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\n\t\t\tPaolo Carlomagno, partner at Arthur D. Little. (Supplied) <\/p>\n
\n\tRIYADH: Saudi Arabia\u2019s logistics sector is emerging as a magnet for global investment, powered by regulatory reforms, incentive schemes, and its alignment with the ambitious Vision 2030 agenda, according to industry experts.<\/p>\n
\n\tAs the Kingdom pushes ahead with economic diversification, strengthening its transport and logistics infrastructure has become a central pillar of the program.\u00a0<\/p>\n
\n\tThe National Logistics Strategy aims to transform Saudi Arabia into a global hub by integrating multiple modes of transport, expanding connectivity, and stimulating economic growth.<\/p>\n
\n\tSpeaking to Arab News, Paolo Carlomagno, partner at Arthur D. Little, said global logistics players now view Saudi Arabia not only as a high-growth market but as a strategic regional hub for multimodal operations \u2014 spanning the Gulf Cooperation Council region, Red Sea basin, and East Africa \u2014 anchored by the Kingdom\u2019s expanding port, airport, and inland logistics network.\u00a0<\/p>\n
\n\t\u201cThe Kingdom has opened its logistics ecosystem through full foreign ownership allowances, streamlined customs procedures, and the development of strategic economic zones such as King Abdullah Economic City \u2014 collectively reducing barriers for international firms seeking to establish or expand their presence,\u201d said Carlomagno.\u00a0<\/p>\n
\n\tHe added: \u201cWith a population of approximately 36 million, Saudi Arabia offers significant domestic demand, which \u2014 combined with rising trade volumes \u2014 is helping transform the Kingdom into a central logistics node for both regional and global flows.\u201d<\/p>\n
\n\tIn January, the Kingdom introduced 15 new incentives under the Authorized Economic Operator program to bolster its export competitiveness. These included streamlined administrative processes, dedicated account managers, and liaison officers to support investors.<\/p>\n
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\n\t\t\tPaolo Carlomagno, partner at Arthur D. Little. (Supplied)
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\n\tCarlomagno said upcoming global events such as Expo 2030 and the 2034 FIFA World Cup would further accelerate the Kingdom\u2019s logistics transformation. Both events are expected to drive infrastructure development, accelerate foreign investment, and unlock new trade corridors, he added.\u00a0<\/p>\n
\n\tAndre Martins, head of transportation, services, and operations for India, Middle East, and Africa at Oliver Wyman, echoed this view. He highlighted Saudi Arabia\u2019s scale, infrastructure investments, and strategic location as key advantages.<\/p>\n
\n\t\u201cSaudi Arabia\u2019s position as the largest country in the Middle East, combined with significant plans to upscale infrastructure and logistics capabilities, creates a strong foundation for becoming a central logistics hub,\u201d he said, adding that the Kingdom is establishing multiple logistics zones while continuing to upgrade ports and increase rail connectivity with potential east-to-west connections under Vision 2030.<\/p>\n
\n\tMartins also pointed to the strong domestic demand, particularly in Riyadh, as a growing force behind the Kingdom\u2019s logistics ambitions.\u00a0<\/p>\n
\n\tGovernment support<\/p>\n
\n\tAccording to a December report by the General Authority for Statistics, the number of logistics facilities in Saudi Arabia has surged 267 percent since 2021. A separate report from Maersk in November projected the Kingdom\u2019s logistics market would hit $38.8 billion by 2026, growing at a compound annual rate of 5.85 percent.<\/p>\n
\n\tCarlomagno pointed to the broader transformation strategy being implemented by the government, particularly the development of logistics zones designed to lower costs, boost connectivity, and drive industrial expansion.<\/p>\n
\n\t\u201cRecent ZATCA regulatory reforms \u2014 notably around less-than-container load handling in seaports \u2014 are increasing operational efficiency and making logistics more accessible for small and medium enterprises,\u201d he said.<\/p>\n
\n\tThe Arthur D. Little partner added: \u201cAdditionally, the rollout of a national logistics platform (Single Window) is streamlining communication between logistics players and government entities, consolidating permits, customs, and approvals into one digital interface.\u201d<\/p>\n
\n\tCarlomagno also emphasized growing transparency, citing publicly available data on land, logistics zones, and shipping routes.<\/p>\n
