تقرير للمنصة اللوجستية السعودية

OUR AMBITION TO BECOME
A LEADING LOGISTICS HUB:

Growth of non-oil exports from
$36 billion to $170 billion

Growth of re-exports from
$5.6 billion to $140 billion

Growth of domestic cargo traffic
from 143 to 375 billion tons-km

Growth of domestic passenger traffic
from 62 to 127 billion pax-km

SOME OF OUR
KEY ACHIEVEMENTS:

24 hours clearance
program implemented

54% reduction on handling
fees for empty containers

Reduced dwell time at
seaports from 14 to 4 days

55% of declarations submitted
prior to vessel arrival

INSIDE
THIS REPORT:
  • Expanding logistics infrastructure
  • Efficiency and process reforms
  • Investment opportunities, privatization and PPPs
  • National commitment to sector reform
OPENING REMARKS

Like most other industries in Saudi Arabia, the logistics sector is currently undergoing immense change; and like all change, this brings tremendous opportunity. New technologies, new market entrants, new customer expectations, and new business models. The global logistics industry plays a pivotal role in global growth and could be considered the backbone of any economy

In the last ten years, Saudi Arabia has invested over $100 billion in its transport and logistics infrastructure, resulting in a coherent and extensive network covering all parts of the Kingdom.

H.E. Eng. Saleh Al-Jasser

Minister of Transport and Chairman of the Saudi Logistics Hub Committee

As a consequence, Saudi Arabia today has one of the fastest growing logistics sectors globally. In fact, Saudi Arabia’s logistics sector is ranked the 3rd most attractive within emerging markets. The Kingdom is also home to the largest logistics market in the GCC, accounting for approximately 55% of the total market in the region.

However, we believe that we can leverage our strategic geographical location at the crossroads of three continents and along global trade routes even further. In 2016, the launch of Vision 2030 formalized the ambition to position Saudi Arabia as a global logistics hub. In 2017, we established the Saudi Logistics Hub, a government initiative to support the logistics sector committee mandated to supportthe logistics sector and capture the opportunities at the heart of the global industry

The Saudi Logistics Hub has developed clear industry targets, thoughtful strategies, and thorough implementation plans. These will generate an industry overhaul in terms of infrastructure development, streamlining of processes and procedures, and modernizing of the sector’s governance in light of greater private sector participation.

However, the past two years were not only about strategies and plans. This pivotal period saw us working tirelessly to achieve key reforms in the sector while awarding strategic private sector contracts. As we officially present the Saudi Logistics Hub to the world, we’re able to showcase a number of early wins and transformative reforms that are testament to how serious we are in pursuing the ambitions set out by Vision 2030.

Our reforms have already received the recognition of international thirdparty organizations such as the World Economic Forum and the World Bank in their most recent reports. We are proud of these achievements, and we have a strategy in place that will allow us to reach our targets in the months and years ahead.

In this special report we cover key facts about Saudi Arabia’s transport and logistics sector, our targets and initiatives, key achievements to date, and exciting investment opportunities.

With the launch of the Saudi Logistics Hub, we call on the private sector to join us on an ambitious journey to consolidate Saudi Arabia’s position as an efficient, competitive, and profitable hub in the global logistics market.

SAUDI ARABIA’S LOGISTICS
SECTOR AT A GLANCE IN 2018

$19 billion market size

55% share of the GCC logistics industry

40 border crossings (land, sea and air)

15 land border crossings connecting to 9 countries

ROADS

70,000 km of intercity roads

5,000 km of highways

145,000 km of unpaved roads

PORTS

257 million tons of cargo capacity across 9 ports 2

615 million tons of port breakbulk capacity

232 berths and terminals

AIRPORTS

99.8 million passengers across 28 airports

110 international destination connections

1 million tons of air cargo and freight handled

RAILWAY

5,590 km of railways serving 15 railway stations

2.3 million railway passengers

9.7 million metric tons of metals and chemicals transported by railway

Saudi Arabia’s Improvement in the 2019 World Economic Forum Infrastructure Rankings 2018 Rank 2019 Rank
Infrastructure 40th
34th
Road Connectivity 2nd
1st
Quality of Road Infrastructure 30th
26th
Road Connectivity 2nd
1st
Effenciency of Train service 50th
26th
Airport Connectivity 24th
24th
Effenciency of Air Transport Services 39th
34th
Liner Shipping Connectivity 21st
21st
Effenciency of Seaport services 44th
40th

