Saudi Arabia’s logistics sector pioneering pathways for global connectivity

Saudi Arabia’s logistics sector pioneering pathways for global connectivity
Significant infrastructure upgrades and favorable regulations are driving a transition towards a more integrated, efficient, and sustainable logistics sector. (SPA)
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Updated 01 October 2024
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Saudi Arabia’s logistics sector pioneering pathways for global connectivity

Saudi Arabia’s logistics sector pioneering pathways for global connectivity
  • Industry analysts are confident that the Kingdom is going to attract more global players into the sector

RIYADH: Saudi Arabia’s logistics sector has undergone a remarkable transformation in recent years, fueled by visionary initiatives like Vision 2030 and the National Industrial Strategy. As the sector continues to evolve, what groundbreaking strategies will drive it forward?

The Kingdom presents substantial opportunities for global logistics players. With a population of approximately 36 million and a gross domestic product of $1.81 trillion in purchasing power parity as of the end of 2023, Saudi Arabia is a central hub for expansive trade routes supported by world-class infrastructure.

Another major catalyst for growth is Saudi Arabia securing the bids for Expo 2030 and the 2034 FIFA World Cup — both of which will attract substantial global business opportunities, opening new channels for trade and commerce.

Industry analysts are confident that the Kingdom is only going to attract more global players into the sector, with Hakan Lanfredi, member of the executive board at Dussmann Group telling Arab News: “For international logistics firms, these developments present lucrative opportunities to establish or expand operations, leveraging major global events and the rising need for advanced supply chain solutions.”

Dominik Baumeister, PwC Middle East head and global partner of transport and logistics echoed that sentiment, and told Arab News the existence of untapped opportunities within Saudi Arabia’s logistics industry that could be attractive to global companies.

“There are several whitespaces in Saudi Arabia’s logistics landscape that offer interesting opportunities for global players. In particular, the logistics services space is still in its early stages of development, and more specifically in Freight Forwarding, 3PL, and warehousing,” Baumeister said.

He added: “Airport and port privatization is an ongoing effort, and roads, while perhaps on the periphery of logistics, are opening up as a public private partnership environment.”

Lanfredi also flagged the surge in e-commerce and last-mile delivery services, fueled by increasing digital consumer engagement. 

“This shift necessitates robust, agile logistics solutions to meet growing consumer expectations and delivery efficiencies,” he said.

Emerging logistics hotspots

Saudi Arabia is swiftly creating several hubs for logistics, assisted by important government programs and an advantageous business environment.

“Besides NEOM and the Riyadh Logistics Park, the Eastern Province has emerged as a key logistics hub due to its proximity to major oil operations and the King Abdulaziz Port,” Saud Al-Sulaiman, CEO of Saudi investment firm Alsulaiman Group, told Arab News.

He added: “These hotspots are attractive due to their advanced logistical infrastructures and strategic positions that facilitate both regional and international trade.”

Dussmann Group’s Lanfredi also noted a prime example of a logistic hotspot is the creation of the Integrated Logistics Bonded Zone in Riyadh, as it offers several attractive incentives to investors and businesses.

“It offers direct access to a vast market of 5 billion people across Europe, Asia, and Africa within an eight-hour flight range,” he said. 

There are several whitespaces in Saudi Arabia’s logistics landscape that offer interesting opportunities for global players.

Dominik Baumeister, PwC Middle East Head and Global Partner of Transport and Logistics

Lanfredi added: “The ILBZ is designed to establish the Kingdom as the region’s premier logistics hub, providing significant incentives like a 50-year tax holiday, 100 percent foreign ownership, and efficient goods processing where items can be market-ready within just four hours of arrival.”

He also noted additional notable hotspots include the Dammam Free Zone and various free zones along the strategic Red Sea corridor.

“Jizan is emerging as a key node on the Silk Road, highlighting its growing importance in global trade routes. These zones benefit from advanced infrastructure and strategic positioning, which are bolstered by governmental support and regulatory enhancements,” he continued.

Technological innovation

According to PwC, the Kingdom is seeing a focus on improving efficiency and competitiveness through technological innovation.

“In Saudi Arabia’s logistics sector, significant strides are being made in technological innovation to boost efficiency and competitiveness,” Baumeister said.

He added: “Saudi customs is enhancing its capabilities through single window initiatives and integration into various data flows, with support from port operators, shipping lines, and airlines.”

He also noted that PwC is witnessing the emergence of innovative technologies, some homegrown, particularly in the e-commerce and parcel space.

Baumeister referred to examples of this including geospatial solutions coupled with AI, and new ways of collecting and analyzing multiple data sources

“These technological advances will support the Kingdom’s Vision 2030 journey, provide more optimized operations, and predictive analytics for future projects,” he said.

