Saudi Arabia’s logistics sector pioneering pathways for global connectivity

Saudi Arabia’s logistics sector pioneering pathways for global connectivity
Significant infrastructure upgrades and favorable regulations are driving a transition towards a more integrated, efficient, and sustainable logistics sector. (SPA)
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Updated 01 October 2024
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Saudi Arabia’s logistics sector pioneering pathways for global connectivity

Saudi Arabia’s logistics sector pioneering pathways for global connectivity
  • Industry analysts are confident that the Kingdom is going to attract more global players into the sector

RIYADH: Saudi Arabia’s logistics sector has undergone a remarkable transformation in recent years, fueled by visionary initiatives like Vision 2030 and the National Industrial Strategy. As the sector continues to evolve, what groundbreaking strategies will drive it forward?

The Kingdom presents substantial opportunities for global logistics players. With a population of approximately 36 million and a gross domestic product of $1.81 trillion in purchasing power parity as of the end of 2023, Saudi Arabia is a central hub for expansive trade routes supported by world-class infrastructure.

Another major catalyst for growth is Saudi Arabia securing the bids for Expo 2030 and the 2034 FIFA World Cup — both of which will attract substantial global business opportunities, opening new channels for trade and commerce.

Industry analysts are confident that the Kingdom is only going to attract more global players into the sector, with Hakan Lanfredi, member of the executive board at Dussmann Group telling Arab News: “For international logistics firms, these developments present lucrative opportunities to establish or expand operations, leveraging major global events and the rising need for advanced supply chain solutions.”

Dominik Baumeister, PwC Middle East head and global partner of transport and logistics echoed that sentiment, and told Arab News the existence of untapped opportunities within Saudi Arabia’s logistics industry that could be attractive to global companies.

“There are several whitespaces in Saudi Arabia’s logistics landscape that offer interesting opportunities for global players. In particular, the logistics services space is still in its early stages of development, and more specifically in Freight Forwarding, 3PL, and warehousing,” Baumeister said.

He added: “Airport and port privatization is an ongoing effort, and roads, while perhaps on the periphery of logistics, are opening up as a public private partnership environment.”

Lanfredi also flagged the surge in e-commerce and last-mile delivery services, fueled by increasing digital consumer engagement. 

“This shift necessitates robust, agile logistics solutions to meet growing consumer expectations and delivery efficiencies,” he said.

Emerging logistics hotspots

Saudi Arabia is swiftly creating several hubs for logistics, assisted by important government programs and an advantageous business environment.

“Besides NEOM and the Riyadh Logistics Park, the Eastern Province has emerged as a key logistics hub due to its proximity to major oil operations and the King Abdulaziz Port,” Saud Al-Sulaiman, CEO of Saudi investment firm Alsulaiman Group, told Arab News.

He added: “These hotspots are attractive due to their advanced logistical infrastructures and strategic positions that facilitate both regional and international trade.”

Dussmann Group’s Lanfredi also noted a prime example of a logistic hotspot is the creation of the Integrated Logistics Bonded Zone in Riyadh, as it offers several attractive incentives to investors and businesses.

“It offers direct access to a vast market of 5 billion people across Europe, Asia, and Africa within an eight-hour flight range,” he said. 

There are several whitespaces in Saudi Arabia’s logistics landscape that offer interesting opportunities for global players.

Dominik Baumeister, PwC Middle East Head and Global Partner of Transport and Logistics

Lanfredi added: “The ILBZ is designed to establish the Kingdom as the region’s premier logistics hub, providing significant incentives like a 50-year tax holiday, 100 percent foreign ownership, and efficient goods processing where items can be market-ready within just four hours of arrival.”

He also noted additional notable hotspots include the Dammam Free Zone and various free zones along the strategic Red Sea corridor.

“Jizan is emerging as a key node on the Silk Road, highlighting its growing importance in global trade routes. These zones benefit from advanced infrastructure and strategic positioning, which are bolstered by governmental support and regulatory enhancements,” he continued.

