What are logistics, their types, and the top logistics companies

Logistics services include planning and executing the operations of transporting, storing, and distributing goods efficiently. Their types include: production, sales, and transport logistics. They are essential for supply chains, as they enhance efficiency, reduce costs, and improve customer experience. Modern trends include: automation, artificial intelligence, and cloud services.

The size of the freight and logistics market in the Kingdom of Saudi Arabia is $25.33 billion in 2024, and experts expect it to reach $32.88 billion by 2029, with a compound annual growth rate of 5.36% during this forecast period.

At the GCC level, estimates indicate that the logistics sector will grow at a CAGR exceeding 5% in the coming years as a result of continuous development in logistics infrastructure, along with increased governmental and private investments seeking to develop the region into a strong logistics hub that adopts supportive regulatory policies for business.

Perhaps several questions now come to your mind regarding the nature of the logistics service, its types, and what is the nature of logistics companies?

This is what we will answer in detail throughout the article, and let's start with the definitions.

What does the word "logistics" mean?

The word (logistics) refers to everything related to the operations of planning, execution, and supervision of the flow of resources, whether they are goods, information, or services, from the point of origin to the point of consumption efficiently and effectively.

This term was originally used in military contexts to describe the organization of supplies and provisioning, and then evolved to include the fields of trade, management, and supply chains.

When "logistical support" or "logistics services" is said, the intention is to provide the means and operations that ensure products or services arrive at the right time, at the lowest costs, and with the best possible quality.

What is logistics service?

In short, logistics service can be defined as the set of operations that include the management, planning, and execution of transporting, storing, and delivering goods to the final consumer through logistics service companies in the fastest possible time and at the lowest possible cost.

Researchers in this field reached this definition of the term after conducting research and studies following the end of World War II, which aimed to apply logistics in business, known as Logistics Business.

Types of Logistics Services

The types of logistics services differ depending on the field, for example:

• Production field: The role of logistics service here is in managing raw materials that are purchased, distributing them within the factory that will carry out production, then shipping them to the warehouse, and managing the packaging and shipping process, etc.

• Sales field: The role of logistics services in this field is to deliver goods from warehouses to wholesalers, then to retailers until they reach the final consumer.

• Transport field: Here, the role of logistics services is in managing the fleet through which goods are transported, whether this fleet is land, sea, or air.

What is the difference between logistics and transport?

Most often, these two terms are used interchangeably to express one thing, but in reality, they are two very different parts of the supply chain.

• Concept: The term logistics refers to the complete system concerned with planning, executing, and managing the flow of goods and information from the point of creation to the point of consumption, while the term transport refers to a part of logistics operations concerned with moving products from one location to another.

• Scope: Logistics services include transport operations, storage, inventory management, packaging, distribution, and after-sales services, while transport is limited to the physical movement of goods.

• Focus: Logistics services focus on the integration between activities and speed of response, while transport focuses on delivery time and the safety of products during movement.

• Goal: Logistics services seek to improve the efficiency of the supply chain as a whole and ensure the smooth flow of products and information, while transport is concerned with executing the shipping plan only using an appropriate means to ensure products are delivered at the specified times without delay.

From this, it becomes clear that there is a general-to-specific relationship between the two terms, as every goods transport operation falls under the term logistics services, while the term transport cannot be used to express logistics service because it is an essential branch of the logistics sector.

What are Market Logistics Services?

Market Logistics Services refer to the activities and services provided to deliver products from the producer or merchant to the market or the final consumer efficiently. They are an essential part of the marketing strategy and supply chain, and include:

• Demand management and forecasting market needs and planning the required quantities at the right time and place.

• Providing warehouses close to target markets, and organizing the movement of goods to points of sale or customers quickly and efficiently.

• Packaging and appropriate labeling for the market in line with customer tastes and retail requirements.

• Selecting the appropriate means of transport that balances cost and speed according to the nature of the market and the product.

• Meeting customer expectations in terms of on-time delivery, ease of return, and tracking updates.

