As Saudi Arabia pursues its programme of economic diversification as part of its Vision 2030 roadmap, the country’s transport networks and logistics industry are set to play a key role in achieving these goals. The sector continues to witness rapid expansion, as large projects in a wide range of areas – including roads, ports, public transport and airlines – are quickly developed with significant public funding. In keeping with the principles of Vision 2030, much of the transformation maintains a focus on sustainability and technological innovation, as the Kingdom aims to establish itself as an advanced modern economy. As Saudi Arabia continues its ambitious efforts to become a leader in transport and logistics, opportunities for private investment remain abundant and are expected to persist.
Structure & Oversight
The Ministry of Transport and Logistic Services (MTLS) is responsible for maintaining road projects and acting as regulator for transport entities within Saudi Arabia. It counts as part of its mission establishing the Kingdom as an international logistics centre in order to achieve global connectivity. The ministry’s services include issuing permits, approving materials for road construction, overseeing maintenance, and other related responsibilities. Within the ministry, the General Authority for Civil Aviation (GACA) and the Saudi Ports Authority (also known as Mawani) regulate their respective sectors, and the Transport General Authority oversees the railway, maritime and land transport sectors. The Roads General Authority (RGA) is responsible for the construction, operation and maintenance of roads within the country.
Saudi Arabia is home to several government-owned transport enterprises. Bahri (formerly known as the National Shipping Company of Saudi Arabia) is the Kingdom’s national shipping carrier. Saudia is the national airline, while a second carrier, Riyadh Air, is being developed by its public owner, the Public Investment Fund (PIF) – Saudi Arabia’s sovereign wealth fund. Riyadh Air expects to commence operations by 2025. Saudi Arabia Railways (SAR), also owned by PIF, manages the Kingdom’s rail network, having taken over the operations of the Saudi Railway Organisation in 2021.
The Expenditure & Projects Efficiency Authority, established in 2021, aims to optimise government agencies’ spending efficiency, improve the quality of projects, assets and facilities, and enhance infrastructure planning, programes, and operational processes. The authority is responsible for monitoring expenditures, proposing legislation and regulations, and developing policies and strategies, among other key functions.
The National Centre for Privatisation and PPP (NCP) is responsible for overseeing the government’s privatisation programme, an initiative launched under the Vision 2030 banner. The programme is geared towards economic development and enhancing the role of the private sector in the provision of services and the availability of government assets. Additionally, it aims to allow the government to maintain a greater focus on its legislative and regulatory duties, while at the same time attracting local and foreign direct investment (FDI). The NCP assists in creating privatisation frameworks, as well as preparing government assets and services for privatisation. Furthermore, it manages the privatisation pipeline, and makes suggestion for which sectors or government-owned assets could be privatised or enhanced through private-sector participation.
Strategy
In April 2016 Saudi Arabia announced its Vision 2030 programme, a comprehensive and multifaceted roadmap that aims to diversify the economy away from a reliance on oil revenue. This initiative emphasises sustainability, technological innovation and improving the overall quality of life for its citizens. Under Vision 2030, the National Industrial Development and Logistics Programme (NIDLP) was launched in 2019. NIDLP focuses on enhancing the country’s energy, mining, logistics and industrial sectors, as well as levaraging its favourable geographical position in the GCC and Middle East to turn the Kingdom into a global logistics centre.
“Saudi Arabia’s ambition to become a regional logistics centre is reshaping the transport landscape through investment in ports, railways and supply chain capabilities,” Hisham Al Ansari, CEO of Mediterranean Shipping Company, told OBG. “The challenge is optimising operations for connectivity and cost-effectiveness.”
NIDLP aims to increase the volume of goods transported through Saudi ports to nearly 40m twenty-foot equivalent units (TEUs) and increase the number of passengers travelling through the country’s airports to about 330m by 2030, thereby enhancing the country’s position as a global transport centre. The plan aims for the country to be ranked first in the region in terms of cargo volume and quality of services, and to rank 10th in the World Bank’s Logistics Performance Index by 2030. This will require increasing global connectivity and reducing the cost of transport.