Technological innovation

According to PwC, the Kingdom is seeing a focus on improving efficiency and competitiveness through technological innovation.

“In Saudi Arabia’s logistics sector, significant strides are being made in technological innovation to boost efficiency and competitiveness,” Baumeister said.

He added: “Saudi customs is enhancing its capabilities through single window initiatives and integration into various data flows, with support from port operators, shipping lines, and airlines.”

He also noted that PwC is witnessing the emergence of innovative technologies, some homegrown, particularly in the e-commerce and parcel space.

Baumeister referred to examples of this including geospatial solutions coupled with AI, and new ways of collecting and analyzing multiple data sources

“These technological advances will support the Kingdom’s Vision 2030 journey, provide more optimized operations, and predictive analytics for future projects,” he said.

Navigating uncertainties

There are challenges facing the logistics sector in Saudi Arabia, and stakeholders are actively addressing them to facilitate growth and ensure operational efficiency.

According to Dussmann Group’s Lanfredi, the challenges are threefold, with the first being the complex navigation of customs and regulatory framework, specifically for new entrants and international companies.

“The need for compliance across various levels — local, regional, and international — adds layers of complexity to logistics operations,” he said, adding that this can be addressed by providing “streamlined customs clearance services” through gateways for sea, air, and ground transport.

Managing extreme temperatures in the Middle East is the second area that needs consideration, as this can complicate the storage and transportation of goods that are sensitive to fluctuations in climate. 

This shift necessitates robust, agile logistics solutions to meet growing consumer expectations and delivery efficiencies.

Hakan Lanfredi, executive board member at Dussmann Group

“Specialized capabilities in cold-chain logistics, utilizing advanced technology for live temperature control and monitoring at each step of the supply chain are necessary requirements for professional service providers,” he explained.

The third challenge is a shortage of skilled labor in the logistics sector, particularly in emerging fields such as automation and robotics.

This can result in operational inefficiencies and increased costs for companies. To address this issue, initiatives supporting workforce development, such as partnerships with institutions like the Saudi Logistics Academy, are essential.

By investing in training and education, logistics providers not only improve their operational capabilities but also contribute to preparing a new generation of skilled professionals specifically tailored for the logistics industry in Saudi Arabia.

PwC highlighted the potential for Saudi Arabia to become a leading player in the global logistics industry through strategic collaboration between the public and private sectors.

“Saudi Arabia’s megaprojects and mega events will create additional logistics capability and capacity that can provide significant competitive advantages for the country,” Baumeister said.

He continued: “As competition increases across the region, Saudi Arabia sets itself apart with its significant import activity and a robust diversification agenda.”

With critical ports in strategic locations, competitive advantages in aviation, and opportunities for land transport connectivity, Saudi Arabia is positioned to play a pivotal role in linking freight corridors from India to Europe.

Additionally, over the next five to 10 years, Lanfredi is anticipating that Saudi Arabia is poised for a transformative shift and growth, in line with the nation’s strategic commitment to sustainability as outlined in the Saudi Green Initiative and Vision 2030. 

FASTFACT

By investing in training and education, logistics providers not only improve their operational capabilities but also contribute to preparing a new generation of skilled professionals specifically tailored for the logistics industry in Saudi Arabia.

“These policies are steering the sector towards green logistics through the electrification of transportation fleets, the integration of renewable energy sources into logistics operations, and the adoption of sustainable supply chain practices,” he said.

He also underlined the shift towards sustainable practices in the transportation and logistics industry.

Furthermore, the use of solar energy in warehouses is highlighted as another example of this sustainability shift.

“Additionally, the rapid digital transformation, especially in payment systems, is reshaping the logistics landscape,” Lanfredi said.

He added: “An increase in digital payments in Saudi Arabia is transforming consumer behaviors and e-commerce logistics, simplifying last-mile delivery processes, and enhancing operational efficiencies.”

