Lessons in Logistics: How Saudi Arabia is Getting it Right

Just eight years after the launch of Saudi Arabia’s Vision 2030 long-term blueprint for economic diversification, the Kingdom has emerged as a global logistics player, positioning itself as a key hub for international trade and commerce.

Driven by its strategic geographic location, ambitious economic policies, and massive investments in infrastructure, the Kingdom has successfully transformed its logistics industry into a dynamic enabler of economic growth.

Let us look at the figures. The KSA logistics market generated revenue of USD 136.3 billion in 2024 and is expected to reach USD 198.9 billion by 2030. When Vision 2030 was launched in 2016, the market size of its logistics sector was a comparatively modest USD 19 billion.

The growth spurt also raised the Kingdom’s World Bank's Logistics Performance Index (LPI) to 38th in 2023, from 55th in 2018, among 139 countries. The Index indicates the quality of logistics services and infrastructure for transportation and trade.

So, what is Saudi Arabia doing right that other countries in the region could emulate?
These are some of the Kingdom’s prime strategies:

1. Strategic Vision and Policy Framework

Vision 2030 prioritizes infrastructure development, regulatory reforms, and technology integration to forge a logistics powerhouse.

Key initiatives, such as the National Industrial Development and Logistics Program (NIDLP), focus on enhancing transportation networks, facilitating trade, and improving logistics services. By setting clear goals, allocating substantial resources, and actively engaging private sector stakeholders, Saudi Arabia has created a cohesive and forward-looking framework.

Aligning public and private sector efforts ensures that the country’s logistics sector’s growth is rapid, sustainable, and responsive to changing global trends.

A key element of the NIDLP commits heavy investment in renewable energy solutions such as solar and wind, to create a clean energy and low carbon future,

2. Leveraging Geographic Advantage

Saudi Arabia has effectively capitalized on its strategic location at the crossroads of Europe, Asia, and Africa. By positioning itself as a natural gateway for trade, it has attracted significant international interest. The Kingdom's ports on the Red Sea and the Arabian Gulf are pivotal in facilitating the movement of goods across these regions.

To enhance its connectivity further, Saudi Arabia has invested heavily in expanding port capacities, modernizing customs procedures, and establishing free zones near key logistics hubs.

King Abdullah Port and the Jeddah Islamic Port, for example, have undergone significant upgrades, enabling them to handle larger cargo volumes and reduce turnaround times.

The Kingdom also announced in November 2024 plans to expand its railway network from 5,500 kilometers to 8,000 kilometers, significantly boosting its country-wide logistics network.

Saudi Arabia’s free zones, meanwhile, are emerging as strategic centers for business growth and international trade. They have become gateways to economic opportunities and offer a range of incentives that are attractive to local and foreign investors.

The incentives include tax exemptions, reduced customs duties, and streamlined business registration processes.

Several global logistics giants are tapping into the transformation precipitated by Vision 2030, Some are vastly expanding their footprints in the KSA—among them the Dubai-based supply chain services, infrastructure, and logistics company  Agility and its innovation arm, Shipa Delivery.

3. Public-Private Partnerships, Saudi Style

A cornerstone of Saudi Arabia's logistics success is its proactive engagement with the private sector. The government has facilitated public-private partnerships (PPPs), allowing private companies to invest in key infrastructure projects while ensuring government oversight and support.

Salman Badr, vice-president of the state PPP procuring authority, announced in May 2024 that over 200 PPP projects are in various stages of development, and another 300 projects are under review.

The approved projects are valued at over USD 50 billion, making the KSA the dominant driver of PPPs in the MENA region.

4. Focus on Technology and Innovation

Saudi Arabia is leveraging advanced technology to streamline logistics operations, improve supply chain visibility, reduce costs, and enhance customer experiences.

The Kingdom has also adopted blockchain technology to facilitate faster and more secure customs clearance processes. Blockchain is also utilized across various sectors such as finance, logistics, healthcare, and government services.

As is the trend internationally, logistics companies operating in KSA are integrating artificial intelligence (AI), the Internet of Things (IoT), and big data analytics to transform inventory management, transportation, and demand forecasting.

By investing in smart logistics systems and encouraging the adoption of digital tools across the supply chain, the Kingdom is positioning itself as a regional leader in logistics technology.

5. Saudi’s Workforce Development and Skills Building Programs

Saudi Arabia has recognized the importance of developing a skilled workforce to sustain its economic and social development programs.

An important pillar of Vision 2030, the Kingdom is promoting targeted training programs, vocational education, and partnerships with international institutions to equip its youth with the skills required for modern commerce and industry.

Initiatives such as the Saudi Logistics Academy aim to nurture local talent and reduce dependence on foreign expertise in the logistics sector. This focus on human capital development not only enhances productivity but also supports broader socio-economic goals, such as job creation.

6. Sustainability and Green Logistics in KSA

Saudi Arabia has incorporated sustainability into its logistics strategy through the Saudi Green Initiative (SGI) launched in 2021.

The SGI promotes environmental protection and sustainability initiatives to help offset and reduce emissions, increase afforestation, and aid in land restoration.

In the logistics sector, the Kingdom says it is exploring green energy solutions, such as solar-powered warehouses and electric vehicles while optimizing transport routes and integrating renewable energy sources wherever possible.

With global trade partners demanding more environmentally conscious practices, green logistics is no longer optional. Saudi Arabia knows this all too well, which is why it has made sustainability a pillar of Vision 2030 and pivotal to its goal of reaching net-zero emissions by 2060.

A Roadmap for Other MENA Countries

By adopting a clear strategic vision, leveraging geographic advantages, fostering public-private partnerships, investing in technology, focusing on workforce development, and prioritizing sustainability, the Kingdom has created a thriving logistics ecosystem.

Saudi Arabia’s success in boosting its logistics sector provides a roadmap for other countries in the MENA region hoping to enhance their competitiveness in global trade.

Countries replicating KSA’s strategies can position themselves as regional logistics hubs, attract greater foreign investment, and drive economic growth.

Learn how Shipa’s logistics operations in Saudi Arabia can help your business expand trade across international and regional borders.  Don’t hesitate to contact our team, they’re always eager to help.