New plan to transform Saudi's logistics landscape welcomed

RIYADH: Experts in Saudi Arabia welcomed the launch of the National Transport and Logistics Strategy by Crown Prince Mohammed bin Salman on Tuesday as a comprehensive program backed up by ambitious targets to deliver the Vision 2030 program.

“This strategy will strengthen human and technical capabilities in the transport and logistics sector in the Kingdom,” the crown prince said.

“It will enhance the connection with the global economy and enable our country to invest its geographical position, in the middle of three continents, in diversifying our economy by establishing an advanced logistics services industry, building high-quality systems of services, and applying competitive business models to enhance productivity and sustainability in the logistics sector.

“Transport and logistics are a major focus of the programs of the Kingdom’s Vision 2030 and a vital enabling factor for economic sectors toward sustainable development,” he added

As part of the strategy, the Ministry of Transport will be renamed the Ministry of Transport and Logistics Services.

“It is not about changing names, but it is the development of clear, ambitious, and comprehensive targets against which performance can be measured,” said Fahad Althunayan, a member of the Institute of Management Accountants.

Althunayan stressed that the current organizational structure of the Ministry of Transport focuses on roads, but the new ministry will have a wider remit and include the Kingdom’s entire logistics system, which will help the local industrial sector to reach its full potential.

One of the main objectives of the strategy, the crown prince noted, is to increase the contribution of the transport and logistics sector to the national gross domestic product from the current 6 percent to 10 percent. This will help to fuel business growth, expand investments, and increase the sector’s non-oil revenues to about SR45 billion ($12 billion) a year by 2030, the crown prince said.

Saleh Al-Jasser, the incoming minister of transport and logistics, said the strategy will help to enhance the Kingdom’s competitiveness on a regional and global level.

The new strategy set several other ambitious targets. “The strategy aims to move Saudi Arabia into fifth place globally in terms of the number of transit passengers, increase the number of international destinations served by the country to more than 250, and launch a new national air carrier,” Talat Zaki Hafiz, an economist, and financial analyst, pointed out.

The plan seeks to improve the capabilities of the air cargo sector by doubling its capacity to more than 4.5 million tons. Regarding maritime transport, the crown prince has set a goal to reach a capacity of more than 40 million containers annually.

For the Kingdom’s railways, the plan aims to increase the network to 8,080 km of track, from 5,330 km at present. One of the most ambitious elements is a plan to build a land bridge spanning more than 1,300 km connecting the Kingdom’s ports on the coast of the Arabian Gulf with those on the Red Sea coast, transporting more than 3 million passengers and 50 million tons of freight per year.

Saleh Al-Nuzha, a member of the Energy and Economy Committee of the Shoura Council, said the delivery of goods is a vital part of any trading supply chain.

“It is known that one of the most important factors of success in any sector is the possibility and ease of delivering the product or service to the customer,” he said.

Al-Nuzhna also praised the plan to include a new airline, as this will enhance competition between different carriers.

One of the key components of any government strategy is having adequate manpower and skilled workers to implement it, something which Meshal Al-Muhayya, a consultant at the Saudi Organization for Certified Public Accountants, said was already underway. “The employees in all of the Kingdom’s airports are qualified to handle all types of travelers, airport operations, and aviation matters in general,” he said.

Logistics and supply chain startup Trukkin, which was last month awarded $7 million from a group of Saudi investors, and which is planning to expand its presence in the Kingdom, welcomed the new strategy.

“This doesn’t come as a surprise to us because we have always believed in Saudi’s potential to become a regional and global champion in logistics,” said Janardan Dalmia, founder, and CEO of Trukkin.