Saudi Arabia seeks to consolidate its position as a global logistics and transportation center. It aims to become a model for integrated transportation, linking Asia, Europe, and Africa, as well as for improving all transportation services and logistical systems. To achieve these goals, Saudi Crown Prince Prince Mohammed bin Salman, launched a National Transport and Logistics Strategy in 2021.
Bin Salman announced that one of the strategy’s main goals is to increase the sector’s contribution to the national GDP. While the sector’s contribution currently stands at 6 percent, the strategy aims to increase its contribution to 10 percent. Ensuring the growth of the transportation and logistics services sector will strengthen the Saudi economy, increase investments, and support local businesses. Thus, the non-oil revenues generated by this sector will increase annually to reach about 45 billion riyals in 2030.
In addition, the strategy includes multiple major projects that enable the achievement of the country’s economic and social goals. It focuses on the adoption of effective governance models to enhance institutional work in the transportation sector. Moreover, the strategy will change the name of the ministry from the Ministry of Transport to the Ministry of Transport and Logistics Services.
Strategy implementation
The strategy focuses on developing infrastructure, launching multiple logistics platforms, and implementing advanced operating systems. Moreover, it emphasizes the importance of strengthening effective partnerships between the public and the private sector to achieve:
- Strengthening the kingdom’s position as a global logistics center
- Improving the quality of life in Saudi cities
- Balancing the general budget
- Improving the performance of the government apparatus
Saudi will be focusing on the following sectors to ensure the success of its strategy:
Aviation
The strategy is expected to advance the kingdom’s rank to fifth globally in transit air traffic and increase international destinations to more than 250. Part of the goal involves launching a new national carrier. This will enable other sectors such as Hajj, Umrah, and tourism to achieve their respective goals. In addition, the strategy seeks to raise air cargo capabilities by doubling its capacity to over 4.5 million tons.
Maritime shipping
Saudi is also aiming, through the strategy, to reach a shipping capacity of more than 40 million containers annually. This means extensive investments in developing port infrastructure and enhancing its integration with the logistics regions in the Kingdom. Additionally, expanding logistic connectivity to international shipping lines is also a key aspect of the strategy. Moreover, the integration of railway and road networks contributes to improving the efficiency and revenues of transportation system lines.
Railway transportation lines
The strategy aims to create a 5,330 km network that services the transport and freight sector. Among this network is a 450 km route through the Haramain High-Speed Railway that connects Mecca and Medina. This will be the largest high-speed transportation project in the region.
Once completed, this will increase the total length of future railways to 8,080 km. It includes the “Saudi–Egypt Causeway” project with a length exceeding 1,300 km and with a 3 million passenger capacity. This will allow the shipment of more than 50 million tons annually. It seeks to link the kingdom’s ports on the Arabian Gulf coast to the ports on the coast of the Red Sea. The line’s logistic location will create promising opportunities for economic centers, industrial cities, and mining activities. Therefore, it will improve the kingdom’s logistic performance index making it among the top ten countries in the world.
Roads and inland transportation
A vital part of the strategy is focused on enhancing crucial transportation pillars. These include expanding the major highway network which will enhance connectivity in the kingdom. This will also help improve road quality and safety. Other initiatives under way are seeking to reduce the number of accidents to a minimum.
Additionally, the strategy aims to achieve efficient connectivity and develop public transportation services in Saudi cities. Significantly, the strategy has also set in place key objectives related to sustainability, environmental preservation, and reducing fuel consumption by 25 percent. Thus, it provides smart solutions to facilitate the movement of passengers between cities and the transport of goods using the latest technologies applied globally.
Read: Saudi unveils ambitious plan for 60 logistics zones by 2030
Global achievements
In 2023, Saudi Arabia jumped 17 places globally in the logistics index issued by the World Bank.
The kingdom advanced to 38th place in the International Logistics Efficiency Index. That came after great leaps in performance efficiency across a number of sub-indices, most notably the Logistics Efficiency Index, Track and Trace Index, Timing Index, Customs Index, Infrastructure Index, and Sea Freight Index.
