Saudi logistics sector: Huge prospects in transport projects
This week, I will try to explain the importance of transportation — a key pillar of the Saudi logistics sector — and its growth potential.
Means of transportation are vital for creating an attractive investment environment in every field. They facilitate the progress of the national economy by mobilizing passengers and goods and attract private investments in key transportation projects.
In a push to diversify its economy, Saudi Arabia is determined to increase the role of the private sector in the development of its transport infrastructure, as well as in the operation of seaports, railroads, airports and related supply channels.
Public-private partnerships are being pursued to fund several key schemes, while a number of the country’s publicly operated facilities are being earmarked for full privatization. The plan is to attract investments in the transportation sector worth over SR70 billion by 2020.
Although Saudi Arabia has 26 airports of which three are international, six regional and 16 domestic, the local and international cargo contribution to the Saudi transportation pillar is still limited compared with seaports and land channels.
As for seaports, the country has the largest seaport network in the Middle East with 10 major ports and around 200 piers. There are three industrial and six commercial ports. All ports are managed, operated and maintained by private sector companies under long-term contracts. The ports authority supervises the development of major seaports and modernizing major ports through a strategic investment plan worth SR30 billion ($8 billion).
Rail transport in the country is vital for driving economic development as it provides a cost-effective and competitive mode of transportation, primarily for the mining industry.
A network is also being developed through significant investments. Between 2015 and 2024, the Saudi Arabia General Investment Authority (SAGIA) plans to invest more than $141 billion on rail-related projects.
Road-based transport is also a major form of freight transportation. The government is planning to further expand the road network and improve safety under the National Transformation Plan 2020. The Saudi road logistics market is highly fragmented and competitive, with a number of major players participating, including Crescent Transportation, Almajdouie Transport, and Saudi Land Transport Co.
With several projects and initiatives already underway with strong private sector participation, I strongly believe that considerable investment opportunities await domestic and international players who are eager to participate in the development of Saudi Arabia’s promising transportation sector.
Basil M.K. Al-Ghalayini is the Chairman and CEO of BMG Financial Group.