Lanfredi highlighted that significant infrastructure upgrades and favorable regulations are driving a transition towards a more integrated, efficient, and sustainable logistics sector.

This shift aligns with Saudi Arabia’s Vision 2030 goals for economic diversification and digital transformation.

 Looking ahead, Al-Sulaiman also envisions transformative growth for Saudi Arabia’s logistics sector with an anticipated annual growth rate exceeding 10 percent.

“This growth will be propelled by continued technological advancements, including artificial intelligence, internet of things, and blockchain integration, enhancing operational efficiency,” Al-Sulaiman said.

He added: “Moreover, sustainability will be a key focus, with initiatives such as adopting electric vehicles and energy-efficient warehouses to align with global trends and attract international partners.”

They further explained that Saudi Arabia’s logistics sector plans to strengthen its connections with global supply chains.

“Expansion of port capacities, enhancement of multimodal transport links, and simplification of customs processes will facilitate smoother international trade, solidifying Saudi Arabia’s role as a critical hub in global commerce,” Alsulaiman continued.

These developments align with Vision 2030 objectives and global environmental, social, and governance trends, positioning the Kingdom as a leader in sustainable and innovative logistics solutions.


Saudi aviation sector set to grow with new US partnerships boosting connectivity, investment

Saudi aviation sector set to grow with new US partnerships boosting connectivity, investment
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Saudi aviation sector set to grow with new US partnerships boosting connectivity, investment

Saudi aviation sector set to grow with new US partnerships boosting connectivity, investment

JEDDAH: Saudi Arabia’s air transport sector is set for further growth as the Kingdom seeks new partnerships with US companies to strengthen connectivity, attract investment, and modernize its aviation infrastructure.

On Feb. 5, the Minister of Commerce Majid bin Abdullah Al-Qasabi met with senior executives from US air mobility firms and members of the global leadership community, Young Presidents’ Organization, to explore cooperation and partnership opportunities.

In a post on his X account, Al-Qasabi said: “Today I met with leaders from the US air mobility industry and members of the YPO global leadership community, where we discussed economic reforms in the Kingdom and opportunities for collaboration and partnership.”

This comes as Saudi Arabia plans to boost trade and investment with the US to around $600 billion over the next four years, as outlined by Crown Prince Mohammed bin Salman in a phone call with US President Donald Trump in January.

Trade between the Kingdom and the US reached $34 billion in 2023. The nation’s leading exports to the US included mineral products and fertilizers, while machinery and mechanical appliances were among the top exports to Saudi Arabia from the North American country, according to the Saudi Press Agency.

Over the past year, the Kingdom’s aviation sector has experienced remarkable growth, driven by a surge in passenger numbers, the expansion of its fleet with new jet acquisitions, and the forging of key global partnerships.

Valued at $1.2 billion in 2023, the industry is expected to grow at a compound annual rate of 8.88 percent from 2025 to 2029.

These developments are part of a larger vision to position Saudi Arabia as a leading global aviation hub and a premier travel destination.

As part of its Vision 2030 initiative, the Kingdom is investing billions of dollars to diversify its economy, strengthen its private sector, and enhance connectivity while solidifying its role in the international aviation landscape.

A key goal of this transformation is to deliver seamless travel experiences for 330 million passengers across more than 250 destinations and transport 4.5 million tonnes of air cargo by 2030.

The country is also prioritizing the development of transportation infrastructures, including airports and airlines, as several facilities, including Riyadh’s King Khalid International Airport and Jeddah’s King Abdulaziz International Airport, have undergone major upgrades to accommodate increasing passenger traffic.

King Salman International Airport is under construction in the Saudi capital, set to become one of the world’s largest travel hubs. This development is a major step toward the country’s goal of becoming a global destination for trade and tourism.

Riyadh Air, which flew its inaugural flight from Riyadh to Jeddah in September, aims to operate more than 200 aircraft.

Saudia remains the largest airline in the country, while budget carriers such as flynas and flyadeal continue to grow.

