Asset-based logistics models will outperform pure third-party-logistics operations in fast-growing emerging markets in the coming years, said APL Logistics’s president.
Jim McAdam said non-asset logistics models were not viable in countries where demand for logistics services and infrastructure was outstripping supply.
“A pure 3PL mindset is difficult in developing markets because there is often more demand than supply for logistics assets,” he said.
McAdams said companies need their own assets to be successful in such markets, and in some cases this requires not just providing warehousing, but also investing in transport routes.
In Asia this approach saw APL Logistics secure a license to provide rail services across India. Operations from from Loni in the north to Mumbai in the west started in 2007, and this June the company launched its first double-stack train service between Mumbai and Kishangarh, near Delhi. APL has also invested in warehousing, equipment and technology in emerging markets such as Indonesia and Vietnam.
“Many of these emerging countries don’t have adequate infrastructure for state of the art domestic supply chains,” he said. “As operators we can either wait for governments or private enterprise to move first, or we can put our own money in to help develop it faster. We are doing the latter.”
As production facilities in China migrate inland in search of lower costs and government subsidies, McAdam said the need for logistics companies to invest of their own accord will also increase there.
“As China goes west and north, then supply chain operators will have to be prepared to invest more capital in distribution centers and truck and transport assets,” he said. “This is creating lots of opportunity and demand for companies that can manage that. It’s a rapidly growing part of our business.
He said APL was investing in infrastructure and technology to tap Indian and Chinese markets.
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