Saudi Arabia, UAE and Qatar will remain key growth catalysts for the contract logistics market in the Middle East, the Transport Intelligence said in a study. It said the contract logistics services market in the Middle East expects to sustain a 6.9 percent compound annual growth rate (CAGR) from 2011 to 2015, reaching a value of $3.7 billion from $3 billion in 2011.
GCC countries have posted the biggest gains in the Middle East contract logistics market, driven by high levels of investment, consumer spending and fast economic growth.
Qatar’s contract logistics market achieved the strongest growth rate in the Middle East in 2011, expanding by 23.1 percent to reach $118 million. Saudi Arabia and the UAE, on the other hand, posted growth rates of 9.1 percent and 11.9 percent respectively during the same period and remain the region’s largest markets with a value of $630 million and $451 million, respectively, in 2011.
In another report, "A Strategic Analysis of the Logistics Market and Contract Logistics in Saudi Arabia", Frost & Sullivan (F&S) forecast that the earned revenues from all logistics ventures in the Kingdom will grow to $20.5 billion in 2015 from an estimated $13.8 billion last year.
F&S said the growth in the logistics sector would be the result of ongoing strength in Saudi Arabia’s oil and gas industries and its business diversification program, which "would cause a surge in exports".
F&S added that the country’s fast-growing population and associated "rise in the domestic uptake of major manufacturing and consumer-oriented industries, such as retail, fast-moving consumer goods, engineering, chemicals, food, and electronics" stimulate the demand for contract logistics services.
"In Saudi Arabia, the impressive performance of the industries and their strong expansion plans, despite the global economic downturn have opened up several prospects for logistic outsourcing," said Srinath Manda, F&S’ transportation and logistics program manager. "In addition, being the largest economy in the Gulf Cooperative Council (GCC), accounting for almost two-thirds of the council nations’ collective economy size, has made Saudi Arabia a happy hunting ground for logistics service providers." F&S sees further opportunities emanating from the investment taking place in the country’s rail system which it said should reduce shippers/consignees’ reliance on trucking services.
South Africa-based Barloworld Logistics, a leading provider of logistics and supply chain management solutions, predicts that market conditions will continue to improve in light of the projected positive growth rates for the region.
This growth is compounded by the growing awareness of the strategic benefits of outsourced logistics solutions such as substantial cost savings, decreased cycle times, improved product and service quality, and enhanced customer satisfaction, which are acting as multipliers to the expected economic growth.
The company will focus on delivering integrated smart supply chain solutions in the region, providing strategic support that empowers Middle East companies to align their supply chain strategy to their business strategy and enables them to be more efficient and competitive.
Frank Courtney, Barloworld Logistics chief executive for EMEA region, said: "Business enterprises in the region are increasingly appreciating the real value of outsourced logistics services, particularly in terms of reduced overhead costs, stronger focus on core competencies, enhanced operational efficiency, superior health and safety standards and improved customer satisfaction through the implementation of world-class methodologies and best practices."
"While adoption of outsourced logistics services has increased significantly, there is a large portion of the market that is yet to consider the idea of outsourcing, creating a huge window of opportunity to grow our business in the region.
"With the growing awareness of the direct and indirect benefits, outsourced logistics services will ultimately be the norm in the future. Moreover, looking at mature markets like the UK where companies outsource approximately 49.5 percent of their contract logistics, there is still plenty of room for growth in the Middle East," he added.