Saudi Arabia Logistics Report 2024

• Global Supply Chain Resilience Initiative (GSCRI): The GSCRI is anticipated to focus its investments on key industries like aerospace and defence, machining and equipment, healthcare manufacturing, automotives, maritime, building materials, petrochemicals, agriculture and food processing, mining and metals, renewables, and information & communication technology. This initiative is expected to have a positive impact on the development of seaports, such as the King Abdullah port and expansion of the Jeddah Islamic port, which are expected to increase sea freight. Financial as well as non-financial
  incentives are expected to attract foreign direct investment (FDI) inflows for trade-oriented products and services mainly revolving around sustainability and climate change, future industry enablement, global supply diversification, and advanced manufacturing.

These Government initiatives are expected to support development of transportation infrastructure and improve global connectivity with prospects of expanding the Saudi logistics sector to a market size of USD 57 billion by 2030.

Future Growth Prospects

Future growth prospects of the logistics industry are reliant on the extent of success in Saudi’s economic diversification efforts, in addition to its effective implementation of national logistics plans with the participation of both public and private sectors.

• Improvement in global connectivity will make Saudi Arabia as an important hub for both for sourcing and redistribution. An estimated 20% of container trade passes through the Suez Canal. Improving connectivity with Europe, North and East Africa and Asia has the potential to make Saudi Arabia an ideal destination for sourcing of materials and redistribution. Due to this geographical advantage, global connectivity is expected to increase, new shipping lines are expected to connect to the country’s ports with major trading partners. Saudi Air Connectivity Program is expected to increase air connectivity for both passenger and cargo segments.
• Adoption levels of digital technologies will strengthen efficiency of supply chain network. Saudi Arabia has established strong interconnectivity between local as well as regional networks for cross-border trade and freight movement to flourish with streamlined and digitalized customs procedures. Adoption of AI, IoT, Robots and Automation are expected to be given priority
  in freight transportation, forwarding and warehousing operations in line with developments in global supply chain.
• Increased focus on sustainability is likely to drive green logistics solutions across the logistics value chain: As there is no unique pathway to make the transition towards sustainability, companies are expected to transform their business models focusing on green logistics solutions. National Determined Commitments (NDC) to reduce GHG emissions, will force companies to adapt to a new set of environmental regulations. A significant part of transport emissions is due to freight movement through road transportation. Therefore, technologies focusing on fuel efficiencies are likely to be given priority by both public and private sectors. Increased adoption of electric fleet and alternative fuels in the urban settings will play a key role in meeting the targets associated with net-zero logistics.
• Growth in e-commerce is likely to drive for smart warehouse solutions and innovations in last mile delivery models will drive delivery automation: Logistics service providers are expected to focus on innovations in the last mile solutions to meet the growing demand of e-commerce logistics. Address accuracy, route optimization, inefficient packaging and returns management are some of the critical factors that determine the success rate of last mile deliveries. Intelligent delivery management platform, fuel efficient and environmentally sustainable vehicles as well as delivery automation are some of the areas expected to limit the growth in emissions from last mile delivery services.