Global leadership in container port efficiency
Saudi Arabia’s efforts at developing its transportation and logistics sector have been rewarded with international recognitions. It has achieved global leadership in the Container Ports Efficiency Performance Index issued by the World Bank, where King Abdullah Port came in first place. On the other hand, Jeddah Islamic Port ranked eighth, up from 53rd place. Meanwhile, King Abdulaziz Port in Dammam advanced to 14th place after being in 102nd place. This plays a major role in the competitiveness of Saudi ports.
Maritime connectivity indicators
In addition, the kingdom improved 71.33 points in the Shipping Connectivity Index issued by UNCTAD. This progress was achieved due to the addition of 25 shipping lines and new shipping services in cooperation with major international shipping companies.
Ministry of Transport and Logistics initiatives
In line with this strategy, the Ministry of Transport and Logistics launched multiple initiatives in the logistics sector. This is aimed at raising performance efficiency and re-engineering procedures. It also seeks to apply the best international practices and to enhance the kingdom’s position as a global logistics center.
Logistics area at King Khalid International Airport
Additionally, the Ministry of Transport and Logistics initiatives included the launch of the private and integrated logistics zone at King Khalid International Airport in Riyadh. Apple was the first international investor to be a part of it. Additionally, 19 logistics zones will launch in multiple regions of the country.
Logistics companies’ licenses
The ministry launched the unified logistics license to develop the work environment and facilitate licensing procedures. This has accelerated business licensing in the logistics sector. For the first time, 1,500 local, regional, and international logistics companies were licensed. The Al-Fasah initiative was also launched within two hours in cooperation with relevant government agencies.
This methodology involved developing the logistics services industry, enhancing the export strategy, and expanding investment opportunities.
The ministry prioritized offering partnerships with the private sector. Thus, the logistics sector is one of the main pillars supporting economic diversification and development in the kingdom.
With all these. the ministry is eyeing to raise the kingdom’s ranking among the top 10 countries in the Logistics Performance Index by 2030.
Read: GCC road safety strategies could drive $250 bn economic growth
Logistics centers
The general plan for logistics centers is part of the National Strategy for Transport and Logistics.
It aims to develop mechanisms for linking trade networks locally, regionally, and internationally and support global supply chains. Its main focus is to benefit from the kingdom’s geographical location that links the 3 continents (Asia, Africa, and Europe). Furthermore, it aims to increase the export efficiency of local industries’ products and e-commerce support. It facilitates the connection between logistics centers and distribution centers within the Kingdom. Additionally, it facilitates the issuance of licenses to practice logistical activity which was granted to about 1,500 local, regional, and international companies.
The plan is set on an area of around 100 million square meters and includes 59 logistics centers, including:
- 12 logistics centers in the Riyadh region
- 12 logistics centers in the Makkah Al-Mukarramah region
- 17 logistics centers in the eastern region
- 18 logistics centers in the rest of the regions
21 logistics centers are currently in operation, while other logistics centers are scheduled for completion by 2030.
Reforms in the transportation and logistics sector
In this context, Saleh Al-Jasser, Saudi Minister of Transport and Logistics, had previously announced that “the general plan for logistics centers supports economic growth and contributes to achieving sustainable development.”
He pointed out that the sector has witnessed extensive structural and operational reforms since the launch of the National Strategy for Transport and Logistics Services in 2021. Al-Jasser pointed to major developments witnessed by the Kingdom in this sector, which included:
- Launching the modern general policy for the postal sector
- Inauguration of the integrated logistics zone in Riyadh
- Announcement of Apple as its first international investor
- Launching 19 logistics zones
- Signing agreements with international companies to launch their logistics zones in the Kingdom’s ports
- Launching 20 new shipping lines during the first half of 2023 to connect the Kingdom’s ports with the world
- Launching the export service from Dry port in Riyadh via railways for the first time
Logistics zone in Dammam worth $267 million
Finally, the General Ports Authority “Mawani” and the Saudi Global Ports Company “SGP” signed a contract to establish an integrated logistics zone in King Abdulaziz Port in Dammam. This investment from the private sector is worth around $267 million and is set in an area exceeding 1 million m².
In this context, Omar Hariri, Chairman of the General Ports Authority, confirmed that the new logistics zone will contribute to increasing the number of logistics zones in the ports. The number of zones now is 12 regions and logistics centers. This contributes to raising the kingdom’s ranking in the Logistics Services Performance Index from 38th place to 10th place globally.
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