Trade is the driver of the logistics and maritime industries, and today, the transformational projects in Saudi Arabia have the potential to redefine global trade lines.
Sitting at the crossroads of three continents, giga-projects such as NEOM are opening new opportunities for trade, while massive infrastructure investments are being made across the Kingdom to achieve the Vision 2030 goal of establishing Saudi Arabia as a global logistics hub.
Port traffic and global trade significance
The changing dynamics are already evident: in 2023, according to the General Authority for Statistics, the Kingdom’s ports reported a 14.6% increase in both inbound and outbound container traffic over the previous year.
While inbound container traffic reached 3.4 million twenty-foot equivalent units, outbound traffic was 2.2 million TEUs, with the quantity of cargo crossing 203.5 million tons. There has been a corresponding increase in ship traffic, with over 19,082 ships, a growth of 33.8% over 2022.
Along the Red Sea, the Jeddah Islamic Port, King Abdullah Port, King Fahd Industrial Port, and Yanbu Commercial Port, among others, are today playing a key role in shaping the logistics ecosystem of the Kingdom, and the adjacent countries. According to the WTO, these ports also highlight the importance of the Red Sea route, which accounts for 15% of global trade.
In the past months, we have seen regional ports reporting significant congestion of vessels and cargo, and in the new normal following the current situation, we can expect a recalibration of the ports ecosystem, with Red Sea ports playing an even more significant role, especially in catalysing regional trade. By connecting the ports along the Red Sea — from the Kingdom to Africa and India — regional trade will further gain traction in the near- and long-term.
Digitalisation and technological advancements
The growth trajectory of the Kingdom’s logistics ecosystem also underpins the need to embrace digital tools. This is reflected in the launch by the Saudi Ports Authority (Mawani) of the Smart Ports Initiative two years ago, which aims to accelerate fifth-generation technologies in logistics and position Saudi ports as leaders in modern technology adoption.
The Kingdom has also launched an upgraded version of the Logisti 2 platform, which aims to provide over 140 logistical services through a single window. Within Logisti, a Ports Community System (PCS) will provide more than 250 electronic services in the Kingdom’s ports.
This system has the added advantage of faster processing time and reduced delays that may arise from paperwork and miscommunication. In its recent report on the Benefits of Digitalisation of Trade Processes, the London School of Economics and Political Science observes that “exclusively digitised customs procedures can lead to a 70% reduction in export compliance times compared to paper-based processes.”
Leveraging digital tools can harness several additional benefits, underscoring the need for every logistics operator to formulate a technology strategy focused on their customers’ needs, especially in terms of data access and analytics.
Digital solutions can enable real-time cargo tracking, automate custom processes, and optimise route planning, all of which help reduce delays and enhance the visibility of the supply chain.
Increased investments in digital platforms for fleet management, predictive maintenance, and route optimisation can significantly improve operational efficiency and reduce costs.
The customer stands to gain from this, as it enables the industry to provide lower end-to-end unit costs for traders and service users and strengthen regional and international competitiveness.
Focus on Saudi Vision 2030
Beyond operational efficiency and cost reduction, digitalisation is also an opportunity to support Saudi Arabia’s focus on reducing carbon emissions as part of the larger Net Zero by 2060 strategy and the Saudi Green Initiative.
For example, Mawani’s Green Ports initiatives aim to cut energy consumption by 15% through equipment electrification. Digitalisation also supports waste management and recycling in the maritime industry — another example of how it can contribute to environmental sustainability.
This is complemented by the clean energy focus of the giga-projects, such as Oxagon in NEOM, an advanced and clean industrial ecosystem that integrates the principles of the Fourth Industrial Revolution and circularity.
In addition to the tangible benefits of digitalisation, such as cost reduction, increased efficiency, and the ability to cut emissions, one of the biggest opportunities it unlocks is the ability to engage Saudi Arabia’s digital-savvy youth in careers in the maritime industry.
While the industry has been viewed as conventional, digitalisation will serve as a pathway to attract tech-savvy talent—both young people and professionals. This, in turn, contributes to Vision 2030’s goals to build a knowledge-based economy while also creating promising job opportunities and career growth for Saudi women and men.
Read more:
Saudi Arabia’s freight and logistics market is estimated to grow from $25.49 billion in 2024 to $35.9 billion by 2030, growing at a CAGR of 5.88%. Drawing on the benefits of digital technology will help further catalyse the industry and accelerate the Kingdom’s journey to be a global hub for logistics.
