UAE-Saudi Arabia shipping costs surge after strict rules on trucks' age

Dubai: Saudi businesses and consumers may have to pick up the extra cost as transporting goods using trucks between UAE and the Kingdom has shot up significantly.

The reason, according to logistics industry sources, is because of a two-year decision taken by the Saudi authorities, but whose impact is being felt on trucking rates now.

“In 2023, Saudi Arabia mandated that no trucks that have been operational for more than 20 years can be used to ship in goods into the Kingdom,” said Usman Rehman, Managing Director at Time World Freight. “Back then, it was OK as there weren’t that many trucks of 20 year and over vintage being deployed on intra-GCC transportation.

“Now, that’s changed.”

Currently, sources say there is an acute lack of trucks that conform to the under 20-year mandate. Even though it’s been two years since the rule came into effect, overland shippers didn’t upgrade their fleet in time, or even if they did, there aren’t enough trucks available to carry the level of container loads via the roadways.

“This meant that where rates used to average Dh4,000-Dh6,000 for a container truck load a few months back, they are now at Dh8,000-Dh9,000,” said Rehman. “All because the market didn’t respond fast enough to the strict enforcement of the Saudi rule on the age of a vehicle.”

Other industry sources the situation will not remedy immediately, and that the higher container rates will remain stuck.

Saudi Arabia's domestic diesel prices increased by a substantial 44% from January 1, 2025, reaching SR1.66 a liter. This is the fourth increase since 2016.

“Diesel accounts for a substantial portion of logistics expenses,” said Rosh Manoli, Vice-President for Freight Forwarding at Consolidated Shipping Services Group.

“Shipping companies will pass increased costs to clients, potentially hiking freight charges. This will likely increase consumer goods pricing due to rising transportation and production expenses.

“These fuel increase will drive up operational costs in KSA and the ripple effect is that it will trickle down to GCC markets as well.

“This adds to the issue of truck shortages due to the mandated rule that the trucks older than 20 years can no longer be used in Saudi Arabia. There is a driver shortage too."

Overland trucking services between UAE and Saudi Arabia assumed extra significance after the Red Sea crisis burst forth in late 2023, when Yemen’s Houthis launched attacks on commercial shipping plying through the crucial shipping lanes.

It meant significant increases in container rates on ships bound between European ports and the GCC, with shipping lines having to divert the vessels to take the longer route through the Cape of Good Hope off South Africa.

To partially compensate for the higher shipping costs, what logistics companies did was offload the containers in Dubai ports and then use the overland routes to take the shipments that had Saudi Arabia or other GCC destinations as their end point.

This did help keep costs down when container rates on the Europe-Gulf sector had been at their peak during early to mid-2023. These costs came in lower than having ships take the direct route from Europe to Saudi Arabia or even having them transshipped from the UAE to a Saudi port.

“Yes, importers and exporters in the UAE and Gulf region have been exploring several cost-effective alternatives due to increased shipping costs and risks associated with the Red Sea,” said Haris Shaikh, Managing Director at Gallop Shipping.

“Some of these channels include overland transport. This means utilizing road and rail networks to neighboring countries, particularly for goods moving to and from markets in Saudi Arabia, Oman, and beyond.

“Some of them used direct sourcing, which is sourcing goods from closer markets or using local suppliers to reduce dependency on maritime routes.”