Saudi Arabia has expressed its plan to push the logistics and transportation sector to grow 4 percent by 2030, putting the industry's contribution at 10 percent of their GDP to align with the latest strategy.
The kingdom's plan includes increasing air transport activities to link major cities such as Makkah, Jeddah, and Madinah alongside kilometers express trains. The linkage would also connect the eastern and western parts of the kingdom's ports to join the Gulf-wide rail network.
Digital Transformation of Logistics in Saudi Arabia
The development of Saudi's logistics industry would require parallel progress of digital infrastructure to equip industry players with hyper-scale co-location capacity data centers, further emphasizing the need for foreign investments in the coming year.
The kingdom also plans to inject over USD 147 billion for developments surrounding the transportation and logistics industry, specifically to turn the country into a transportation hub.
The application of digital solutions such as Artificial Intelligence (AI) and robotics operations in warehousing and facility can act as the game-changer for Saudi Arabia's reputation in the global logistics industry, encouraging technological advancement to transform the logistics and transportation process.
The digital transformation aims to create a seamless industry workflow and remove pain points usually burdened to each industry-layer player.
Lately, Saudi Arabia's strategic geographical location has become the current emphasis on foreign players' consideration in tapping into the kingdom's logistics industry.
For instance, the American logistics giant FedEx has announced its decision to invest USD 400 million into domestic logistics operations to attract other foreign players to contribute to the vast developments.
Supply Chain Logistics Market Size
Saudi Arabia is already the Middle Eastern North Africa's (MENA) forefront runner of transportation and logistics activities, generating a total amount of USD 27.6 billion annually with gradual growth over the years.
The amount accounts for 40 percent of the Gulf countries' revenue in transportation and logistics, positioning the kingdom as a highly-expected investment destination in the respective industries.
The government has introduced new trade zones such as Jizan Economic City that provide duty exemptions and benefits for players to leverage to push forward the industry's progress. Additional infrastructure includes the Jazan Airport, Neom Airport, SPARK zone, and the Red Sea Gateway Terminal expansion.
The newly launched infrastructure would help logistics players deliver the surging domestic and foreign demands efficiently as players reported potential bottleneck struggles in the years to come.
The bottleneck stems from unprecedented growth happening as people shift to online shopping due to the COVID-19 virus containment measures, forcing stores and people to limit their daily mobility.
As the COVID-19 pandemic eases and governments worldwide implement thorough vaccination programs, Saudi Arabia and the global e-commerce landscape continue to grow bigger and dominate and show no signs of slowing down.
Consumers are expressing intentions to stick permanently to online shopping, resulting in Saudi Arabia's logistics industry poised for a 24 percent growth in 2022.
The forecast exceeds the kingdom's pre-pandemic levels and is expected to continue the drastic movement until 2025, when the industry reached USD 50 billion in value.
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