Port of NEOM Offers Alternative Route for Gulf Importers As Hormuz Remains Volatile

Only a month into the Iran war, Qatar-based distributor Salam Studio & Stores had already gone weeks without its regular Red Bull shipments, prompting it to test a little-used route.

The conflict and effective closure of the Strait of Hormuz, now in their fourth month, had scattered its products across ports in India and Sri Lanka, while Gulf hubs it typically relies on faced Iranian fire and capacity constraints.

Wary of losing market share, Salam opted for an untested solution: shipping cargo to Doha via Saudi Arabia's Port of NEOM, a Red Sea facility now pitching itself as a faster alternative to the region's traditional trade routes.

The move highlights the lengths some Gulf businesses are willing to go to keep goods flowing as the war disrupts established regional supply chains. But shipping data suggest such workarounds remain niche, offering speed for select cargo rather than a fix for wider supply disruptions.

FASTER, BUT MUCH MORE EXPENSIVE

Salam initially ordered a single truckload to test the corridor from Europe to the Gulf, which spans multiple sea and land legs, director of distribution Adam Mulla told Reuters.

"It took us less time than it usually does," he said, though costs were sharply higher. The shipment arrived within 22 days - nearly half the usual time from Europe to the Gulf.

Encouraged, the company ordered 15 more truckloads, paying about $10,000 per load, compared with roughly $2,500 for maritime shipping before the war. The extra costs reflected higher diesel and insurance prices rather than port fees, Mulla said.

NEOM, the brainchild of Saudi Crown Prince Mohammed bin Salman, was unveiled a decade ago as a futuristic urban project before plans were scaled back amid cost overruns. Its port is now being positioned as part of a faster trading corridor.

NICHE SOLUTION

"Europe-Egypt-NEOM-GCC: your faster route," the port said in a post on its official LinkedIn page, describing a mix of sea crossings and trucking aimed at speeding goods into the six Gulf Cooperation Council (GCC) markets, and adding that importers from several European countries were already using it.

NEOM did not provide details and did not respond to a request for comment.

Shipping data, however, show its role remains limited. Roll-on/roll-off vessels account for most traffic at the port, which had not recorded any container activity as of April, according to data firm Kpler. More than 95% of shipping activity is concentrated in just two vessels.

"NEOM remains a niche, RoRo-focused port with stable but limited activity," Kpler said, adding there was no sign of a rerouting-driven surge since the Iran war began.

Iran has blocked nearly all shipping into and out of the Gulf since late February, disrupting roughly a fifth of global oil and gas flows and leaving hundreds of vessels unable to transit the Strait of Hormuz.

For Salam, congestion at Jeddah - Saudi Arabia's main Red Sea port - was what made NEOM appealing.

"They chose NEOM because it has no traffic," Mulla said.

NEOM Port: New Hormuz Reroute https://www.reuters.com/graphics/IRAN-CRISIS/NEOM/zjpqmrednpx/chart.png

(Reuters)