Saudi Arabia’s modern infrastructure and favorable business environment are drawing global logistics giants as the country’s logistics industry experiences unprecedented growth. Industry insiders and recent market research highlight the influx of international and regional players into the Saudi logistics market, spurred by significant infrastructure investments and a booming e-commerce sector.
The Saudi logistics market is projected to reach an impressive $36 billion (SAR 135 billion) by 2028, driven by the integration of advanced technologies like AI and IoT. This growth is further accelerated by upcoming mega-events such as Expo 2030 and the 2034 FIFA World Cup, which are expected to boost the sector’s value to over $41 billion by 2032, showcasing Saudi Arabia’s logistical capabilities on the global stage.
Industry experts note the strategic allure of Saudi Arabia’s logistics market, emphasizing the country’s untapped potential, strategic opportunities, and supportive government policies. Mohammed Balsharaf, Founder and CEO of Nawel Company, a leading local player, stated, “The strategic location of the country – an effective touchpoint for three continents – is attracting global interest, particularly for the booming e-commerce sector.”
Balsharaf highlighted the significant investments by the Saudi government in ports, airports, and road networks, enhancing connectivity and efficiency, thus attracting international players. He emphasized that Saudi Arabia’s modern infrastructure and business-friendly environment make it an attractive destination for global logistics giants. Balsharaf also envisions future investments focusing on Public-Private Partnerships to further enhance infrastructure and operational efficiency.
Surge in Demand for Retail Logistics
Recent market research by global consultancy RedSeer indicates a critical demand for retail logistics as Saudi Arabia’s online retail market is expected to grow at a rate three times that of offline retail. The report attributes the unprecedented growth in the logistics sector primarily to the booming retail market, projected to reach $176 billion (SAR 661 billion) by 2028, up from an expected $137.30 billion (SAR 515 billion) this year.
RedSeer’s report states, “Saudi Arabia’s logistics industry is expected to grow at 7 percent driven by improvements in logistics infrastructure and robust growth in demand.” The country’s retail logistics market is poised for significant growth, with retail logistics estimated to contribute 34 percent to the total demand. The online logistics market, in particular, is expected to double compared to the offline market, driven by the “last mile” logistics needs unique to online retail.
Sandeep Ganediwala, Partner at RedSeer Strategy Consultants, noted, “We are already seeing startups catering to these diverse needs. Salasa, Sirdab, Nawel, and RedBox are examples of innovations in the online logistics segment.”
Rising Efficiencies Elevate Saudi Arabia’s Global Standing
Massive investments in infrastructure such as ports, airports, and road networks, coupled with the booming retail sector, have significantly improved Saudi Arabia’s position in the global logistics performance index. The country has risen from 55th in 2018 to 34th in 2022.
Key drivers of this growth include national initiatives like ‘Vision 2030’ and the ‘National Industry Strategy,’ which focus on economic diversification and modernizing logistics capabilities. Technological advancements, including the integration of AI, IoT, and automation, are also streamlining logistics operations, enhancing efficiency and competitiveness.
Balsharaf praised the contributions of domestic logistics companies like Nawel to the sector’s growth, stating, “By focusing on continued investment and expansion, Nawel will play a crucial role in shaping the future of retail logistics in Saudi Arabia, significantly contributing to the nation’s economic diversification and growth.”