South Korea’s CJ Logistics said Thursday that the company will invest around 60 billion won ($45.4 million) to establish a global distribution center in Saudi Arabia, the Middle East's rising logistics powerhouse.
The distribution center will be located in Riyadh’s Special Integrated Logistics Zone, a special economic zone, through which the Saudi Arabian government aims to boost the country’s supply chains.
The facility will be built on 18,000 square meters of land within the economic zone, with construction to be completed in the second half of 2024, according to the Korean company. When completed, the center will be capable of handling some 15,000 packages per day.
CJ Logistics will provide consumers in the Middle East with iHerb products through its global distribution center. The Korean parcel delivery firm said the new distribution center will be responsible for e-commerce orders from nine countries in the Middle East region, including Saudi Arabia, UAE and Kuwait.
CJ Logistics and US-based healthcare products company iHerb signed a separate agreement for an 8-year distribution of iHerb products in the region.
Since 2018, CJ Logistics has been responsible for the distribution of iHerb products in Asia, through its global distribution center located at Incheon Airport.
CJ Logistics said a global distribution center has become increasingly important in cross-border e-commerce as it can significantly reduce delivery time that currently takes two or three weeks.
The South Korean logistics firm said its new distribution center in Saudi Arabia will help the company streamline other cross-border online shopping orders in the Middle East region. According to the company, the Middle East’s e-commerce market has been posting two-digit growth every year.
“The new distribution center in Saudi Arabia will become a strategic location, through which CJ Logistics can expand its cross-border e-commerce business to Europe and Africa,” a CJ Logistics official added.
CJ Logistics CEO Kang Sin-ho noted that “CJ Logistics will utilize the company’s cutting-edge logistics technologies" to pave the way for the new distribution center in Saudi Arabia "to become a leading logistics hub for the e-commerce market in the Middle East region.”
CJ Logistics added the company will continue to seek new opportunities to increase its logistics capacity in the global cross-border e-commerce market, which will continue to grow in the following years. According to the official from CJ Logistics, the global cross-border e-commerce market is estimated at around 100 trillion won. The official added the market could grow to 176 trillion won by 2026, quoting a report released by Transport Intelligence, the world's leading providers of logistics & supply chain market research.
Kang met with the General Authority of Civil Aviation President Abdulaziz Al-Duailej on Wednesday at a business launch ceremony held at Riyadh Marriott Hotel in Saudi Arabia. Other attendees included Majid bin Abdullah Al-Qasabi, minister of commerce and president of the E-Commerce Council, and Park Joon-yong, South Korean ambassador to Saudi Arabia.