DHL & Aramco Deal Confirms Saudi's Logistics Standing

DHL Suppply Chain joint venture with Saudi Arabia energy giant Aramco will create a sustainable procurement and logistics hub in the Kingdom

Saudi Arabia was blessed not only with rich natural resources, but geographically it is also perfectly placed to become a global logistics hub servicing the continents of Asia, Europe, and Africa.

Recent years have seen the Kingdom announce a seemingly never-ending series of huge logistics initiatives.

Saudi leaders say their huge investment in this area has seen the country rise 17 places (to 38th) in the World Bank's Logistics Performance Index (LPI). Its ultimate goal is to hit the top 10 by 2030.

The latest logistics development is a joint venture between DHL Supply Chain and energy giant Aramco to create a sustainable procurement and logistics hub in Saudi Arabia is yet another sign that the Kingdom is becoming one of the major world centres for supply chain.

The companies have created an organisation called Advanced Supply Management Operations (ASMO), which will service the growing demand for sustainable and efficient supply chain services in Saudi Arabia.

AMSO will also consolidate the region as a global trade gateway for the energy, chemical and industrial sectors. 

DHL and Aramco say digital technologies are fundamental to the project, which will leverage automation, collaborative robotics, AI, data analytics and blockchain.

Saudi deal with DSV for NEOM logistics hub

This follows news in October 2023 of Saudi striking a multi-billion-dollar joint-venture deal with Danish freight-forwarding giant DSV, to provide a full suite of ground, sea and air logistics services to the kingdom’s planned futuristic urban development project, NEOM.

NEOM is a planned 26,500-square-km (10,230-square-mile) high-tech region in northwest Saudi Arabia on the Red Sea that is expected to eventually house 9 million people, and which will be powered by renewable energy. 

The joint venture with DSV – the world's third largest freight forwarder – will provide end-to-end supply chain management, development and investments in transport and logistics assets and infrastructure, as well as transport and delivery of goods and materials within NEOM, the parties said at the time. 

The Kingdom is also set to build 59 logistics centres with a total area exceeding 1 billion square feet. 

These include 12 each in capital city, Riyadh and the Makkah region, 17 in the Eastern Province, and 18 dotted about the kingdom. Initial development work is focused on 21 centres. The aim is to complete them all by 2030. 

Saudi sources say the finished centres will help local industries efficiently export Saudi products and support e-commerce by connecting regions, cities and provinces. 

Returning to the ASMO development, the combination of Aramco’s procurement expertise and DHL’s supply chain pedigree will allow ASMO to offer the lowest cost of procurement, and promote growth for the energy, chemical and industrial sectors. 

DHL Saudi deal will cut inventory costs

DHL will connect suppliers and customers through its brokerage model, reducing the need for inventory holding and so reducing costs, it says. 

Oscar de Bok, CEO of DHL Supply Chain, said: “By uniting the expertise of DHL Supply Chain and Aramco we aim to break free from traditional procurement and logistics constraints, responding to the evolving dynamics of global supply chains. 

“ASMO is the region’s first hub providing a comprehensive and integrated end-to-end supply chain service offering for businesses in the energy, chemical and industrial sectors. 

“ASMO plans to redefine the way these companies will procure, store and transport goods and services within, to and from Saudi Arabia and the wider MENA region, seeking to drive efficiencies, cost savings and economies of scale.”

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