SAUDI ARABIA AS A HUB
CONNECTING THREE CONTINENTS

Through Vision 2030, the Kingdom has developed an ambitious investment program that will transform the logistics sector into a pillar of the national economy and a key driver of economic growth. We have already invested heavily in the construction of ports, railways, roads, and airports.

The Heart of the Arab and Islamic world The Investment Powerhouse The Hub Connecting Three Continents

To take full advantage of these investments, we plan to work with the private sector and enter into a series of new international partnerships that will complete, improve, and link our infrastructure internally and across borders

We will unlock our “hard” infrastructure with systems that can drive higher performance, including more rigorous governance, leaner processes, and a more efficient customs system. We will also improve existing laws and regulations. Air, maritime, and other transport operators will be encouraged to make the most of their capacity, achieving durable links between existing trade hubs, as well as opening up new trade routes for the first time.

This will reinforce our position as a unique logistical gateway to three continents.

Saudi Arabia offers logistics companies, supply chain managers, and manufacturers a thriving G20 consumer-driven economy and the opportunity to leverage a globally strategic location

KEY TRADE FACTS

  • Total Re-Exports:

    $8.7 billion

TOP 10 EXPORT PARTNERS:

  • 1.China
  • 2.Japan
  • 3.India
  • 4.South Korea
  • 5.USA
  • 6.UAE
  • 7.Singapore
  • 8.Netherlands
  • 9.Belgium
  • 10.Bahrain

TOP 10 IMPORT PARTNERS:

  • 1.China
  • 2.USA
  • 3.UAE
  • 4.Germany
  • 5.India
  • 6.Japan
  • 7.France
  • 8.South Korea
  • 9.Italy
  • 10.United Kingdom

INTRODUCING THE
SAUDI LOGISTICS HUB

The Saudi Logistics Hub is a government committee formed by leading transport and logistics entities in Saudi Arabia to support growth in the logistics sector. The committee is overseeing an initiative to position Saudi Arabia as a hub connecting three continents in line with Vision 2030’s bold ambitions.

Saudi Logistics Hub will transform Saudi Arabia into a globally competitive and efficient export, re-export, and domestic connectivity platform by enhancing the sector’s infrastructure, processes and procedures, and regulatory frameworks.

In unlocking over $35 billion worth of potential investment opportunities by 2030, Saudi Logistics Hub works in partnership with the private sector to enhance the competitiveness, transparency, and efficiency of the sector.

THE COMMITTEE IS MANDATED TO:

  • 1

    regulatory, funding, and national policy priorities to enhance the competitiveness of the logistics sector

  • 2

    sector stakeholders in the implementation of strategic initiatives, monitor the sector’s performance, and take any necessary corrective actions

  • 3

    the representation of Saudi Arabia’s transport and logistics sector locally and internationally, and drive increased private sector participation in the industry

  • 4

    opportunities to leverage and adopt disruptive trends and international best practices in Saudi Arabia

  • 5

    and influence national policies in terms of logistics speed, cost, and supply chain visibility

SAUDI LOGISTICS HUB
MEMBERS

PERMANENT MEMBERS

Saudi Arabia has set ambitious targets to position the country as an efficient export and re-export platform while enhancing the efficiency of domestic connectivity infrastructure

Saudi Arabia’s Targets
as a Logistics Hub

EXPORT PLATFORM

Saudi Arabia aims to grow its non-oil exports by 500% by 2030, from $36 billion to $170 billion, which would more than double the current export-related transportation throughput from 63 million tons to 131 million tons.

EXPORT PLATFORM

Saudi Arabia’s re-export targets are even more ambitious, aiming to increase the re-export of goods from the current $5.6 billion to $140 billion by 2030, leading to a tenfold increase in re-export throughput from 10 to 101 million tons.

