The Future of Shipping Logistics in South and Southeast Asia

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Shipping logistics has been a growing industry in developing economies in Asia throughout the last decade. With an average annual growth rate of 3.8%, the economies of emerging markets in Southeastern Asia and South Asia will see unprecedented growth in the next decade.

With increasing investments, the development of logistics and shipping in this region will be changed through e-commerce, sustainability, and technological advancement.

With the effects of globalization, the internet has created a web of connections around the world. This has helped the e-commerce industry boom for the past five years and made products more accessible throughout the globe.

New technologies are capable of making shipping logistics more efficient through finding the best routes to consumersand providing access to consumers even in the most remote areas of the world.

 

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e-Commerce Mania is Nourishing Indonesia’s Shipping Industry


Indonesia has one of the fastest-growing e-commerce markets in the world. The industry is predicted to be worth over $55 billion dollars in the next three years.

Due to the increasing demand, there are more than 2,500 shipping companies, each serving a small region within Indonesia.

In recent years, technology start-ups such as Shipper have used data analysis and algorithms to improve logistics in Indonesia. The company uses its algorithm to analyze distribution channels throughout Indonesia. The algorithm maps out the best routes and partners with many different shipping companies around Indonesia to get each product in to the hands of each customer.

Shipper along with other shipping companies are changing logistics in the region. 

 

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A Floating Network of Shipping Logistics in the Philippines 


The Philippines is another country in the South-East Asia region that has seen immense economic growth in recent years. This gives room for investors to find opportunities within the country.

Shipping logistics in the Philippines is heavily reliant on their waterways. This is due to the island geography of the Philippines.

On land, terrible road conditions and congestions are bottlenecks for shipping logistics. However, due to the growing economy in the Philippines, the government has created new infrastructure companies and projects to upgrade existing networks.

With investors optimistic about the future of the country, logistics companies such as Philhua Philippines, and 2Go Group (PM: $2GO), have received new capital from their investors. With the influx of capital going into infrastructure, shipping logistics will see a parallel growth with the growing economy of the Philippines.

 

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Foreign Investments Are Fuelling Vietnam’s Shipping Logistics 


As prices continue to increase, large corporations often invest in countries that provide lower costs for their business, thus contributing to the emerging economy in Vietnam.

In 2019, Vietnam saw a total of $362.5 billion total investments going into projects throughout the country. $38.2 billion of this amount comes from foreign investments across the world – an increase of 7.2%.

The geographical location of Vietnam is what makes it attractive to investors. Its coastline is one of the world’s busiest shipping lanes making it suitable for import/export from Asia to the rest of the world.

Due to the sudden influx of capital, the shipping logistics industry in Vietnam has rapidly developed to satisfy demand. The country has begun focusing on shipping logistics by creating new infrastructure projects and upgrading existing hubs.

This has helped Vinalines, one of the largest shipping logistics companies in Vietnam, to become more efficient logistically. 

 

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India’s Road Issues


India, another emerging economy, has seen a large growth in e-commerce since the introduction of 4G. The industry is expected to be worth over $200 billion dollars in 2026.

With this expected growth, the future of logistics in India will be dependent on the infrastructure. Ongoing infrastructure projects in India such as the Delhi–Mumbai Industrial Corridor Project, will see a boost in efficiency to logistics.

40% of all roads in India are composed of dirt.

By 2022 the Indian government plans to invest a total amount of $777.73 billion to upgrade existing infrastructure and create new infrastructure projects throughout the country.

With these investments, India’s large portfolio of logistics companies such as Concor (NSE: $CONCOR) and AllCargo (NSE: $ALLCARGO) will continue to grow in the next few years. 

 

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Singapore Is Not Only a Financial Hub


South and Southeast Asia have seen large amounts of growth financially and economically for the past decade. Singapore, one of the largest economies in this region, is ranked number four in GDP.

This is impressive given its small population of 5.8 million when compared to other countries in this region. With its open business policies and low taxation rates, the country is ranked to have one of the freest markets in the world.

Many financial institutions have set their headquarters in Singapore to invest in businesses across South-East Asia. This accounts for over $43 billion of its economy.

Through trade and investments, it has become one of the largest shipping hubs in the world – ranking second in total volume. Due to its mature economy, many of its shipping logistics companies have enjoyed stable increases in wealth and volume.

Pacific International Line is one of the largest shipping logistics companies in the region with investments throughout South-East Asia. With ongoing deals, it is looking to expand its business to different countries within the region.

 

Emerging markets in Asia have seen the rapid development of new logistics companies and shipping networks. With countries such as India and Indonesia becoming logistical giants across South-East Asia and South Asia.

The growth of e-commerce and globalization allows new logistical opportunities to emerge in developing economies. With new technologies such as 5G and global efforts of sustainability, the future of logistics and shipping is looking at positive growth.

 

Andrew Chu

Andrew is a third year student pursuing Cognition in Computing Systems at the University of British Columbia. Trading from a young age has sparked his interest in searching for value in the financial markets. Working at the largest private equity firm in Taipei, he conducted many industrial research including telecommunication, semiconductor, and aviation in Asia. With his experiences, he looks to explore how the future of computer systems can add value into finance.

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