Growth prospects for the Saudi Arabian logistics industry look promising over the next five years as economic diversification, policy reforms, tax regimes, and foreign direct investment (FDI) policies are shifting in favor of an open economy and encouraging private investment.
In Frost & Sullivan’s recent analysis of the Saudi logistics market, analysts forecast the market to reach $60.68 billion by the end of 2024, driven by government initiatives in trade and industry promotion, development of economic cities, infrastructure development, and economic diversification.
“Saudi Arabia is focused on diversifying from oil and increasing gross domestic product (GDP) contribution from non-oil sectors by developing economic, industrial cities,” the report said.
“Until recently, Saudi Arabia was a closed market. However, the recent initiatives on economic diversification have opened doors to industrial, retail, and logistics players around the world by allowing 100 percent FDI ownership,” it further added.
The report also noted that this region is extensively focusing on industrialization and improving the transport infrastructure to become a transshipment hub.
“With the rapid growth in ecommerce, automation of warehouses with built-to-suit models is likely to be in high demand through 2024. In addition, the rail freight transportation is underutilized and the government is taking necessary steps by developing new rail lines and building better port connectivity to increase the usage,” the report said.
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