RE-EXPORT PLATFORM

Saudi Arabia is committed to building a strong capillary distribution system providing affordable goods and inputs across the regional and intra-city and on-demand delivery market.

  • 1.4 billion

    tons-km

    62 billion

    passengers-km

  • 375 billion

    tons-km

    127 billion

    passengers-km

A STRATEGY BASED ON
THREE PILLARS

To achieve these targets, the Saudi Logistics Hub has developed an ambitious strategy focused on 3 pillars that together cover ease of shipment, logistics costs and infrastructure development and capacity utilization within ports, railroads, roads, and information technology

  • Targeting capacity expansions in key transport and logistics assets, will eliminate infrastructure bottlenecks, reduce congestion and serve the rapidly growing cargo and passenger traffic

  • Streamlining and automation of border crossing and logistics processes, will reduce the time and cost of shipping

  • Enhancing sector governance & regulations and encouraging private sector involvement will improve transportation and logistics service quality

SAUDI LOGISTICS HUB
INFRASTRUCTURE PLAN

A long-term infrastructure plan designed to increase competitiveness, attract investment, and unlock the sector’s full potential. The plan further supports all types of logistics providers, operating in areas such as forwarding, multi-modal transportation, and third-party logistics services.

The infrastructure plan will develop:

PORTS
INFRASTRUCTURE PLAN

Large investments have already been made to ensure that port capacity exceeds current demand and is able to meet future demand. In addition, the Saudi Logistics Hub will continue expanding the Kingdom’s ports capacity as needed.

AIRPORT
INFRASTRUCTURE PLAN

The planned expansion of airport capacity will support growing passenger numbers and freight volumes

RAILWAYS
INFRASTRUCTURE PLAN

Rail infrastructure and high-speed rail links will be integral to addressing the increasing demand on domestic freight and passenger transport.

ROADS, LOGISTICS PLATFORMS
AND BORDER CROSSINGS
INFRASTRUCTURE PLAN

Targeted investments in ring roads, road infrastructure, border crossings, and road extensions are required for reliable parcel delivery and for capacity upgrades to match the growth in parcel volumes. This is especially relevant in rural areas, enabling cross-border businesses to penetrate lower-tier cities

The plan will also improve the overall service quality of the sector by eliminating infrastructure bottlenecks and reducing congestion.

PROCESS
IMPROVEMENTS

In addition to enhancing the country’s physical infrastructure, the infrastructure plan also lays the groundwork for streamlining and automating border crossings and logistics processes.

2017

We launched the Fasah Program (starting from 7-10 days customs clearance)

2019

We reached the Fasah Program Goal within 24 hours customs clearance

2022

We aim to reach the Fasah Program Goal of customs clearance within 2 hours

Areas of
Development
Description Current
Status 2019
Target 2022
Procedures
Restructuring
Streamline the customs clearance process for import and export operations and launch the unified reception center 24 Hours 2 Hours
Promote Stakeholder
Compliance
Increase stakeholder compliance to ensure data processing and completion before the arrival of the consignment 22% 80%
Enhance Risk Management and Targeting System Apply a risk management and targeting system to all consignments and fast-shipping packages to reduce the percentage of manual inspection (depends largely on the number of products restricted by the relevant authorities) 48% 10%
Enhance IT Infrastructure Through Single Window System Automate linkages with all stakeholders (including other clearing authorities, express carriers, port operators, and customs brokers) in the single window system (Fasah) to consolidate all trade-related services 33% 100%

LOGISTICS
SECTOR REFORMS

Saudi Arabia is reforming the transportation and logistics sector across all modes in order to improve service quality and increase private sector participation.

