Being the strongest connection between Asia, Europe, and Africa, Saudi Arabia, plays a key role in the warehousing market. Warehousing demand is constantly increasing, and it’s expected to boost even more in the coming years. The development of Saudi Arabia contributed to the development of the warehousing market. What adds more to the warehousing expansion is the increase in demand for online retail and e-commerce, which led to the lack of storage space, and all this happened due to the Coronavirus pandemic. It also led to the rise in shipping and logistics companies. Warehousing in KSA mainly covers three major cities, Riyadh, Jeddah, and Dammam. So, let’s have a complete overview of the main traits of warehousing in KSA, its logistics, and its solutions. Understanding the warehousing features may feel daunting, but it doesn’t need to be so. This article will help you understand warehousing and its main components.
What is warehousing?
Warehousing is the process of storing items for sales or further distribution. It plays a crucial role in the supply chain network. Without warehousing, it wouldn’t be possible to transport goods and inventory, especially overseas. Warehouses are used by different types of businesses, manufacturers, importers, exporters, transportation businesses, customs, etc. Also, they are usually located in industrial areas on the outskirts of cities. Their main aim is to safely and securely store products in an organized way. And the organization consists of many things, from keeping track of where items are located, their quality, when they arrived and how long they have and will be there. Shipping and logistics companies are aware of its importance and always include warehousing in their services since distribution is not enough. You need to store your goods or items somewhere.
Since warehousing plays a crucial role in goods distribution, it has to offer strong services such as:
- Order fulfillment: Packing, crating, and labeling
- Inventory control and management: reduce the receiving errors
- Contact warehousing: warehouses set up overnight to fulfill customers’ demands. It’s mostly popular with startups. The warehouse can last from several months to a couple of years.
- Cross-docking: goods are distributed directly to a customer with little or no storage.
- Transloading: transporting goods from one means of transport to another. For example, from truck to airplane.
- Pallet racking
The importance of warehousing
Warehousing represents the bridge between the manufacture of products and their consumption. Thus, it plays a vital role in the supply chain network. In the past, you could only store raw materials in a warehouse. However, nowadays, it’s different. Thanks to the development warehousing system and structure, manufacturers are now able to produce surplus goods. This way, they can meet the demand in the future by releasing their goods whenever there’s an increase in demand for a product. Warehouses are used to store a large number of stocks. Usually, the goods are stored at a seaport or airport warehouse waiting to reach the final destination – the customers. Most of the goods are in a large and bulk quantity. That’s why warehouses are outskirts. The importance of warehousing is so huge that even technological advancements have been made to provide a better warehousing experience.
Warehousing in Saudi Arabia and its importance
Saudi Arabia has always been a major trading hub due to its strategic position. With Saudi Arabia’s economy on the rise, the warehouse market is expanding, too. With Vision 2030, the government started improving KSA’s logistics infrastructure, and with its development, warehousing also develops. According to Ken Research, the warehouse market grew by 2.8 percent between 2015 and 2019, and it is estimated it will continue to grow even more. According to Statista, the operating revenue of warehousing was 8.84 billion U.S. dollars in the period from 2010 to 2017. On the other hand, the value of e-commerce warehousing in the Middle East may increase to 500 million U.S. dollars in 2024.
When it comes to GAGR, experts estimated that the market will have s positive GAGR of 4.1 in terms of revenue until 2023. Factors that may contribute to this are: the emergence of transshipment hubs, foreign investment, and the rising of logistics companies.
Major warehouse areas in Saudi Arabia
The largest warehousing areas are in the cities of Riyadh, Jeddah, and Dammam. Even though Jeddah has the main revenue share, Dammam and Riyadh stand close.
- Jeddah: a port on the Red Sea that has a warehousing area of 26.1 million square meters.
- Dammam: its warehousing districts occupy 20.9 million square meters. If you need storage services, you can always rely on our logistics company in Dammam.
- Riyadh: the capital of Saudi Arabia. Its warehousing area stretches 24.5 square meters, and they are mainly close to Riyadh’s dry port.
Warehousing in Jeddah
Jeddah, as already stated, has the largest revenue share for warehousing. It is thanks to excellent infrastructure and well-developed ports. Warehouse Jeddah has excellent features such as a climate-controlled storage unit, long-term and short-term storage, etc. In the last couple of years, warehouse Jeddah made a huge market change. The most notable being the relocation of industrial activities from Al Hamiah and An Nuzha. According to Knight Frank’s research, the majority of warehousing is located within the Al-Khomra district for 81 percent. The major percent is Al-Khomra South (33%) and Al-Khomra Central (29%). Then go Shammama Nakhil, Al Kawthar, and others. When it comes to the types of storage, dry storage, cold storage, and open yards dominate in Jeddah.
Warehousing in Riyadh
The second-largest warehousing area is in Riyadh. There are three main warehousing and logistics districts in Riyadh. They are Al Sulay, Al Faisaliyah, and Al Azizyah. The three districts are very well developed. Another district worth mentioning is the Mishal district, with 23% of the area. When it comes to warehouse types, you can choose from conventional warehouses like in Jeddah. These include dry and cold storage and open yards as well. So, if you need a storage unit, warehouse Riyadh should be your choice. If you choose Four Winds KSA and use the Riyadh warehouse, you can use the following services: public warehouse, contact warehouse, and cross-docking.
