The strengthening of Kuwait’s transport and logistics sector is central to the government’s overall diversification drive, as it underpins activity across the economy. Major infrastructure developments are taking place throughout the sector with more in the pipeline, as the relevant authorities and entities work to boost passenger and freight capacities. Some projects have stalled in recent years due to political impasse, while operational bottlenecks with some key operators also being a factor. However, action is being taken to resolve these challenges, with transport and logistics holding significant potential to unlock latent economic activity and attract high levels of international investment.
Structure & Oversight
The Ministry of Public Works (MPW) oversees and enables the construction of public buildings and national infrastructure. In fulfilling those duties, the MPW coordinates and collaborates with government authorities relevant to the various segments of the transport sector regarding infrastructure development.
One of those entities is the Directorate General of Civil Aviation (DGCA), whose primary duties include managing and operating Kuwait International Airport, and supervising all facilities related to air traffic control at the airport. Furthermore, the DGCA oversees the construction and maintenance of all aviation-related infrastructure; provides navigation, telecommunications and meteorology services for the aviation segment; and handles matters related to aircraft and air traffic safety, public and international relations, and marketing and business procedures related to aviation and international airport.
Notably, in May 2023 the Cabinet approved the disbanding of the Public Authority for Roads and Transportation (PART), established by Law No. 115 of 2014. PART’s remit included the construction and development of the country’s road networks and its related infrastructure, which had resulted in significant overlap with the MPW. Operational and bureaucratic inefficiencies were cited as the reason for the dissolution of the PART.
Kuwait Ports Authority (KPA) was established in 1977, at which time it was responsible for commercial ports at Doha and Shuwaikh, with a third facility, Shuaiba Port, added to its portfolio in 1986. Kuwait’s economy is largely dependent on oil export revenue, making its ports instrumental to the country’s economic prosperity. KPA’s duties involve the oversight of commercial and operational activities at the three ports, as well as oversight of construction and maintenance works, while the training of the maritime workforce is also key to its remit.
KPA is working to establish the country as a regional commercial centre, in line with the goals of New Kuwait 2035, the government’s overarching economic development plan. As such, the authority is focused on cultivating advanced port systems, with significant resources channelled into the development of port technology, maritime operations and civil works, among other areas.
Furthermore, the aviation industry is proving attractive to graduates and other young people, with Kuwait Airways receiving 4000 job applications between December 2022 and May 2023 after it launched a number of new recruitment initiatives. The airline hired 212 Kuwaiti staff members in 2022 and was aiming to employ 300 more in 2023.
Size & Performance
According to the most recent sector-specific data published by Kuwait’s Central Statistical Bureau (CSB), the transport and logistics sector was valued at KD873.5m ($2.8bn) in 2020, down 16% from KD1bn ($3.3bn) the previous year. This built on the trend seen between 2018 and 2019, when the sector size fell by 10.6% from KD1.2bn ($3.9bn). The severity of the more recent contraction can be largely attributed to the economic ramifications of the Covid-19 pandemic, with global transport activities curtailed to prevent the spread of the virus. The transport sector’s performance in Kuwait during the pandemic reflects a broader global picture. Despite project delays and regional competition stifling growth prior to 2020, the fact that oil, Kuwait’s primary export, was classed as an essential commodity at a time many product supply lines were temporarily closed, helped prop up sector GDP. While CSB figures had yet to be released for 2021-22 as of early 2024, positive trade figures for this period suggest a significant improvement.
The value and volume of foreign trade processed by Kuwait with respect to land, sea and air ports underwent significant increases from 2021 to 2022, with trade value rising by 38.1% from KD30.2bn ($98.3bn) to KD41.7bn ($135.8bn) over the period, and the volume of imports and exports combined up 2.6%, from 157.2m tonnes to 161.3m tonnes. Alongside the post-pandemic resurgence in global demand, the increase in value, in particular, can be partly attributable to the rising price of oil in global markets, with Brent crude reaching an intraday high of nearly $140 per barrel in March 2022 following Russia’s invasion of Ukraine the previous month.
In its most recent budget, the government forecast lower revenue in 2023 than in 2022 due to a moderation of global oil prices, thereby negatively impacting the anticipated value of Kuwait’s export trade. Combined tonnage for imports and exports followed a similar pattern, with 42.9m tonnes processed in the first quarter of 2023, compared to 41.8m tonnes in the second quarter of that year. The share of exports out of the total foreign trade value was 68.2% in 2021 and 73.6% in 2022, while exports accounted for 78.6% and 79.2% of trade tonnage, respectively. In terms of trade by modes of transport, Kuwait’s maritime centres witnessed the highest throughput of foreign trade in 2022, with 99% of export tonnage and 90.2% of import weight processed at the country’s seaports.
