Insight: Exploring Saudi Arabia's $15 Billion Logistics Sector Strategy

The Ministry of Transport & Logistics Services (MOTLS) in Saudi Arabia (KSA) has recently revealed a massive logistics strategy worth US$15.31 billion that will see it become one of the world's leading names in logistics, if the investment goes to plan.

At present, the logistics sector in Saudi Arabia is around 6% of KSA GDP, with the new strategy aimed at making that figure closer to 10% by the end of the decade.

This piece explores what Saudi Arabia has in store, and how influential the Kingdom will be in future decades.

KSA: A Leader in Logistics

Saudi Arabia's logistics plans form part of its Vision 2030, the strategy to make KSA an ultra-modern, technologically advanced state that is no longer reliant on oil for its long-term income.

Saudi Arabia already benefits from an excellent location between the Global East and West, meaning it's an ideal arena for transhippment and one-stop-shop supply chain services, yet it does have competition in the area.

The UAE is the main player here at present having invested billions into its logistics market already, and having the results to show for it, with the popular, world-leading and highly-advanced Jebel Ali seaport, as well as Dubai Airport (DXB) which facilitates the most international passengers globally.

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However, Saudi is making progress too, with a host of ports and airports, the country already has 12% of the global container trade passing through annually.

Further, with mega-projects that are way more ambitious than anything else in the world, such as the mega-city NEOM, Saudi has a strong claim as a logistics future heavyweight.

MOTLS said in a statement: “Transport and logistics are the backbone of any economy, and our aim is to develop the sector, build connectivity and enhance our global competitiveness as a country.

"We are putting all our weight into developing internal and external supply chains and streamlining processes to the best international standards to provide world-class infrastructure and services.

"Our focus is on opening Saudi to the world with a multitude of opportunities.”

Masses of New Infrastructure

In a typically bold and ambitious plan, KSA has announced the launch of 59 logistics zones by 2030.

Given 21 of these are already operational, this may be one of the more easily realizable projects it has, yet it still has awesome power to transform the Middle Eastern and global supply chain network(s).

KSA also recently inaugurated its first Special Integrated Logistics Zone at King Khalid International Airport, Riyadh.

Spanning 3 million square mtrs, the Special Integrated Logistics Zone is strategically located to serve billions of potential customers in easy reach across Africa, Asia and Europe, and uses technology designed to streamline the movement of goods.

A Changing World

Judging by the Logistics Performance Index 2023 (LPI), produced by the World Bank, KSA's strategy is already showing signs of success.

In 2018, the Kingdom was at number 55, yet by 2023 it's made the jump to number 38 in only 5 years.

What marks Saudi Arabia out isn't just its sheer investments and will to change the logistics sector, but how it's investing.

KSA appears to have a strong interest in technology, automation and digital excellence, and without some of the obstacles of other regions in the world such as space, unions and debt, it's already established itself as a technology leader for the future.

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