Saudi Arabia Last Mile Delivery Market

Saudi Arabia Last Mile Delivery Market Overview

• The Saudi Arabia Last Mile Delivery Market is valued at USD 290 million, based on a five-year historical analysis. This growth is primarily driven by the rapid expansion of e-commerce, increasing consumer demand for fast and flexible delivery services, and the rise of mobile applications facilitating logistics. The market has seen significant investments in digital platforms, automation, and infrastructure, enhancing operational efficiency and customer satisfaction. The adoption of electric vehicles and urban warehousing is also accelerating market development .
• Key cities such as Riyadh, Jeddah, and Dammam dominate the market due to their high population density, robust economic activities, and strategic locations. These urban centers serve as major hubs for logistics and distribution, attracting both local and international delivery service providers. The concentration of retail and e-commerce businesses in these cities further fuels the demand for last mile delivery services .
• In 2023, the Saudi government implemented regulations to enhance the efficiency of logistics services, including the introduction of the "National Transport and Logistics Strategy" (NTLS), issued by the Ministry of Transport and Logistic Services. This framework aims to streamline operations, improve delivery times, and ensure compliance with safety and environmental standards, thereby fostering a more competitive last mile delivery market. The NTLS mandates digital tracking, operational transparency, and the adoption of sustainable practices for licensed logistics providers .

Saudi Arabia Last Mile Delivery Market Segmentation

By Type:The last mile delivery market can be segmented into various types, including B2C Delivery, B2B Delivery, C2C Delivery, Same-Day Delivery, Scheduled Delivery, Express Delivery, On-Demand Delivery, and Others. Among these, B2C Delivery is the most dominant segment, driven by the surge in online shopping and consumer preferences for home delivery services. The convenience and speed offered by B2C services have made them a preferred choice for consumers, leading to increased market share .

By End-User:The end-user segmentation includes Retail, E-commerce, Food and Beverage, Pharmaceuticals & Healthcare, Consumer Electronics, Fashion & Apparel, and Others. The E-commerce segment is leading this category, as the growth of online shopping has significantly increased the demand for last mile delivery services. Retailers are increasingly adopting efficient delivery solutions to meet consumer expectations for quick and reliable service .

Saudi Arabia Last Mile Delivery Market Competitive Landscape

The Saudi Arabia Last Mile Delivery Market is characterized by a dynamic mix of regional and international players. Leading participants such as Aramex, DHL Express, FedEx, Zajil Express, Naqel Express, SMSA Express, Fetchr, Talabat, Careem NOW, Noon Express, Jahez, Diggipacks, Barq, Safe Arrival, AJEX (Ajlan & Bros Holding Group) contribute to innovation, geographic expansion, and service delivery in this space.

Saudi Arabia Last Mile Delivery Market Industry Analysis

Growth Drivers

• Increasing E-commerce Penetration:The e-commerce sector in Saudi Arabia is projected to reach approximately SAR 50 billion in future, driven by a growing consumer base and increased internet penetration, which stood at99 percentin recent reports. This surge in online shopping is creating a significant demand for last mile delivery services, as consumers expect quick and reliable delivery options. The rise of platforms like Souq.com and Noon.com further fuels this growth, enhancing the logistics landscape.
• Urbanization and Population Growth:Saudi Arabia's urban population is expected to reachover 36 millionin future, accounting for over80 percentof the total population. This rapid urbanization is leading to increased demand for efficient last mile delivery solutions, as urban dwellers seek convenience and speed in receiving goods. The concentration of consumers in urban areas also facilitates the establishment of more localized delivery networks, enhancing service efficiency and customer satisfaction.
• Technological Advancements in Logistics:The logistics sector in Saudi Arabia is witnessing significant technological advancements, with investments in automation and digital platforms expected to exceed SAR 10 billion in future. Technologies such as route optimization software and real-time tracking systems are enhancing operational efficiency in last mile delivery. These innovations not only reduce delivery times but also improve customer experience, making logistics providers more competitive in the evolving market landscape.

Market Challenges

• Infrastructure Limitations:Despite ongoing investments, Saudi Arabia's logistics infrastructure still faces challenges, particularly in rural areas. The World Bank reported that onlyapproximately 60 percentof the road network is paved, which complicates last mile delivery operations. These infrastructure limitations can lead to delays and increased costs, hindering the overall efficiency of delivery services and impacting customer satisfaction in less accessible regions.
• High Operational Costs:The operational costs for last mile delivery in Saudi Arabia are significantly high, with logistics companies facing expenses that can reach SAR 20 per delivery. Factors such as fuel prices, labor costs, and vehicle maintenance contribute to these high expenses. As companies strive to maintain profitability while meeting consumer demands for faster delivery, managing these costs becomes a critical challenge in the competitive landscape.

Saudi Arabia Last Mile Delivery Market Future Outlook

The future of the last mile delivery market in Saudi Arabia appears promising, driven by the increasing integration of technology and evolving consumer expectations. As urbanization continues, logistics providers are likely to enhance their delivery networks, focusing on efficiency and speed. Additionally, the growing emphasis on sustainability will push companies to adopt eco-friendly practices, aligning with global trends. Overall, the market is set to evolve, presenting new opportunities for innovation and growth in the coming years.

Market Opportunities

• Expansion of Delivery Networks:There is a significant opportunity for logistics companies to expand their delivery networks, particularly in underserved regions. By investing in localized hubs and partnerships with local businesses, companies can enhance their service reach and improve delivery times, catering to the growing demand for efficient last mile solutions.
• Adoption of Green Logistics:The shift towards sustainable practices presents a unique opportunity for last mile delivery services. Companies that adopt green logistics initiatives, such as electric vehicles and eco-friendly packaging, can not only reduce their carbon footprint but also attract environmentally conscious consumers, enhancing their brand reputation and market share.