وزارة اﻟــــﻨــﻘـــــــــــــــــــــــــﻞ واﻟﺨﺪﻣﺎت اﻟﻠﻮﺟﺴﺘﻴﺔ Ministry of Transport and Logistic Services

The Kingdom of : An exceptional location with unique advantages for international trade and logistics وزارة اﻟــــﻨــﻘـــــــــــــــــــــــــﻞ واﻟﺨﺪﻣﺎت اﻟﻠﻮﺟﺴﺘﻴﺔ Ministry of Transport and Logistic Services

Introduction: The Kingdom of Saudi Arabia has competitive advantages that rarely coexist in one country, making it pivotal for global trade. The largest oil exporter in the world, the Kingdom is also the only Arab member in the G20 with the largest Arab economy, which represents an economic driver for the entire region. The Kingdom's pivotal location is supported by a strategic vision for its global position. Over the past five years, the business environment in the Kingdom has witnessed qualitative leaps that placed it at the forefront of the world in terms of economic reforms, in addition to its long experience in crowd management and logistics services through its annual hosting of Hajj and Umrah and its regional leadership in adopting technology, smart solutions and digital services.

Vision 2030 seeks to achieve a comprehensive transformation in the Saudi economy by increasing investment to stimulate and diversify the economy and transform the Kingdom into a global hub connecting Asia, Europe and Africa. Its geographical advantage based on access to major emerging markets and important sea routes, along with the significant development of its infrastructure and legal structures, has played a major role in this transformation.

The Saudi government is committed to developing the sector and has allocated significant investments in infrastructure projects and expansion plans for the transport sector. Vision 2030 aims to make the Ministry of Transport projects self-financed by 20%, which facilitates private sector participation in ports, airports, railways, road infrastructure and strategic services. وزارة اﻟــــﻨــﻘـــــــــــــــــــــــــﻞ واﻟﺨﺪﻣﺎت اﻟﻠﻮﺟﺴﺘﻴﺔ Ministry of Transport and Logistic Services

Location

Saudi Arabia is located amidst three continents on the trade routes linking Asia and Europe. The Kingdom is the only Gulf state located between two seas: the Arabian Gulf, through which a third of global oil exports pass, and the , through which 12% of international trade passes, giving it an unparalleled regional advantage.

The Kingdom is a pioneer in cross-border trade and has the largest logistical market in the Gulf Cooperation Council countries. It is a market that has grown at an annual rate of 5%. The Kingdom also has a solid logistics infrastructure, thanks to having the largest maritime network in the Middle East, as well as one of the largest road networks in the world.

The strategic location of the Kingdom provides a unique advantage over other countries, enabling it to become a leading regional logistics center. This location is ideal for the distribution of goods across the region, as well as the countries of the Middle East and North Africa. These areas have a total GDP of 9 trillion Saudi riyals and are home to 647 million consumers. The broader framework of global trade, in the middle of which the Kingdom is located amidst three continents, includes more than six billion people. وزارة اﻟــــﻨــﻘـــــــــــــــــــــــــﻞ واﻟﺨﺪﻣﺎت اﻟﻠﻮﺟﺴﺘﻴﺔ Ministry of Transport and Logistic Services

Today, the logistics market in Saudi Arabia is valued at 67.5 billion Saudi riyals ($ 18bn) placing it first among the GCC countries. This logistics services market accounts for 55% of the total market in the GCC, and is the third most attractive in emerging markets. The logistics services sector is one of the fastest growing sectors in the world, and is expected to reach 94 billion Saudi riyals ($ 25bn) by 2021. وزارة اﻟــــﻨــﻘـــــــــــــــــــــــــﻞ واﻟﺨﺪﻣﺎت اﻟﻠﻮﺟﺴﺘﻴﺔ Ministry of Transport and Logistic Services

Third-Party Logistics (3PL)

The third-party logistics (3PL) sector has significantly increased the revenues of the logistics market between 2010 and 2015, with a compound annual growth rate of 26.6% (compared to a global growth rate of 7.5%) and the total value reached 3 billion Saudi riyals ($0.8bn). In 2020, the value is expected to have reached 8.25 billion Saudi riyals ($2.2bn). The demand for the third-party logistics services (3PL) sector is also expected to increase for several reasons.

