Saudi Arabia’s Logistics Sector Poised to Become Logistics Hub by 2030

Saudi Arabia’s logistics sector is in an expansion mode with the Saudi Ministry for Transport and Logistics Services (MOTLS) chalking out a strategy to position the Kingdom into a global logistics hub with a market size of $15.31 billion by 2030.

As part of this strategy, the Crown Prince and Saudi Arabia’s Prime Minister H R H Mohammed bin Salman launched the Global Supply Chain Resilience Initiative (GSCRI) in October last year to attract local and international investments in the supply chain sector. Aiming to raise $10.64 billion in its first two years, the initiative has set $270 million in financial and non-financial incentives for investors.

Saudi Arabia, which has been moving away from its dependence on oil revenue has targeted logistics sector as one of the growth engines to achieve the goals of economic diversification. The Kingdom’s logistics sector contributes 6% of the Kingdom’s GDP and is projected to contribute around $272 million by 2030.

The Saudi government plans to establish 59 logistics zone across the country by 2030, of which 21 are already operational. Boosting its cargo capacity and bolstering supply chains further, the kingdom announced the launch of 59 logistics zones by 2030, 21 of which are already operational.

The country also inaugurated its first Special Integrated Logistics Zone at King Khalid International Airport in Riyadh.

The government’s other plans include increasing the port capacity to reach more than 40 million standard containers, the Kingdom’s share in the transshipment market to 45%, port operation rate to 70% of its total capacity, increase the number of re-export logistics centres to 30.

The measures are part of the infrastructure development strategy and aim to fuel business growth, attract investment, and increase the sector’s non-oil revenue to about $12 billion a year by 2030.

Key for Kingdom’s Prosperity

Lauding the rapid expansion of the Kingdom’s logistics sector, which is driving a major transformation in the region, Henadi Al-Saleh, chairperson of the Kuwait-based Agility Logistics, said that powered by the Vision 2030 initiative to diversify Saudi Arabia’s economy, the industry is one of the key economic growth levers that have attracted substantial investments in infrastructure and technology.

Addressing a panel discussion on the second day of the 10th Arab-China Business Conference in Riyadh on Tuesday, she said: “From our point of view, Saudi Arabia is leading and is at the centre of a major transformation spearheading this region. It is literally pivoting and transforming the logistics landscape.”

“Agility issues an emerging market index every year and scans 50 emerging markets and Saudi Arabia hands down ranks at the top, it is in the top five in overall markets, top five in business fundamentals, and top 10 in digital readiness,” she added.

Al-Saleh highlighted that the sector’s growth puts it in the forefront of investment appeal, making it the easiest market to do business in.

Loay Mashabi, Saudi Arabia’s Deputy Minister for Logistics Services, said that the industry still holds vast areas of untapped potential.

Mashabi said that with its youthful demographic, forward-looking strategies, and robust investment potential, along with strategic geographical positioning at the juncture of three continents, the Kingdom offers tremendous opportunities for growth.

The Saudi Minister also explained that while the Kingdom’s diversification strategy primarily emphasizes the industrial, tourism, and investment sectors, it positions the logistics industry as a crucial catalyst to accelerate growth in other areas.