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 compelling impact on e-commerce. Even though sales were already strong throughout the last few years, 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 growing tech-savvy young population, making it a key market player in the region. Over 90% of the population had internet services by 2023. In Saudi Arabia, these factors eased the adoption of e-commerce, with around 80% of active internet users being online shoppers compared to China.
- According to a January 2024 report published by the International Trade Administration of the United States, e-commerce is becoming an increasingly viable sales channel for US companies in Saudi Arabia. Saudi Arabia is one of the world's top mobile phone users, with a 97% penetration rate, and ranks 10th in internet speed.
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Increasing Maritime Trade in Saudi Arabia is Driving Demand for 3PL Services
- The Saudi Arabian marine industry has been changing rapidly, making the country a regional logistic hub and an international participant in global trade as the region is at a key location in the international trade route.
- In September 2023, Saudi Arabia and India merged with the European Union and the United States in venturing into the India-Middle East-Europe Economic Corridor and Partnership for Global Infrastructure and Investment (PGII). The project will improve connectivity, reduce tensions, and promote trade among nations.
- According to industry experts, the King Abdullah Port Project, which drew an investment of SAR 40 billion (USD 10.66 billion) in 2019, is contributing to increasing Saudi exports to more than SAR 600 billion (USD 159.96 billion) by 2030. King Abdullah Port is the first fully owned and operated private sector property. The port is known for its container handling capacity and is listed as one of the world's largest ports. King Abdullah Port witnessed a significant 2.3% growth rate in container traffic during the first quarter of 2023 compared to last year. This upward trend indicates the port's constant commitment to efficient TEU handling and its ability to respond to evolving industry needs.
