IBHAR, with an initial capital of SAR 1bn ($267m) and co-owned by several prominent Saudi businessmen, will offer links to ports in Egypt and Sudan.
Boss Mohammad Abood Babiadan told Saudi media the establishment of the company was a result of a very meticulous and long study on the viability of operating a ferry service to ply across the Red Sea.
A deal has been lined up with a Canadian company for the purchase of four five-year old ferries. Each has a capacity of 1,200 passengers and five hundred tons of cargo including 500 cars.
The idea of setting up a Saudi ferry company was triggered by the Al-Salam Boccaccio 98 tragedy in 2006 in the Red Sea. The Egyptian ferry sank with the loss of 1,033 people on a trip from Saudi Arabia.