Saudi Arabia accelerates pivot to land logistics amid regional instability

Saudi Arabia’s trucking corridors are proving vital in times of regional instability. As the US-Iran war has kept Hormuz in a state of limbo, logistics providers are turning to land routes to circumvent the maritime corridor — and Saudi Arabia is poised to capture the upside of this pivot, according to Bloomberg.

“Alternative routing such as land bridges and smaller ports may be more cumbersome, but it is working,” freight intelligence platform Xeneta’s Peter Sand told the business information service. The strategy paid off for German industrial giant Siemens Energy, which identified a 2k-km overland route linking Jeddah to Dammam that helped the firm to keep its business running despite shipping disruptions, Siemens’ Karim Amin said. And Siemens wasn’t alone: MSC alerted customers back in March of inland alternatives connecting King Abdullah and Jeddah ports to ports in the Arabian Gulf, allowing cargoes to bypass the Strait of Hormuz on their way to Asian destinations.

The pivot could become permanent: Although a US-Iran agreement seems to be imminent, logistics players are still wary of returning to traditional routes. “Even if the Strait of Hormuz reopens, shippers will be cautious about returning to an over-reliance on ports such as [the UAE’s] Jebel Ali because the geopolitical situation will remain fragile and a sudden deterioration puts them back to square one,” Sand said.

IN CONTEXT- The war seems to have fast-tracked the Kingdom’s land and rail ambitions. Saudi Arabia Railways launched five freight routes connecting ports on the Arabian Gulf to the Kingdom’s northern and central logistics zones, and at the end of May, Saudi Arabia joined the GCC railway agreement, which plans to link the six Gulf states via a 2.1k-km railway. There’s also the USD 7 bn Riyadh-Jeddah Landbridge rail project, set for completion by 2034.

^^ Want to read more? Check out our deep dive into how Gulf supply chains rerouted overland when Hormuz went dark.