The Kingdom, moreover, is working to establish open skies agreements with various countries to enhance air connectivity and expand its aviation services.


ACWA Power and Saudi Aramco ink deals to boost renewables, hydrogen, and desalination

ACWA Power and Saudi Aramco ink deals to boost renewables, hydrogen, and desalination
Updated 41 min 56 sec ago
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ACWA Power and Saudi Aramco ink deals to boost renewables, hydrogen, and desalination

ACWA Power and Saudi Aramco ink deals to boost renewables, hydrogen, and desalination

RIYADH: Saudi utility giant ACWA Power has signed two agreements with Aramco to accelerate the deployment of renewable energy projects and evaluate the performance of vanadium flow batteries in the Kingdom’s climate.

The first agreement, inked during ACWA Power’s third flagship Innovation Days event, involves the development of an advanced photovoltaic energy forecasting project. The initiative will use big data analytics and machine learning to improve solar power generation predictions.

By improving forecasting accuracy, the model aims to strengthen grid stability, optimize energy dispatch, and improve microgrid management.

The second deal focuses on measuring the efficiency and durability of vanadium flow battery technology in Saudi Arabia’s climate. This initiative will examine how well these batteries can store energy over extended periods and contribute to the increased use of renewables, particularly for water desalination.

This undertaking aligns with the Kingdom’s strategic push for clean energy, reinforcing the initiative’s goal to advance collaboration in renewables and hydrogen technologies while solidifying the nation’s role in the global energy transition.

“By investing in cutting-edge desalination technologies alongside renewable energy innovation and green hydrogen production solutions, we are paving the way for a more resilient and sustainable energy and water infrastructure in Saudi Arabia,” said Thomas Altmann, executive vice president for Innovation and New Technology at ACWA Power.

An agreement was reached by ACWA Power and Hysata. Supplied

Four other agreements were signed by ACWA Power with UK-based Bluewater Bio, global chemicals producer Dow, Australian hydrogen electrolyzer manufacturer Hysata, and King Abdullah University of Science and Technology.

ACWA Power and Bluewater Bio partnered to test advanced filtration technology for desalination projects in Saudi Arabia, with the aims of enhancing the efficiency and sustainability of the process.

Additionally, a desalination-related agreement was signed with Dow to test its anti-scaling chemicals at ACWA Power’s pilot facility.

This initiative aims to gather valuable data on the effectiveness of these chemicals in preventing scaling and contributing to the development of more sustainable solutions.

A pilot agreement between ACWA Power and Australian hydrogen technology company Hysata will focus on advancing cost-effective green hydrogen production, and will facilitate an in-country demonstration of the firm’s high-efficiency electrolyzer technology in the Saudi Arabia. 

Representatives from ACWA Power and KAUST shake hands on a deal. Supplied

In addition, ACWA Power and KAUST have extended their master research agreement, to further strengthen their partnership in innovative sustainable solutions for water desalination and solar energy.

Since 2019, the two entities have jointly operated the Center of Excellence for Desalination and Solar Power, fostering research and innovation to support the Kingdom’s ambitious sustainability agenda. 

These agreements underscore Saudi Arabia’s commitment to technological advancement and energy transition, reinforcing its leadership in the global shift toward renewables and sustainable water solutions.

The utility company also signed a framework agreement with Fraunhofer IMWS, Fraunhofer ISC, and Fraunhofer IWES, initiating a strategic collaboration in renewable energy and green hydrogen research and development.

This partnership aims to drive innovation in the clean energy sector by leveraging Fraunhofer's expertise in materials science, energy systems, and hydrogen technologies.

The agreement lays the groundwork for joint research initiatives focused on enhancing efficiency, sustainability, and technological advancement in the global energy transition.

Under the theme Innovate for Impact, the inaugural three-day event was held in Riyadh from Feb. 3 to 5, and welcomed over 1,000 delegates.

