Port in Oman © 123RF
Port in Oman © 123RF

Oman logistics market to grow at 7% a year

23 March 2016

Oman’s logistics industry has the potential to be one of the region’s key players and is likely to grow at nearly 7% a year until 2020, according to a report by Frost & Sullivan.

The key drivers behind the growth will be infrastructure investments that have been made to support national logistics development plans, efforts to diversify the economy away from dependence on hydrocarbons, and trade with GCC, Asia and sub-Saharan African countries.

According to the consultancy, Oman’s Logistics Plan 2020 aims to invest in the development of major hubs for handling international cargo.

Last year Oman also released the Sultanate of Oman Logistics Strategy (SOLS) 2040 to improve the country's soft infrastructure, particularly the regulatory environment, support mechanisms and institutions as well as investing in roads, rail lines and ports.

The sultanate aims to at least double the level of employment in its logistics sector to 80,000 jobs by the end of the decade.

“Oman’s strategic centralised location in the Arabian Gulf makes it ideal for conversion into a major trans-shipment hub for East-West trade route,” said the report.

Main exports are likely to continue to be mineral fuels, oils distillation byproducts, while imports comprise manufacturing goods and agriculture products.

The transport and logistics sector accounted for around $8.81bn of Oman’s GDP in 2015, while sea transport accounts for more than 80% of freight.

Sea freight is likely to grow by 4.8% per cent in 2016, driven by the increasing intra-region GCC trade and demand from Asia, Europe, and Africa.

A new 680km road between Oman and Saudi Arabia is also likely to increase road freight by providing a more direct route between the two countries as well as reducing the number of border crossings.

Gopal R, global vice president, supply chain and logistics transformation practice, Frost & Sullivan, said Oman’s growth as a key regional logistics centre could be challenged by surging competition mainly from the UAE and Saudi Arabia.

He also cited an inefficient logistics infrastructure, especially outside urban areas and shortage of skilled logistics labour as factors that could hold back the sector’s growth.

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