To accomplish the goals set forth in Saudi Vision 2030, the Saudi government recently re-expressed its interest to have foreign investors tap into the country’s growing transport and logistics industries.
Foreign businesses have seemingly taken note as American logistics giant FedEx announced that it will invest approximately 400 million USD into its Saudi logistics operations over the next 10 years, as per an article by Air Cargo News. Such a move will help attract other foreign companies and further drive investment within the region. Given Saudi Arabia’s strategic location, both foreign and local businesses have put the country at the heart of supply chain and logistical processes.
Ultimately, due to increases in foreign investment and continued utilization of Saudi Arabia’s strategic geographical location by enterprises, the entirety of the logistics industry in Saudi Arabia is set to benefit exponentially.
Saudi Arabia as a Logistics Hub
In the YCP Solidiance white paper Transforming Saudi Arabia into the Middle East's Logistics Powerhouse, several relevant statistics indicated the rapid development of the Kingdom’s logistics industry. Within the Middle East and North Africa (MENA) region, data revealed that the KSA accounted for a total value of 27.6 billion USD; a figure which represented the highest contribution within the region. Moreover, an influx of logistical demand brought about by the COVID-19 pandemic also helped the logistics industry register a growth rate of 14.87%.
As the country aims to improve its logistical infrastructure via the application of digital solutions, such as Artificial Intelligence (AI) in facility operations or even robotics in warehouse logistics, foreign players will be further compelled to invest in the sector as it proactively seeks to enact measures that ensure industry-wide development. With Saudi investment in transport and logistics surging as a result of foreign and domestic interest, expect the KSA to continue growing and record similar numbers in years to come.
The Pivotal Role of E-Commerce
While the growth of KSA’s logistics industry can be attributed to an increase of investment from a plethora of sources, the role of the e-commerce industry and its reliance on logistical operations will also play a vital part. For instance, due to increased e-commerce activity in the KSA, the country’s e-commerce industry registered an improved CAGR of 24% for 2020 to 2022, which is 10% higher than the pre-pandemic forecast. This growth is expected to continue until 2025 wherein the industry’s total value is expected to reach 50 billion USD. Given that a post-pandemic society is expected to continue to rely on digital spaces and online services, such a trend benefits the KSA e-commerce industry as well as the logistics industry.
Considering that the KSA logistics industry’s value is being recognized by domestic and foreign parties, as well as the promising outlook of related industries like e-commerce, the country is well on its way to fully realizing Saudi Vision 2030. Reaching such milestones will not only be favorable to the industries and businesses concerned, but more importantly, the growth achieved will help set a foundation from which the entire country and its citizens can also benefit.
For further updates on the logistics industry within Asia, subscribe to our newsletter here.