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Last Sunday, Saudi Crown Prince Mohammed bin Salman launched a master plan to develop logistics centres in the kingdom. According to the Saudi Press Agency (SPA), the project aims to develop the infrastructure of the country’s logistics sector, diversify the local economy and advance it as a global logistics hub.
Concretely, the plan calls for the development of 59 logistics centres covering a total area of 100 million square metres. These centres will cover various regions and will be distributed as follows: 12 in Riyadh and Mecca, 17 in the Eastern region and 18 in other parts of the kingdom.
Under the new strategy, the logistics centres will facilitate faster export of Saudi products and enhance e-commerce by ensuring fast and efficient connections between logistics and distribution centres nationwide.
The plan will also improve product traceability and facilitate the process of obtaining logistics activity licences, notably with the introduction of a “unified logistics licence”. The Supply Chain Quarterly news agency points out that, to date, the Saudi authorities have granted a total of 1,500 licences to local, regional and international logistics companies such as Swiss forwarder Kuehne+Nagel in 2021.
Through this new strategy, Saudi Arabia is seeking to turn the kingdom into a truly global logistics hub. This initiative is an integral part of strengthening its international trade relations, particularly with Asia, Europe and Africa, by taking advantage of its strategic geographical position between these three continents.
The logistics sector, a major driver of Saudi economic growth
According to the business magazine Forbes Middle East, the logistics sector is the major driver of economic growth in the Kingdom of Saudi Arabia. Key employer in the country (more than one million), it is expected to contribute 10 % of the country’s gross domestic product by 2030.
This remarkable growth is being driven by a number of factors, including the country’s ambitious plans for economic diversification, the expansion of its e-commerce market and the growth of its manufacturing sector. It also comes against the backdrop of Saudi Arabia’s rise in the World Bank’s Logistics Efficiency Index. In April this year, Riyadh moved up 17 places in the global rankings and is now standing 38th out of 160 countries.
In the same month, the Saudi Ministry of Transport and Logistics called on companies and contractors to launch more initiatives to increase efficiency, reorganise procedures and apply international best practice in this sector. Earlier, the Crown Prince introduced the Global Supply Chain Resilience Initiative in October 2022, to attract local and international investment to the kingdom’s logistics and supply chain sectors.
The main strategic point of this new global logistics hub will be Riyadh’s King Salmane International Airport, where the authorities plan to create a specialised logistics zone. The Kingdom’s ambition is to expand this airport to become the largest in the world. The logistics sector is also seen as a facilitator of foreign investment in Saudi Arabia. For example, the American multinational Apple has been announced as the first international investor in this new specialised logistics zone.
According to a previous press release, the Ministry of Transport and Logistics Services had already presented an ambitious strategy aimed at increasing the size of the Saudi logistics market to $15.3 billion (SAR 57.4 billion) by 2030.
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