By the end of this year the UAE will see the launch of the first phase of its first railway line. By 2018, the Etihad Railway will be complete, with trains able to travel from the gas fields of Shah and Habshan up to the port of Ruwais and along the UAE coastline right up to the Northern Emirates.

The network will make it easier and more efficient to move goods and commodities between the UAE’s ports, airports and industrial zones. This will further cement the GCC state’s role as a global and regional trade hub, particularly once the rail line connects into Saudi Arabia’s and Oman’s planned railways.

Traders will be able to ship goods into the UAE and then transport them on to regional destinations by rail, or transport them to another port or airport within the country to be shipped internationally. Not only will the railway improve trade connections, it will also generate job creation, drive growth in the logistics sector, reduce road congestion and help diversify the UAE’s economy. 

Along with neighbouring Saudi Arabia, the UAE is spearheading the railway revolution in the GCC, transforming the regional landscape and way of doing business.

Project roots

Etihad Rail was established as Union Railway in 2009 to manage the development, construction and operation of the UAE’s first federal railway.

Abu Dhabi government owns 70 per cent of the firm, with the federal government owning the remainder.

The drivers behind the scheme include Abu Dhabi’s ambitions to increase gross domestic product (GDP) contribution by non-oil sectors to 60 per cent by 2030. Transport and logistics was identified by the emirate as a key sector to drive this diversification. Similarly, the UAE government’s Vision 2021 called for a shift to a diversified economy and saw the development of a railway network as instrumental to achieving these ambitions.

On a practical level, the need to transport more freight by rail has been growing increasingly acute as congestion on the country’s roads and the emissions from trucks increase pollution levels.

According to the World Trade Organisation, the value of export freight being moved across the GCC increased by 13 per cent between 2005 and 2010, and import freight rose by 14 per cent. As the UAE reports increased trade and re-export volumes, overland freight volumes are only likely to gather pace. Dubai’s non-oil foreign trade grew by 13 per cent in 2012 to AED1.235 trillion ($334bn), compared with AED1.089 trillion in 2011.

Transporting cargo by rail is seen as a far more efficient method of handling these rising volumes than using roads. The locomotives to be used on the Etihad network will have a capacity of 260 20-foot equivalent units (TEUs), and one single freight train will have the load-carrying capacity of up to 300 trucks.

The Ghweifat-Jebel Ali line will be able to carry 90 container trains a week once operational, while the Ghweifat-Sharjah route will carry 20 trains a week.

Demand for the new railway is already gaining momentum, with customers lining up to transfer the transportation of their goods from road to rail. Etihad Rail has signed more than 15 memorandums of understanding with logistics companies as well as firms active in industries ranging from petrochemicals through agriculture to aggregates and waste.

The operator is also working on successfully integrating the railway into the existing transport system in the UAE. It has an agreement with Dubai’s DP World to develop an intermodal rail terminal in Jebel Ali port, which will allow for the transfer of containerised freight arriving at the facility.

The Etihad Railway and its envisaged economic benefits will soon be put to the test when the first phase partially opens later this year. The entire planned network covers 1,200 kilometres and the 264km-long first phase, which is under construction, connects the sour gas fields of Habshan and Shah to the port of Ruwais. 

On schedule

Etihad Rail chief executive officer Nasser al-Mansoori confirmed in April that the scheme was running on schedule, with the first trains to start running from Habshan to Ruwais before the end of the year. The Shah-Ruwais connection will follow in 2014. The company’s first major customer will be Abu Dhabi National Oil Company (Adnoc).

The second phase, covering 628km, will connect phase 1 in the Western Region of Abu Dhabi to other major ports and industrial zones in the rest of the UAE.

A rail line will link Ruwais to Ghweifat, connecting to the Saudi border, and a line running from Tarif to Dubai and Al-Ain will reach Oman. The network will also link Musaffah port to the Khalifa Industrial Zone Abu Dhabi (Kizad), the new Khalifa port and Dubai’s Jebel Ali port.

Phase 2 is still at the tender phase and bids for the four design-and-build packages are currently under evaluation. Consultants are also vying for the phase’s project management consultancy contract, with just two or three firms or consortiums now left in the running and the deal due to be awarded soon. Phase 3 of the rail network will connect the northern emirates of Ras al-Khaimah and Fujairah.

The UAE has already established itself as a leading regional and global aviation and shipping hub, being home to the world’s second-busiest airport and one of the largest ports. The opening of the railway will further boost connectivity and strengthen the country’s position in global trade.