Held under the patronage of the Ministry of Energy, the gathering focused on elevant technologies brought together government dignitaries, industry leaders, and innovators, researchers, and academics to discuss  accelerating the deployment of new technologies, institutionalizing foresight and forward-thinking in the energy transition landscape, and making significant contributions to the realization of Saudi Arabia’s Vision 2030.


Oman’s property market expands 29.5% as foreign investment grows

Oman’s property market expands 29.5% as foreign investment grows
Updated 47 min 56 sec ago
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Oman’s property market expands 29.5% as foreign investment grows

Oman’s property market expands 29.5% as foreign investment grows
  • Mortgage contracts accounted for the largest share of transactions in 2024, reaching 2.2 billion rials
  • Real estate sector’s contribution to GDP hit 820.7 million rials in the first nine months

RIYADH: Oman’s real estate sector surged 29.5 percent in 2024, with total transactions reaching 3.3 billion Omani rials ($8.57 billion), driven by foreign investment and government-led reforms. 

The real estate sector’s contribution to the country’s gross domestic product hit 820.7 million rials in the first nine months of the year, according to data from the Ministry of Housing and Urban Planning, cited by Oman News Agency. 

The sector’s growth aligns with broader trends in the Middle East, where countries are actively advancing their economic diversification programs. 

In Saudi Arabia, the property sector maintained its upward trajectory in the fourth quarter of 2024, with the real estate price index rising 3.6 percent year on year. 

The UAE is also witnessing robust expansion, with Dubai’s residential sales surging 30 percent year on year to $32.4 billion in the fourth quarter. 

Qatar recorded 3,548 real estate transactions in 2024, totaling $3.97 billion. 

Oman’s government has introduced several initiatives to accelerate real estate sector growth, including easing property ownership laws for foreigners and offering tax incentives to developers. 

According to Oman News Agency, mortgage contracts accounted for the largest share of transactions in 2024, reaching 2.2 billion rials. 
Sales contracts in Oman’s real estate market stood at 1 billion rials, while swap contracts were valued at 13 million rials. 

Reflecting an increase in international investments, foreign real estate trading in Oman grew 19.4 percent in 2024 compared to 2023. 

Real estate transactions by Gulf Cooperation Council nationals reached 38.1 million rials, registering a year-on-year increase of 16.5 percent. 

Among Oman’s governorates, South Al Batinah led the fastest-growing real estate markets, posting a 244.4 percent surge with a trading value of 1.2 billion rials. 

Al Batinah North recorded transactions worth 877 million rials, reflecting a growth rate of 122.8 percent. 

Al Dakhiliya Governorate saw a 119.2 percent increase, with real estate transactions amounting to 380 million rials. 

Al Sharqiyah North recorded a growth rate of 101.6 percent, with a turnover of 135 million rials. 

In Muscat Governorate, real estate transactions reached 1.2 billion rials in 2024, expanding at a more modest rate of 1.7 percent. 


Saudi Arabia explores partnership opportunities with India’s TATA Group

Saudi Arabia explores partnership opportunities with India’s TATA Group
Updated 06 February 2025
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Saudi Arabia explores partnership opportunities with India’s TATA Group

Saudi Arabia explores partnership opportunities with India’s TATA Group

RIYADH: Saudi Arabia is exploring collaboration opportunities with India’s largest business conglomerate TATA Group in multiple sectors, including military, aviation, and electronics. 

According to a Saudi Press Agency report, the Kingdom’s Minister of Industry and Mineral Resources, Bandar Alkhorayef, met with officials of the group’s affiliates, TATA Defense, TATA Electronics Limited, and TATA Steel, where he discussed cooperation avenues. 

During the meeting, the Saudi minister outlined the economic diversification goals of the Vision 2030 program and highlighted investment opportunities in the country’s industrial sector.

The Indian conglomerate’s affiliate TATA Motors is already operating in Saudi Arabia, with the automobile manufacturer celebrating its 30th anniversary in the Kingdom in November. 