Initiatives Main levers or projects
Regulations improvement
  • Enhancement and enforcement of the regulation of the road freight industry
  • Opening up customs to industrial and logistics players
Port sector reform
  • Revision of concession frameworks to make them more attractive
  • Establishment of an independent sector regulator
Rail sector transformation
  • Integration and privatization of railway operations
  • Establishment of an independent sector regulator
Port sector reform
  • Revision of concession frameworks to make them more attractive
  • Consolidation of infrastructure ownership and management
Air cargo liberalization
  • Providing PPP and concession opportunities for air cargo facility development and operation to the private sector
Special economic zones (SEZs)
  • Upgrading of existing economic cities and bonded zones to SEZ status
  • Establishment of new SEZs
Logistics players funding
  • Rollout of targeted financing mechanisms (e.g. low-cost loan programs and loan guarantee programs)
Human capital development
  • Development of higher education degrees and vocational training programs

SAUDI LOGISTICS HUB
ACHIEVEMENTS TO DATE

We are proud to announce that we have already recorded several achievements across the industry.

KEY ACHIEVEMENTS IN TERMS OF CUSTOMS, PROCESSES AND PROCEDURES
  • Launched the Fasah clearing program within 24 hours
  • Reduced the manual inspection rate from 89% to 48% via the new Customs Targeting Center
  • Reduced the number of documents required for import from 12 to 2 and export from 8 to 2
  • Automated the approval procedures of the Saudi Food and Drug Authority and the Ministry of Environment, Water and Agriculture for clearing cargo at the main ports
  • Enabled easier transit and cross operations from one customs port to another through means of sea, air, and land transport
  • Launched the Truck Management System at King Abdulaziz Port in Dammam and in 4 other main ports
CUSTOMS PROCEDURES IMPROVEMENT
  • Before
  • /
  • After

No. of Required Documents

Export 8 - Import 12

Export 2
Import 2

Payment

Cash

Electronic
Transfer

Container Duration of Stay at Port

14-16 Days

4-5 Days

Clearing Time

7-10 Days

24 Hours

Duration of Free Storage at Port

10 Days

5 days

Manual Inspection

89%

48%

Submission before Arrival

0%

55%

Electronic Transactions

15%

100%

SAUDI LOGISTICS HUB
ACHIEVEMENTS TO DATE

Launched 5 logistics e-platforms

DIGITIZATION OF LOGISTICS PROCESSES AND PROCEDURES

Launched 5 integrated logistics e-platforms:

  • Fasah:A single window that will reform import and export process, supporting an easier trade ecosystem. Easily connect with all relevant parties and track, schedule, and pay via a single e-window
  • Wasl:e-platform that links organizations working in the land transport field with organizational entities, enabling the Transport General Authority to monitor and control land transport and enhance quality, safety, and security
  • Bayan:e-platform that enables carriers and freight agents to issue goods transport documents, declare the load of trucks on land roads, and verify cargo information and conditions
  • Naql:e-platform that enables logistics providers to remotely apply for the various licenses necessary to carry out their work by completing all procedures and processes electronically
  • Washaj:e-platform that supports the beneficiaries of air cargo products, enabling customers—whether companies or individuals—to track cargo from the moment it is loaded to the moment it is delivered

10 Transport & Logistics Sector Reforms

TRANSPORT & LOGISTICS SECTOR REFORMS
  • Launched the Authorized Economic Operator (AEO) program, which offers customs advantages to trusted businesses (customized pathways)
  • Launched logistics sector financing through the Saudi Industrial Development Fund, soft financing up to 75% of project costs to enhance competitiveness
  • Enhanced the Bonded Zone bylaws
  • Liberalized the postal sector and separated the legislator from the operator for improved governance
  • Launched the General Regulations for Shipping Agents (local and foreign investors)
  • Adopted the Trucks Parking regulations
  • Adopted the goods carriage, freight brokers, and trucks leasing regulations
  • Adopted new rules and conditions for the establishment and operation of storage areas and warehouses
  • Established the National Traffic Safety Center
  • Reduced the restricted chemicals import list from 135 restricted substances to 35

KEY ACHIEVEMENTS IN
THE AIRPORTS SECTOR

SEVERAL AIRPORTS UNDER DEVELOPMENT:

Al Jouf

Al Qunfudhah

Abha

Started the operation ofNeom Bay Airport,the first airport to service the new$500 futuristic city in the North-west of Saudi Arabia

Launched a new terminal at King Khalid International Airport in Riyadh,bringing the airport’s capacity to 12 million passengers

Inaugurated King Abdulaziz International Airport in Jeddah, the main gateway to the Western Region of Saudi Arabia and the two Holy Cities of Makkah & Medinah

