CJ Logistics to establish global distribution center in Saudi Arabia

South Korea's CJ Logistics unveiled plans on Thursday to construct a Global Distribution Center (GDC) in Saudi Arabia, a burgeoning logistics hub in the Middle East. This strategic move signals the company's intent to make significant inroads into the Middle East's thriving e-commerce sector.

The GDC model allows e-commerce businesses to store their merchandise at strategically located delivery centers, ensuring prompt delivery once orders are placed. With an investment of 60 billion won ($45 million), CJ Logistics' Saudi GDC is expected to span 18,000 square meters and handle a daily volume of 15,000 package boxes. Completion is slated for the second half of 2024.

This new initiative indicates CJ Logistics' strategic entry into the Middle Eastern cross-border logistics market. The center is anticipated to handle receipt, order and delivery operations across nine Middle Eastern countries, including Saudi Arabia, the UAE and Kuwait, at a time when the region's e-commerce sector is experiencing robust double-digit growth.

Leveraging advanced logistics technologies grounded in robotics, data and AI, CJ Logistics is well-positioned to penetrate the cross-border parcel delivery market, which boasts an estimated annual value of 100 trillion won ($75.6 billion).

In a precursor to this announcement, the company secured a long-term contract with iHerb, a prominent American online retailer, to oversee logistics operations in the Middle East region.

According to CJ Logistics officials, GDCs offer significant advantages in the cross-border e-commerce (CBE) market. The strategic establishment of GDCs can dramatically streamline delivery times from a few weeks to substantially less, providing comprehensive fulfillment services that encompass product storage, inventory management and packaging.

"The Saudi e-commerce market has high growth potential and the geographical advantage of Saudi Arabia, connecting Africa and Europe," CEO of CJ Logistics Kang Sin Ho said. "We will deploy the most advanced logistics technology to position the Saudi GDC as a leading logistics hub in the Middle East e-commerce market." 

Write to Hun-Hyoung Ha at hhh@hankyung.com