RIYADH: The recent escalation of tensions involving the US, Iran and Israel, coupled with prolonged disruption to Red Sea shipping, has accelerated a rethink of global trade routes and supply chain strategies.
As businesses seek more resilient logistics networks, Saudi Arabia sees an opportunity to convert short-term geopolitical disruption into long-term economic gains through Vision 2030, which targets a top-10 global logistics ranking and aims to increase the transport and logistics sector’s contribution to gross domestic product to 10 percent by 2030.
How geopolitical tensions, shipping disruptions affecting global supply chain
Paolo Carlomagno, partner at Arthur D Little
The disruptions of the past 18 months mark a structural shift in global supply chains, not a temporary disruption.
According to Paolo Carlomagno, partner at Arthur D Little, with both the Red Sea and Strait of Hormuz facing pressure, regional risk is now a planning assumption rather than an exceptional scenario.
“An important lesson from this period is that uncertainty disrupts trade both before and long after any physical closure,” he said, adding: “Hormuz became commercially inaccessible before any military declaration-war-risk premiums rose to 7-8 percent of vessel value.”
Carlomagno explained that even after Red Sea attacks paused, Suez transits remained roughly 60 percent below 2023 levels.
“As a result, cargo owners now assign a measurable economic value to routing alternatives, redundancy and inventory buffers,” the Arthur D Little official told Arab News.
Carlomagno added that the disruption creates an opportunity for Saudi Arabia to position itself as a resilient trade hub linking Asia, Europe and Africa. Its Red Sea ports, East-West Pipeline, and expanding transport network provide alternative routes that strengthen both oil and non-oil trade.
“The opportunity is therefore concrete but conditional: it requires converting infrastructure that proved useful in an emergency into services that shippers choose under normal conditions, based on cost, transit time and reliability,” the ADL partner said.
How businesses are adapting to supply chain disruption
Waleed Rashed, founder and CEO of SIDEUP
Waleed Rashed, founder and CEO of logistics firm SIDEUP told Arab News that Saudi Arabia’s logistics sector is being propelled by rapid e-commerce growth, an improving regulatory environment and a young, digitally connected population.
He added that with more than 60 percent of Saudis under the age of 35 shopping online, demand for fulfillment and last-mile delivery infrastructure is set to continue rising.
“With EXPO 2030 in Riyadh and the FIFA World Cup 2034 on the horizon, Saudi Arabia has a once-in-a-generation opportunity to show the world that its infrastructure, including digital commerce and last-mile delivery, is not just regionally competitive but globally relevant,” he said, adding that investment is happening right now and there is pressure to deliver.
“Every layer of the logistics ecosystem needs to be ready, and that urgency is accelerating everything,” Rashed said.
With regards to supply chain disruptions, the CEO said businesses are moving away from relying on a single carrier or trade route, instead prioritizing flexibility and resilience in their logistics operations.
He added that technology platforms such as SIDEUP help merchants quickly switch between multiple logistics providers, reducing the impact of delays, price increases and capacity constraints.
“Going forward I think businesses will stop treating logistics as a cost center they want to minimize and start treating it as a strategic function they want to optimize. Technology platforms that give them visibility, flexibility, and data will become essential, not optional,” Rashed said.
When asked what could further accelerate the sector’s growth, Waleed pointed to continued digital and regulatory reforms, including seamless digital identity systems and simpler customs procedures for cross-border e-commerce.
He said these measures would help more SMEs expand internationally and strengthen Saudi Arabia’s logistics ecosystem.
Outlook for Saudi Arabia’s logistics, trade sector
Ankur Goyal, Partner, Bain & Company
Ankur Goyal, partner, Bain & Co. told Arab News that a global logistics hub is no longer defined by geography but by ecosystem design.
He added that supply chains are increasingly being redesigned around resilience as much as cost, creating a structural opportunity for Saudi Arabia.
“The next phase will depend less on building assets and more on maximizing their utilization through seamless trade facilitation, innovation and AI, and continued private sector investment,” said Goyal.
Arthur D Little’s Carlomagno believes the Kingdom’s logistics and trade outlook is strong, driven by regionalized supply chains and rising demand for resilient trade hubs.
This creates opportunities to expand manufacturing, logistics and value-added industries, enabling the Kingdom to capture more value from global trade rather than simply move cargo.
“At the regional level, competition is expected to shift from individual ports to integrated logistics corridors. Rather than replacing Suez, global trade will increasingly rely on a network of complementary maritime, land and multimodal corridors,” he said.
Saudi Arabia is well positioned to become a key regional trade hub by integrating its multimodal transport corridors with emerging regional trade routes, the ADL partner underlined.
He added that going forward, success will depend less on building new infrastructure and more on efficient execution, digital integration, seamless cross-border logistics and attracting long- term private investment.
