Industry Report

Outlook, Opportunities and Challenges of the Logistics Industry in Malaysia

The logistics sector in Malaysia has undergone significant transformations in recent years that are driven by better logistics infrastructure, increasing freight volumes, and structural growth in eCommerce. These factors are creating growth opportunities for logistics companies looking to expand in the country. 

However, the growth of e-commerce has changed the procedures and processes of logistics and supply chains in Malaysia, causing many of Malaysia’s logistics companies to struggle to fulfil the demands due to a lack of resources and technological development.

In this excerpt from our industry report, State of Logistics in Southeast Asia 2023, you will learn more about these opportunities and challenges for the logistics industry in Malaysia – and how to navigate them 

For the full report, download the complete it from for free.

Read Also: Outlook of the Logistics Industry in Southeast Asia

Outlook of the Logistics Industry in Malaysia

With a population of 33.574 million people and 78% residing in urban areas, Malaysia is ranked 26th out of 160 countries in the World Bank‘s Logistics Performance Index (LPI) in 2021.

Malaysia secured the fourth position among ASEAN nations, trailing behind Singapore, Thailand, and Vietnam, as stated in the WorldBank LPI report. With an overall score of 3.60 out of 5, Malaysia’s logistics performance identifies moderate efficiency. All the scoring factors have risen in recent years, with the most significant improvements in tracking and tracing shipments and customs clearance efficiency.

(Source: Malaysia LPI Score by WorldBank, 2023)

The Challenges

The Ranaco Education & Training Institute report reveals that Malaysia’s logistics and supply chain industry encounters noteworthy hindrances that impede its optimal functioning and growth prospects. One of the most significant obstacles identified in the report is the need for synchronisation in implementing logistics-related regulations, resulting in industry inefficiencies. The data demonstrate that the absence of coordination makes establishing effective supply chain systems difficult, which may lead to increased expenses and reduced adaptability.

The report also highlights the knowledge gap between Malaysian logistics managers and their foreign counterparts as another industry challenge. The lack of experience and expertise may lead to suboptimal logistics operations, hindered market expansion opportunities, and diminished levels of cooperation among companies, thereby amplifying the complexity of the country’s logistics system.

Read Also: Reshaping the Logistics Landscape: Unpacking Southeast Asia’s Four Key Drivers of Growth

The Opportunities

Kenresearch’s report highlights Malaysia’s logistics sector’s significant expansion from 2017 to 2022, driven by government investments in infrastructure and technological advancements. Improved logistics infrastructure is expected to enhance efficiency, with robotics, EDI, and RFID adoption for inventory management. Given these factors, the report forecasts a robust growth trajectory for Malaysia’s Logistics Market from 2022 to 2027, with a projected CAGR of 7.8%, supported by government initiatives and a favourable business environment.

Considering the economic standpoint using the data provided by UNCTAD, it is worth noting that the country’s Gross Domestic Product (GDP) amounts to $370,218 million, exhibiting a growth rate of 2.55%. The statistics confirm that in terms of international merchandise trade, the country’s total trade volume reveals exports worth $299,028 million and imports worth $237,980 million, leading to a trade surplus of $61,048 million in 2021. China, Singapore, the United States, Hong Kong SAR, and Japan emerge as the country’s top five export destinations.

(Source: Malaysia Total Merchandise Trade by UNCTAD, 2021)

(Source: Malaysia Top 5 Partners by UNCTAD, 2021)

Concerning the economic metrics, the statistics reveal that the nation’s financial metrics reveal an average GDP per capita of $11,027, with a current account balance representing 3.49% of GDP, a trade balance of 8.12% of GDP, and a trade openness ratio reaching 150.8%.

Read Also: Outlook, Opportunities and Challenges of the Logistics Industry in Indonesia

GlobalData’s report highlights Malaysia’s remarkable e-commerce expansion, boosting the Logistic Performance Index (LPI) and projecting a substantial surge of 19.9% in the e-commerce market, reaching MYR 38.2 billion ($9.2 billion) in 2022. The report attributes this growth to digital technology advancements and the increasing preference for online purchases. Predictions indicate a CAGR of 16.1% in e-commerce sales from 2022 to 2026, with a projected value of MYR 69.3 billion ($16.6 billion) by 2026, building upon a CAGR of 22.4% from 2017 to 2021, where sales reached MYR 31.9 billion ($7.6 billion) in 2021.

(Source: Malaysia E-Commerce Value by GlobalData, 2022)

PWC‘s report highlights that the escalating cross-border e-commerce demand has generated new opportunities for logistics firms in Malaysia, fostering growth and prompting them to expand their networks and improve their efficient global shipping and delivery capabilities.

Read the Complete Industry Report

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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