India and Saudi Arabia share a strong trade and bilateral relationship, and according to the latest report by the General Authority for Statistics, India was the second favorite destination for the Kingdom’s non-oil exports in November, with outbound shipments to the Asian nation amounting to SR2.52 billion ($670 million) — a rise of 19.43 percent compared to the previous month. 

During the meeting with Alkhorayef, Sukaran Singh, CEO of Tata Defense, showcased the company’s products, including military aircraft and vehicles. 

He also highlighted the firm’s expertise in designing, building, and operating military factories. 

 

 

TV Narendran, CEO of Tata Steel, showcased the company’s expertise in exporting materials in the construction, automotive, and supply chain sectors across various international markets. 

SPA added that Tata Electronics and Saudi Arabia’s National Industrial Development Center also discussed potential collaboration opportunities to foster the development of the semiconductor industry within the Kingdom. 

Alkhorayef’s visit to India had already seen a new deal prior to the latest meeting, with the countries agreeing to strengthen cooperation in the critical minerals sector on Feb. 4. 

The Saudi official and Indian Minister of Coal and Mines G. Kishan Reddy discussed building a resilient mineral supply chain to reduce import dependency and promoting joint ventures in the critical minerals sector to support the energy transition journey. 

Alkhorayef began his visit to India on Feb. 3, leading a high-level delegation from the industry ministry and the Local Content and Government Procurement Authority. The meeting aimed to enhance industrial collaboration with India and attract high-value investments.

Earlier this month, Saudi Arabia’s Deputy Minister of Finance for International Relations Khalid Bawazier met with Suhel Ajaz Khan, ambassador of India to the Kingdom, where they discussed bilateral relations and other issues of common interest. 


Saudi Aramco raises March oil prices for Asia

Saudi Aramco raises March oil prices for Asia
Updated 06 February 2025
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Saudi Aramco raises March oil prices for Asia

Saudi Aramco raises March oil prices for Asia

RIYADH: Saudi Aramco has significantly raised its crude oil prices for Asian customers in March, reaching their highest levels in over a year.

This price hike comes as a result of rising benchmark prices, driven by increased demand from China and India, as well as supply disruptions due to US sanctions on Russian oil.

According to an official statement, the official selling price for the benchmark Arab Light crude has been increased by $2.40 per barrel. For March, the price for Asian buyers has been set at $3.90 per barrel above the regional benchmark.

Other grades also saw price hikes, with the OSP for Arab Extra Light and Super Light increasing by $2.40 and $2.10 per barrel, respectively. The OSP for Arab Medium crude was raised by $2.50 per barrel, while the price for Arab Heavy crude went up by $2.60 per barrel.

For North America, Aramco has set the March OSP for Arab Light crude at $3.80 per barrel above the Argus Sour Crude Index.

Earlier this week, OPEC+ members reaffirmed their commitment to maintaining stability in the global oil market through production cuts. The 58th Joint Ministerial Monitoring Committee session, conducted via videoconference, reviewed crude oil production data for November and December 2024 and highlighted strong compliance by both OPEC and non-OPEC countries involved in the Declaration of Cooperation.

The committee reiterated its commitment to the DoC, which is set to extend through the end of 2026. It also commended Kazakhstan and Iraq for their improved compliance, including voluntary production adjustments.

OPEC also welcomed renewed pledges from overproducing countries to fully comply with production targets.

Saudi Aramco produces five grades of crude oil: Super Light, Arab Light, Arab Extra Light, Arab Medium, and Arab Heavy. These grades are differentiated by their density. Super Light has a density greater than 40, Arab Extra Light ranges from 36 to 40, Arab Light falls between 32 and 36, Arab Medium is between 29 and 32, and Arab Heavy has a density of less than 29.

Saudi Aramco typically releases its crude OSPs around the 5th of each month, setting the price trend for other major producers, including Iran, Kuwait, and Iraq. These price benchmarks affect approximately 9 million barrels per day of crude oil shipments to Asia.