Launched the Integrated Logistics Bonded Zone (ILBZ) at King Khalid International Airport in Riyadh, Saudi Arabia’s first special economic zone

Opened a new cargo terminal in King Fahd International Airport in Dammam, the gateway to Saudi Arabia’s most advanced industrial areas

Achieved best-in-class domestic access with over 25% peer-to-peer network connectivity ratio

KEY ACHIEVEMENTS IN
THE RAILWAYS SECTOR:

Integrated, and privatized national railway operations

Launched the North Network passenger servicein 2017,serviced by15 stations

Launched one of the world’s longest trainswith a train length of3 Km

Launched the Mineral railway which replaced 800,000 single truck trips and significantlyat reduced carbon emissions for minerals transport

Launched the Haramain High-speed Railway (HHR) in 2018,, one of the 10 fastest trains in the world linking the Western cities of Jeddah, Makkah, and Medinah

Initiated theSaudi Landbridge project:a 1,000 km cross-country freight railway line connecting the East and West coasts of Saudi ArabiaAchieved best-in-class domestic access with over

KEY ACHIEVEMENTS IN THE ROADS
AND LAND PORTS SECTOR:

Completed 57 road projects for a total of 1,700 km in length

Signed contracts for the operation and maintenance of 110road projects, with an investment of over $1.1 billion

Signed 88 project contracts for new roads with a total value of $1.3 billion

Opened88 the new Raqa’i land port in the Saudi-Kuwaiti border

Reduced road accidents mortalities rate from26 to 18per 100,000 residents

LAND TRANSPORT PROCEDURES IMPROVEMENTS
  • Before
  • /
  • After

Trucks Operating Cards

3 Days

Immediately

Duration of Licenses Issuance

2 Months

24-48 Hours

Restricted Licenses

N/A

Immediately

Passenger Transport Regulations

2

5

Electronic Platforms

0

3

KEY ACHIEVEMENTS IN
THE PORTS SECTOR

TIME REDUCTION BEFORE AFTER
Free storage time for import/exports of empty containers 5 days 30 days
Truck stopover time by launching trucking appointment system 3 hours 25 minutes
Exemption of storage fees at ports 10 days 5 days
Dwell time in ports 14 days 4 days
License issuance and renewal procedure 20 days 1 day
Private sector participation 30% 43%
COST REDUCTION

Launched an initiative to facilitate the export of national products which reduced the total cost by 53% for exporters

Reduced the fee for handling containers in King Fahad Industrial Port in Yanbu by up to 57.5%

Reduced the original tariff rate for loading empty containers at Jeddah Islamic Port on the way to King Fahad Industrial port by up to 50%

INFRASTRUCTURE IMPROVEMENT

In final stages of container terminal concession deals with the private sector worth over $4 billion

Expanded port capacity with 1 additional berth for container goods inDuba Port

Expanded port capacity with 2 additional berths for bulk cargo in King Abdulaziz Portin Dammam

Increased transshipment at Saudi Ports by 1.73%

LAUNCHING
SAUDI LOGISTIAT

On October 13th, the Saudi Logistics Hub launched the Saudi Logistiat initiative. The Saudi Logistiat initiative involves the development of over 60 logistics platforms in more than 50 different locations across Saudi Arabia

WHAT IS A LOGISTICS PLATFORM?

A logistics platform is a defined area where logistics and distribution activities are carried out by various operators.

