Double-digit growth in Asia Pacific logistics set to continue

The dynamism and complexity of the Asia Pacific transport and logistics market offer investors and operators the industry’s best prospects for growth and returns. This is one of the key conclusions of Asia Pacific Transport and Logistics 2011, the latest report from specialist research company Transport Intelligence.

While logistics companies in Europe and North America are coming to terms with a long-term weak economic environment, Asia offers many more opportunities. The report identifies three key drivers of growth:

*The rapid development of the Chinese economy shows little sign of slowing, and its progression from low cost manufacturing base to high value production location is marking a new stage in its evolution. As labor costs rise in China, production is spilling over into neighboring, lower cost markets. Both trends offer numerous opportunities to freight forwarders and contract logistics providers.

*The Integration of the leading Asian economies is proceeding fast with free trade agreements reducing barriers to international commerce. Logistics companies can increasingly view parts of the region as a “single market.”

*Governments throughout the region are investing in numerous transport infrastructure projects as intra-regional trade increases, facilitating the provision of logistics services. Emerging countries such as Laos, Cambodia and Sri Lanka have seen major boosts in their economies as the number of manufacturing operations increase and disposable income rises. Consequently, these countries are rapidly ramping up projects to build airports, roads and rail networks in order to compete in the global economy.

“Although the region will remain an export leader for years to come, the growing intra-regional trade is creating an intricate supply chain particularly as China advances to more skilled manufacturing and lower-value production migrates to other Asian countries,” said Cathy Roberson, the report’s principal author. “Growth in contract logistics, express and freight forwarding services is expected to maintain double-digit increases through 2014 with China and India leading the way.”

BIMCO, an independent international shipping association based in Bagsvaard, Denmark, also reported today that increasing freight rates on the Far East - Europe trading lane is “a very positive sign.”

Bimco’s chief shipping analyst, Peter Sand, told SCMR that rates would continue to decline “on the forward curve” in the transpacific trade.

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