Middle East third-party logistics market to reach $173.3 billion by 2035: competition for logistics hubs amid economic transformation

When Logistics Becomes a National Strategy: The Deep Logic of the Middle East 3PL Market

The scale of the Middle East's third-party logistics market is rewriting the region's economic narrative along a steep growth curve. According to the latest report released by Global Market Insights, the market is expected to jump from $86.7 billion in 2026 to $173.3 billion in 2035, with a compound annual growth rate of 8%. Behind this figure is no longer merely a simple expansion of warehousing and freight, but a systemic transformation in which Gulf states, in the "post-oil era," treat supply chain infrastructure as core national assets.

For observers, the boom in the logistics industry is precisely the clearest mirror of the Middle East's economic transformation. As governments move economic diversification from slogans to real allocations in national budgets, logistics—owing to its leveraging role in connecting manufacturing, trade, tourism, technology, and other diversified sectors—has quickly become a priority for investment.

From Oil Passage to Trade Hub: The Redirection of Infrastructure Investment

Over the past decade, Gulf states focused their main energy on attracting global cargo flows through ports, airports, and free zones, in order to escape their dependence on hydrocarbon exports. Today, these efforts are entering a harvest phase. The report clearly states that the UAE and Saudi Arabia are the region's two major logistics hubs, and their common feature is reshaping geographic connectivity through state-led megaprojects.

The UAE's strategy is particularly clear: to position itself as a transit hub between Asia, Europe, and Africa. In January 2026, the cargo division of Emirates announced its "2026 Logistics Strategy," planning to add up to 10 Boeing 777F freighters within the year, directly boosting regional air cargo handling capacity. This is not an isolated aviation expansion, but one coordinated with land infrastructure. The $3.5 billion Al Mafraq-Al Ghuwaifat highway directly connects multiple industrial zones to Jebel Ali Port and the Saudi border, significantly shortening cross-border transit times. Such projects are enhancing the appeal of Dubai and Abu Dhabi as global logistics nodes, attracting multinational and regional third-party logistics providers to establish bases there.

Saudi Arabia is also taking action. Although it is not listed as a leading market in the report sample, its role as a growth engine is increasingly clear. As megaprojects along the Red Sea coast advance, Saudi Arabia is leveraging free zones and digital customs ecosystems to attract manufacturers and retailers to use regional distribution centers, making it another growth pole for 3PL outsourcing.

Game on the Canal: The "Megaproject" Drive of Ports and Corridors

Notably, the growth of the third-party logistics market is deeply tied to the region's macro-geoeconomic projects. In January 2026, Kuwait signed a $4.1 billion agreement with China, with China Communications Construction Company leading the development of Mubarak Al-Kabeer Port. The port will not only elevate Kuwait's standing in maritime trade, but is also seen as a key node connecting the Belt and Road Initiative. Such mega-port projects will create new cargo corridors and expand high-capacity opportunities for 3PL services.Meanwhile, Bahrain is entering the competition with a unique "efficiency-oriented" positioning. The country has invested $32 billion to build a fast "sea-air transshipment" hub, claiming it is 50% faster and 40% cheaper than traditional single-mode sea or air freight options, and can deliver a 69% cost advantage for companies that use it. This reflects how smaller Gulf states are avoiding head-on competition with major ports on scale, instead relying on process innovation and digital integration to build competitive strength in niche segments. Taken together, these projects are reshaping the traditional logistics landscape, which depended on single ports, into a multi-node, multi-modal regional network.

Dual Deployment of Capital and Giants: An Investment Metaphor of Still-Low Market Concentration

Although Agility Logistics leads with a market share of over 5%, the top five players (Agility, DHL, CEVA Logistics, Kuehne+Nagel, and DB Schenker) together account for only 13% in 2025. This figure reveals that the Middle East 3PL market remains highly fragmented, and also implies that there is ample room for M&A consolidation and localized specialized operations.

Leading companies are locking in competitive barriers through ultra-large-scale facilities. Both Kuehne+Nagel and Expeditors International have committed to building 23,000-square-meter logistics facilities in Dubai South, showing that physical scale and strategic location have become baseline requirements for winning large multinational clients. Meanwhile, local emerging forces are also pouring in. In November 2025, AKI Logistics' newly established AKI Contract Logistics set up a 3PL division in the UAE focused on contract logistics, warehousing, and last-mile delivery, to serve the customized needs of local and multinational customers.

Even more noteworthy is the entry of sovereign wealth funds. In December 2024, Mubadala Investment Company acquired 80% stakes in both Global Medical Supply Chain and Al Ittihad Drug Store, directly entering the medical supply chain and pharmaceutical distribution sector. This move not only reflects Abu Dhabi's capital tilting toward high-value-added logistics segments, but also reveals a trend: in the post-pandemic era, medical logistics with special qualifications and cold-chain capabilities is becoming one of the most strategically valuable assets.

Structural Transformation: Air Freight Dominance, E-Commerce Drive, and the Rise of Rail

By transport mode, air freight dominated the Middle East 3PL market in 2025 with a share of about 44%, and is expected to maintain growth of over 7.1% from 2026 to 2035. High-value, time-sensitive goods (such as e-commerce parcels, pharmaceuticals, and electronic products) are the main drivers of this structure.On the application side, e-commerce and logistics lead with a 24.2% share, with growth projected to exceed 10% over the next decade. Rapid urbanization, high internet penetration, and expanding cross-border trade in the region are driving logistics operators to increase investment in automated warehousing, last-mile delivery, and real-time visibility technologies. Meanwhile, pharmaceutical logistics has become the fastest-growing sub-segment, driven by cold-chain demand, specialized handling capabilities, and compliance requirements, attracting major capital such as Mubadala and accelerating industry consolidation.

Rail and road transport, for their part, have risen to prominence owing to the cost-effectiveness of long-distance bulk freight transport and sustainability goals. In February 2026, Etihad Rail launched a nationwide campaign encouraging logistics providers, manufacturers, and heavy industry companies to shift from traditional road transport to intermodal rail services. With the continued improvement of the regional expressway network and the optimization of rail-road intermodal connections, overland transport is expected to gain further market share in the coming years. Moreover, digitalization is reshaping service capabilities. In February 2026, Etihad Airways restructured its cargo business and introduced a digital cargo tracking system, enhancing operational transparency and customer responsiveness.

Conclusion: The Logistics Market as a "Barometer" of Economic Transformation

The trajectory of the Middle East third-party logistics market from $81.3 billion (2025) to $173.3 billion (2035) is by no means merely the self-driven prosperity of the logistics industry. It is a process in which Gulf states are shifting national wealth from underground oil to above-ground supply chain networks, an outcome of the coordinated evolution of free zones, ports, airports, and railways as a multi-system framework, and an inevitable result of global logistics giants and sovereign wealth funds reassessing the region's strategic value.

However, market fragmentation, infrastructure bottlenecks, and intensifying regional competition remain unavoidable challenges. While governments continue to inject massive capital into macro-level projects, they also need to reduce the costs of fragmentation through policy coordination, unified technical standards, and regulatory facilitation. For international investors and enterprises, understanding the true value of the Middle East logistics market lies not in tracking the construction progress of individual projects, but in grasping the logistics network reset driven by this round of economic transformation—one that is providing lasting momentum for industrial upgrading across the entire region and the restructuring of global supply chains.