The Saudi Logistics Sector Supports Global Supply Chains & Economic Growth

Vision 2030, launched in 2016, aims to diversify and strengthen Saudi Arabia’s economy, with a focus on the growth of the transport and logistics industry, unlocking its potential and transforming the country into a sustainable, 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.

Integrating Key Economic Drivers

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, 2019 saw the launch of the National Industrial Development and Logistics Programme to integrate four of the Kingdom’s key economic drivers — energy, mining, industry and logistics — and maximise their contribution toward the nation’s growth and economic diversification.

Since its inception, the programme has facilitated over $100 billion in investments to strengthen Saudi industry, establishing the Kingdom as a key player in supply chains and markets, resulting in a 16% year-on-year revenue growth in transport and logistics services.

In October 2022, one of the most important announcements regarding actions occurred 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 aims to attract investment, enhance economic diversification, increase non-oil exports, and grow the Kingdom’s GDP. The Ministry of Transport and Logistics Services is also establishing 59 logistics zones, with 21 operational as of 2022, to further accelerate growth in the logistics sector.

Besides, 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 totalling $7.7 billion. Over 1,500 permits were issued to local and foreign logistics companies in 2022 to bring these new areas to reality.

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Accelerating Economic Diversification

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 maximise 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.

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Benefits for Logistics Companies: Unlocking New Business Opportunities

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 per cent 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, as the Kingdom changes at a never-before-seen rate, value and growth will be open.

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