FedEx Corp. is strengthening its logistics capabilities in Saudi Arabia with new air connectivity from key markets in the West, full ownership of distribution facilities and investment in a new regional air hub in Riyadh to capitalize on the country's trade growth.
Other logistics companies, including express delivery rival DHL, are similarly making strategic commitments in Saudi Arabia and neighboring Middle East states.
FedEx (NYSE: FDX) said this week it launched its first dedicated all-cargo to Saudi Arabia from the United States and Europe, marking the first time an express delivery company has established a nonstop connection from the West to Saudi Arabia. The inaugural flight departed FedEx's hub in Paris and landed at King Khaled International Airport late Tuesday morning local time.
The integrated parcel and logistics giant also plans to build a regional air hub at King Salman International Airport, currently under development in Riyadh and scheduled for completion in 2030, to serve Saudi Arabia, Bahrain, Kuwait and Qatar. A company spokesperson also confirmed that FedEx recently secured a license to operate as a foreign air carrier to regional destinations.
In further investments, FedEx has taken full ownership of its customs clearance and pickup-and-delivery operations in Saudi Arabia after previously being required to operate with local joint venture partners, according to a separate announcement. The company now directly manages those functions, supported by four gateway facilities and four delivery stations. Bloomberg reported that FedEx has also opened a regional office in Riyadh to oversee business in the region.
And the Memphis, Tennessee-based company has established a FedEx Logistics division in Saudi Arabia, offering freight forwarding services across all modes.
Company officials didn't disclose how much money is being invested to build out services and infrastructure in Saudi Arabia.
FedEx's expansion comes amid Saudi Arabian economic growth and implementation of the government's ambitous economic development strategy aimed at diversifying the oil-based economy and expanding global trade opportunities. A growing manufacturing and logistics base is driving an increase in exports while the rise in online shopping, tourism and events, and infrastructure expansion have created a strong inbound market for business-to-consumer shipments.
Saudi Arabia, the United Arab Emirates and Qatar, because of their location and ability to build modern freight infrastructure, are increasingly becoming global logistics hubs, connecting Asia, Europe and Africa. Saudi Arabia's logistics sector is projected to grow at a 6.5% annual rate and be valued at $199 billion by 2030.