Warehousing in Saudi Arabia: advancements
In order to fulfill the Vision 2030 goals, logistics Saudi Arabia set up some advancements as possible solutions. Due to these solutions, storage services in Saudi Arabia went forward. Here are some of the most notable ones:
- Cold storage: Being aware of pharmaceutical needs due to Covid-19 Pandemic, Saudi Arabia found a way to store vaccines and medicines. Saudi Arabia introduced cold storage option.
- On-demand warehousing: Businesses that need to store their inventory can access warehouse solutions temporarily. It means they can pay as they go.
The warehousing industry uses advanced technology to improve efficiency and make the workflow easier. It seems like technology advancements will continue to integrate into the industry. Here are some of the most important advancements:
- Block-chain: artificial intelligence is a trend in many industries, and warehousing is not an exception. The most notable trend is block-chain technology. It helps to strengthen the shipping logistics and facilitate trade and storage. It is very useful, especially in seaports. Most importantly, it makes the whole supply chain more transparent.
- IoT: The Internet of Things also improves transparency across the supply chain network. IoT devices are attached to shipments so that companies can track the shipment in real-time. It contributes to the faster and safer flow of goods.
- APIs: these systems help software fulfill orders, manage inventory, and allow warehouses to communicate with each other. This makes the warehousing process easier and enables warehouses to connect with other supply chain parts.
Warehousing requires a lot of strategies in order to ensure operational success. That’s why companies implement new trends. And alongside the automation trends mentioned above, logistics Saudi Arabia will implement some new ones. Maybe the most important trend is sustainable warehousing in Saudi Arabia. Why? More and more businesses will be looking for green warehousing. Besides carrying for the plane an eco-friendly business will reduce utility bills. Wonder how to ensure sustainable warehousing? Well, it’s simple. Businesses will invest in energy-efficient equipment. Also, warehouses are implementing recycling plans. Then, they’ll use less packing or more eco-friendly packing supplies. So, synthetic and plastic materials will be changed with biodegradable materials. This will reduce the waste and also the carbon footprint.
Insulation of warehouse
If insulation is poor, it may disrupt the warehouse temperature. It leads to additional bill expenses. What’s more, your impact on the environment increases. So, ensure to have your warehouse properly insulated. This way, you won’t only protect the environment, but you’ll also keep your warehouse climate-controlled. Besides, you’ll reduce the risks of damaging the warehousing items.
Last-mile delivery is a trend that happened thanks to e-commerce, especially during the pandemic. According to Statista, e-commerce sales increased almost 21.5 percent in 2019. It is estimated that in 2022, it will increase even more. That’s why business starts following this trend. Fast delivery, even the same-day delivery, will be on top of their priorities. And this leads to the demand for last-mile facilities. They will help in delivering the goods quickly and frequently. So, more and more businesses will implement last-mile facilities in their supply chain.
In 2022, the introduction of drones will be a trend many businesses will follow. Why? Well, the benefits are many. The first benefit is that drones are able to spot items in no time. It will facilitate the job of warehouse employees.
Warehousing in Saudi Arabia: challenges
The world has faced many warehousing challenges due to the Coronavirus pandemic, so has Saudi Arabia. It has hugely impacted its logistics, and Saudi Arabia has to face some obstacles to keep the warehousing expansion. Here are some main challenges that logistics managers face:
- Supply chain interruptions: this happened due to Covid-19, and it may continue to interrupt the supply chain since the situation constantly changes. However, logistics companies develop their strategies to keep the supply chain unbreakable.
- E-commerce: Online commerce also expands quickly, and suppliers may still struggle to meet all demands.
- Warehouse again: This is the most common challenge. An increase in demand constantly changes, e-commerce develops, and technology is required. That’s why it’s challenging to keep the warehouses automated and up-to-date.
Warehousing challenges happen every day, and they’ll continue to happen in the future. That’s the beauty of logistics. So, logistics managers will have to meet the challenges and come up with solutions. The first solution is to establish close proximity to suppliers. By minimizing the goods-traveling distance, logistics managers reduce the ineffectiveness. Next, as already mentioned, businesses should introduce warehouse automation to avoid warehouse aging. The introduction of technology will also help with dealing with e-commerce challenges. Besides, more space should be created as the demand is increasing. Then, a larger workforce should be created, too. Most importantly, warehouse modernization and digitalization are essential in overcoming the challenges. And last but not least, logistics managers in Saudi Arabia should make strong warehouse systems. This way, the workflow will be optimized.
Need storage space? Four Winds Saudi Arabia should be your choice
Now that you’ve read an overview of warehousing in Saudi Arabia, you’ve realized the importance of proper storage. Your goods need to have a strong logistics background to reach the customers. Four Winds Saudi Arabia offers a plethora of services. You can choose from cargo transportation, customs clearance, freight forwarding, cold chain services, packing and crating, warehousing, etc. Four Winds Saudi Arabia is one of the leading logistics companies in KSA. With us by your side, you won’t have to worry whether your goods will arrive on time. Our logistics plans are very detailed. So, if you need warehousing service or any other service, contact us today. By using our warehouse, you’ll save money, improve business productivity, reduce the possibility of goods damage and theft. And, most importantly, you’ll get a safe place for storing. You can be sure that we’ll meet all of your requirements.