What are logistics companies?

They are companies that provide diverse logistics services such as: storage, packaging, shipping, and other types of logistics services which include warehouse management, inventory management, and control of supply chains, etc.

You should know that if you seek to make your business successful and provide a unique and distinctive experience for your customers, you must rely on a leading logistics service company in the logistics sector to be able to transport, store, manage, and deliver your goods at the specified time and place according to your requirements to meet customer expectations, thereby enhancing their loyalty to the business and achieving more profits.

Types of Logistics Service Providers

To make the picture clearer to you, we relied on a live example that we will use to illustrate the difference between the different types of logistics companies in terms of business model, as follows:

1. First-Party Logistics (1PL) Companies:

First-party logistics refers to companies or individuals who handle their logistics operations internally instead of relying on external sources to perform the different operations.

If we assume that a person owns a farm that is still in its beginnings and produces limited quantities of products, they rely on the means of transport available to them to transport these products to the market to sell them and earn a living from them without relying on any external sources.

2. Second-Party Logistics (2PL) Companies:

This is a type of logistics company that focuses on providing transport services for various commercial activities.

If we assume that the farmer has expanded their business and is producing larger quantities of products, in this case, they will need a second party to help them in the process of shipping and transporting goods to the market for sale, which will make them consider Second-Party Logistics companies to help them transport their products and thus ensure cost reduction.

3. Third-Party Logistics (3PL) Companies:

This type of company provides many diverse logistics services such as: internal and external transport, management and operation of distribution centers, packaging, inventory management and monitoring, etc.

If the farmer has expanded their business further and now has multiple distribution centers and warehouses, they will use a Third-Party Logistics partner to manage shipping and transport operations, provide packaging services, manage storage operations, and other services efficiently to provide the best possible quality to customers.

4. Fourth-Party Logistics (4PL) Companies:

Unlike the other types of logistics companies that were discussed a little while ago, this type of company is characterized by complete control over the supply chain of the contracting company.

In other words, the role of these companies is not limited to providing transport and storage services and so on, but goes further to include: planning, resource acquisition, monitoring, coordination, auditing, providing consultations, and executing operational performance professionally and accurately, etc.

With the large size of the farm and the increase in its customers, the farmer will need this type of company to lead all the operational processes of the farm and execute various logistics services in a more professional manner that serves the commercial activity and provides a distinctive experience for customers.

5. Fifth-Party Logistics (5PL) Companies:

This type of company aims to deal with a wide and multiple range of supply chains in order to reduce costs by relying on technological development and emerging innovations that contribute to dealing with increasing volumes, and improving standards to provide better service.

This type of company relies on extremely complex systems based on artificial intelligence technologies and machine learning applications, enabling it to benefit from big data to manage and automate all logistics services. This type of company represents a major challenge for developing logistics services in integration with the 3PL and 4PL business model.

In our example, this type of company will lead the commercial activity, i.e., the farm, from start to finish, meaning from manufacturing and production until the products are delivered to the final consumer.

⭐ Read also about the most prominent types of shipping companies in Saudi Arabia in 2025

14 Important Factors for Choosing the Best Logistics Service Company in Saudi Arabia

Choosing the best logistics service company is crucial for the success of your business, as it can significantly affect the efficiency of your supply chain, customer satisfaction, and overall operational costs. Below are the essential factors and steps that should be considered when choosing a logistics partner:

• Scope of Services: Ensure that the logistics service company offers the services you need, such as warehousing, inventory management, shipping, and order fulfillment.

• Specialized Services: If you have specific requirements, such as handling hazardous materials, temperature-controlled shipping, or international shipping, ensure that the company has expertise in these areas.

• Industry Experience: Look for companies with experience in your industry, as they will better understand your specific needs and challenges.

• Local Expertise: If you need regional or local distribution, make sure the provider has expertise and facilities in those areas.

• Reputation: Research the company's reputation through online reviews, testimonials, and industry references. The best logistics service provider will have a history of reliability and quality service.

