The Huge Supply Chains Behind $1.5tn Saudi Neom Project

Saudi Arabia's Neom development is reshaping supply chain management on an unprecedented scale, with a US$10bn logistics joint venture setting new standards for procurement and materials handling in mega-construction projects.

The futuristic US$1.5tn Neom development represents more than just an ambitious construction vision. For supply chain professionals, it signals a fundamental shift in how the world's largest infrastructure projects approach procurement, logistics and materials management.

While Saudi Arabia is significantly downscaling Neom's construction because of rising costs and repeated delays, according to reports from Bloomberg and other industry sources, the supply chain innovations emerging from the project continue to advance. The flagship development includes plans for a city named The Line, consisting of a vast stretch of 500 m skyscrapers in the desert.

Construction timelines are being reconsidered, but the logistical frameworks being established could outlast the project itself.

Vision 2030 and strategic procurement

Neom is central to HRH Crown Prince Mohammed bin Salman's Vision 2030, a strategic framework designed to end Saudi Arabia's dependence on oil. Funded primarily by the Public Investment Fund, Neom is the "crown jewel" of the Kingdom's Giga-projects.

From a supply chain perspective, the project is a global branding vehicle for a "New Saudi Arabia" – one that is technologically advanced and open to international capital.

With oil prices fluctuating and the Kingdom managing a widening budget deficit, focus has shifted to high-value segments offering immediate economic returns, such as luxury tourism and digital infrastructure, which require sophisticated supply chain solutions.

Managing unprecedented material flows

The scale of Neom has demanded involvement from global engineering and construction companies, each presenting unique supply chain challenges. The project is the world's largest customer for civil engineering services.

Major contractors include WeBuild from Italy, spearheading the US$5bn dam project at Trojena. Vinci SA and ACS from Europe, alongside regional heavyweights Nesma & Partners and Al Bawani, are heavily involved in the backbone infrastructure – high-speed rail links and underground utility tunnels.

China State Construction Engineering Corp is instrumental in rapid vertical construction using modular techniques to meet aggressive deadlines. Coordinating materials procurement across these diverse contractors has required unprecedented supply chain integration.

For procurement executives, one of the most significant developments is the $10bn logistics joint venture with DSV, established in late 2023 and fully operational in 2024.

The partnership, 51% owned by NEOM and 49% by DSV, is responsible for end-to-end supply chain management of the entire region. The sheer volume of materials – from sustainable timber to high-grade steel and sensitive AI hardware – requires a dedicated ecosystem.

The joint venture is developing an innovation centre at Oxagon to pioneer autonomous freight and carbon-neutral last-mile delivery. For global suppliers, the Neom Supplier Portal has become a critical gateway, with the project seeking partners who can adhere to circular economy principles and the highest ESG standards.

This could represent a template for how mega-projects approach sustainable procurement in the future.

Oxagon and industrial supply chains

Development is happening at varying speeds across Neom's four main regions, each with distinct supply chain requirements. The most significant shift is towards AI and industrial automation.

The PIF has unveiled HUMAIN, a venture focused on transforming sections of Neom into a global hub for data centres and AI research.

Beyond The Line, Oxagon Port stands out for its technical complexity. It is set to be the world's first fully automated port and integrated supply chain, becoming a hub for green hydrogen production and automated manufacturing.

The site is home to the NEOM Green Hydrogen Company, which aims to be the world's largest utility-scale green hydrogen plant. This requires entirely new supply chain models for hydrogen storage, transport and distribution, potentially influencing global energy logistics for decades to come.

While The Line was originally planned to house 9 million people across 170 km, focus is currently on the first 2.4 km "starter" segment. Even at this reduced scale, the materials management challenge exceeds most urban construction projects globally.