What Maersk's $250M logistics park means for Saudi Arabia
Danish logistics company remains invested in the Red Sea despite continued threats to shipping from Yemen's Houthi militants.
DUBAI — Shipping company Maersk said Wednesday it was launching the largest single-site logistics and services facility in the Middle East in Saudi Arabia's Jeddah Islamic Port, amid Riyadh's plans to position itself as a key transportation hub in the Middle East.
What happened: Danish shipping and logistics company Maersk is building a 225,000-square-meter facility in Saudi Arabia's Red Sea-facing Jeddah Islamic Port. The company is investing $250 million in developing a key logistics hub with the Saudi Ports Authority, also known as Mawani. The facility allows for connectivity over land, sea and air. It has warehouses for e-commerce and business requirements and caters to a wide range of sectors such as fast-moving consumer goods, frozen food, automotive, retail and lifestyle, petrochemicals, electronics and pharmaceuticals. The logistics hub will also provide and first- and last-mile deliveries, as well as custom services.
Why it matters: Maersk is looking to expand its presence in the Middle East, particularly in Saudi Arabia, the region's largest economy. As part of its Vision 2030 directive, Saudi Arabia is investing heavily in non-oil sectors through investment vehicles such as the Public Investment Fund. The National Industrial Logistics Development Program, for instance, looks to strengthen links between Saudi Arabia's mining, logistics and energy sectors as part of its Vision 2030 goals. Riyadh also recently amended its investment law, removing licensing requirements for foreigners setting up companies and providing international and local investors an equal platform. Big-ticket announcements such as the Maersk investment as well as the establishment of regional headquarters by global investment institutions such as Goldman Sachs and BlackRock is part of Riyadh's broader push to become a regional economic hub.
Know more: Maersk's investment in Saudi Arabia's Red Sea port also comes amid challenges it has faced since October 2023, when its containers came under attack by Yemen's Houthi militants. The Houthis, who joined the Israel-Hamas war in late October, have threatened all shipping liners that carry Israeli goods or travel to or from the country's ports. Maersk and other liners have had to reroute away from sensitive choke points vulnerable to Houthi attacks such as the Bab el Mandeb and transit via the longer Cape of Good Hope route. With the logistics investment in Saudi Arabia, Maersk is hedging its bets on continued Middle East trade that circumvents Houthi threats.