The government launched the National Transport and Logistics Strategy (NTLS) in June 2021, also with the aim of positioning Saudi Arabia as a global logistics centre. The strategy includes plans to extend the length of the national rail network to an estimated 8080 km, to develop a 1300-km-long landbridge and connect ports on the coast of the Arabian Gulf with those on the Red Sea coast. Under the NTLS, in August 2023 the government launched the Master Plan for Logistics Centres, which stipulates the creation of 59 logistics centres across the country, with a total area of more than 100m sq metres, including 12 centres in Riyadh Region, 12 in Makkah Region, 17 in the Eastern Region and 18 throughout the rest of the Kingdom. Of these, 21 are currently in development, with all centres scheduled for completion by 2030. The centres are intended to help local industries export their products efficiently, provide support to e-commerce by enabling rapid connections between logistics and distribution centres and to provide oversight and cargo traceability.
Regional Leadership
The Kingdom’s Global Supply Chain Resilience Initiative (GSCRI), launched in October 2022, aims to attract investment from leading global industrial companies and to optimise the investment environment for investors in supply chains. The GSCRI is intended to identify and develop investment opportunities and present them to investors, establish a number of special economic zones to create an attractive investment environment and attract the regional headquarters of international companies. Given the impact that the pandemic and trade disputes have had on global supply chains in recent years, the GSCRI intends to strengthen the Kingdom’s resilience in order to mitigate the effects of future global disruptions. As well as pursuing improvements to the investment environment, the strategy will provide opportunities and an incentives budget, including SR10bn ($2.7bn) in financial and non-financial incentives.
Saudi Arabia is pursuing several initiatives to transform its transport sector, in light of its focus on sustainability and drive to tackle climate-related challenges. A 2022 report published by Mawani, titled “Enabling Growth and Innovation Across the Saudi Maritime Sector”, outlined three key policy initiatives. The first is a switch to electric vehicles (EVs), with the aim that EVs will make up 30% of all cars in Riyadh by 2030; the second focuses on electrifying public transport vehicles; and the third offers incentives to travellers to utilise sustainable alternatives to private vehicles. The NEOM giga-project – a vast, high-tech urban area currently in development in the north-west of the country and one of the flagship projects of the Vision 2030 roadmap – is a particularly high-profile example of the government’s commitment to sustainability and tackling climate change. The mobility component of NEOM aims to make walkability and cycling central to the project, and to achieve net-zero carbon emissions and use 100% renewable energy.
Ride-hailing services have been growing in popularity in Saudi Arabia, with UAE-based Careem and US-headquartered Uber operating in the field. Careem launched Careem Bike in Madinah in 2023, where the local municipality had built 70 km of bike paths. As part of the country’s Vision 2030 agenda, and working in conjunction with the National Transformation Programme and the NIDLP, the government is planning to invest $133bn into developing key infrastructure such as ports, airports and railways through to 2030.
“The market is seeing high digitalisation and is being driven by shared rental pools for large developments like NEOM, which is improving efficiency and cost savings in Saudi Arabia’s transport sector,” Syed Azfar Shakeel, CEO of Lumi Car Rental, told OBG. “This dynamic supports the growing demand for rental cars while aligning with Vision 2030’s emphasis on sustainability and technological advancement.”
Size & Performance
The Ministry of Economy and Planning records transport sector data under the broader category of transport, storage and communications. The ministry’s data show that this category posted economic growth of 5% in the first quarter of 2024, compared to the same period a year earlier. This follows an expansion of 6.4% in the fourth quarter of 2023, 5.1% in the third quarter and 12.9% in the second quarter. The sector recorded annual rise in GDP of 7.6% in the third quarter of 2023 – the second highest growth rate of any sector in the Kingdom – behind only community, social and personal services.