• Tracking and Visibility: Ensure the company uses advanced tracking systems that provide real-time visibility into your shipments.

• Automation and Integration: Look for logistics providers who offer technical integration and connectivity with your existing systems (such as ERP systems and e-commerce platforms) to streamline operations.

• Transparent Pricing: Request detailed quotes and compare them, be wary of hidden fees, and ensure you understand all involved costs.

• Value for Money: Evaluate the overall value offered, not just the price. Consider factors like service quality, reliability, and additional features that can add value to your business.

• Scalability: Choose a logistics partner who can scale with the growth of your business, accommodating increasing volumes and expanded services as needed.

• Flexibility: Ensure the company can handle fluctuations in demand and offer customized solutions to meet your changing needs.

• Responsiveness: Evaluate the responsiveness and customer service of the logistics company. Quick and effective communication is crucial in solving problems.

• Dedicated Account Management: Consider whether the company provides dedicated account managers to offer personalized support and meet your specific needs.On-Time Delivery Rates: Check the company's performance metrics, such as on-time delivery rates and error rates.

• Quality Control: Ensure the provider has robust quality control procedures to handle your shipments professionally and prevent damage or loss, and ensure the existence of Service Level Agreements (SLAs) to guarantee performance standards and accountability.

OTO: The Best Logistics Service Provider in the Arab World

All the important considerations we mentioned for choosing a logistics company or provider can be found in OTO – the leading shipping gateway in the Arab world – which provides more than 7 integrated systems embedded in a single control panel to manage, ship, return, track, and analyze everything related to your operational logistics processes.

With OTO, you will also get:

• The lowest shipping prices in the Kingdom with prices negotiated on your behalf with shipping companies.

• Shipping services integration with over 400 local and international logistics shipping companies.

• Technical integration with more than 25 Arabic and international e-commerce platforms such as: Zid and Expand Cart, in addition to Shopify, WooCommerce, OpenCart, Adobe Commerce, etc.

• A comprehensive and advanced system for warehouse and inventory management alongside the OTO PACK application.

• An innovative system for notifying customers of shipment progress and tracking it moment by moment.

• An advanced system for managing drivers or your private shipping fleet, represented by the OTO FLEX application.

• A system for managing returns smoothly.

• A system for managing orders automatically to reduce errors.

• Printing shipping policies in a few moments.

• Automating shipping and order fulfillment operations according to your own rules, based on which the most suitable shipping companies for the nature of your shipments are chosen.

• An analytics and business intelligence system that allows you to view all analyzes related to the shipment path, the work of shipping companies, the quality of order delivery, etc.

You can visit the Packages page to learn more about OTO's logistics services, and you can also create a free account and experience the best shipping services with OTO now.

The Importance of Relying on Logistics Service in 2025

James Cox says: "Behind every great leader, there is a logistics man with greater capability."

If you reflect on this quote carefully, you will know that it summarized the importance of the logistics sector and reliance on various logistics services for business success, and it also hinted at the necessity of relying on a strategic partner that provides the logistics service in an integrated manner to lead your commercial activity toward development and achieving more profits.

We can summarize the importance of relying on logistics services in several points as follows:

• Improving Production Efficiency: By managing your commercial activity's supply chain and utilizing data analysis to know market trends, forecast consumer product needs, and deliver them on time, giving you a competitive edge.

• Providing a Unique Customer Experience: By delivering shipments to the right place and in the fastest possible time, which ensures enhanced customer loyalty to the business.

• Enhancing Business Value: As a result of giving you a general impression that reflects reliability, security, and quick shipment delivery, which enhances business value and reflects the quality of the brand.

• Professional Inventory Management: This is done through specialized systems and tools such as the OTO PACK system provided by OTO, which allows you to manage your incoming inventory, distribute it, classify it, maintain its balance, and monitor it in real-time.

