Intra-Asia trade could surpass $13T by 2030

Intra-Asia trade could double in value by 2030 to $13.5 trillion, according to a new study from AlphaBeta, part of global policy consulting firm Access Partnership specializing in economic consultancy. The study, commissioned by UPS and conducted from January 2022 to February 2022, examined the possibilities for growth in intra-Asia trade lanes as well as obstacles to it. The study identified the 12 markets that are key to trade growth: Australia, China, Hong Kong, Indonesia, Japan, Malaysia, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam. The so-called “Asia-12” accounted for 88% of intra-Asia trade when the study was released, with China accounting for 30% of that figure. The value of intra-Asia trade among the Asia-12 was $6.4 trillion in 2020, 34% of global trade. Brandon Fried , executive director of the Airforwarders Association (AFA), agreed with AlphaBeta’s report. “All those economies are growing at a rapid pace and they’re becoming self-sustaining marketplaces,” Fried told Air Car go Next . “And as a result, there’ll more demand for airfreight-related services in the next few years there, probably the likes of which we’ve never seen in the past.” Digitalization driving growth Four product segments will drive growth in intra-Asia trade: retail, industrial manufacturing and automotive, high-tech and health care. Those segments made up 75% of intra-Asia trade in 2020, according to the study. High-tech has shown the strongest growth, at 4.4% annually from 2011 to 2020, including a 5.2% increase from 2019 to 2020. The high-tech segment’s growth is attributed to increasing digitalization, the study notes. On the World Bank ’s Digital Adoption Index, the Asia-12 nations scored an average of 0.65 compared to the global average of 0.56. The freight industry globally saw an increase in digitalization as the pandemic struck. “I think we saw probably in that two, two-and-a-half-year period, the most dramatic adoption of digital processes,” Glyn Hughes , director general of the International Air Cargo Association (IATA) , told Air Cargo Next . “Now I find that we’re actually in a significantly better place in terms of how we actually run the industry.” It is much easier to book cargo and communicate with each element of the supply chain, he pointed out. Increasing digitalization, especially the rise of ease-of-use technology, will make this growth possible, Fried added. “Ease of use technology and the abundance of technology and automation is certainly helping them facilitate this,” he said, noting that online cargo booking platforms facilitate communication between companies speaking different languages. Growth is a factor Other growth factors for intra-Asia trade included the region’s growing middle class, growing cities and specialized economic zones. Some 567 million people will join the middle class in the Asia-12 between 2020 and 2030, according to the study, leading to greater demand for traded goods. The study also cited continuing city growth as a factor that will boost supply chains. “Asia-12 cities are already home to over 1.4 billion urbanites, with another 209 million expected to arrive between 2020 and 2030 — approximately 21 million per year,” the study notes. “Greater connections between cities could lead to more integrated and specialized supply chains for high-value electronics, machinery and high-tech equipment.” Barriers could lead to stagnation Businesses surveyed as to the major barriers to intra-Asia trade ranked them as follows: Tariffs and other punitive measures; Lack of harmonization and standards; Non-tariff barriers in the form of customs administration; Shortage of labor and skills in the logistics industry; Lack of high-quality logistics infrastructure; and Poor engagement of micro-, small- and medium-sized enterprises. Other concerns included the impact of geopolitical struggles. Even if trade does stagnate, AlphaBeta predicts that intra-Asia trade could grow 7.81% to reach $6.9 trillion by 2030 with health care goods being the most resilient product, followed by industrial manufacturing and automotive. Geopolitical conflict could move Asia into a more self-sustaining economy, cut off from the west, Fried said, noting that likelihood could increase as China sides with Russia on the war in Ukraine. Fried also said that he sees manufacturers in the United States moving toward a “China plus one” sourcing policy, purchasing goods from China while maintaining back-up options in other territories. “I would hope they would continue to let U.S. freight forwarders and integrated carriers have access to those markets, but who knows, Fried said.

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