Riding the Wave of Change in Saudi Arabia

By Dennis Daniel

Logistics providers are stepping up to support Saudi Arabia’s bold energy transformation, adapting to the surge in demand for specialized transport and supply chain solutions. Project professionals from Roll Group, Bahri, MSC and DENZAI discuss the opportunities.

From Issue 2, 2025 of Breakbulk Magazine.

Saudi Arabia’s energy sector is in a transformative phase, shaped by its historical reliance on oil and ambitious economic diversification efforts. The Kingdom is taking the lead in energy transition in the Middle East through its National Renewable Energy Program, which aims for 50% of the electricity to be generated from renewable sources by 2030 and to achieve net-zero emissions by 2060.

The target for renewable energy capacity is 100–130 GW by 2030. Currently, Saudi Arabia has 6.2 GW of renewable energy capacity connected to the grid, and 44.2 GW capacity is under development.

To achieve these ambitious goals, the government is implementing largescale solar wind, hydrogen, and battery storage projects such as the Al Shuaibah solar PV plants, Jumat Al Jandal wind farm, NEOM green hydrogen plant, and Bisha battery energy storage facility. It is estimated that Saudi Arabia has between 15 and 20 renewable energy projects in various stages of development.

Simultaneously, the government is exploring opportunities for vertical integration in the renewable energy supply chain and localized manufacturing. They include the extraction of energy transition minerals and manufacturing components for wind and solar power projects.

Early this year, Aramco and Ma’aden signed a non-binding agreement to form a minerals exploration and mining joint venture to focus on energy transition minerals, including the cost-effective extraction of lithium from newly discovered deposits in the country. The joint exploration is expected to benefit from Aramco’s existing infrastructure, supply chain and subsurface knowledge, and the collaboration could potentially lead to commercial lithium production by 2027.

If the commercial lithium production is achievable, it could, among other things, help establish Saudi Arabia as a hub for electric vehicle manufacturing. The Saudi government aims to produce 500,000 electric vehicles annually by 2030. The ambition is being realized through Ceer Motors, the first Saudi EV brand, and Lucid Motors, which is majority owned by Saudi PIF and operates the country’s first car manufacturing and assembly facility.

Saudi Arabia also aims to localize 75% of renewable energy components by 2030. To achieve this, the PIF-owned Renewable Energy Localization Company has entered into manufacturing joint ventures with Envision Energy and Vision Industries for wind turbines, blades, and nacelles; Jinko Solar and Vision Industries for solar PV cells and modules; and TCL Zhonghuan Energy and Vision Industries for solar PV ingots and wafers.

The energy infrastructure boom has necessitated a rapid expansion of the domestic logistics and transport networks to support the large-scale projects targeted for delivery by 2030. It is also enabling the Kingdom to position itself as a global logistics hub with access to critical maritime routes in the Red Sea and the Arabian Gulf.

Keeping Up With Demand

Energy infrastructure is currently the main driver for project cargo logistics, which is becoming increasingly complex with larger components requiring specialized transport vessels. This has presented new opportunities - and challenges - for heavy cargo operators.

Japan-based heavy-lifting and transportation specialist DENZAI entered Saudi Arabia in 2024 through a 50-50 joint venture with Fawaz Ali Alshammari Co. for transportation, to provide value-added services, especially to wind farm and power plant projects, DENZAI’s areas of expertise.

Kohki Uemura, president and CEO of DENZAI, said: “The primary reason we have established a base in Saudi Arabia is to contribute to renewable energy projects. Saudi Arabia is already a major hub for importing advanced decarbonization technologies, and I believe that it will become a leading exporter of such technologies within the next two decades.”

Netherlands-based heavy haul and lifting solutions provider Roll Group has expanded its operations in Saudi Arabia this year with a new storage facility, and additional heavy equipment including a new barge.

Peter Rondhuis, CEO, Roll Group, pointed out that demand for project logistics is the highest he has seen in the last 10 years. “The current demand for project logistics and fleet capacity outweigh supply. All our ships are booked for this year. That said, we are dealing with complex projects which may have unexpected changes in schedules, especially for moving large components. So, carriers should be able to adapt to any situation,” he said.

