(Bloomberg) -- Saudi cargo shipper Folk Maritime, owned by the kingdom’s sovereign wealth fund, plans to invest hundreds of millions of dollars to expand its fleet.
The shipping line aims to buy or charter 15 to 18 container ships over the next three to five years, Chief Executive Officer Poul Hestbaek said in an interview. The company operates just three vessels now.
Saudi Arabia, like other wealthy Persian Gulf energy producers, is working to transform its economy to curb reliance on oil sales and build up industries such as manufacturing, technology and tourism. In support of that plan, the country is adding transportation links to connect consumers, companies and travelers.
Folk, wholly owned by the Public Investment Fund, will buy about two-thirds of the ships it’s adding and charter the rest, Hestbaek said in the coastal city of Dhahran. The company bought its first vessel this year and leases two others.
Folk is expanding to link up the country’s smaller ports, alleviating demand for road transportation as the kingdom builds new domestic businesses to bolster the economy and add jobs.
“We are working on a long-term strategy,” Hestbaek said. “First and foremost, the geographical scope is the Red Sea, all the countries surrounding the Red Sea.”
The company will introduce three new routes next year to connect India to the Red Sea region, the Gulf and East Africa. That will add to the two routes it currently operates in the northern Red Sea.
Hestbaek declined to specify how much Folk may spend on the vessels. Container ships fetch tens of millions of dollars each, with the price varying according to the cost that shippers can charge for freight, he said.
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