The industry of logistics in Oman is a thriving one and is central to the advancing and competitive economy of the country that is decisive in the increasing inward investment and non-oil exports, which are proving to be an essential aspect of the national economy. Freight and logistics have a critical role in global trade. It is an ambitious and rapidly growing industry with several national and international players dominating the scenario.
The phenomenon of globalization has broken the trade barriers and increased the global consumption of diverse commodities by leaps and bounds. Consequently, it has put an enormous amount of pressure on the worldwide supply chain. The freight and logistics industry is responsible for the smooth transport of products from one point to another through an efficient supply chain network with the help of different freight management services. Every channel, including airways, railway, road, and waterways, is crucial to transportation, which facilitates the logistics industry.
The indigenous logistics industry of Oman- an overview:
The logistics industry in the GCC countries is a thriving sector estimated to be worth around USD 100 billion by 2020. Warehouse automation in the Middle East and North Africa (MENA) region has been one of the major driving factors behind this tremendous growth. The increasing relevance of e-commerce has compelled the logistics industry in the region to work on its productivity and affordability continually.
The Sultanate of Oman has a high-performing logistics industry estimated to reach a valuation of around USD 885 million by 2022, demonstrating a CAGR of about 7% from 2015 to 2020. Therefore, Oman itself accounts for the lion’s share of the GCC logistics industry market. According to the Logistics Performance Index based on the data released by the World Bank, Oman ranks second among all Arab nations with a global rank of 43 and LPI score of 3.20. In contrast, UAE is the highest performing Arab nation ranking 11 on the list with an LPI score of 3.96. These statistics shed light on how the logistics industry in Oman is globally evaluated at the moment.
Logistics is a significant industry in its own right and a decisive agent that holds together businesses of different scales all across the Sultanate. It supports diverse industries like gypsum quarries, industrial goods manufacturers, food and beverage, raw materials producers, oil and gas.
A highly functional logistics industry facilitates the highly diverse and specialized Omani businesses and drives profits for the industry.
Oman’s logistics industry contributes around 4.9% of the GDP of the Sultanate. It is presently undergoing a transformation to conquer the challenges faced due to lack of infrastructure, investment in port handling capacity, and land transport network with the other GCC countries.
Oman has a significant role in maintaining the trade flow of the GCC because of its FTA with the USA. Its status as a part of the Ishqabad trade corridor is also a critical driver in this regard. Apart from having FTA negotiations with countries like China, Australia, and New Zealand, it is also a part of the Free Trade Associations between certain countries of EU and GCC and Singapore.
Key drivers in the logistics industry in Oman
There are several reasons which have bolstered the success of the Omani logistics industry. Some of the vital factors which led to the growth of the logistics industry in Oman are as follows:
Strategic geographical location:
Oman has the privilege of being located on the strategic axis of the Indian Ocean and the Arabian Gulf. This puts at its disposal access to excellent trade routes and exceptionally fast transit times to the world’s most lucrative markets emerging at the moment.
Advantageous shipping routes:
The Sultanate has excellent transportation connections because of its location on the international shipping routes and a good two-week distance to most major world ports. It also has direct routes facilitating trade with GCC countries, India, and north and middle-Africa.
Extraordinary waterway infrastructure:
Oman has an exceptional transportation infrastructure that is counting on three deepwater ports at Salalah, Duqm, and Sohar, five airports at Muscat, Salalah, Duqm, Sohar, and Ras Al Hadd, and excellent road networks along with promising access to resources like energy, finances, and labor.
The most brilliant minds at play:
The Sultanate of Oman Logistics Strategy 2040 (SOLS 2040) is a blueprint designed by the Government to convert Oman into one of the world’s top 10 logistics hubs by 2040. The experts have developed it at the Oman Logistics Centre to ensure that the logistics sector keeps on increasingly contributing to the national GDP.
Creation of the SAOC to realize long-term goals:
ASYAD, a Government-holding company to inform and regulate government investments in infrastructures like ports, free zones, logistics centers, maritime, and land transport to holistically develop the logistics industry and strategically achieve developmental goals.
Automation and disruptive technologies like IoT, AI, ML, and deep learning have been excellent driving forces behind the growth of the Omani logistics industry in recent years. As Oman has witnessed an enormous surge in the use of e-commerce due to the COVID-19 situation, its supply chain has been subjected to a cracking amount of pressure in this pandemic with a shortage of human resources. Technology provided a viable solution for the seamless functioning of the logistics sector. It has not only been a great alternative source of income, but it has curtailed job losses and has provided opportunities to people who have lost jobs due to the slowdown of other industries.
The Oman Logistics Centre has a mission to establish the country as a leading nation as far as logistics are concerned by 2040 by implementing the SOLS 2040 and designing a market development plan to lead the way. The OLC is planning a market strategy for national-level implementation to achieve the desired objectives within the time frame. It will provide intelligence with the assistance of the National Center for Statistics and Information (NCSI) by publishing accurate reports to inform government policies.
These efforts will complement Oman’s location at the juncture point of two of the most exciting water bodies in terms of international business transportation. The Indian Ocean and the Arabian Sea cater to some of the world’s most notable trading routes.
This privileged geographical location can be helpful to attract heavy-weight investors from GCC, Asia, and Africa. The Logistics Industry of Oman is one of the most promising ones in that region. The significant increase in domestic output is propelling large volume freight movements to and from Oman. Although there are challenges like inefficient logistics infrastructure, especially in the suburbs, and a sheer dearth of specialized labor to work with logistics technologies, the advanced networking and connectivity offer ample scope for development.