Saudi Arabia’s strategic location and large-scale infrastructure development will position KSA as one of the world’s leading transport and logistics hubs. The Transport and Logistics (T&L) Sector in Saudi is supporting a population of 27.14 millions (2010), and within only 3 hours flying radius, the T&L sector can serve both cargo and passengers more than 250 million inhabitants
SAGIA’s T&L mission is to develop the globally most competitive multimodal, integrated transportation infrastructure & systems, led by a comprehensive supply chain and logistics network. With its unique strategic location straddling the markets of east and west, KSA is recognizing its potential as a leading global transport and logistics hub. The nation already boasts numerous land and sea routes to Eastern Europe, the Indian subcontinent, the Middle East and North Africa plus East Asia. However, SAGIA, in collaboration with domestic and international partners, is now making substantial investments in a sophisticated transportation network that will leverage KSA’s competitive advantages.
Strong demand for sector growth
The future logistics demand in the Kingdom can be divide into three main areas, boosting today’s cargo flows from around 1 Mil tons a day to more than 2.5 Mil tons by 2020; 60% of expected growth is based on basic demand, 10% of expected growth is based on additional demand from leveraging additional logistics "launch pads". Finally Saudi’s rapid domestic development spearheaded by the planned Economic Cities will capture a stronger demand for sector growth; the cities alone will contribute an additional 86-129 million tons per annum (or approximately 30% of the expected growth in cargo flow through KSA).
Saudi Arabian domestic cargo demand is expected to grow by a 4-5% compound annual rate through 2020, while international flows are expected to grow at 5% and 7-8% for air and sea cargo, respectively.
Improved efficiencies and speed to market
The development of a world-class, multi-modal transportation system in Saudi Arabia will improve operating efficiencies and speed to market for businesses looking for strategically located transportation systems for distribution and/or supply chain networks.
Naturally, the availability of low-cost fuel is a key factor making it an ideal site to centralize energy intensive logistical activities, such as Refueling.
Good reasons to invest
- Unparalleled land and sea lane access, with close links to Europe, Africa, South and East Asia
- Substantial cost advantages due to the low domestic cost of energy
- Large-scale, mutually reinforcing investments in road, rail, sea, and aerial transportation
- Strong domestic growth, supported by massive capital spending and rising personal wealth
- A highly stable, competitive and increasingly liberal business environment
SAGIA has identified numerous investment opportunities within Transportation & Logistics Sector between the Base Economy & Economic Cities. An overall of US$100 Billion investment is anticipated over the next 10 years. These include:
Sea Ports: Studies indicate several opportunities for capacity expansions and operational enhancements with attractive opportunities for qualified port operators. Jeddah Islamic Port alone could increase capacity by 30-50%. Some of the opportunities include 2 ports construction and operations in King Abdullah Economic City and Jizan Economic City, the development & administration of Logistics Park adjacent to Yanbu Commercial Port, and a 2nd Container Terminal in Jubail Commercial Port.
Air: Major air aviation developments are taking place; air operators are sought to drive expansions to KSA’s air transport infrastructure. For example, significant upgrades are currently underway at Medina Airport, a new Cargo Village is being planned for Dammam airport. As part of promoting the private sector, the first planned private airport is currently in progress in Prince Abdul Aziz bin Musa’ed Economic City.
Rail: The rail infrastructure in Saudi is in need of major expansion, creating significant investment opportunities for railway operators and related industries. Planned projects include the 950 km rail link between Jeddah-Damman known as the Land Bridge Project, a 2,400 km Mineral Line Project running north to south; connecting Riyadh , Raz Azour, Hazm Al-Jalamid and Qurayyat. Finally, Light Rail Transit Systems within Cities such as Riyadh, Jeddah and Medina are being planned and developed.
Road: SAGIA seeks to invest in roads to accommodate basic demand growth, in addition to traffic resulting from the establishment and evolution of the Economic Cities. According to the 9th 5 year development plan, the Ministry of Planning has announced government spending to increase from the 8th Five-Year Development plan by 97.5% (from SR 51.4 BN to SR 101.5 BN). Some of the opportunities include the design and supervision of new connections and expansions, and road services including but not limited to Public Transportation services.
Logistics: Rising demand and deliberate public investment in Transportation infrastructure will drive development of world-class capabilities and critical need for Supply Chain Management. Hence, many opportunities such as Logistics Centers & Warehouse Service Facilities across the country including the Economic Cities are in great demand.