According to data published by the Ministry of Commerce highlighting the performance of 10 promising sectors in the second quarter of 2024, the logistics industry showed the highest growth, with commercial registrations up by 76% year-on-year (y-o-y). Container-handling services were in third place, with y-o-y growth of 48%, and urban and suburban passenger land transport was in sixth place with 31%. Moreover, Saudi Arabia’s maritime network has grown significantly and is ranked 16th out of 187 countries, according to a 2024 report published by the UN Conference on Trade and Development. In 2024 Saudi Arabia was awarded a connectivity score of 77.66 points on the UN’s Maritime Index, beating the Kingdom’s 2030 target of 75 points. Similarly, the country’s rank in the World Bank’s Logistics Performance Index increased to 38th, up by 17, reflecting improvements to the logistics sector and supply chains. Both local and global private sector investment in the sector have increased. There are currently 25 international shipping lines operating in the Kingdom, plus 12 major logistics zones in Saudi ports.
Roads
According to MTLS, the total length of operating highways in Saudi Arabia is over 5000 km. The length of the single-road network is 49,000 km, all of which the ministry reportedly intends to expand into double roads. Currently, the total length of double roads is over 12,000 km, and the network of paved dirt roads stands at about 144,000 km. In May 2024 the Ministry of Municipalities and Housing announced an initiative to improve the network of city roads, which aims to increase traffic safety levels.
A 2024 survey by the RGA ranked Saudi Arabia fourth among G20 countries for road quality. According to the survey, over 77% of Saudi roads meet safety standards, exceeding the 2023 target of 66%. These results reflect the progress of the Roads Sector Strategy, which focuses on safety, quality, traffic density, and sustainability. The strategy aims to improve the road network and user experience while promoting innovation.
Government projections expect the strategy to contribute SR74bn ($20bn) to GDP and create 293,000 direct and indirect jobs. The authority has established a road safety data centre to collect and analyse traffic accident data, helping to develop plans for reducing accidents. Furthermore, road maintenance contracts have been converted into performance-based agreements to improve work quality. An advanced system for managing bridges, monitoring infrastructure quality, and forecasting repairs has also been developed. In addition to improving the road quality index and reducing road fatalities, the authority aims to increase private sector participation in operational work to 20%.
A major highway project linking Aseer region to Jazan was announced, with the RGA stating in June 2024 that 69 companies had submitted bids to win the contract. Among these are 37 global companies, including Spain’s Accinoa Construccion, France-based Bouygues Batiment, Korea’s Hyundai E&C and India-headquartered Larsen & Toubro. The 136 km-long highway is a collaboration between the RGA and the NCP on a design-build-finance-operate-maintain model. The RGA expects the project to take 30 years to complete.
In August 2024 the Royal Commission for Riyadh City announced that it had awarded four road development contracts, worth a total of SR13bn ($3.5bn), as part of phase one of its programme to enhance Riyadh’s transport system. The first phase will consist of the development of a system of main and ring roads, which will improve the city’s connectivity. This phase is expected to take three to four years to complete.
Rail
Official figures show that SAR carried 5.1m passengers in the first six months of 2024, a 17% y-o-y increase from 2023. The figures also show a 5% increase in trips in the same period, consisting of 17,200 trips on the Eastern Train, Northern Train and Haramain High-Speed Train networks. In addition, the volume of minerals and goods transported through the Kingdom’s rail network in the first half of 2024 increased by 9% y-o-y, standing at over 13.3m tonnes. Official estimates suggest that this increase in train cargo transport resulted in a reduction of vehicle trips on the country’s highways by over 1m in total.
Several rail initiatives and agreements were made in the first half of 2024 to improve the rail system and boost passenger numbers. A luxury train service is set to begin in the fourth quarter of 2025, while SAR has purchased 10 new trains for its Eastern Railway Network. Additionally, two memoranda of understanding were signed with the Saudi Authority for Industrial Cities and Technology Zones to connect the logistics zone in Dammam to the national rail network, linking ports and the industrial sector to consumer markets.
