Rising e-commerce industry in the country has triggered the demand for logistics and warehousing services in past few years. This has also accelerated the market size of express delivery, as all the companies in e-commerce industry in the country are offering the express delivery services and last mile delivery. Majority of the companies in the country has tie ups with logistic companies to ship their products from ware houses to the end customers. In line with this, Saudi Arabia’s retail sector is booming as the government eases restrictions on foreign investment and rising young population in the kingdom. The country has one of the fastest-growing retail sectors in the world, growing at 11% per annum. The expanding retail industry in the country has majorly attributed to the increase in the market size of the logistic industry of Saudi Arabia with an increased requirement of hyperlocal logistics. The increase in the retail stores, super & hyper marts in the country has triggered the demand for logistics & warehousing space. The rise in demand for freight forwarding services from the factory units to the retail stores has attributed in the market growth of the logistics industry.
Trade scenario in a country always tends to have a favorable influence on the country’s logistics sector. The kingdom of Saudi Arabia is the largest economy in the GCC region. It accounts for 25% of the Arab’s GDP. The kingdom has oil based economy with strong government controls over major economy activities. The export of oil to other countries and rising import of different items from other countries to Saudi Arabia has triggered the demand of freight forwarding and warehouse storage in the country. Also, increase in the government support by increasing the capacity of the ports will result in rising demand of logistics & Warehousing industry in the kingdom.
Saudi Arabia’s economy is heavily dependent upon the exports of oil products. Petroleum exports accounted for more than 95% of merchandise exports in 2012-2013. Also, they constitute for about 40% of GDP. Total merchandise exports in Saudi Arabia accounted for USD 201.7 billion in 2015. Although total exports grew at a healthy rate during the period 2010-2012, they declined sharply after 2012. Growing exports have played a key role in the growth of logistic industry as ports and airports get huge business owing to logistics.
According to Research Analyst, Ken Research, the companies should expand their resources by increasing their fleet and warehousing capacity. Moreover, the companies should focus on regularly updating their warehouse with modern technologies to provide better services to the clients. This will increase the capacity of the company to offer better service to the clients which will positively impact the revenues of the company. Companies should also expand their warehouses to handle the cold storage items. As, in future it has been anticipated that the logistic market will be driven by cold storage segment and hence large warehousing capacity for different temperature zone will be required.
The report titled “Saudi Arabia Logistics & Warehousing Market Outlook to 2020 – Expanding Industrial and Retail Activities Supported by Infrastructure Spending to Support Growth” provides detailed overview on the Logistics & Warehousing market and helps readers to identify the ongoing trends in the industry and anticipated growth in future depending upon changing industry dynamics in coming years. The report is useful for freight forwarding companies, warehousing companies, Cold chain companies, 3PL companies and express logistics companies and other stakeholders to align their market centric strategies according to ongoing and expected trends in the future.
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Ankur Gupta, Head Marketing & Communications