“The Asian 6” to reshape supply chains

DHL highlighted the persistent growth potential of the Asia-Pacific (APAC) region, and urged all links in the supply chain to take note of emerging trends and plan strategically, to capitalize on such opportunities with the recent release of its “Demystifying Asia Pacific Trade Trends” white paper (see graphics below). Shifting centers of production will alter distribution patterns, while regional growth will fuel both domestic consumption, and high-value foreign imports — two trends that will challenge and reward logistics providers moving into 2030 and beyond, the paper concluded.

The paper identified six Asian countries to watch between now, and 2030 based on key measures of economic activity, including domestic production and exports, consumption and cross-border trade. Despite slowing growth in China, the manufacturing powerhouse will continue play a key role in the region, the study found. In fact, China co-shares the category for highest projected growth in merchandise exports with Vietnam and India with 10-12 percent growth expected for 2015-2030.  In addition to China, India, Vietnam, Thailand, Indonesia and Malaysia also made the “The Asian 6” list.

As APAC manufacturing activity continues to expand, one key implication is that major trade routes to Europe and North America will continue their growth trajectory, but that intra-Asian trade will become almost equally important, the DHL study found. By 2030 it is estimated that 80 percent of the top 15 trade lanes will involve an Asian country. More revealing, however, is the projection of the key trade global trade lanes in 2030; more than half are expected to be intra-Asian routes. Trade between China and Japan, for example, is expected to surpass some of today’s largest bilateral trade lanes, such as the one between Germany and France.

Much of intra-Asian trade will be fueled by the burgeoning cross-border e-commerce market, DHL said. Already the world’s largest B2C e-commerce region, the market is expected to grow to more than US$1.89 trillion by 2018, double what it was in 2015.  While the complexity of customs procedures was often cited as a key hindrance to B2C e-commerce expansion across the APAC region, there were also challenges left to the industry can resolve on its own through innovative solutions and local partnerships. Cross-border delivery lead times and the lack of last-mile delivery options in many overseas markets are two such issues identified in the white paper.

How, then, will growth in the APAC region affect supply chains? The report closed with five key implications:

• Invest in high-potential APAC markets and trade lanes
• Redraw manufacturing strategies
• Develop an omni-channel strategy with a strong e-commerce channel
• Review multimodal transportation solutions
• Partner with a logistics provider that offers end-to-end solutions