Metro & Buses
Riyadh’s public transport network is set for a significant transformation, with the introduction of a new, rail-based metro system and ongoing expansion of the bus network. The initiatives are part of the greater King Abdulaziz Project for Riyadh Public Transport, which aims to expand the city’s public transport options into a world-class, affordable and reliable network that will in turn reduce traffic congestion and provide economic, social and environmental benefits across the population, reflecting the country’s drive towards climate sustainability and improved quality of life as part of Vision 2030.
The project will consist of six metro lines, 84 metro stations, 80 bus routes, 2860 bus stops and 842 buses in total, with an expected capacity of 1.7m passengers per day in the initial operational phase. The network has been developed with consideration given to population density and distribution, connections between points of interest – including ministries, universities, hospitals and commercial complexes – estimated traffic volume, anticipated passenger levels, journey duration, and achieving reductions in road congestion and emissions.
The development of the metro project, which has an estimated cost of $23bn, is under way, and is envisioned as being the backbone of public transport in Riyadh. In its first phase, the metro is expected to have a capacity of 1.2m passengers per day, with potential capacity of 3.6m daily once the project is fully operational. The network will span six lines over 176 km, covering densely populated areas, public facilities and major institutions. It will connect to key locations, including King Khalid International Airport, King Abdullah Financial District, universities, downtown Riyadh and the public transport centre. The metro will feature fully automated trains with advanced operational technologies.
Once launched and fully operational, the expanded bus network is expected to have a passenger capacity of over 500,000 annually. In addition, a demand-responsive transit service is being planned to offer flexible connections for passengers, particularly for the first or last mile of their journey in residential neighbourhoods. In December 2023 the Royal Commission for Riyadh City announced the completion of the main bus network, which includes 54 routes and 2145 stops. However, as of November 2024, no official completion dates have been provided for the remaining phases of the bus network expansion or the urban metro project.
Air
The Kingdom’s aviation segment has experienced considerable expansion from 2023 and is poised to become one of the fastest-growing air markets in the world, according to research published by GACA. The authority’s 2024 State of Aviation Report, the first of its kind to assess the contributions of the aviation sector to the Saudi economy, states that it contributed $53bn to the economy in 2023, or 5.2% of the country’s gross value added (a measure of the value of goods and services net taxes), thanks in large part to a surge in tourism growth. The sector supported 958,000 jobs, and the country experienced a record high for traffic, with 111.7m annual passengers passing through Saudi airports in 2023, a y-o-y increase of 26%. The sector’s post-Covid-19-pandemic recovery is also surpassing global averages; in 2023 Saudi Arabia’s seat capacity was 123% of 2019 levels, compared with 90% globally and 95% for the Middle East region as a whole.
Several major airport projects progressed throughout 2023, including a significant terminal expansion at Jeddah Airport, which saw its capacity increase to 114m passengers per year. The Red Sea International Airport opened in September that year, a key component in supporting the Rea Sea tourism industry and the Red Sea giga-project, another flagship initiative of Vision 2030. The Abha Airport masterplan was announced in October 2023. A public-private partnership intended to boost the airport’s annual capacity from 1.5m passengers to 13m in the coming years, the plan received expressions of interest from over 100 private sector partners around the world. In addition, progress continues on the development of King Salman International Airport, which is eventually expected to become one of the world’s largest airports, featuring six runways. Official figures project that it will accommodate up to 185m passengers and 3.5m tonnes of cargo by 2050.
Ports
King Abdulaziz Port in Dammam continues to play a key role in the country’s trade and logistics, as it handles ever-increasing cargo volumes and serves as an important gateway for international goods to the eastern and central regions of the Kingdom. The port has 43 fully equipped berths, a handling capacity of up to 105m tonnes of cargo and containers, and features a rail connection to the Riyadh dry port. In August 2024 the port set a record for container throughput on a single vessel – 20,645 TEUs – and in May of that year it set a new monthly container throughput record of 292,612 TEUs. Also in 2024, the port received an order of 21 quay cranes and rubber-tyred gantry cranes, following a deal between Mawani and Saudi Global Ports (SGP), worth SR7bn ($1.9bn). SGP has also recently signed a contract with China’s heavy-equipment manufacturer Sany to provide the port with 80 electric trucks.
