Due to rapid economic growth, Southeast Asia is becoming a top choice for logistics investments. By 2030, these nations are expected to lead half of global trade growth, with 55% coming from Asian trade. Favourable conditions like a solid economy, population growth, urbanisation, and a thriving middle class drive this trend.
Logistics companies need to grasp Southeast Asia’s logistics potential to leverage opportunities for growth in this dynamic market. Therefore, this report explores the logistics industry’s current outlook in Southeast Asia and offers actionable strategies for success.
This is an excerpt of our industry report State of Logistics in Southeast Asia 2023. Download the complete report from Luwjistik for free.
Logistics in Southeast Asia
The economies of Southeast Asian countries have stood up well to the challenges of the last few years, boosting the region’s outlook for the logistics industry. And it looks likely to continue.
One study of the third-party logistics market in Southeast Asia forecasts a compound annual growth rate (CAGR) of 5.5% until 2025, resulting in a market value of $55.7 billion by 2025. Based on these figures, the market will expand and achieve a substantial value of $85.2 billion by 2033.
What’s powering this growth is the rise of e-commerce across the region. From 2016 to 2021, the total value of e-commerce sales in Southeast Asia grew fivefold, or 40%, annually. The e-commerce sector’s share of all retail sales surged to 20% from 5%.
In terms of cross-border trade, the size of the Southeast Asia cross-border e-commerce market is currently worth USD 13.5 billion. It is anticipated to register a CAGR of over 5.7% over the next few years.
Based on The United Nations (UN) Database, Singapore dominates all the others among these five selected countries in Southeast Asia. The data recognises that Singapore has a larger share than the following five countries combined in 2022 regarding cross-border eCommerce trade. Regarding this growth, Google, Temasek, and Bain & Company’s report maintains that Indonesia takes the lead regarding eCommerce Gross Merchandise Volume (GMV) in Southeast Asia.
In response to these developments, recommendations have been put forth to address the evolving logistics landscape in Southeast Asia. These recommendations, outlined by institutions such as the Economic Research Institute for ASEAN and East Asia (ERIA) and further elaborated on by PwC, emphasise the crucial role of technology and collaboration in ensuring the industry’s success.
Now, let’s delve into the recommendations for the logistics industry, focusing on how companies can prepare themselves for the future.
Recommendations for the Logistics Industry
In the report by the Economic Research Institute for ASEAN and East Asia (ERIA) cited in the introduction, the institute made various recommendations to meet the challenges faced by the logistics industry (page 65).
While most of the recommendations are for government policy-makers, two of them apply directly to logistics companies in the region:
- Increase the use of technology to improve standardisation and interoperability among cross-border logistics companies. This solution includes standardising loading units, contracts, labelling, and data flow to reduce inefficiencies and improve transparency.
- Enhance seamless cooperation between stakeholders in logistics. Logistics service providers must share resources and form partnerships to achieve economies of scale and expand regional operations.
In a whitepaper on the future of the logistics industry, PwC goes deeper into these recommendations, particularly for LSPs. They propose four ways LSPs can set themselves up for success by exploiting new technologies.
- Integrate data and analytics into the value chain to improve performance and serve customers better, scale capacity and plan routes.
- Implement cloud technology to provide flexibility, scalability, and standardised and harmonised processes across the organisation.
- Embrace automation to offer better service and save money simultaneously, not only in warehouse operations but also in last-mile delivery.
- Adopt a digital culture with training to match the industry’s customers’ advanced digital culture and avoid the risk of being left behind permanently.
(Source: Technological breakthroughs for LSP, PwC)
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This was just an excerpt from the State of Logistics in Southeast Asia industry report. To explore these insights further and discover how logistics companies can prepare for the future, we invite you to download the complete industry report for free.
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