FAR EAST LOGISTICS:
AN N.N.R. GUIDE

Our regional focus on the Far East must resonate with many of the industry stalwarts, due to volumes of cargo currently coming out of major countries in the area. Continued double-digit growth in China alone, and consecutively over the last 10 years, showcases an example of how Far East nations have kept up phenomenal growth throughout periods of turbulence. China alone can now operate trade movements from over 130 international ports and will continue to grow and develop. These developments, coupled with their smooth communicative efforts with roughly 90 per cent of the globe, means that this Far Eastern trading giant is only going to continue to grow.

Whilst capacity issues, erratic carrier behaviour, port congestion and driver shortages have a major disruptive influence today, in the near future, larger vessels and fuel-efficient aircraft will help ease some of the aforementioned aspects and mitigate the cost. The success of The Silk Road train connection between Europe and the Far East will also be a determining factor.

The need for high quality and consistency will be essential as the world procures on an ‘ex-factory’ basis – a considerable change from just 30 years ago. This means that logistics partners must have strong internal partnerships from within a respected and trusted network, ideally supported by a globally renowned brand. The local forwarder may still play a supporting role but the considerable investment required in technology should see the global brands dominate the market. That accepted, from within the global brands, the local knowledge and experience combined with strong relationships with carriers will continue to be vital.

Whilst industry practitioners have pointed towards sanctions as a source of reduced growth, not all countries sign up to such sanctions and there will always be methods around these restrictions. A level-headed perspective on this will show that it will be unlikely to see significant drops in volumes from the Far East, demonstrating the magnitude of power they host. Supply chain management is now appreciated as a vital part in supporting and sustaining any business’ growth and is a target career for many of the next generation. The likelihood is the space will be dominated by multi-lingual, university qualified millennials who, with a thirst for technology, will drive dramatic and positive change within Logistics Providers.

Digitalisation is here to stay and connectivity will prompt the success or failure of Logistics Providers soon, as the explosion of e-commerce continues. Amazon, eBay, Alibaba, DHGate, Uber, even ASOS, Boohoo etc, were unheard of 20 years ago and now they dominate global sales in their respective domains. The boom of ‘next day delivery’ has a dramatic effect on capacity from Asia as airfreight facilitates swift changes in trend and shortening lead times. In 2017, ‘Singles Day’ in China saw a record USD $25billion spent online in just one day. Multiply this out across all Asian countries and you can start to visualise how quickly e-commerce has developed and the demand it has created.

If blockchain is to find a permanent position in the market, the next generation of buyers will have full visibility of the logistics process and the consumer’s buying decisions may not only be based upon the best price for the quickest delivery but possibly who has the best online technology with eye-catching and user-friendly platforms, etc. Those opting to ignore technology or be unable to support the investment will probably be reduced to a collaborative role at best.

The constant Brexit rhetoric has led practitioners to review the global connections they have made with the Far East and consider the possible connotations surrounding the UK leaving the single market and the comfort of the trade agreements. In some quarters there is scepticism regarding Britain’s ability to quickly renegotiate suitable trade tariffs with every country globally – not just the current EU member states – for both import and export transactions. Trade agreements with the Far East will remain crucial to the UK economy with the optimists claiming a failing EU business unit offers less opportunities than historical British relationships present on the world stage.

The other educated opinion predicts that with population growth and an increased appetite for FMCG, ‘throwaway societies’ will continue to evolve. In these circumstances, Far East trade will surely increase and of course impatience will drive an increased imbalance between ‘supply and demand’ that will perpetuate growth and increase the importance of a solid global logistics partner.

Lee Griffiths, Executive Director, NNR Global Logistics

2018-06-13T10:04:56+00:00 June 13th, 2018|Categories: Far East, Regional Focus|
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