Market Trends of Saudi Arabia Third-Party Logistics (3PL) Industry
Growth in E-Commerce boosting the demand for 3PL services
- The expansion in the e-commerce business drove the growth of the 3PL market in Saudi Arabia. COVID-19 lockdown measures had a significant impact on e-commerce. Despite the fact that sales were already strong throughout the review period, limits and curfews prompted most businesses to shift from in-store to e-commerce to offset losses (due to the absence of in-store shopping). With the expansion of the supply chain and the emergence of new technologies, new businesses have evolved, and existing businesses have grown even more.
- Saudi Arabia has the largest population in the GCC, with a tech-savvy and growing young population, which makes it a key market player in the region. In 2022, more than 90 percent of the population had internet access. These factors eased e-commerce adoption among the population, with around 80 percent of active internet users in Saudi Arabia engaging in online shopping, which is the same share as in China.
- Thus, Saudi Arabia's e-commerce market is one of the largest in the region, and it is expected to continue growing. While the COVID-19 pandemic shook businesses around the world, e-commerce witnessed immense growth. Saudi Arabia was no exception to this general trend.
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Increasing Maritime Trade in Saudi Arabia is Driving Demand for 3PL Services.
- Saudi Arabia’s marine industry has been changing rapidly, making the country a regional logistic hub and an international participant in global trade because the region is at a key location in the international trade route. Saudi Arabia has an advantage in the marine industry as it overlooks the Red Sea and the Arabian Gulf.
- Saudi Arabia is one of the main destinations for maritime activities and is on the path of becoming a complete logistic hub. All the development in the maritime sector is enhancing the logistic services of the country making it reach a better logistic position. This scenario has highly increased the need for 3PL logistics in Saudi Arabia to efficiently handle complex marine logistics processes.
- The King Abdullah Port Project, which drew an investment of SAR 40 billion (USD 10.66 billion), is contributing to increasing Saudi exports to more than SAR 600 billion (USD 159.96 billion) by 2030. King Abdullah Port is the first port that is fully owned and operated by the private sector. The port is known for its container handling capacity and is listed as one of the world’s largest ports.
- The Saudi government has recognized the importance of the maritime industry to expand its regional as well as international logistic services in the state. Saudi Arabia is now one of the main destinations for maritime activities and is on the path of becoming a complete logistic hub.
- In January 2022, Saudi Arabia and Greece signed a cooperation agreement for maritime transport. The deal includes developing commercial maritime navigation and increasing the traffic of commercial ships. It also aims to provide facilities to maritime transport companies. The agreement also includes a mechanism for the treatment of ships of both countries when accessing their ports, stay, and departure, and in cases of emergency and maritime accidents in their territorial waters.
