Market Trends of saudi arabia road freight transport Industry
Saudi Arabia invested around USD 133 billion to boost the transport infrastructure of the economy
- The revenue from the KSA logistics industry is expected to register a CAGR of 6.7% from 2023-2030, in line with the government's strategy to develop the sector. In 2021, around USD 15 billion was invested in infrastructural and transportation projects across Saudi Arabia. Vision 2030 for Saudi Arabia includes goals to expand sea freight capacity, establish a multimodal railway line, and increase the transport and logistics sector's contribution to reach 10% of the GDP by 2030.
- In 2021, Saudi Arabia announced an ambitious plan to invest USD 147 billion in transport and logistics infrastructure over the next eight years to transform the country into a major global aviation hub. The government will provide around 35% of this investment, while the remaining funds will come from the private sector. The plan includes the launch of a new international airline, the expansion of airports, the development of a comprehensive train network, and the exploration of new technologies. These plans are part of a greater strategy to diversify the economy of the world's largest crude exporter. Saudi officials want to turn Riyadh's capital city into a global business to attract more foreign talent and 100 million tourists annually by 2030.
- The Saudi Arabian government has outlined plans to invest over SAR 500 billion (USD 133.15 billion) in infrastructure development, including ports, airports, and rail, by 2030. The investment will cover several projects, including the planned GCC railway, a USD 15.5 billion initiative to create a 2,172 km track network connecting all six GCC countries. The railway will play a crucial role in handling up to 29 million tons of the region's total of 61 million transported goods annually across all modes of transportation.
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Owing to supply concerns due to the Russia-Ukraine war, crude oil reached an all-time high of USD 147 per barrel in 2022
- In August 2022, oil prices soared by more than USD 3 per barrel after Saudi Arabia floated the idea of OPEC+ output cuts to support prices and the prospect of a drop in crude inventories from the United States. After Russia's invasion of Ukraine exacerbated supply concerns, oil reached an all-time high of USD 147 in 2022. Prices have been weighed down by fears of a global recession, rising inflation, and weak demand. Although the cost of Brent crude oil has been dropping significantly since the end of 2022, the market structure and price differentials in the physical oil market continue to point to supply tightness.
- Saudi Arabia has relied heavily on its vast oil reserves as a significant energy source and revenue source. However, the country has recognized the importance of diversifying its energy mix and incorporating renewable energy sources. Saudi Arabia is increasing domestic energy prices as part of its efforts to reduce consumption and meet emission reduction targets. In 2021, Saudi Arabia set an upper limit on domestic gasoline prices to mitigate the impact of rising living costs on citizens.
- In July 2022, Saudi Arabia, the world's largest oil exporter, set a cap on local gasoline prices to help alleviate rising living costs and boost the economy. Fuel prices were capped at SAR 2.18 (USD 58.1) per liter for 91 octane grade and SAR 2.33 (USD 62.0) per liter for the 95-octane variety. However, the government has been working to maintain domestic fuel prices in line with international levels, part of reforms aimed at easing the burden of subsidies on state finances, improving energy efficiency, and cutting consumption. In addition, the country has set the ambitious target of achieving net-zero carbon emissions by 2060.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- KSA unveiled USD 51 billion investment plan in March 2023 for economic diversification away from oil
- The e-commerce sector in KSA grew by 2% YoY in 2022, led by fashion and electronics subsegments
- Saudi Arabia rank 38 in the Logistic Performance Index due to advancements in its transportation and logistics infrastructure
- Saudi Arabia aims to lead global hydrogen exports, driven by its mission towards zero carbon emissions
- Shortage of truck drivers in 2022 and rising fuel prices impact the trucking operational costs in KSA
- Saudi Arabia aims to have 30% of all vehicles in Riyadh be battery-powered by 2030
- Increased investment in roads and excellent cross-border connectivity with other GCC countries are anticipated to improve road freight prices
- WPI and CPI rising due to increase in transportable goods and household costs, and decreasing unemployment
- Saudi Arabia to diversify the economy with growth of non-oil sectors and to become a neutral country by 2060
- KSA aims to invest USD 1.3 trillion into the economy by 2030 to boost the manufacturing sector
- Growing road infrastructure investments and the building of new roads are driving market growth
- Saudi Arabia intends to localize 85% of its food imports by 2030 to promote domestic entrepreneurship
- The expansion of the construction and mining industries is boosting the demand for commercial vehicles in Saudi Arabia
- The Saudi Government planned investment of USD 147 billion under Saudi Vision 2030 to transform transportation infrastructure in order to provide cost-effective freight solutions
- Saudi Vision's 2030 National Transport and Logistics Strategy driving growth across modes of transport
