Saudi Arabia's cold market chain sector is poised for solid growth registering a CAGR of 11.2 per cent by 2023over the next four years mainly driven by the rising demand for dairy, meat and pharmaceuticals, said a report.
The kingdom's market is increasing largely due to growth in modern retail stores, rise in demand and consumption of perishable products and increasing pharmaceutical imports in the country, according to Ken Research.
Due to Saudi Arabia’s arid climatic conditions, around 75 per cent of its food requirements are met through imports from countries such as Brazil, India, Australia, New Zealand, US and France.
Increasing imports of meat and seafood and pharmaceuticals and rising consumer retail spending has driven the cold chain market in Saudi Arabia, it stated.
The country also imports a large quantity of pharmaceuticals, it added.
In the last few years, the market also witnessed an impressive incline in the consumer retail spending in the country.
According to the Global Storage Capacity Report, 2018 by GCCA, the consumer retail spending on grocery grew at a CAGR of 9.5% over the 2012-2017 period.
Ken Research said the market witnessed a strong demand for full-fledged integrated distribution centres that included logistics’ facilities, cold storage, dry storage and supporting retail facilities.
As a result, demand for new-generation logistics facilities (built-to-suit) increased in the market and increase growth potential for 3PL companies that could handle stock distribution for companies with large and sophisticated supply chains, it added.
Currently, majority of the cold storage warehouses are concentrated in cities such as Riyadh, Jeddah and Dammam, stated the Ken Research report.
However, now many third party logistics (3PL) companies were planning to expand their operations across other cities as well to exploit the rising opportunities in the Saudi logistics sector, it added.
The growing cold chain market of Saudi Arabia is simultaneously witnessing increasing number of new players and existing players boosting their current level of operations, and with the gates opening for the private sector including major players such as Al Faisaliah, Abu Dawood, Tamer, Sunbulah, Al Baik and Flow Progressive.
These companies are likely to upgrade and enhance the country’s logistical infrastructure to capitalize on the new opportunities, the report added.-TradeArabia News Service