Logistics Expansion
Four planned new logistics cities represent a $400m investment, spanning a combined 1.9m sq metres. Each of the four facilities, as part of the Logistics Cities project, is designed to specialise in areas that have been identified as having the potential to facilitate Kuwait’s bid to become an international re-export gateway and bolster e-commerce infrastructure. Underscoring the importance of the latter, the pandemic necessitated significant expansion of online retail capacities, with compound annual growth in e-commerce for 2023-27 forecast at 8.6%, according to eCommerce Insights, an online industry intelligence firm; this would bring e-commerce market revenue to $2.1bn.
The planned new logistics sites are key to Kuwait’s plans to attract greater inflows of private and foreign investment, while the Logistics Cities master plan sees all of the country’s primary and secondary shipping facilities incorporated into a comprehensive logistics network. A completion date of 2025 was set at the initial announcement in July 2021.
In March 2023 the government announced that work on the first phase of the re-development and expansion of Shuwaikh Port, valued at KD48.8m ($158.6m), had begun. The initiative is being carried out under a joint venture between South Korea’s Hyundai Engineering and Construction, and local engineering firm Gulf Dredging and General Contracting, with the former accounting for 70% of overall contract value. Significant upgrades to the port’s docks and related machinery will be implemented during the first phase, with total dock length set to reach 1330 metres by the project completion date. The authorities aim to finish the project within three years of the kick off of the first phase.
Sovereign Investment
In October 2023 the government announced that it utilised its largest sovereign fund, the Kuwait Investment Authority, to establish an integrated national logistics service. The Kuwait Storage Company, which was launched with operating capital of KD50m ($162.7m), will focus on national food and medicines security, with the goal of maintaining supplies of essential goods sufficient to last one year at all times. The government said it expects the new entity’s working capital to reach KD300m ($976.1m) within two to three years, expressing its hope that the new strategy would help insulate the country’s population from erratic global price fluctuations and inflation.
Furthermore, the Ministry of Finance (MoF) and the Kuwait Investment Authority announced in July 2023 that they collaborated to compile a study regarding the establishment of a new sovereign investment entity, Ciyada Development Fund. The institution will be central to financing and advancing large-scale infrastructure projects, making it a key entity in transport sector development.
Ports
Maritime is Kuwait’s primary form of freight transport. The total weight of foreign trade processed by the country’s seaports decreased from 178.9m tonnes in 2016 to 156.7m tonnes in 2022, according to CSB foreign trade data. Despite the lower weight, the value of foreign trade rose from KD18.8bn ($61.1bn) to KD35.7bn ($116.1bn) over that same period, with global inflation and fluctuations in oil prices factors in that dynamic. Shuwaikh, the largest among the country’s three main ports, is the main trade centre, anchoring the Kuwait Free Trade Zone and Shuwaikh Industrial Zone.
Shuwaikh Port contains 21 berths, and has a total land area of 3.2m sq metres and total water basin area of 1.2m sq metres. In addition, it comprises 486,000 sq metres of open storage space, 170,000 sq metres of warehouse space and processes around 500,000 twenty-foot equivalent units (TEUs) annually. In total, Kuwaiti ports processed 900,000 TEUs in 2021, with that figure forecast to increase to 945,000 TEUs by 2026, according to market intelligence provider ReportLinker.
Shuiaba Port
In August 2023 KPA and Kuwait Oil Company (KOC) announced the two sides had signed a KD12.3bn ($40bn) contract that would see KOC occupy two of Shuaiba Port’s 20 berths and 20,000 sq metres of its storage space for an initial period of three years. Shuaiba was chosen for its optimal infrastructure and services, supporting KOC’s new offshore drilling and exploration venture. Indeed, Shuaiba is the country’s primary industrial port, specialising in commercial goods, heavy equipment and machinery, chemicals, raw materials and various other items. One of the port’s berths is operated by Kuwait Petroleum Corporation, and specifically dedicated to handling oil and gas shipments. In April 2022 KPA awarded a KD17.8m ($58.1m) construction contract for the upgrade of Shuaiba Port’s general and utilities infrastructure to local firm Combined Group Contracting, with Australian engineering firm SMEC set to supervise the design and construction phases. The project is slated for completion during the fourth quarter of 2024.
