Logistics

Saudi Arabia to build 59 logistics centres by 2030

By Pramod Kumar, Gavin Gibbon

August 28, 2023, 7:26 AM

Saudi Crown Prince Mohammed bin Salman said the new logistics plan will boost partnerships with the private sector. 21 logistics centres are already under construction

Boost to kingdom’s e-commerce
Total area of 100m sq m
Aim for sector to contribute 10% of GDP

Saudi Arabia will have 59 logistics centres by 2030, as the kingdom aims to transform itself into a global logistics hub.

Crown Prince Mohammed bin Salman unveiled the masterplan for the centres as part of ongoing initiatives under the national transport and logistics strategy.

The 59 centres will have a total area of more than 100 million square metres, including 12 centres each in the Riyadh and Makkah regions, 17 in the Eastern region and 18 across the rest of the kingdom.

Some 21 centres are already under construction, state-run SPA news agency reported.

The crown prince said the new plan will increase local, regional and international connections with global supply chain centres and boost partnerships with the private sector.

The centres will also enable local industries to export Saudi products and support e-commerce.

Saudi e-commerce revenue rose 12 percent to $10.70 billion in 2022, according to Statista. The sector is forecast to expand by a compound annual growth rate of 16.2 percent from 2022 to 2027 when annual revenues will hit $22.68 billion.

In October 2022 the crown prince launched the global supply chain resilience initiative to attract local and international investments in the supply chain sector.

The initiative aims to raise SAR40 billion ($10.64 billion) in its first two years.

One of the aims of Saudi Arabia’s Vision 2030 is to transform the kingdom’s aviation and logistics sector, increasing annual cargo capacity from around 1 million tonnes to 4.5 million tonnes by the end of this decade.

Riyadh has also set itself a target of boosting the transport and logistics sector’s contribution to national GDP from the current 6 percent to 10 percent, helping to boost the sector’s non-oil revenues to about SAR45 billion ($12 billion) a year by 2030.

Saudi Arabia launched four new special economic zones in April to strengthen its position as a global investment destination.

The new zones will be in Riyadh, Jazan, Ras Al Khair and King Abdullah Economic City.

The plans come despite a recent slowdown in new orders and non-oil business activity. The seasonally adjusted Riyad Bank Saudi Arabia Purchasing Managers’ Index fell to 57.7 in July, its lowest level since December, down from 59.6 in June. Any score over 50 indicates economic growth.

While overall output remained on a par with June, as companies caught up on unfinished work, new order growth was the slowest for seven months.

“Rising cost of capital and intense competitive pressures are among the factors holding back new business expansion,” Naif Al-Ghaith, chief economist at Riyad Bank, said.

Manufacturing activity increased by 10.1 percent in June compared to the same period a year ago, according to the kingdom’s Industrial Production Index.