ACTIVITIES
Activity Type of stakeholder involved
Consolidation or deconsolidation Freight forwarders
Storage and other warehousing activities Wholesalers / Retailers / Manufacturers / 3PL
Cross-docking and sorting Retailers / Wholesalers / Courier, Express and Parcel (CEP) Trucking companies / Freight forwarders
Bonded storage and clearanceCustom brokers / Freight forwarders / 3PL Custom brokers / Freight forwarders / 3PL
VALUE PROPOSITION
Location Proximity to customers and producers
Inter-modality and access I ntermodal terminal / Access to road, rail, and air / Proximity and ease of connections with all ports
Size & Facilities Tax and customs / System of industrial licensing / Timing of construction
Price Prices for rental of space and logistics services built / Fees for concession rights to land
Services Tax and customs services / Offering different types of businesses
BENEFITS
Cost efficiency Significant potential for cost reduction across various logistics activities1:~12% in warehousing | ~10% in deconsolidation | ~6% in consolidation
Productivity improvement 15% increase in handling capacity1 driven by productivity improvements
Service quality Higher reliability and on-time delivery performance driven by resource pooling and traffic decongestion
Economic development Attraction of international trade flows and enablement of exports and re-exports Opportunities for private sector investments (PPP)
Environmental sustainability Reduction of emissions driven by improved network planning and routing of trucks, and by reduced traffic congestion
Economic and socioeconomic GDP contribution through construction, operation, and maintenance of the platforms Direct and indirect job creation for Saudis and non-Saudis
WHAT’S NEXT FOR THE SAUDI LOGISTICS PLATFORMS?

The first wave of 14 Logistics Platforms will be launched in the next 12 months, with 5 of these to be launched by the end of 2019.

By November 2019, Saudi Logistics Hub has launched 2 Logistics Plaforms: ILBZ Riyadh Airport and Al Khomra.

INTEGRATED LOGISTICS
BONDED ZONE (ILBZ)

SAUDI ARABIA’S NEXT SPECIAL ECONOMIC ZONE

Overseen and regulated by the General Authority of Civil Aviation (GACA) the ILBZ aims to be a regional hub for unified pre- and after-sale logistics services for multinational companies

The zone allows Original Equipment Manufacturers worldwide to bring, store, or manufacture goods in Saudi Arabia before dispatching them to local and international distributors without having to pay customs duties.

The ILBZ welcomes investors across all segments of the supply chain, including:

In final stages of container terminal concession deals with the private sector worth over $4 billion

Expanded port capacity with 1 additional berth for container goods inDuba Port

Expanded port capacity with 2 additional berths for bulk cargo in King Abdulaziz Portin Dammam

Increased transshipment at Saudi Ports by 1.73%

MAIN FEATURES:

Anunrivaled business environment for local and foreign companies

Aregulatory environment that is more conducive to setting up and operating businesses in Saudi Arabia

The ability to attract quality investmentwith international anchor tenants

The ILBZ is located in a 3 million square meter area at King Khalid International Airport (KKIA) in Riyadh. KKIA is strategically located to access seaports on both the Western and Eastern coasts of Saudi Arabia by both road and rail transport.

FINANCIAL BENEFITS:

100%

VAT Exemption

100%

Customs Exemption

100%

Access to government sponsored training programs

EASE OF DOING BUSINESS BENEFITS:

One-stop shop for administrative processes

Accelerated processes (e.gvisa issuance)

24/7 customs servicesand rapid cargo clearance

Flexible Saudizationrequirements

No restrictions on capital repatriation

Free flow of funds

100%
foreign business ownership

AL KHOMRA

SAUDI ARABIA’S LARGEST INTEGRATED LOGISTICS ZONE

Al Khomra is a modern logistics zone that offers commercial facilities, Customs Bonded Zone, and re-exports area. Strategically located near the Red Sea, a major crossing point for global maritime trade amounting to 12% of the global trade, Al Khomra is one of the major trade platforms between Europe, Africa, and Asia.

The zone will also help in reducing shipping costs, improving productivity, increasing reliability and punctuality. Al Khomra will also improve the quality of services and attract investment opportunities for the logistics sector, along with generating direct/indirect employment during its primary phases

MAIN FEATURES:

Strengthen strategic partnerships with the private sector

Open up new promising investmentand commercial opportunities

Provide integrated and advanced logistics services

Al Khomra covers over 2.3 million square meters in its first phase, with a flat area of over 1.2 million square meters. Al Khomra logistics zone hosts 10 business areas across 4 vital sectors:

Electronics

Vehicles

Electrical equipment

Food & Beverage

It includes primary and secondary processing facilities, storage facilities, cold chain, and food distribution centers.

Find out more about Al Khomra’s investment opportunities at: www.alkhomra.mawani.gov.sa