Saudi Arabia’s NEOM and DSV establish US$10 billion logistics joint venture

Published: Tuesday, December 19, 2023

The joint venture which is expected to commence in 2024 will provide a full suite of ground, sea, and air logistics services for the multibillion-dollar mega project.

NEOM and DSV announced in December a US$10 billion exclusive logistics joint venture to support the development of the ambitious projects taking shape in NEOM, a new urban area planned by the Kingdom of Saudi Arabia being built in northwestern Tabuk province, which is north of the Red Sea, east of Egypt across the Gulf of Aqaba and south of Jordan.

NEOM’s total planned area is 26,500 km² with distinct eight regions and many sectors. Backed by Saudi’s Public Investment Fund, the new futuristic city’s total cost is estimated to be more than US$500 billion once fully completed by 2039.
NEOM and DSV’s partnership will focus on providing logistics services for NEOM in the coming years. NEOM will hold 51% of the joint venture with DSV holding the remaining 49%.
Under the agreement, the joint venture will provide end-to-end supply chain management, development and investments in transport and logistics assets and infrastructure as well as transport and delivery of goods and materials within NEOM.
NEOM envisions unparalleled demand for construction logistics through 31 December 2031, with sustained growth in non-construction logistics thereafter. In addition to its impact on the logistics landscape, the venture is expected to boost the Saudi economy, through infrastructure development and creating more than 20,000 job opportunities.
“The projected demand in both construction and non-construction logistics will make NEOM one of the largest customers in the world, and this partnership allows NEOM to create value from its demand. Working alongside one of the world’s leading logistics companies, the joint venture with DSV will build on expertise and know-how to drive innovation and sustainability throughout the logistics value chain. The economic benefit to this partnership will not only provide tens of thousands of jobs, but it will also enable growth to capture local and regional market share. It’s a living example of Saudi Vision 2030 in action, fostering job creation and building a future-leaning economy,” said Nadhmi Al-Nasr, CEO of NEOM.

Jens Bjørn Andersen, Group CEO, DSV, commented: “NEOM is one of the largest and most complex projects in the world. It provides a unique opportunity for DSV to support a development that is at the forefront of innovation, technology and digital transformation. DSV already has a strong presence in Saudi Arabia, and this is a significant growth opportunity for us in the region and we look forward to working with NEOM Company and bringing our logistics capabilities to the table.”
NEOM and DSV affirmed their commitment to driving innovation and will allocate a portion of the JV’s revenues to foster the development of ground-breaking technologies and commercialize new sustainable next-generation logistics solutions.
The vision extends further by establishing a dedicated innovation centre at NEOM’s clean and advanced manufacturing hub, Oxagon.
The new joint venture is a significant milestone demonstrating NEOM’s commitment to revolutionizing Saudi Arabia’s logistics sector and paves the way for pioneering sustainable logistics solutions, marking a new chapter in its journey towards realizing Vision 2030.
Completion of the partnership is awaiting customary regulatory approvals, which are expected to be obtained in the second quarter of 2024.

DSV, the global transport and logistics powerhouse
Since its establishment in 1976 in Denmark, DSV has seen a series of mergers to maintain a key position in the global transport industry. Today, it is one of the largest transport and logistics companies in the world with more than 75,000 employees in over 80 countries.
DSV’s parent company, DSV A/S is listed in NASDAQ Copenhagen and included in the C25 index as one of the 25 most actively traded shares on the Copenhagen stock exchange.
DSV A/S has three divisions: DSV Air & Sea, DSV Road, and DSV Solutions.
DSV Road is one of the leading road freight operators in Europe with distribution networks in North America and Africa. It handles more than 30 million shipments loaded onto over 20,000 trucks.
DSV Air & Sea offers alternative routings and flexible schedules to suit even the most demanding logistical requirements to and from all parts of the world. The company handles 2,600,000 TEUs of sea freight and 1,700,000 metric tonnes of air freight every year.
DSV Solutions designs and delivers logistics solutions, adding value by increasing operation and cost efficiency. Its logistics facilities total 6,000,000 m2.
In 2021, DSV acquires Agility’s Global Integrated Logistics business (GIL), a leading global transport and logistics provider with a strong footprint in emerging markets and with a broad span of strong offerings within logistics. With this addition to the organization, DSV becomes a global top-three player within transport and logistics.
DSV reports good H1 results and strong cash flow, adapting to soft market conditions by leveraging its asset-light business model. Gross profit was down 14.2% and EBIT before special items 31.6% from last year’s extraordinary results but compared favorably to pre-pandemic levels.
DSV’s joint venture with NEOM will not have any material financial impact on DSV for the financial year 2023. Source: DSV and NEOM newsrooms