Revolutionizing GCC Logistics: Impact of the Proposed Kuwait-Saudi Railway

The Kuwait-Saudi Railway, a groundbreaking infrastructure project set to stretch 650 kilometers and connect Kuwait City with Riyadh by 2028, could revolutionize logistics in the Gulf Cooperation Council (GCC) region. This rail link promises to bring about significant improvements in efficiency, cost-effectiveness, and environmental sustainability, marking a transformative moment for the region’s logistics landscape.

Status of project

The ‘initial design’ phase is underway for the railway project connecting Kuwait and Saudi Arabia, which aims to transport both passengers and goods. This follows approval from the Project Management Committee of Kuwait and Saudi Arabia after a comprehensive feasibility study. Implementation is set to begin in 2026, with international companies to be invited to participate.

The railway will have the capacity to carry 3,300 passengers daily with six round trips, covering about 500 km in 1 hour and 40 minutes at high speed. Starting from Shaddadiyah in Kuwait and extending to Riyadh, the project is expected to be completed within 4 years and is part of broader efforts to enhance economic integration and strengthen historical ties between the two countries.

Goals of the Kuwait-Saudi rail link project

Currently, the transport of goods between Kuwait and Saudi Arabia relies heavily on road networks, which is both time-consuming and expensive. The new railway will drastically reduce travel time from over 10 hours to just 2 hours. This substantial decrease will lead to faster delivery of goods, which is vital for businesses that operate on tight schedules or deal with perishable items.

According to a DHL report, logistics costs in the GCC region can account for up to 15-20 percent of total product costs due to inefficiencies in the current transport networks. The Kuwait-Saudi Railway, by offering a faster and more reliable transport option, is expected to significantly lower these costs. The inherent efficiency of rail transport, capable of handling larger volumes of goods in a single trip, will further reduce per-unit transport costs. This efficiency will benefit businesses by reducing freight costs, allowing them to either pass these savings on to consumers or reinvest in their operations. Additionally, the railway’s capacity to handle larger and heavier loads will be particularly advantageous for industries such as construction and manufacturing, which require the transport of bulky materials.

The environmental benefits of rail transport compared to road transport are considerable. The International Energy Agency (IEA) reports that railways produce up to 90 percent fewer greenhouse gas emissions per tonne-kilometer than trucks. By shifting a significant portion of freight traffic from road to rail, the Kuwait-Saudi Railway will help reduce the carbon footprint of the logistics sector. This shift aligns with the GCC’s broader sustainability goals, as the region increasingly focuses on reducing environmental impact and promoting greener practices. Businesses globally are placing a higher emphasis on sustainable logistics solutions, with many customers demanding more environmentally friendly supply chain practices. The new railway offers a greener alternative to road transport, helping businesses meet their sustainability targets while contributing to regional environmental goals.

Moreover, the Kuwait-Saudi Railway can act as a catalyst for economic integration within the GCC. By creating a reliable and efficient link between two major economic hubs, the railway will facilitate the smoother flow of goods, services, and people, boosting trade and investment across the region. It will play a crucial role in the development of the GCC Railway Network, an ambitious project aimed at connecting all six member states through an integrated rail system. This network will enhance intra-GCC trade, making it easier for businesses to access new markets and for consumers to benefit from a wider range of products and services.

A PwC study estimates that this integrated network could boost regional GDP by 1.3 percent, highlighting the economic impact of improved transport connectivity. Just in May 2024, Etihad Rail, Oman Rail, and Mubadala Investment Company entered into an agreement to start construction on the proposed Omani-Emirati railway network project.

The GCC rail link developments will likely spur the growth of logistics hubs along its route. Cities such as Kuwait City and Riyadh, already major economic centers, will see their roles as logistics hubs further enhanced, attracting new businesses and investments. Additionally, the railway will promote the creation of new industrial zones and free trade areas, providing businesses with the infrastructure needed to thrive. These zones will benefit from the railway’s connectivity, facilitating efficient movement of goods within the GCC and beyond. Integrated logistics hubs have the potential to improve supply chain efficiency by up to 30 percent, underscoring the railway’s impact on the region’s logistics infrastructure.

Key considerations for GCC states

Despite these advantages, the Kuwait-Saudi Railway faces challenges that must be addressed to realize its full potential. Ensuring seamless integration with existing logistics networks and developing efficient intermodal transport solutions will be crucial. Regulatory and operational harmonization between Kuwait and Saudi Arabia will also be necessary to prevent bottlenecks and inefficiencies. Investment in modern infrastructure, including terminals and warehouses, and ongoing maintenance of the railway will be essential to sustaining its performance. As the GCC continues to invest in infrastructure and modernize its logistics networks, the Kuwait-Saudi Railway will play a central role in shaping the future of freight transport in the region.

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