Emerging Trends that will Contribute to the Development of Logistics Services in 2025

Technological development is increasing rapidly, and this means the emergence of new technologies that help improve the logistics services sector. Among these emerging technologies are:

• Cloud Logistics Services:

The future lies in relying on big data and remotely hosted operations, which has led to the emergence of cloud logistics services and some reliance on them because they provide flexibility and real-time access to information and data, thereby enabling the scaling of highly responsive business models upon demand, which contributes to improving business pathways.

For example, cloud technologies have contributed to the emergence of a term known as integrated transport operations in logistics services, based on enabling platform solutions that in turn allow new business models, such as virtual shipment re-routing through virtual corridors.

It should be noted that this business model is still under experimentation, but it has shown great effectiveness and high value in terms of reducing the cost of transporting various goods.

It is worth mentioning that the application of cloud technologies in logistics services still requires a lot of processing and development to eliminate the slowing of processing times resulting from the huge amounts of data, which various institutions around the world are working on to save time and costs.

• Autonomous Trucks:

Autonomous trucks are one of the emerging technological trends that are expected to cause a significant leap in the logistics sector. Many specialized companies around the world have conducted intensive tests to begin relying on this technology to save time and cost and reduce environmental pollution caused by traditional trucks, especially when covering long distances in shipping operations.

• Automation of Operational Processes Inside Warehouses via Robots:

It is well known that all operational processes that take place inside warehouses are carried out manually by humans, but with the massive technological development of artificial intelligence technologies and machine learning applications, it has become possible to complete all operations such as packing, packaging, shipping, unloading, and so on via robots, which contributed to the emergence of the term Dark Warehouses.

Dark warehouses are warehouses equipped with the latest systems and robots that can perform all operations automatically and without the use of light for visibility. Among the operations that can be performed using these technologies are:

• Receiving and storing goods.

• Sorting goods.

• Packing and packaging.

• Loading shipments.

We would like to point out that this trend is still expected to see significant development and growth in the coming few years to make logistics inside warehouses more efficient.

• Virtual Reality and Digital Twin:

In the logistics services sector, simulation and digital twinning of physical assets have become emerging technological trends that enable businesses to test, monitor, and control machines and operations.

Virtual reality and digital twin technologies allow planned operational procedures within supply chains to be tested through digital visualization, which provides opportunities to discover defects or weaknesses and work to address and improve them, thereby reducing errors and costs.

What is the role of the Saudi government in supporting logistics services?

The Saudi government plays a pivotal role in supporting and developing the logistics services sector, as it is one of the main pillars of Saudi Vision 2030. This role is manifested through a set of strategic policies and initiatives, the most prominent of which are:

• Launching the National Transport and Logistics Strategy which was developed with the aim of transforming the Kingdom into a global logistics hub connecting Asia, Africa, and Europe.

• Developing the logistics infrastructure through the expansion of ports and airports, and the establishment of modern road networks and transport hubs that contribute to improving the efficiency of shipping and distribution.

• Establishing integrated logistics zones to support supply chains and enhance competitiveness by reducing costs and raising the level of services.

• Facilitating customs procedures through the application of advanced digital systems and data integration among relevant authorities to speed up clearance and improve the investor experience.

• Supporting the use of modern technologies such as artificial intelligence and the Internet of Things in the transport and logistics sector.

• Enhancing governance and regulatory oversight through the effective role of entities such as the Public Transport Authority and the Saudi Ports Authority to ensure the quality of services and effectiveness of performance.

Finally, how has the environment contributed to the development of transport and logistics services?

The environment, with its climatic challenges, regulatory legislation, and geographical variables, has contributed to reshaping the transport and logistics sector toward greater efficiency and sustainability. Environmental concerns and legislative pressures have prompted companies to adopt environmentally friendly solutions such as electric vehicles, low-emission cooling systems, and employing technology to improve fleet management and shipment tracking.

Increased public awareness of the importance of environmental protection has also contributed to motivating supply chains to reduce their carbon footprint and promote green transport practices. Thanks to these factors, the environment is no longer just a regulatory framework, but has become a major catalyst for innovation and competitive distinction in modern logistics services.