Doha Port is located at the entrance of Kuwait Bay and operates primarily as a regional merchant port, serving traders from across the GCC. It contains nine berths and a total storage space of approximately 50,000 sq metres, generally used for agricultural goods, cattle and commercial products.
Raising Efficiency
KPA announced in January 2023 that it submitted plans for a number of construction projects designed to strengthen various arms of its operations. Those projects included proposed expansion works at Shuwaikh Port, which is situated southwest of Kuwait City; and the development of the country’s four logistics cities. However, in recent years the flow of financing for the development of KPA operations and interests dropped, with 0.7% of the KD46m ($149.6m) allocated to the authority for FY 2021/22 received.
Operational inefficiency within KPA has been cited as the primary bottleneck in funding distribution, with significant storage and logistics space either disused or performing below potential. The government has recognised the challenges and taken action to address them. In July 2023 it issued seven recommendations to boost KPA’s efficiency and ease funding constraints, with forward movement on the port development projects a central focus due to their potential to increase national trade and investment revenue. Other issues to be tackled under the recommendations include the review and, if necessary, alteration of port tariffs; increased coordination with relevant government entities, such as the Kuwait Supply Company and the Kuwait Storage Company; development and revitalisation of neglected assets; and the heightening of security and punitive measures regarding non-compliance from contractors and other partners.
Boosting Revenue
The government announced in February 2023 that it decided not to renew contracts relating to a number of the country’s largest logistics facilities and warehouses, with a combined footprint of 3.5m sq metres, that were previously occupied by Kuwait-headquartered Agility, a global logistics player. The decision was made due to the fact that the tenancy price Agility was paying was deemed outdated and significantly below the current market value. The government announced its intention to retender the contracts. Although Agility is contesting the move, it will be permitted to compete for new contracts in a bidding process designed to facilitate the government’s drive to maximise and diversify revenue.
The government has assumed operational duties of the warehouses until a new tenant is secured, with subletters contracted by Agility being instructed to transfer their rent payments to the government. Agility is a key player in Kuwait’s transport and logistics activities, especially in light of its growing interest in the aviation sector. In August 2022 the company completed its £763m takeover of prominent UK-based international aviation service provider John Menzies. Combined with Agility’s National Aviation Services, the new business will operate as Menzies Aviation. In September 2023 the new entity signed a five-year contract extension with Kuwait’s leading low-cost airline, Jazeera Airways.
Aviation Segment
Kuwait International Airport is the country’s only commercial aviation centre, hosting 38 international airlines that serviced 96 destinations as of December 2023. The facility’s total passenger throughput in 2021 was 3.6m, which was 8% lower than the 3.9m recorded during the first 90 days of 2020. In 2021 the airport processed 208.7m kg of freight, up from 193.9m kg in 2020. Kuwait’s aviation and statistical authorities had not yet released data for 2022 as of early 2024.
The international airport is home to national carrier Kuwait Airways. In 2022 the airline’s passenger revenue reached KD289.1m ($940.6m), an 11% increase from the previous year. This helped the company cut annual losses by 48.6% between 2019 and 2022 from KD107m ($348.1m) to KD55m ($178.9m). The first half of 2023 brought a host of positive indicators for the airline as revenue grew by 30% and debt fell 39% compared to the corresponding period of 2022. Passenger traffic and craft utilisation rose by 45% and 34%, respectively, while flights operating on time increased to 81% during the same period. Kuwait Airways’ executives cited the accelerated uptake of advanced technologies in operational procedures and the growing portfolio of strategic partnerships as contributors to success. Indeed, those factors were key topics when Kuwait hosted the Arab Air Carriers’ Organisation meeting on digital transformation in September 2023, with aviation executives discussing the importance of a collective approach to improve the industry’s environmental and economic sustainability.
Reflecting this performance, in 2023 the company was named Most Improved Airline by Skytrax, a UK-based consultancy that manages an airline and airport rating programme. In 2023 Kuwait Airways was ranked 42 out of the best 100 airlines worldwide, up from a ranking of 76 the previous year.
