Saudi logistics industry fuels economic transformation, empowers global supply chains
With the launch of Vision 2030 in 2016, Saudi Arabia embarked on a profoundly ambitious journey to unlock its vast potential and transform itself into a diversified, sustainable and world-leading industrial nation.
Strategic investments in social and industrial infrastructure and legal and financial reforms are changing the Kingdom’s cultural and economic landscape, opening the country to the world as a business hub and a tourist destination.
Unveiling multiple initiatives to diversify and strengthen the Kingdom’s economy, Vision 2030 places special emphasis on developing the Kingdom’s transport and logistics sector, identifying it as a critical pillar for progress.
Consequently, the National Industrial Development and Logistics Program was launched in 2019 to integrate four of the Kingdom’s key economic drivers — energy, mining, industry and logistics — and maximize their contribution toward the nation’s growth and economic diversification.
Since its inception, the program has facilitated investments of over $100 billion to bolster Saudi industry and position the Kingdom as a gateway to local, regional, and global supply chains and markets. These investments have been well chosen, leading to a 16 percent year-on-year revenue growth from transport and logistics services.
In terms of actions, one of the most significant announcements was made in October 2022, when the Ministry of Industry and Mineral Resources launched the National Industrial Strategy.
Its goals are to triple industrial output and increase the value of the Kingdom’s exports to over $149 billion by 2030.
The strategy also lays out how the Kingdom will attract investment into the sector, boost economic diversification, increase non-oil exports and grow the Kingdom’s gross domestic product.
But we are not resting on our laurels. To further accelerate growth in the logistics sector, the Ministry of Transport and Logistics Services is establishing 59 logistics zones across the Kingdom, out of which 21 were fully operational in 2022.
Also, the ministry will expand the 19 industrial zones into industrial logistics zones to accommodate the ever-increasing cargo traffic into and out of the country. These 19 zones are being developed through public-private partnerships and have attracted investments totaling $7.7 billion. Over 1,500 permits were issued to local and foreign logistics companies in 2022 to bring these new areas to reality.
While enhancing connectivity with regional and global supply chains is central to the industrial strategy, the logistics zones will also support the growth and integration of the local supply chains.
The ministry is also strengthening local supply chains and integrating small and medium enterprises with large strategic industries to maximize and develop local content in national products and their industrial value chains.
The government also announced signing agreements worth over $267 million to boost private sector investment in domestic and global supply chains.
Further bolstering the local supply chain ecosystem, Saudi Prime Minister and Crown Prince Mohammed bin Salman launched another visionary initiative last year, the Global Supply Chain Resilience Initiative.
Attracting global industrial companies to the Kingdom, the GSCRI will support the growth of critical sectors and aims to secure $10.6 billion in investments in its first two years.
Leveraging the Kingdom’s resources, infrastructure and strategic location, the initiative strives to bring resilience to economies and companies across Europe, the Americas and Asia and overcome challenges faced by global supply chains while boosting the Kingdom’s overall investment attractiveness globally.
Highly beneficial to logistics companies, GSCRI unlocks many business and investment opportunities for regional and international companies, with $2.66 billion allocated in financial and non-financial incentives.
Economically, the Kingdom remains the largest market in the Gulf Cooperation Council region and one of the most important consumer markets in the Middle East and North Africa due to its population and purchasing power. On the back of growing its global stature and diversifying revenue streams, the country’s leadership is pursuing the development of all modes of transport and logistics — air, sea, rail and road.
Since the launch of NIDLP, the Kingdom’s logistics sector has witnessed a rapid transition, with investments reaching $559 million, which are being used to develop infrastructure, build operational efficiencies, forge government support and enhance local competencies and capabilities in the sector.
Making its presence felt in the global arena, the Kingdom climbed up 17 positions in the latest global Logistics Performance Index 2023 published by the World Bank, claiming 38th rank among the 139 listed countries.
This change marks a significant elevation of Saudi Arabia from the 55th rank in the previous edition of the Index published in 2018.
Riding the wave of unprecedented transformation guided by Vision 2030, its able leadership and core economic initiatives, Saudi Arabia emerged as the fastest-growing G20 economy, reaching 8.7 percent growth last year. This position puts Saudi Arabia on track to become a top-15 economy by the end of the decade.
Strengthening trade ties with the region and creating a sustainable and thriving business ecosystem for international players, the Kingdom is set to unlock value and growth as it transforms at an unprecedented pace.