Navigating uncertainties

There are challenges facing the logistics sector in Saudi Arabia, and stakeholders are actively addressing them to facilitate growth and ensure operational efficiency.

According to Dussmann Group’s Lanfredi, the challenges are threefold, with the first being the complex navigation of customs and regulatory framework, specifically for new entrants and international companies.

“The need for compliance across various levels — local, regional, and international — adds layers of complexity to logistics operations,” he said, adding that this can be addressed by providing “streamlined customs clearance services” through gateways for sea, air, and ground transport.

Managing extreme temperatures in the Middle East is the second area that needs consideration, as this can complicate the storage and transportation of goods that are sensitive to fluctuations in climate. 

This shift necessitates robust, agile logistics solutions to meet growing consumer expectations and delivery efficiencies.

Hakan Lanfredi, executive board member at Dussmann Group

“Specialized capabilities in cold-chain logistics, utilizing advanced technology for live temperature control and monitoring at each step of the supply chain are necessary requirements for professional service providers,” he explained.

The third challenge is a shortage of skilled labor in the logistics sector, particularly in emerging fields such as automation and robotics.

This can result in operational inefficiencies and increased costs for companies. To address this issue, initiatives supporting workforce development, such as partnerships with institutions like the Saudi Logistics Academy, are essential.

By investing in training and education, logistics providers not only improve their operational capabilities but also contribute to preparing a new generation of skilled professionals specifically tailored for the logistics industry in Saudi Arabia.

PwC highlighted the potential for Saudi Arabia to become a leading player in the global logistics industry through strategic collaboration between the public and private sectors.

“Saudi Arabia’s megaprojects and mega events will create additional logistics capability and capacity that can provide significant competitive advantages for the country,” Baumeister said.

He continued: “As competition increases across the region, Saudi Arabia sets itself apart with its significant import activity and a robust diversification agenda.”

With critical ports in strategic locations, competitive advantages in aviation, and opportunities for land transport connectivity, Saudi Arabia is positioned to play a pivotal role in linking freight corridors from India to Europe.

Additionally, over the next five to 10 years, Lanfredi is anticipating that Saudi Arabia is poised for a transformative shift and growth, in line with the nation’s strategic commitment to sustainability as outlined in the Saudi Green Initiative and Vision 2030. 

FASTFACT

By investing in training and education, logistics providers not only improve their operational capabilities but also contribute to preparing a new generation of skilled professionals specifically tailored for the logistics industry in Saudi Arabia.

“These policies are steering the sector towards green logistics through the electrification of transportation fleets, the integration of renewable energy sources into logistics operations, and the adoption of sustainable supply chain practices,” he said.

He also underlined the shift towards sustainable practices in the transportation and logistics industry.

Furthermore, the use of solar energy in warehouses is highlighted as another example of this sustainability shift.

“Additionally, the rapid digital transformation, especially in payment systems, is reshaping the logistics landscape,” Lanfredi said.

He added: “An increase in digital payments in Saudi Arabia is transforming consumer behaviors and e-commerce logistics, simplifying last-mile delivery processes, and enhancing operational efficiencies.”

Lanfredi highlighted that significant infrastructure upgrades and favorable regulations are driving a transition towards a more integrated, efficient, and sustainable logistics sector.

This shift aligns with Saudi Arabia’s Vision 2030 goals for economic diversification and digital transformation.

 Looking ahead, Al-Sulaiman also envisions transformative growth for Saudi Arabia’s logistics sector with an anticipated annual growth rate exceeding 10 percent.

“This growth will be propelled by continued technological advancements, including artificial intelligence, internet of things, and blockchain integration, enhancing operational efficiency,” Al-Sulaiman said.

He added: “Moreover, sustainability will be a key focus, with initiatives such as adopting electric vehicles and energy-efficient warehouses to align with global trends and attract international partners.”

They further explained that Saudi Arabia’s logistics sector plans to strengthen its connections with global supply chains.

“Expansion of port capacities, enhancement of multimodal transport links, and simplification of customs processes will facilitate smoother international trade, solidifying Saudi Arabia’s role as a critical hub in global commerce,” Alsulaiman continued.

These developments align with Vision 2030 objectives and global environmental, social, and governance trends, positioning the Kingdom as a leader in sustainable and innovative logistics solutions.


Saudi Arabia leads MENA startup funding in April with $158.5m  

Saudi Arabia leads MENA startup funding in April with $158.5m  
Updated 05 May 2025
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Saudi Arabia leads MENA startup funding in April with $158.5m  

Saudi Arabia leads MENA startup funding in April with $158.5m  

RIYADH: Saudi Arabia led startup funding across the Middle East and North Africa in April 2025, attracting $158.5 million across eight deals — accounting for more than two-thirds of the region’s total investment for the month. 

