 22-and-a-half years in Dammam's King Fahd International Airport (KFIA).

The new cargo terminal, at S$40 million, will be SATS' largest green field investment to date, said president and chief executive officer of SATS Alex Hungate in an interview. It is done in partnership with the General Authority of Civil Aviation of Saudi Arabia (GACA) and KFIA.

SATS, a constituent company of the Singapore Exchange's benchmark Straits Times Index, will build a new 20,000-square metre cargo terminal in the vicinity of KFIA and within the kingdom's new cargo village.

The facility will be capable of handling 150,000 tonnes of cargo annually, more than doubling the volume handled currently. KFIA handled 95,321 tonnes of cargo in 2015.

The facility will incorporate a dedicated cold chain facility to meet the growing needs of the pharmaceutical and food industries to ship high-value, temperature-sensitive goods, said SATS.

Construction is expected to be completed by the first quarter of 2019.

Sats had fended off other competitors to clinch the tender. It comes as Saudi Arabia, one of the world's largest oil producer, aims to wean its economy off independence in oil revenues.

Air freight is expected to increase as its economy restructures, said Mr Hungate.

Dammam, in eastern Saudi Arabia, is the kingdom's third-largest air freight centre.

Saudi Arabia is a key aviation hub in the Middle East. It is the second-largest in terms of cargo throughput among the Gulf Cooperation Council member states.

Said Turki Al-Jawini, director-general of KFIA: "We believe this strategic partnership with SATS will further enhance KFIA's position as a gateway for cargo in the east of Saudi Arabia ... KFIA looks forward to working together with SATS to grow cargo activity and services."

SATS is already present in the United Arab Emirates for food solutions services, while it announced earlier this year a joint-venture deal with Oman Air for cargo handling at Muscat International Airport.

SATS' counter closed flat on Monday at S$4.80.