Reflecting the NTLS’s objectives of positioning Saudi Arabia as a global logistics centre, Mawani’s July 2024 data for the ports that it oversees show a 9.1% y-o-y increase in the volume of cargo handled that month. Tonnage rose from 25.1m tonnes in July 2023 to 27.4m tonnes a year later. The number of inbound containers also increased, by 15.7%, though the number of outbound containers decreased slightly, by around 2.5%.
Also in July 2024 Mawani announced the listing of Jeddah Islamic Port on the London Metal Exchange (LME). According to Mawani, the listing of the port as a new delivery centre for copper and zinc, in particular, helps to raise its status as a global logistics platform. The signing also enhances the port’s attractiveness as an investment destination for global stock exchanges and positions it as a global storage platform and distribution centre for minerals. The LME stated that the listing will become active three months after the first warehouse company is approved at the port.
FDI & Private Investment
In June 2024 Egyptian engineering and construction company Hassan Allam Holding announced that its Saudi division had partnered with the local construction company El Seif Engineering Contracting and China Harbour Engineering Arabia to secure a major design-and-build contract at the Port of NEOM, worth an estimated SR4bn ($1.1bn). The facility is located in Oxagon, one of the regions participating in the greater NEOM project. The deal is expected to provide engineering, procurement and construction services for the development of the port’s Container Terminal 1 and a marine services area, as well as the entrance zone to the new container terminal. The port is regarded as a critical part of NEOM’s development, as it will enable the giga-project to receive an ever-increasing volume of materials as construction ramps up. The port will offer container handling, general cargo, bulk and roll-on/roll-off automobile ferry services and has been designed such that it is strategically located to connect to regional and global cargo supply chains.
The deal at the Port of NEOM follows a number of other contracts that are also in the pipeline. In October 2023 the contractors Belgium’s Deme and Greece’s Achirodon were awarded a contract worth an estimated $1bn as part of a joint venture project to complete the second phase of the Duba port expansion at Oxagon. Similarly, in August 2024, Bahri signed a strategic Letter of Intent with the local government-owned mining company, Ma’aden to invest in local maritime industries with the goal of developing resilient supply chains.
In July 2024, flynas, the leading Saudi low-cost carrier, signed a significant agreement with Airbus to purchase 160 new aircraft, bringing its total order to 280 by doubling previous orders from 2016 through to 2023. This expansion will enhance flynas’s capacity, range and fleet capabilities. The deal includes the provision of 75 narrow-body A320neo-family aircraft and 15 wide-body A330-900 jets, estimated to be worth approximately $4bn and $1.7bn, respectively, according to Cirium Ascend, an aviation analytics company.
The airline stated that the new additions were slated to serve a range of international, regional and domestic routes, and anticipated that its fleet would consist of over 160 aircraft by 2030. Abdulaziz Al Duailej, president of GACA, emphasised the significance of the deal in contributing to the National Civil Aviation Strategy’s goal of connecting Saudi Arabia to over 250 destinations and increasing passenger traffic to the Kingdom to approximately 330m annually by 2030.
Outlook
As a pillar of Saudi Arabia’s long-term diversification and expansion plans, the transport sector plays a crucial role in many aspects of the Kingdom’s economy, and remains an area of interest for investment. The government has continued with its efforts to streamline regulatory processes and provide incentives to private investors. Further, the country’s flagship giga-projects offer a broad range of extensive long-term opportunities. As the Kingdom continues to evolve, it presents opportunities for companies that can contribute to these key areas. Those able to offer innovative, tech-driven solutions will find Saudi Arabia’s investment environment to be both supportive and ripe with long-term potential, as the country seeks to diversify its economy and modernise its infrastructure.
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