The Kingdom’s dominant performance was largely driven by iMENA Group’s $135 million pre-initial public offering round, placing it ahead of the UAE, which followed with $62 million raised across nine startups. 

In total, MENA startups secured $228.4 million in April through 26 deals, marking a 105 percent increase from March and nearly triple the amount raised in April 2024, according to Wamda’s monthly report.  

Notably, the month’s funding activity featured no debt financing.

“Interestingly, the absence of debt-financed deals in April highlights growing investor confidence in equity-based funding — a trend reflecting a healthier capital environment,” the report stated.  

Morocco ranked third regionally, raising $4 million across two startups, while Egypt lagged behind with just $1.5 million secured by four companies. 

Early-stage ventures led in deal volume, bringing in $49 million through 20 transactions. Late-stage activity was concentrated entirely in iMENA’s pre-IPO round. 

By sector, fintech remained the top draw for investors, attracting $44 million across seven transactions. Traveltech also gained momentum, driven by HRA Experience’s deal, while e-commerce startups raised $2.5 million across three deals. 

Software-as-a-service ventures made a comeback after a quiet first quarter, securing $1.8 million from three transactions.  

In terms of business models, business-to-business startups dominated, raising $180 million across 12 deals.  

Business-to-consumer ventures followed with $43 million from seven transactions, while six companies operating both B2B and B2C models accounted for the rest of the disclosed funding. 

Gender disparities in startup funding persisted in April. Female-led startups secured less than $500,000 in total, while male-founded ventures captured 97 percent of all disclosed capital. Startups co-founded by men and women raised an additional $6.5 million. 


Closing Bell: Saudi main index closes in green at 11,422 

Closing Bell: Saudi main index closes in green at 11,422 
Updated 05 May 2025
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Closing Bell: Saudi main index closes in green at 11,422 

Closing Bell: Saudi main index closes in green at 11,422 

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Monday, gaining 11.45 points, or 0.10 percent, to close at 11,422.95. 

The total trading turnover of the benchmark index was SR5.21 billion ($1.39 billion), as 153 stocks advanced, while 84 retreated. 

The Kingdom’s parallel market, Nomu, also rose, gaining 129.67 points, or 0.46 percent, to close at 28,142.99. This comes as 41 of the listed stocks advanced, while 33 retreated. 

The MSCI Tadawul Index increased by 4.27 points, or 0.29 percent, to close at 1,455.44. 

The best-performing stock was Mouwasat Medical Services Co., with its share price surging 9.97 percent to SR78.30. 

Other top performers included Fawaz Abdulaziz Alhokair Co., which saw its share price rise 9.92 percent to SR14.18, and Saudi Reinsurance Co., which posted a 9.71 percent gain to reach SR53.10. 

Umm Al Qura for Development and Construction Co. recorded the day’s steepest decline, with its share price slipping 3.47 percent to SR25.05.   

Sahara International Petrochemical Co. and Saudi Steel Pipe Co. also saw declines, with their shares dropping by 2.82 percent and 2.58 percent to SR17.90 and SR52.90, respectively.   

On the announcements front, Ades Holding Co. reported interim financial results for the first three months of the year, posting a net profit of SR196.6 million — a 6.3 percent decline compared to the previous quarter. It said that the drop in net profit reflects an increased ratio of depreciation and tax costs to revenue in this period.   

The company’s total comprehensive income saw a 45.7 percent quarter-on-quarter decrease in the first quarter of 2025 to reach SR170.8 million.  

Ades Holding Co.’s share price traded 0.94 percent lower on the main market during today’s session to reach SR14.78.   

In another announcement, Makkah Construction and Development Co. reported a 32.7 percent year-on-year increase in net profit for the same period, reaching SR150 million.   

The company credited the growth to higher revenues from the hotel and towers this quarter, driven by the inclusion of the last nine days of Ramadan, increased mall revenues, and gains from financial assets classified at fair value through profit or loss.   

Similarly, the company’s total comprehensive income rose to SR758 during the quarter, up from SR576 last year.   

The MCDC’s share price traded 1.5 percent higher to reach SR108.20. 


