The market earned revenues of $7.87bn in 2013 and is estimated to reach $12.02bn in 2017, according to Strategic Analysis of Oman's Transportation and Logistics Market, research from Frost & Sullivan. The study covers transportation, warehousing, freight forwarding and value-added logistics services. Being a highly import-dependent economy, Oman will be particularly attractive for logistics providers that have a significant presence in the global freight forwarding business.

“Oman’s strong transportation and logistics requirements stem from its centralised location in the Arabian Gulf, which makes it a transshipment centre and an ideal gateway for goods moving to the interior parts of Saudi Arabia, United Arab Emirates and Yemen,” said Srinath Manda, Frost & Sullivan Automotive & Transportation Program manager.

“To fulfill the needs of the logistics industry and consolidate the nation’s position as a premier logistics and transshipment hub, large-scale infrastructure projects, including Al Mazyounah Free Zone, Sohar Free Zone, Salalah Port, Muscat Knowledge IT City, and Duqm Special Economic Zone have been initiated by the government,” Manda said. “These special economic zones are also expected to encourage foreign businesses to set up operations in the country.”

However, there is a lack of skilled labour to support transportation and logistics businesses. Low domestic manufacturing activity for many industries is also limiting the opportunities for domestic logistics services. Further, the existing infrastructure is inefficient, especially in the suburban areas of Oman, reducing the time and cost-efficiency of logistic operations and, in turn, adversely impacting service providers’ bottom lines.

“Recognising these limiting factors, the Government of Oman has designed industrial expansion plans to diversify the economy and create manufacturing clusters to reduce the economy’s dependence on the oil and gas industry,” said Manda. “These initiatives will lead to the much-needed growth of the domestic manufacturing sector and, thus, necessitate a host of logistics services to carry raw materials and finished products for domestic and international consumption.”

Source: Frost & Sullivan