In April 2023 the DGCA announced that it submitted plans for a cargo village neighbouring Kuwait International Airport for approval by the MoF. The facility is designed to boost freight capacity, attract private investment in the country’s aviation space and drive government revenue. Neighbouring Bahrain announced a similar project, Cargo Express Village, scheduled for completion in March 2024. Kuwait’s cargo village is an integral component in the DGCA’s three-phase long-term strategy that runs through 2050, and is designed to boost both passenger and freight aviation traffic. The initial phase of the project will include the design and construction of all main buildings and essential infrastructure and facilities.
In the defence space, in March 2023 US aerospace firm Boeing announce a $70m deal with the US government to provide logistics support for Kuwait’s new fleet of fighter jets, in turn boosting cargo capacities for the sector. Kuwait has two operational airbases, with a third set to be financed by the US with an investment of $32m in the coming years.
Road Development
Expanding and upgrading Kuwait’s road network is an integral part of the national transport and logistics strategy. In December 2022, before the entity was disbanded, the PART announced a major programme of transport infrastructure developments worth around $16.3bn. That programme included a series of roadworks such as the Third Ring Road, Fourth Ring Road, Fahaheel Expressway and East Raqqa Roads projects.
More recently, in May 2023 the MPW announced that 36 companies from countries including China and the US had shown interest in a road development programme with a total value in the range of KD220m ($715.8m) to KD240m ($780.9m). The ministry released 10 tenders that month, with bidding open until mid-June and contracts awarded in midJuly of the same year. The MPW stated that technical specifications would be the primary concern when selecting contractors for the projects, citing its previous prioritisation of cost as a significant factor in the stalling of previous projects.
Public Transport
Kuwait Public Transport Company (KPTC) was established in 1962 by royal decree and operated over 1000 buses along more than 100 routes throughout the country as of early 2024. KPTC’s range of services includes urban bus routes connecting Kuwait City with its surrounding suburbs and districts, as well as intercity buses, airport buses and charter buses, the latter of which are available for private hire and corporate events.
In 2002 City Bus, Kuwait’s inaugural private bus operator, commenced operations. By early 2024 its fleet surpassed 500 buses, with 80 being low-emission vehicles, aligning with Kuwait’s environmental sustainability efforts. Buses play a crucial role in Kuwait’s transport, recording about 120m fares in 2020, or roughly 122 journeys per 1000 people per day. Recent initiatives aim to boost ridership.
Private vehicle travel remains the preferred mode of passenger transport, causing high levels of pollution, congestion and road degradation, particularly in and around Kuwait City and other commercial centres. Those issues are expected to worsen as Kuwait’s population expands in the future. In a bid to boost both the sustainability and appeal of bus travel, KPTC announced in December 2022 that a fleet of modern, electric buses, built by China-based manufacturer King Long would be brought into operation in Kuwait in January 2023, with more of the vehicles to be introduced in the coming years.
The country had plans to build a 160-km metro network, to be built over five stages covering 68 stations. The project, which was announced in 2015, hit a series of delays. In November 2023 the Supreme Committee of the Public-Private Partnerships Authority cancelled the metro project, citing administrative and financial burdens on the public.
Railways
Kuwait does not have an operational railway, but significant developments are in the pipeline in the segment. The long-awaited GCC Railway project is being revitalised, a move that could transform the segment in Kuwait and beyond. The project was initially approved by all GCC members in 2009 and, once complete, will connect the six countries via a 2177-km railway. The line will start in Kuwait City and end in Muscat, the capital of Oman. In January 2023 PART issued tenders for the first phase of the new railway project, which will cover 110 km of the GCC Railway line and 154 km continuing through to Mubarak Al Kabeer Port. The first tender for phase one has an estimated value of $3.3m. As of September 2023 nine local and international firms were vying for the project (see analysis).
Another development is a high-speed rail link between Riyadh, Saudi Arabia, and Kuwait City. In October 2023 officials from the two countries awarded the $10.6m consultancy and feasibility contract to French consulting firm SYSTRA, with relevant studies set to be completed inside six months.
Outlook
Rail developments carry the potential to unlock significant economic potential for Kuwait and the GCC, as do planned and active development projects throughout the transport and logistics sector. As is the case across the country’s economy, political accord and operational efficiency will be key to facilitating financing. Evidence across the GCC demonstrates that international financiers are keen to invest in the regional transport sector, given the potential for returns from large-scale, high-usage infrastructure projects. If existing challenges can be overcome, transport and logistics could propel Kuwait towards its development and diversification goals, as well as provide an engine for job creation.
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