Navigating Geopolitical Crises

Geopolitical risks will be the biggest threat to shipping over the next two years, according to the Lloyd’s List Outlook Survey 2025. The Red Sea crisis, for example, has had significant repercussions on container shipping since October 2023, disrupting global supply chains and increasing freight costs. Over a third of the respondents of the Lloyd’s List Outlook Survey said they thought the Red Sea would not open fully to shipping until 2026.

Several container shipping companies have announced they will continue to sail around Africa via the Cape of Good Hope until safe passage through the Babel- Mandeb strait is ensured.

Paul Smith, regional head – IMEA, Maersk Project Logistics, said: “The Red Sea crisis has created numerous challenges and uncertainties for shipping and logistics companies. We cannot revert to the Red Sea route until we are absolutely certain that it is safe. I believe the only way to get around this crisis is for all stakeholders including government bodies, shippers, port operators and customers to collaborate and take a strategic, rather than tactical, approach to solving the problem.”

No project exemplifies the urgency of solving this crisis than the Neom green hydrogen plant under construction at the Oxagon industrial city on the Red Sea. Slated to be the world’s largest green hydrogen production facility by the end of 2026, the plant will produce up to 600 tonnes per day of carbon-free hydrogen in the form of green ammonia.

Air Products, the primary EPC contractor and system integrator and exclusive offtaker of the green hydrogen at the plant, has been working closely with partners to ensure that scheduled deliveries and the project timeline are not affected.

Mayur Karekar, project logistics manager, Air Products, explained: “The decisions regarding sourcing and long lead items were made almost two years ago. Consequently, a significant amount of the material was sourced from Asia and the Middle East.

“Currently, with the disruptions at the Red Sea, we are faced with complex decisions and time-cost-risk tradeoffs, such as paying war risk and insurance surcharges for the Red Sea route or opting for the Cape of Good Hope route which adds two weeks to the transit time, depending on the criticality of the cargo.

“To mitigate future risks, we are selecting the right strategic partners, upskilling our staff to manage chaos effectively, adopting new technology to give our team more visibility of the project and cargo, and maintaining transparency with all key stakeholders including LSPs, carriers, and our internal projects team.”

Infrastructure Upgrades Required

As supply chains evolve to accommodate new energy technologies and large-scale projects, there is a growing demand for a more interconnected and efficient transportation network.

The Saudi Minister of Economy and Planning Faisal Al Ibrahim recently stated that infrastructure investments are expected to reach approximately US$1 trillion by 2030. A significant amount of these investments is directed toward building new transport infrastructure and increasing capacity utilization.

“It is only fitting that Saudi Arabia, which is witnessing a boom in energy and infrastructure projects and is strategically positioned between the East and West, unlocks the full potential of multimodal transport to strengthen its supply chain network,” said Hisham Al-Ansari, CEO, MSC Saudi.

Rajith Aykkara, line vice president, Bahri, shared the challenges of operating one of the largest ship fleets in the region and connecting Saudi Arabia with the world, only to find limitations in the inland transportation network.

“As the national flag carrier of Saudi Arabia, we serve a large number of projects and transport a substantial amount of project cargo. We are able to manage inbound freight smoothly up to port hubs like Jeddah, but then we run into roadblocks with domestic logistics. We would like to see greater flexibility in customs procedures, port infrastructure upgrades, and expansion of rail and road infrastructure to keep up with the fast pace of project delivery,” he said.

Al-Ansari pointed out that there will always be bottlenecks due to the disparity between cargo volume and infrastructure capacity, but the gaps can be closed through sustained investment in infrastructure while considering the interests of project stakeholders.

“Rail, for example, is a primary mode of freight transport in many countries, and there is no reason it should not be the same in Saudi Arabia. A much-anticipated project is the Landbridge railway line to connect Jeddah and Riyadh. If the railway line was operational, the Red Sea disruptions would have been manageable,” he said.

Karekar added: “Multimodal transport offers advantages in mitigating the schedule impact of projects. For instance, railways would be a safer option compared to roadways for transporting sensitive cargo. In these uncertain times, a one-week or two-week delay can have a knock-on effect on project delivery. So, we welcome any improvement in speed and reliability of delivery."

Breakbulk Middle East 2026 will take place on 4-5 February in Dubai.

TOP PHOTO: Aramco workers carry out checks at an industrial plant in Saudi Arabia. CREDIT: Aramco