Saudi Arabia posts $15.6bn budget deficit in Q1 with resilient non-oil growth

Saudi Arabia posts $15.6bn budget deficit in Q1 with resilient non-oil growth
Updated 05 May 2025
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Saudi Arabia posts $15.6bn budget deficit in Q1 with resilient non-oil growth

Saudi Arabia posts $15.6bn budget deficit in Q1 with resilient non-oil growth

RIYADH: Saudi Arabia recorded a deficit of SR58.7 billion ($15.65 billion) in the first quarter of 2025, driven by declining oil revenues and increased spending to support Vision 2030 development initiatives, according to the Finance Ministry.

According to the quarterly budget performance report, total revenues reached SR263.61 billion, marking a 10.16 percent decline compared to the same period last year.

The drop is primarily attributed to reduced oil revenues, which fell 17.65 percent year on year to SR149.81 billion, driven by ongoing OPEC+ production cuts that curbed export volumes despite relatively steady global oil prices.

Oil income accounted for 56 percent of total government revenues, down from 62 percent in Q1 2024.

In contrast, non-oil revenues continued to grow modestly, rising 2.06 percent to SR113.81 billion, underpinned by structural economic reforms and the Kingdom’s diversification agenda under Vision 2030.

Taxation on goods and services remained the largest contributor to non-oil income, generating SR71.56 billion—up 2.37 percent year on year. Other non-oil revenue sources, including fees and investment returns, added SR25.41 billion, making up 22.3 percent of the non-oil total.

Total government expenditures in the quarter rose 5.39 percent year on year to SR322.32 billion. The increase reflects Saudi Arabia’s continued investment in strategic initiatives and priority development projects aligned with Vision 2030 goals.

Compensation for government employees remained the largest expenditure category, totaling SR146.09 billion—an annual increase of 6.24 percent—and accounting for 45.3 percent of total spending.

Expenditures on goods and services amounted to SR64.63 billion, or 20 percent of the quarterly total, while capital spending represented 8.6 percent. Other operational costs comprised 10.6 percent.

The first quarter deficit was entirely financed through debt instruments, pushing Saudi Arabia’s total public debt to SR1.33 trillion—up 19.08 percent from a year earlier.

Of this, 60 percent was sourced domestically, with the remainder attributed to external borrowing, in line with the Kingdom’s debt diversification strategy.

Despite the fiscal shortfall, the ministry noted that the quarterly figures remain consistent with the government’s 2025 budget plan. Revenues in the first quarter represent 22.3 percent of the full-year target, while expenditures account for 25 percent of the planned annual spend.

Looking ahead, Saudi Arabia’s fiscal outlook may receive a boost from higher oil output. OPEC+ recently announced plans to accelerate the unwinding of prior production cuts, including a June increase of 411,000 barrels per day. Combined with earlier boosts in April and May, the group plans to restore a total of 960,000 barrels per day—reversing 44 percent of the 2.2 million bpd reduction agreed upon in December 2024.


Saudi Aramco raises June oil prices for Asian markets

Saudi Aramco raises June oil prices for Asian markets
Updated 05 May 2025
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Saudi Aramco raises June oil prices for Asian markets

Saudi Aramco raises June oil prices for Asian markets

RIYADH: Saudi Aramco has increased its official selling price for crude oil destined for Asia in June, ending a two-month streak of price cuts, the company confirmed in an official statement on Sunday.

The state-owned oil giant raised the price of its benchmark Arab Light crude by $0.20, setting it at $1.40 per barrel above the average of Oman and Dubai crude prices.

The adjustment comes despite persistent downward pressure on global oil markets due to concerns over rising supply and a fragile demand outlook.

The move follows Saturday’s announcement from the OPEC+ alliance, which agreed to boost oil production for a second consecutive month. The group, which includes both OPEC members and key allies like Russia, plans to increase output by 411,000 barrels per day in June.

Market observers are now closely watching the outcome of the next OPEC+ meeting, scheduled for May 5, which will further clarify the group’s production strategy heading into summer.

Saudi Aramco prices its crude oil across five density-based grades: Super Light (greater than 40), Arab Extra Light (36-40), Arab Light (32-36), Arab Medium (29-32), and Arab Heavy (below 29).

The company’s monthly pricing decisions impact the cost of around 9 million barrels per day of crude exported to Asia and serve as a pricing benchmark for other major regional producers, including Iran, Kuwait, and Iraq.

In the North American market, Aramco set the May OSP for Arab Light at $3.40 per barrel above the Argus Sour Crude Index.

Aramco determines its OSPs based on market feedback from refiners and an evaluation of crude oil value changes over the past month, taking into account yields and product prices.


