The Eurogroup Consulting and Newton Vaureal white paper offers a detailed analysis of the evolving supply chain landscape within the Gulf Cooperation Council (GCC) region. It underscores the region’s commitment to weaving its supply chains into the global fabric, seizing integration opportunities, and bolstering supply chains through the promotion of local production. The document underscores the rapid ascent of the GCC as a pivotal business hub, spotlighting its strong infrastructure and advantageous tax regimes. It delves into the pivotal role of supply chains in catalyzing economic transformation and the necessity of perpetual innovation in supply chain management. The paper culminates by spotlighting key initiatives and triumphs within the GCC, such as national industrial and logistics development strategies, the Jebel Ali port, and Bahrain’s emergence as a global sea-air hub.
The report highlights that GCC countries have crafted logistics solutions tailored to their unique contexts, leading to the establishment of several free-trade zones. For example, Saudi Arabia has created special economic zones to magnetize investments and recently launched a new economic zone with Apple as a notable investor. The GCC’s free-trade pacts with various nations and trading blocks mirror its ambition to evolve into a premier international business nexus. Policy shifts, such as the UAE’s adjustments to local sponsorship requirements for company boards and the allowance of foreign ownership in select sectors, represent significant strides. With a uniform external tariff system that imposes a 0% rate on essential goods and 5% on others, the GCC aims to nurture its manufacturing sectors. Particularly, Saudi Arabia is zeroing in on Industry 4.0 and local content to establish itself as a global industrial and logistics stronghold through its national industrial and logistics development scheme.
By 2030, Saudi Arabia’s objective is to secure a position among the top ten in the Logistics Performance Index. It climbed 17 spots to 38th in the 2022 rankings. Reaching this milestone will necessitate enhancements in trade facilitation, regulatory environments, customs processes, and infrastructure, including slashing customs clearance times to an average of two hours and offering enticements to overseas investors. The paper identifies five key areas for supply chain evolution in the GCC: logistics master plan updates, boosting organizational maturity, emphasizing sustainable development, advancing urban logistics for intelligent cities, and achieving operational excellence. It emphasizes the importance of addressing both present and future logistics demands and of refining the skill sets of supply chain professionals while adhering to local employment quotas.
The GCC sees opportunities for supply chain transformation in increasing railway utilization, gearing up for alternative fuel technologies, exploring waterway usage, fostering sustainable urban development for efficient last-mile delivery, and reducing carbon emissions in warehouses. With objectives of achieving carbon neutrality by 2060 and pivoting towards renewable energy by 2030, the GCC is focusing on sustainability measures. For instance, enhancing warehouse sustainability through eco-friendly construction techniques and energy efficiency is a priority, considering warehouses’ substantial contributions to logistics chain CO2 emissions. Innovations such as Talabat’s delivery robots and Saudi Arabia’s integrated logistics park underscore these initiatives.
Progressive urban planning in the GCC is reshaping supply chains and logistics, with notable endeavors like NEOM and Oxagon smart cities in Saudi Arabia, which strive for carbon neutrality and logistics excellence. The rise of e-commerce and urban commerce brings challenges in last-mile delivery, but initiatives like Saudi Arabia’s national addressing system and what3words are streamlining processes. For GCC enterprises, achieving operational excellence is crucial for enhancing performance and sustainability, necessitating a focus on service rates and the adoption of technologies for improved efficiency. Eurogroup Consulting leads the charge in facilitating supply chain transformations and operational improvements in the Middle East.
Key takeaways include:
- Economic Diversification: Through initiatives like Vision 2030, GCC states, particularly Saudi Arabia, plan to invest $1.7 trillion by 2030 to diminish oil dependency.
- World-Class Infrastructure: Ongoing investments aim to develop ports and logistics hubs, including the ambitious $500 billion NEOM project in Saudi Arabia.
- Free Trade Agreements: The GCC’s broad array of free-trade agreements plays a vital role in boosting international trade and solidifying its global business stature.
- Local Manufacturing: A focus on local manufacturing, especially via Saudi Arabia’s industrial development initiative, seeks to augment local production and its contribution to the manufacturing sector’s GDP.
- Carbon Neutrality Goals: The GCC’s carbon neutrality aim by 2060 involves substantial investments in sustainable initiatives, amounting to hundreds of billions of dollars.
- Urban Logistics Transformation: Significant investments in urban logistics, such as delivery robots and smart warehouses, with projects like the NEOM city, are noteworthy.
- Business Pressures: GCC firms are under increasing pressure to enhance operational excellence, with investments in efficiency and tracking technologies totaling billions of dollars.
These highlights reflect the GCC countries’ extensive endeavors and investments to refresh their supply chains.
