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Truck racing

A single market for the ASEAN countries is a big step forward for cargo flows

Ian Putzger discovers that most operators know there are still many obstacles to overcome before they can take advantage of the ASEAN region’s full potential.


From a political standpoint, 2016 opened with a boost for cargo flows within the Asia-Pacific region. 1 January ushered in the single market for the 10 ASEAN economies. Since that day, goods, services, capital and skilled labour have supposedly been flowing freely between the member countries, creating a unified market of 622 million people.


Obstacles remain, largely in the form of non-tariff barriers. Nevertheless, the potential is promising. According to a study from the Australia and New Zealand Banking Group, ASEAN trade volume could exceed US$1 trillion by 2025.


Jasmin Aladad Khan, executive Vice President, Commercial and Managing Director, Emerging Markets, Asia Pacific at DHL Express, sees a lot of promise. "We do see some DHL customers with an ASEAN strategy. Some of these are in response to the AEC, while others have been calibrating their regional strategies for many years," she says.


"We believe there will be increasing need for timely and rapid delivery services, giving the logistics and express industry ample opportunity to grow in the region," she continues.


The Indonesian government is bent on creating opportunities for logistics providers from outside. In February it unveiled plans to loosen investment restrictions in nearly 50 sectors of the economy, including logistics. These plans aim to raise the ceiling for foreign ownership in transport supporting services and warehouse distribution, from the 49% and 33% they are currently, to 67%. The limit on cold storage facilities, currently at 33%, is to be eliminated altogether.


A number of international logistics players have Indonesia on their radar. Yusen already moved in January, when it launched an air freight consolidation service out of Java to speed up transit times to international destinations. Two months later it began import operations at Jakarta's Halim Perdanakusama International Airport.


Japanese logistics firms are looking increasingly beyond their home market, partly following manufacturers who have moved production from Japan to other Asian countries. "The Japan market is shrinking," says one airline executive in Tokyo. "A company that focuses on Japan is in trouble. That's why Japanese forwarders look to other markets."


So does All Nippon Airways (ANA) Cargo which, in the words of its management, is transforming itself from a Japanese air carrier into one with a global and regional perspective. This led to the establishment of a freighter hub in Okinawa, where its Boeing 767 freighters can reach some two billion people within a flying radius of four hours.


Now, management is looking further south. Last year, ANA holdings President, Shinya Katanozaka, revealed that the company is planning a regional hub for Southeast Asia. No further details have been disclosed. A company spokesman says that the plan has been constantly on the radar.


ANA's freighter fleet looks set to grow beyond the 12 767 freighters currently in use. Management's five-year forecast, issued in February, envisages the airline becoming one of the top five global cargo carriers by 2021.


One strategic plank in ANA's expansion plan has been the rise of e-commerce within Asia. On that front, management intends to utilise the company's Overseas Courier Service (OCS) subsidiary.


Asian consumers’ enthusiastic embrace of the internet to order goods is fuelling many of the logistics firms' expansion within the Asian arena. Not surprisingly for many – including OCS – the main focus is on China. Japanese forwarder Logi-Rex has been consolidating and shipping e-commerce traffic to China for Japan Post, which is selling directly to Chinese consumers via its Chinese homepage, says company President, Tomoyasu Fukuyama.


Hong Kong-based logistics firm Tigers Ltd, which focuses on e-fulfillment services (mostly into China), has been developing high-end food traffic – such as fresh lobster and seafood from Australia – which reaches Chinese consumers and restaurants via its hub in Guangzhou. "We place orders in the morning for evening deliveries," says Chief Executive Officer, Andrew Jillings.


The rising tide of parcel traffic has fuelled the emergence of a number of start-up all-cargo carriers in China. Over the past 15 months, Ningxia Cargo Airlines launched a service with Boeing 737 freighters; Guangzhou-based Avil Cargo was formed with a mix of Boeing 757 and Xian MA600 freighters; and a number of investors, including US ACMI provider, Air Transport Services Group, moved to form United Star. All three companies target China and neighbouring countries.  >>

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