UAE, Kuwait, and Qatar sustain non-oil growth in April: S&P Global

UAE, Kuwait, and Qatar sustain non-oil growth in April: S&P Global
Updated 05 May 2025
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UAE, Kuwait, and Qatar sustain non-oil growth in April: S&P Global

UAE, Kuwait, and Qatar sustain non-oil growth in April: S&P Global

RIYADH: The non-oil private sectors of the UAE, Kuwait, and Qatar continued their expansion in April, supported by strong demand, improving output, and stable employment conditions, according to the latest Purchasing Managers’ Index surveys released by S&P Global.

In the UAE, the headline PMI held steady at 54 for a second consecutive month, reflecting continued momentum in the country’s non-oil economy. While output growth eased to a seven-month low, firms ramped up hiring at the fastest rate in nearly a year to manage capacity pressures. New orders surged, underpinned by the strongest international demand in five months.

This robust performance aligns with a wider regional trend of economic diversification, as Gulf nations—including Saudi Arabia—work to reduce their long-standing reliance on oil revenues.

“The April PMI results signaled a notable uptick in hiring activity across the non-oil private sector,” said David Owen, senior economist at S&P Global Market Intelligence.

“After several months of mild increases in payroll numbers, despite robust sales growth, job creation rose to its highest level in 11 months.”

Owen noted that the hiring push was largely aimed at easing backlogs, which, while still rising, did so at the slowest pace in six months. “That said, employment growth was still modest overall, adding to suggestions that some firms may be struggling to recruit,” he added.

Any PMI reading above 50 indicates expansion in the non-oil private sector, while a figure below 50 denotes contraction.

Business confidence in the UAE climbed to its highest level so far in 2025, as firms cited strong demand pipelines and positive expectations. Input purchases rose again in April, though at a slower pace than March, which had marked a 68-month high.

“Firms are hopeful that elevated demand levels and strong pipelines, as characterized by steeply rising backlogs, should propel activity higher in the coming months,” Owen said.

Despite increased purchasing and faster supplier delivery times, stock levels remained largely unchanged for the second consecutive month. Business optimism also rose for the third straight month in April.

In Dubai, operating conditions in the non-oil private sector improved at a slower pace due to weaker growth in new business inflows. Nonetheless, order books continued to expand sharply, driving strong overall business activity. Employment rebounded in April after a brief dip in March, as companies aimed to boost capacity. However, firms in Dubai expressed subdued confidence about future activity, with sentiment among the lowest on record.

Kuwait sees strongest output

Kuwait's non-oil private sector saw significant gains in April, with the country’s PMI rising to 54.2 from 52.3 in March—marking one of the sharpest expansions on record since the survey began in 2018.

“It was a bumper start to the second quarter of 2025 for non-oil companies in Kuwait, with a further influx of new orders leading companies to expand output at one of the sharpest rates since the survey began,” said Andrew Harker, economics director at S&P Global Market Intelligence.

The expansion was driven by robust new order growth, supported by competitive pricing and strategic marketing efforts. However, firms faced rising input costs that made it harder to maintain price stability.

While employment rose only marginally, the minimal hiring contributed to a further buildup in outstanding work.

“It remains to be seen, however, whether firms will be able to keep restricting selling prices in a scenario where input costs are rising sharply,” Harker noted. “The coming months will illustrate the extent to which companies are happy to see margins come under pressure in order to keep orders flowing in.”

Kuwaiti firms also reported a notable increase in export orders. Optimism about future output remained high, supported by competitive strategies, product development, and marketing.

Qatar growth slows slightly

Qatar’s non-oil sector saw a slight dip in overall momentum in April, with its PMI falling to 50.7 from 52 in March. Despite the decline, the index stayed above the neutral 50 mark for the 16th consecutive month, reflecting continued—if slower—growth.

Output among Qatari non-energy firms rose for the first time in 2025, but the sector faced a drop in new business and a cooling labor market.

“The PMI indicated continuing growth of the non-energy private sector economy at the start of the second quarter, but there was a loss of momentum owing mainly to a renewed reduction in new business and slower employment growth,” said Trevor Balchin, economics director at S&P Global Market Intelligence.

“The latest figure of 50.7 was the lowest in three months and below the long-run trend level of 52.3, as weaker demand offset an increase in total output.”

Growth was led by the manufacturing, services, and wholesale and retail sectors, while construction activity remained weak despite signs of stabilization.

Job creation remained positive across sectors, although April saw the slowest employment growth since August 2024.

“The employment component remained elevated in April, indicating further strong jobs growth. That said, there was evidence that the recent labor market boom was easing, with the rate of job creation down at an eight-month low,” Balchin said.

Wage growth also slowed to a five-month low but remained among the strongest since the survey’s inception in 2017.

Looking ahead, Qatari businesses maintained optimism for the year ahead, citing growth in real estate, infrastructure development, tourism, and a rising expatriate population as key drivers.