Asia – The New Global Logistics Center
Logistics centers at the global level are often located at transportation hubs, near global economic and trade centers, providing logistics center services for a continent and the globe to create an international logistics system for the development of the global trade economy.
In the face of strong growth in countries in Asia, many global brands are now reconsidering China's place in their supply chain strategies. Multinationals are redesigning their supply chains to make the most of developing markets in Asia. An important question is where will the next logistics hub in Asia? The article will highlight some of the most potential logistics markets:
Singapore
With its favorable geographical location, less affected by the weather, Singapore owns ports and airports that operate throughout the year. Combined with modern infrastructure, Singapore is a "bustling" transit point for ships of five continents in terms of convergence.
Singapore is a prime location for major logistics firms, with 25 industry leaders operating here. Most major companies, such as DHL and Schenker, have set up global headquarters right here in the city. Singapore has an extensive network of free trade agreements with more than 30 trading partners to enhance its access to major markets. Seaports have worked closely with shipping lines to build one of the world's densest maritime transportation networks. Currently, Singapore has links with 200 shipping lines to 600 ports in 123 countries, with daily trips to most major ports worldwide.
At the same time, Singapore is focusing on unmanned automated control technologies, leveraging smart sensors to detect shipping anomalies such as piracy and analyzing data to predict traffic bottlenecks.
In addition to this, the government strongly encourages and supports the private sector to invest in additional infrastructure. Strong private sector partnerships ensure that initiatives are commercially sustainable in the long term and do not become a burden on public funds. For example, private sector operators such as SATS and FedEx have invested in air transport facilities such as cold chain hubs and regional freight facilities, with the help of the government helping to develop business plans for such investments. The challenges are addressed together, so that investment makes commercial sense for the private sector. These factors have allowedlogistics in Singapore to flourish.
India
The logistics industry in India grows by more than 10% per year. India's 2018 budget spends heavily on infrastructure investment. Plans to improve road, rail and inland waterway connectivity are ongoing. The nation's freight corridor, which includes 15 states across India, will be completed by the end of 2019. The project's specifications relate to quality and efficiency that are on par with freight railways in Russia, China and the United States. In particular, the Delhi-Mumbai Industrial Corridor and Development Corporation (DMICDC) develops multimodal logistics hubs in many key cities to provide end-to-end supply services.
Indian ports handle 95% of the country's trade, playing an important role in the international supply chain. India currently allows 100% FDI for the construction and maintenance of ports, along with government tax support. With more enthusiastic participation from the private sector and the government, opportunities for foreign investors in the supply chain in India are growing. Foreign companies with little knowledge of India can still benefit from partnerships with Indian companies in the industry for ease of doing business.
The licensing of 100% FDI is also applied to warehouses. According to FTWZ, there are several designated areas in India dedicated to warehouse system development. Incentives such as exemption from import duties on construction materials and equipment for these zones are attracting investors to this sector.
With greater participation from the private sector and increased spending from the government, opportunities for foreign investors in the nation's logistics system are increasing. This includes the transformation of infrastructure towards digital, along with federal campaigns such as Digital India supporting the growth of startups and technology inclinations.
China
Hong Kong is one of the two special administrative regions of China. Possessing a perfect geographical location, this city is not only the world's gateway to China, but also China's gateway to the world. This doubles the value for the supply chain in Hong Kong. It is also a free trade market, With low taxes, a solid legal system and an excellent banking network, Hong Kong is considered the freest economy in the world. In the DHL Global Connectivity Index (GCI) 2016, Hong Kong ranked 2nd in terms of global connectivity.
Hong Kong International Airport (HKIA) has been ranked as the world's busiest airport since 2006. In 2017, total production (including airmail) surpassed the 5 million ton mark. The Port of Hong Kong ranked as the fifth busiest container port in the world in 2017.
For warehousing, Hong Kong has a lot of efficient and safe distribution facilities. Governments and large enterprises are always looking to modern warehousing complexes in remote new areas. Such a project would essentially double the total available storage space in Hong Kong.
Regarding China in general, after 30 years of working as a large workshop of the world with cheap labor and focusing on heavy industry, has initiated the campaign "Made in China 2025" (2015) to promote global supply activities, wishing to become a version of the industrial revolution 4.0 (Germany).
After years of construction, China holds a strong advantage, with significantly higher infrastructure in place than India, which ranks 27th in LPI. 7 of the world's 20 largest ports are located in China. Southern China is the traditional light industrial manufacturing center of the world. After trying to improve the production value chain here, the region will shift to more complex heavy industrial production.
In recent times, US-China trade tensions have continued to escalate. The US tightening currency and import tariffs caused China's economy to slow down, subject to high tariffs when exporting goods to the US, leading to a loss of competitiveness. Many U.S. companies are operating under the "China plus one" formula, relocating their supply chains to another location if the cost of importing from China is pushed too high. Vietnam is a popular choice for this "plus one" position.
Vietnam
The average annual development rate of Vietnam's logistics is at a sustainable growth rate of 14-16%. Vietnam's LPI in 2018 ranked higher than large-scale economies such as India, Indonesia and Malaysia with better logistics service performance than markets with similar incomes.
In terms of geographical location, Vietnam has many favorable conditions to bring import and export goods to the world as well as become an ideal transshipment location for countries. For example, Vietnam is a transshipment point for goods imported from Asian countries through Cat Lai port (Ho Chi Minh City) and goods exported to the US and EU through Cai Mep-Thi Vai port area (Ba Ria-Vung Tau).
Experts at Deutsche Bank Hong Kong predict exports from Vietnam to the US will increase by about 1.7%. The $40 billion slice of Vietnam's logistics market continues to be looked at by foreign businesses during this period.
China's Alibaba has completed an M&A deal with Lazada Vietnam to expand its services to 23 million people in the region. In early 2018, Tiki was JD.com invested $ 44 million. Warburg Pincus also joined hands with Becamex IDC to set up a BW real estate joint venture to develop the logistics chain and industrial real estate. South Korea's Woojin Group opened the Logistics Valley service complex in Yen Phong 2 Industrial Park. This is the largest logistics service complex in the North with an area of about 7 hectares, of which, the warehouse is about 60,000 m2.
Although Vietnam has a lot of potential for logistics development, up to now, infrastructure as well as management technology and policy environment still need to be further promoted to catch up with the development level of partner countries and attract foreign investment.
According to ejinsight, knightfrank, pwc, 3plnews, supply chain asia