Railway ambitions put Saudi Arabia on track to realize Vision 2030

Saudi Arabia has its eye on the prize with its Vision 2030 ambitions of transforming the Kingdom into a major global economic powerhouse by diversifying the economy, reducing oil dependence, and advancing key industries. Among the country’s most ambitious ventures is its plan to expand a modern and sustainable railway network, driven by the vision of establishing the Kingdom as a key player in transportation and a central logistics hub for the region and beyond.

With the Saudi Rail 2024 event currently underway, now is the ideal moment to explore how this forward-thinking infrastructure project is poised to drive the Vision 2030 goals and help the Kingdom progress toward its broader objectives.

The expansion of Saudi Arabia’s railway system goes beyond a mere infrastructure upgrade; it is a strategic move designed to boost economic growth by reducing logistics costs and establishing efficient trade corridors. A distinct advantage lies in the Kingdom’s strategic location between Europe, Asia, and Africa, with Saudi railways poised to open up new opportunities as a vital link for logistics across continents. The expansion of the railway system, which improves connections between important cities and creates new international trade routes, supports Vision 2030’s goal of developing a diversified economy.

The Saudi Ministry of Transport and Logistic Services believes that investing in rail could lead to significant economic benefits, including saving up to $4.2 billion in transportation costs annually and generating 200,000 jobs in related sectors. The railway industry is already attracting foreign investments and forming strategic alliances with top international corporations. One example of this is Saudi Arabia Railways’ recent partnership with Alstom for hydrogen train technology, showcasing a commitment to sustainability, innovation, and successful global collaborations.

One of the main goals of Vision 2030 is to ensure that Saudi Arabia’s growth follows a sustainable and environmentally conscious path. The progress made with the successful trial of the Coradia iLint hydrogen train in the Kingdom is an important step in this direction. Hydrogen-powered trains, fueled by renewable energy, represent the future of eco-friendly public transportation. With their low emissions and high efficiency, they align well with the Kingdom’s commitment to reducing carbon emissions and promoting green energy solutions.

The Saudi railway system will also help decrease reliance on highways, thereby aiding in reducing emissions throughout the Kingdom. Shifting to rail, which is more energy-efficient per ton of freight moved, is one of the simplest and most effective ways to reduce the environmental impact of logistics. By pioneering clean transport technologies, Saudi Arabia is positioning itself as a leader in sustainable transportation solutions in the Middle East and setting a benchmark that could inspire other countries globally.

With an ambitious rail expansion underway, Saudi Arabia aims to set itself on the path to becoming a global logistics hub by setting up modern connectivity and sustainable transport infrastructure.

In addition to sustainability, the railways in Saudi Arabia have a significant impact on the local economy through improvements in supply chains, greater mobility, and support for tourism. Railways help reduce transportation costs, making the nation more appealing for global commerce, which, in turn, benefits industries like manufacturing, retail, and services.

Railways also improve local tourism by providing access to areas in the country that were previously hard to reach. The upcoming rail network will make it easier and more environmentally friendly for tourists to explore Saudi Arabia’s natural and cultural heritage by adding new routes that connect popular areas, such as the historic site of AlUla. This is expected to boost revenue from tourism, which is a key pillar of economic diversification under Vision 2030.

Despite facing challenges, Saudi Arabia has ambitious goals in the railway sector. Creating a network of this scale involves technical challenges, substantial financial requirements, and the need for successful partnerships across different industries. Nevertheless, by implementing a carefully planned strategy that includes collaborations between the public and private sectors, these challenges can be effectively addressed.

Having trusted private sector partners is essential for the secure, effective, and legally compliant advancement of major transportation initiatives. Experienced legal consultants can help navigate complex regulatory environments, ensure clear contracts, and manage risks effectively. Moreover, large international legal firms understand global best practices, which are crucial in establishing successful project structures that enable private financing and facilitate the integration of new technologies into the Kingdom’s regulatory framework.

When choosing a legal partner for a major project such as the Saudi rail expansion, it is important for operators and developers to focus on expertise in infrastructure and laws and regulations relating to transport, as well as a proven history of successfully handling significant infrastructure projects. Having a legal partner who understands the complexities of global best practices can help streamline operations, minimize legal obstacles, and support the Kingdom’s railway sector in achieving its ambitious objectives.

Events like Saudi Rail 2024, of which Addleshaw Goddard is a proud sponsor, are crucial for fostering partnerships. These events provide a platform for global and regional participants to share ideas, discuss technological advancements, and form important partnerships to address the industry’s challenges and realize opportunities. Emphasizing the significance of inter-sector partnerships, Saudi Rail highlights the importance of collaboration in innovation, strategy, and cooperation for a thriving railway industry.

• Will Smith is a partner at Addleshaw Goddard law firm, and Paul Hirst is a partner and head of the firm’s transport division.