Developing trade relations between the Kingdom of Saudi Arabia and other countries attracts greater interest in the values of exports and imports in KSA. In addition, strong FDI inflows (especially in the oil and gas sector) will increase opportunities for third-party logistics service (3PL) providers, as well as expanding industrial activity that stimulates the need for supply chain management services. وزارة اﻟــــﻨــﻘـــــــــــــــــــــــــﻞ واﻟﺨﺪﻣﺎت اﻟﻠﻮﺟﺴﺘﻴﺔ Ministry of Transport and Logistic Services

Cold Chain

The cold chain sector in Saudi Arabia's logistics market has similarly witnessed noticeable growth in recent years at a compound annual rate of 4%, from SR 2.92 billion ($0.78 billion) in 2010 to SR 3.65 billion ($0.95 billion) in 2015. It is expected that the value in 2020 will reach SR 6.15 billion ($1.64bn) thanks to the active participation of the pharmaceutical industry and the increasing demand for fresh and processed fruit, vegetables, meat and dairy products. وزارة اﻟــــﻨــﻘـــــــــــــــــــــــــﻞ واﻟﺨﺪﻣﺎت اﻟﻠﻮﺟﺴﺘﻴﺔ Ministry of Transport and Logistic Services

A Government Effort to Develop the Sector Saudi Arabia has a well-established logistics infrastructure that is witnessing continuous development to keep pace with a rapidly expanding market. The government has directed significant efforts towards the growth of this sector through regulatory reforms and massive investments in logistics infrastructure.

Plans have been announced to invest 112.5 billion Saudi riyals ($30bn) in upgrading facilities to enable the Kingdom's ports to compete on the global stage. In addition, 159 billion Saudi riyals ($42.4bn) have been allocated for the development of the ‘King Abdullah Port ', KSA's first privately owned port. The Kingdom is also investing 337.5 billion Saudi riyals ($90bn) in extensive development of its road and rail infrastructure.

The region will gain many benefits by stimulating trade, improving transportation and reducing waiting times. In addition, the Kingdom of Saudi Arabia is developing six economic and industrial cities dedicated to transporting goods easily between them. Industrial production in the Kingdom constitutes an actual 90% of non-oil exports, which means that the logistics services industry is set for a big boost after settling in new hubs at the central industrial cities. وزارة اﻟــــﻨــﻘـــــــــــــــــــــــــﻞ واﻟﺨﺪﻣﺎت اﻟﻠﻮﺟﺴﺘﻴﺔ Ministry of Transport and Logistic Services

The Ministry of Transport has launched plans for the Al-Khomrah logistics zone in for the Red Sea to be open to private investments, strengthening the Kingdom's strategic position as a trading hub between Europe, Asia and Africa.

The aviation industry plays a major role in Vision 2030, accounting for 4.6% ($34 bn) of GDP in 2018. Over the past two decades, the aviation market has grown significantly. After accelerating growth over the past five years, the Kingdom's airports welcomed more than 99 million passengers in 2018.

To improve airport facilities' infrastructure, the Saudi government has approved an expansion plan for both upgrading existing airports and creating new ones. The planned expansion includes the redevelopment of airports in , Al-Ahsa, Al-Qassim, Arar, Hail and Jizan. There are also plans to develop new airports in Al-Qunfudhah, Farasan Island, Taif, northern and southern .

The Kingdom of Saudi Arabia is implementing major projects that keep pace with this growth, developing new airports in Taif, Jizan, Al-Qunfudhah, Farasan and . Expansions are also underway at Jeddah and Riyadh’s airports. This rapid modernization includes air cargo facilities, in addition to operating new airlines in the market, which means greater options in terms of prices and destinations. This supports the Kingdom's goal of becoming an aviation center in the Middle East.

In addition, KSA’s sea freight already surpasses other countries in the region in terms of capacity and usage, yet it is set to significantly increase due to ports expansion and technological advancement. وزارة اﻟــــﻨــﻘـــــــــــــــــــــــــﻞ واﻟﺨﺪﻣﺎت اﻟﻠﻮﺟﺴﺘﻴﺔ Ministry of Transport and Logistic Services

Sea freight dominates KSA's transport market, playing a major role in the import and export of goods throughout the Kingdom. Saudi seaports handle about 7 million containers per year and receive 11,000 ships annually. In 2017, more than 270,000 million tons of goods went through nine industrial and commercial ports in the Kingdom, making Saudi Arabia's maritime network the largest in the Middle East.

Saudi Arabia is heavily investing in its seaports to increase their capacity by developing digital systems that greatly reduce red tape and simplify goods clearance procedures. The Kingdom intends to complete the largest marine network in GCC's countries by transforming it into one of the most technologically advanced and functional systems in the world. وزارة اﻟــــﻨــﻘـــــــــــــــــــــــــﻞ واﻟﺨﺪﻣﺎت اﻟﻠﻮﺟﺴﺘﻴﺔ Ministry of Transport and Logistic Services