Delivering logistics worthy of Saudi Arabia’s gigaprojects

28 February 2024
The regional logistics industry is rising to the challenge of the kingdom's Vision 2030, according to CEVA Logistics

Logistics sits at the heart of Saudi Arabia’s Vision 2030 programme. It is both an enabler of Vision 2030 – the world’s most ambitious industrial policy – and an engine of the kingdom’s wider economic growth.

Logistics matters in two ways. Firstly, the slew of gigaprojects being built across the kingdom require a robust, reliable supply chain to ensure timely delivery of vast quantities of construction materials.

Secondly, developing world-class logistics infrastructure is an important part of Vision 2030 in its own right. The kingdom aims to leverage its prime location on the Asia-Europe shipping route to become a global trade hub and a central distribution point for the GCC.

The kingdom’s location is not its only natural advantage. Saudi’s twin coastlines give it extensive access to the sea and provide choices and flexibility for its maritime logistics. This flexibility has proved vital this year as tensions in the Red Sea impact the flow of shipping along the west coast.

Supporting the ecosystem

The Saudi government and the country’s fast-growing logistics sector are now working together to capitalise on the kingdom’s natural gifts of geography.

First, there is financial support. The Saudi Ports Authority (SPA) invested SR17bn ($4.5bn) in the kingdom’s maritime, logistics and port sector in 2023, and signed agreements to create new logistics parks on both coasts – in the east at King Abdulaziz Port in Dammam, and at Jeddah Islamic Port in the west.

The SPA has also rolled out a steady digitalisation of customs processes. Learning from the examples of China and Dubai, Saudi’s new digital-first approach has slashed the time for an international shipment to clear customs from seven to eight days to mere hours.

Global transport players such as CEVA Logistics are bringing their expertise and resources to bear, too, developing the multi-modal capabilities required to move huge volumes of freight from sea to ground – or sea to air – transport and vice versa.

These innovations are making logistics operations quicker, greener and cheaper, and in 2023 they propelled Saudi Arabia 17 places higher in the World Bank’s Logistics Performance Index. The kingdom now sits at 38th place out of 139 countries.

With most of the materials and technology being used to build the Vision 2030 gigaprojects coming from overseas, such multi-modal efficiency in freight has long been important for Saudi Arabia.

But amid the current Red Sea crisis, the integrity of the Vision 2030 supply chain depends on it.

Navigating disruption

Attacks on commercial shipping vessels in the southern Red Sea have disrupted the flow of construction materials from Asia bound for West coast destinations, including Jeddah Islamic Port, King Abdullah Port and the new Port of Neom.

The logistics sector’s response has been rapid and agile – with significant volumes of cargo originating in Asia now being rerouted to Dammam, or even Jebel Ali in the UAE, and then moved overland to their final destination in Saudi.

With the Suez Canal open as usual, cargo from Europe and the Americas destined for the Gulf is being unloaded at Jeddah before switching to overland or air transport for the final stage of its journey.

Testing though the current situation is, it is just the latest in a series of challenges the Saudi logistics sector has faced in recent years – from the global pandemic to the 2021 blockage of the Suez Canal by the grounding of the cargo ship Ever Given.

Each challenge has been different, but all required the logistics sector to develop resilience and adaptability.

Both traits will be improved further by the $7bn Landbridge rail project, which begins construction in 2024 and will connect the two Saudi coasts and lay 1,500km of new track, and by the Gulf Railway, which aims to link all six GCC nations.

Saudi’s logistical capability is also being boosted by the tax incentives and specialisation offered by the kingdom’s Special Economic Zones.

For example, King Abdullah Economic City and the neighbouring King Abdullah Port are set to be the kingdom’s principal gateway for automotive cargo.

Logistics providers are investing in dedicated facilities that will handle hundreds of high-value vehicles a day – initially as imports, but ultimately as exports too, as Saudi Arabia’s homegrown auto industry advances towards its goal of producing 500,000 electric vehicles a year by 2030.

Facilitating construction

While construction materials, including large, manufactured components, are the most obvious cargo required by Vision 2030’s gigaprojects, the logistics sector is also playing a vital role in providing the housing needed for thousands of construction workers.

Scheduling is key when building an entire city from scratch. Where there is no existing accommodation, modular and temporary accommodation units must be provided from the outset. This is especially true in Saudi Arabia’s desert climate, where a failure to provide safe, operational housing on time could quickly derail a project.

CEVA Logistics is currently transporting thousands of high-quality accommodation units ‘door-to-door’ from factories in Turkey and China to construction sites in the kingdom, leaning into its global expertise and predictive logistics capability to manage the huge freight volumes within sensitive timeframes.

The scale of Vision 2030, and the ambition of its timeline, are both enormous. Saudi Arabia’s logistics sector is proud to be playing its part in making the kingdom’s vision a reality.

As an industry, we are learning the lessons of the past, while investing and innovating today to jointly solve challenges that will create a more thriving economy and vibrant society for Saudi Arabia long into the future.

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