- 02
- SEP
- 2010
Asian logistic sector to become driver for global growth
Author: Jonathan Webb - Categories: Direct Spend
The emergence of Asian economies as the world's workshop has placed increased importance on the region's logistics networks. The PIU's latest Category Report, on Logistics in Asia, finds that the growing market will surpass North America's by 2013.
The global logistics market is valued at US$3.5 trillion, and is expected to reach US$4 trillion by 2013. Most of the demand will shift from North America and Europe to emerging economies in Asia, and other BRIC countries. The Asia transport and warehousing sector will be subject to significant change over the next few years. Its share of the global market is currently 18% and this is expected to rise to 21% by 2013.
If friendly investment conditions are contained, this growth may be accelerated. For instance, South Korea recently announced its intention of converting its Free Economic Zones into a logistics hub for the entire North-East Asian region. Further innovation may fuel this growth. The closer integration of hardware and software is allowing the 'Internet of things' to provide greater direction of distribution channels and co-ordination of deliveries through deploying increasingly sophisticated logistics applications.
Between 2004-08 the revenues for Asia-Pacific countries grew by 10% to a total figure of US$291.3 billion. Although the global recession severely impacted the global logistics industry, Asia-Pacific recovered faster than other regions, with the market growing by another 10% to reach a value of US471.5 billion by 2013.
The report, which details all key suppliers in the sector and their capabilities, finds that in terms of attractiveness to foreign logistics investment, India is leading the Asian countries, followed by China and Japan. However, Asian countries still need substantial investment to improve their logistics sector, with the World Bank Logistics Performance Index 2010 ranking China and India 27th and 47th place respectively (out of 155 countries). Singapore and Japan scored well, respectively standing in second and seventh place.
For companies aware of the potential to invest in a growing market early, a significant competitive advantage may be delivered. The report makes case studies of the operations of LG Electronics and Radial Magnets, which both generated significant savings in their supply chains by intelligently leveraging their involvement within the Asian logistics market.
The question for firms not making greater investments into their Asian logistics networks is whether they can afford to be left out?
