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This is how Saudi Arabia is turning logistics into a strategic advantage

The kingdom aims to redefine its economic playbook by making logistics its new frontier

This is how Saudi Arabia is turning logistics into a strategic advantage
[Source photo: Krishna Prasad/Fast Company Middle East]

Saudi Arabia’s focus on tourism has driven a 32% increase in revenue, contributing $118 billion to GDP—a significant step in diversifying the economy. But the kingdom’s ambitions extend further.

The logistics sector, valued at approximately $20.47 billion, is expected to grow substantially, potentially reaching $32.12 billion by 2026. Other estimates project that the market will reach $25.49 billion by 2024 and increase to $35.90 billion by 2030.

Backed by strategic investments and a focus on infrastructure, Saudi Arabia is positioning itself as a major logistics hub.

SAUDI ARABIA’S AMBITION 

Logistics is a cornerstone of Saudi Arabia’s Vision 2030, which aims to diversify the economy and reduce dependency on oil, says Achraf Ellili, CEO of Flow Progressive Logistics. The kingdom’s strategic location, bridging three continents —Asia, Africa, and Europe—positions it as an ideal international hub for transit and re-export.

Ellili says Flow, as part of Alsulaiman Group, is playing a crucial role in delivering end-to-end logistics solutions that enhance supply chain efficiency and position Saudi Arabia as a key node in global trade routes.

Nizar Al Manea, CEO of Four Sides Company, emphasizes that key government initiatives also drive the logistics infrastructure’s expansion and modernization. One of the most prominent is the National Industrial Development and Logistics Program (NIDLP), which integrates reforms in the logistics and road transportation sectors with initiatives aimed at fostering the growth of industrial projects.

Projects under NIDLP include expanding bonded warehouses, introducing ATA Carnet, reforming transportation models, implementing environmental regulations, and developing railways to enable faster, more affordable container movement.

From the development of ports like King Abdullah Port to expanding railway networks and creating new economic cities, these initiatives are laying the groundwork for a logistics ecosystem.

Ellili says, “Over the next few years, these investments will not only enhance the efficiency and capacity of logistics operations but also foster innovation in logistics services.”

Many projects are being undertaken, most prominently concerning private-public partnerships (PPPs). Logistics zones at King Abdulaziz Seaport and Jeddah Islamic Port are among the largest globally. The upcoming King Salman Airport will feature a vast free zone for air cargo, designed to compete on a world stage. A cross-country container railway is also expected to be announced soon. In NEOM, a floating seaport and industrial zone with advanced logistics infrastructure is under development, adds Al Manea.

The Saudi Landbridge Project also aims to connect the east and west coasts with a new railway system, fundamentally changing rail transport in the region, highlights Ali Akram Al-Sayed, Country Manager at EIRD/UPS Saudi Arabia. Logistics zones are also being developed, with 21 already operational and plans for more by 2030, which will reshape the Middle Eastern and global supply chain network. Additionally, NEOM is being constructed as a futuristic city that will include advanced logistics hubs to support regional and international trade.

With the government actively promoting PPPs and opening the sector to foreign investment, opportunities abound. Emerging areas like last-mile delivery, e-commerce logistics, and cold chain solutions show promise, driven by the rapid growth of online retail and the increasing demand for sophisticated supply chain services, says Ellili.

Additionally, the logistics tech sector is ripe for innovation, with private companies positioned to lead advancements in AI-driven supply chain management, blockchain-based tracking systems, and IoT-enabled logistics networks.

MODERNIZATION THROUGH TECHNOLOGY

The embrace of digital transformation within the logistics sector is comprehensive and forward-thinking.

“The kingdom knows that staying competitive globally means embracing advanced technologies to optimize every aspect of the supply chain,” says Elli. AI is being deployed to predict demand, streamline routes, and manage inventories with unmatched precision. Meanwhile, IoT enables real-time tracking of goods, delivering visibility and transparency that were unthinkable just a few years ago.

Blockchain technology is also being explored to ensure the integrity and security of transactions, particularly in complex supply chains. This digital shift is not only boosting efficiency but also building a logistics ecosystem that is resilient, adaptable, and ready for the demands of the digital economy.

The integration of advanced technologies in smart ports and automated warehousing streamlines operations and improves supply chain management, says Al-Sayed. He highlights that the government also supports e-commerce and last-mile delivery by promoting digital platforms to meet consumer demands. Additionally, it aims to invest 2.5% of GDP in research and development by 2040 to drive technological advancements and innovation in logistics.

Speaking about the government’s role, Al Manea points out that Saudi Arabia has been investing heavily in digital transformation across all public sectors for more than 15 years, from civil affairs to healthcare.

These early investments allowed the kingdom to overcome challenges during COVID-19 and build on that foundation. Today, every aspect of logistics is digitized—from customs declarations and tax linkages to import-export operations and transportation trip licenses. The ability to track and trace critical shipments, such as medicine and vaccines, is now a reality across the country. Additionally, all licensed warehousing space in Saudi Arabia is registered and monitored digitally.

Al-Sayed adds that the logistics sector also plays a vital role in Saudi Arabia’s strategic vision for the next decade by focusing on several key areas. First, it aims for economic diversification, reducing the country’s reliance on oil exports and increasing the logistics sector’s contribution to GDP. Second, the sector seeks to establish Saudi Arabia as a leading global logistics hub, enhancing its role in international trade by connecting continents. Lastly, it emphasizes sustainability and innovation by incorporating eco-friendly practices and technological advancements to improve efficiency and competitiveness.

He says, “These initiatives and projects are expected to reshape Saudi Arabia’s logistics landscape significantly, positioning the kingdom as a pivotal player in global trade. To support this vision, we are committed to investing over $100 million in the coming years to expand our infrastructure and domestic presence.”

By building a robust and efficient logistics network, the kingdom is attracting a wide range of industries and supporting key sectors like manufacturing, retail, and technology—crucial for economic diversification.

“The logistics sector itself is becoming a major economic driver, creating jobs, fostering innovation, and fueling growth in related industries,” says Ellili.

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ABOUT THE AUTHOR

Karrishma Modhy is the Managing Editor at Fast Company Middle East. She enjoys all things tech and business and is fascinated with space travel. In her spare time, she's hooked to 90s retro music and enjoys video games. Previously, she was the Managing Editor at Mashable Middle East & India. More

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