As Saudi Arabia progresses towards the ambitious goals outlined in Vision 2030, its logistics sector will play a pivotal role in diversifying its economy
By Sue Donoghue, Country Manager of DHL Global Forwarding – Saudi Arabia
In the dynamic global logistics landscape, seamless integration of transportation and distribution networks is pivotal for powering economic growth across various sectors. By ensuring efficient and effective movement of goods, services, and people, logistics is fundamental to economic diversification and reducing reliance on traditional revenue streams.
Saudi Arabia’s booming logistics sector is not only enhancing connectivity and infrastructure but is also stimulating growth in the hospitality, retail, and real estate industries. With the explicit aim of reducing its dependence on oil and further strengthening public service sectors such as health, education, infrastructure, recreation, and tourism, the Kingdom is leveraging its strategic geographical position at the crossroads of important international trade routes that link Asia, Europe, and Africa.
Increased investments
Saudi Arabia‘s strategic geographical location is a crucial advantage in the Middle East logistics market, which is expected to approach US$ 97.1 billion by 2030, with an annual growth rate of more than 5.7%. The Kingdom has significantly improved its logistics infrastructure such as Saudi Arabia Railways (SAR) recent plans to expand the kingdom’s 4,500 rail network to 8,000 kilometers over the next five to seven years.
The Saudi government has invested billions of dollars in developing ports and airports, significantly enhancing the country’s infrastructure. For example, the expansion of the King Abdulaziz Port in Dammam has enabled it to account for more than a quarter of the country’s imports in the first quarter of 2024. The development of the Jeddah Islamic Port demonstrates the country’s efforts to improve its shipping capabilities, create 400 job opportunities, both directly and indirectly, and provide training for national staff in the logistics services sector.
These investments play a crucial role in the regional supply chain, enhancing the Kingdom’s export potential and facilitating easier access to international markets for emerging sectors.
Technological shift
Technological advancements such as artificial intelligence (AI), blockchain, and the Internet of Things (IoT) are being increasingly embraced within Saudi logistics. These innovations are set to transform the industry by boosting supply chain efficiency and transparency, reducing costs, and improving service quality. This technological shift aligns with Saudi Arabia’s overarching strategy to increase targeted investments in the AI sector to SAR 80 billion by 2030.
The logistics industry is rapidly evolving under the dual influences of digitalization and sustainability. AI, in particular, is being aggressively adopted in Saudi Arabia, with plans to deploy self-driving vehicles and aim for 15% of its public vehicles to be autonomous by 2030. Additionally, several mega projects are in progress to develop and implement autonomous transportation systems, showcasing the kingdom’s commitment to cutting-edge technology and efficiency.
This strategic application of logistics fosters a vibrant environment for both new investments and the expansion of established industries, demonstrating how central logistics is to achieving broad economic objectives and building resilient economic frameworks.
The logistics sector is a cornerstone of Saudi Arabia’s transformative strategy under Vision 2030. By capitalizing on its geographical location, investing in infrastructure, adopting new technologies, and focusing on sustainability, the Kingdom is setting a foundation for robust economic growth that extends far beyond its traditional oil-based economy. This holistic approach will not only strengthen the Kingdom’s position in global trade but also support its transition to a dynamic, diversified economy and a global powerhouse.