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Economic Diversification Initiatives, Investments towards Developing Logistics Infrastructure such as Multimodal Hubs, and Logistics Parks are Expected to Support Growth of Industry Segments
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The logistics industry in Saudi Arabia is evolving rapidly to meet the dynamic demands of customers, changing industrial landscape, and expansion of trade. Economic diversification initiatives, tax policy reforms, and FDI policies are encouraging open economy and private investment. Technology advancements and the nation’s vision on economic diversification are creating opportunities across sectors such as retail, eCommerce, healthcare, and other non-oil based industries.The freight transportation sector is undergoing significant transformation driven by investments in port modernization, rail developments, and airport expansions, while the growth in eCommerce is driving the demand for built-to-suit and modern warehousing solutions. The new rail developments are expected to decrease the nation’s dependency on road as the primary mode of transport and also reduce the time taken to transport goods from coast to coast. Linking of rail infrastructure with ports would also improve multimodal connectivity.Saudi Arabia is an import-based economy that is dependent on other nations for most products, except oil, for domestic consumption. Key imports include automotive, machinery, electronics, and, more importantly, food products. China, the US, and UAE continue to be the major import sources for Saudi Arabia. The nation’s food-related demands are met from countries like Egypt, Pakistan, and India. These food products find their way inward via containers through sea and are then sold to the consumers via organized supermarket / hypermarket outlets. Saudi Arabia constitutes around 35% of the cold chain business in the GCC region, and is expected to benefit more from its economic diversification initiatives as such measures would bring in more food processing industries which would depend on cold chain logistics service providers for services. This study provides a detailed analysis of the key trends and their implications for the logistics industry segments in Saudi Arabia for the period from 2018 to 2024.
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