\n\t\u201cCollectively, these initiatives reflect a coordinated push to make Saudi Arabia a modern, investor-ready logistics ecosystem,\u201d he said.<\/p>\n
\n\tMartins noted the government\u2019s proactive efforts to attract global firms, offering tax breaks, incentive packages, and access to a large captive market.\u00a0<\/p>\n
\n\t\u201cThe Kingdom encourages these international companies by facilitating access to captive demand while providing specific incentive packages and tax advantages to encourage market entry and expansion,\u201d he said.<\/p>\n
\n\tIn December, Saudi Transport and Logistics Minister Saleh Al-Jasser announced plans to increase the number of logistics zones from 22 to 59 by 2030. This includes 18 new zones, backed by investments exceeding SR10 billion ($2.66 billion).<\/p>\n
\n\tUNCTAD\u2019s 2024 report also highlighted Saudi Arabia\u2019s growing global role, noting a 231-point rise in the Liner Shipping Connectivity Index and the addition of 30 new maritime shipping lines.<\/p>\n
\n\tIn August, Saudi Arabia approved an updated investment law to improve transparency and streamline the investor journey. It guarantees fair treatment, protects intellectual property rights, and enables seamless fund transfers.<\/p>\n
\n\tLeveraging geography and megaprojects<\/p>\n
\n\tSaudi Arabia\u2019s geographic location \u2014 at the crossroads of Asia, Africa, and Europe \u2014 positions it advantageously on the global logistics map, but Carlomagno said this natural strength has historically been underutilized.<\/p>\n
\n\t\u201cTargeted infrastructure investments \u2014 such as port automation, integrated rail and road links, and inland logistics zones \u2014 are now enabling the Kingdom to fully harness this potential and position itself as a global logistics hub,\u201d he said.<\/p>\n
\n\tMartins noted that megacity developments are driving up logistics demand, not only during construction but throughout their operational lifespans.<\/p>\n
\n\t\u201cThe construction and deployment periods require significant flows of goods and materials, while operational cities with resident populations create ongoing logistics needs. With expected continued population growth, demand for logistics services will only increase,\u201d he said.<\/p>\n
\n\tCarlomagno pointed to NEOM\u2019s Oxagon as a prime example of logistics integration, describing it as \u201cbeing developed as a next-generation logistics hub.\u201d<\/p>\n
\n\tHe added that it will blend automated ports, AI-driven supply chains, and advanced manufacturing in a single maritime-logistics ecosystem.<\/p>\n
\n\t\u201cSupporting this is the new NEOM International Airport, which is strategically planned to handle both cargo and passenger volumes at scale, and NEOM Airlines, a new carrier designed to integrate seamlessly with smart logistics and cargo distribution infrastructure,\u201d said Carlomagno.<\/p>\n
\n\tWith e-commerce surging, the Arthur D. Little partner said demand is also rising for fast, tech-enabled logistics services \u2014 especially in last-mile delivery, smart warehousing, and fulfillment operations.<\/p>\n
\n\tA report from Research and Markets in April projected the Kingdom\u2019s e-commerce market, valued at $24.67 billion in 2024, will grow to $68.94 billion by 2033 at an annual rate of 12.10 percent.\u00a0<\/p>\n
\n\tAddressing the challenges<\/p>\n
\n\tDespite the momentum, experts warned of challenges that need to be addressed to sustain Saudi Arabia\u2019s rise.\u00a0<\/p>\n
\n\t\u201cWhile Saudi Arabia is moving in the right direction at a good pace, other countries are simultaneously investing in their logistics infrastructure, airports, ports, and platforms. The key challenge is ensuring that market demand, supply, and economics remain commercially viable for all players,\u201d Martins said.<\/p>\n
\n\tHe added: \u201cAdditionally, geopolitical uncertainty presents potential risks to plans, and so many players are deploying a certain level of modularity to mitigate geopolitical risks while maintaining competitive positioning.\u201d<\/p>\n
\n\tCarlomagno pointed out that a shortage of specialized talent \u2014 particularly in digital logistics \u2014 could pose a hurdle, calling for more training and localization.<\/p>\n
\n\tHe also stressed the importance of sustainable logistics practices to align with global environmental, social and governance standards.<\/p>\n
\n\t\u201cAddressing these challenges demands a systemic approach that aligns infrastructure, policy, and human capabilities,\u201d he concluded.
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