Intra-Asia transport traditionally has been a game played out by sea and air. Now third-party logistics providers are working hard with customs officials to make international trucking a viable third option.
Regardless of continent, trucking offers obvious advantages, most notably because it’s cheaper than air cargo and faster than ocean shipping. But in Asia, although road services are already the bedrock of domestic transportation systems even in the largest countries, cross-border services remain a relative novelty.
In the past, divergent customs and tax regimes served as a roadblock to companies wanting to convert domestic trucking operations into viable international services. The tangled web of officialdom, often administered with the dour conservatism and love for red tape that distinguishes the worst bureaucratic regulators and the most enthusiastic swindlers, created formidable paperwork barriers at border crossings.
When cargo has to be unloaded for inspection at road borders, this not only undermines trucking’s speed advantage over ocean, but also threatens the cargo’s security and integrity, two of air freight’s big advantages.
The intense regulatory scrutiny pressured even the most intrepid international trucking operators in Asia to find another path. Not anymore. Today’s more enlightened Asian administrations are encouraging customs officials to facilitate, rather than hinder, a process that is opening new trade routes.
TNT has been at the forefront of efforts to develop cross-border trucking in Asia as it attempts to replicate its European network of vast express trucking networks linked to international air cargo connections via airport hubs. David Stenberg, general manager of the company’s Asia Road Network, said the growth of Asian consumer markets was driving demand for time-definite options to supplement express premium delivery.
“The decentralization of OEMs (original equipment manufacturers) is another factor, while in places such as China, Vietnam and Thailand, where manufacturing is moving away from the coast, more trucking is also needed,” he said. “Road is well-positioned to take advantage of that growth.”
TNT’s Asia Road Network now covers 127 cities over 4,800 miles in Southeast Asia and China.
“Within Asia, there is also limited air capacity with narrow-bodied planes operating on many routes,” Stenberg said. “There are also a limited number of big ports and serious congestion at seaports, so the reliability and flexibility of road offers opportunities.”
Another driver of cargo volumes by road — in Southeast Asia, at least — is the search for sufficient, or cheaper, air cargo capacity. “During peak-season backlogs, we use our road services to provide an alternative for customers to find a suitable flight,” Stenburg said. “We also use them to support our own network freighter flights, especially out of Singapore and Hong Kong.”
DHL offers truckload and less-than-truckload intra-Asia bonded services not only as a supplement to its core ocean and air business, but also as a means of optimizing internal flows and customer supply chains. Road services became viable because infrastructure and customs improved and security could be guaranteed, said Thomas Tieber, DHL Global Forwarding’s CEO for South Asia.
This is prompting high-tech customers to switch cargoes to road instead of relying on air. Conversely, fast-moving consumer goods that normally moved by ocean are being delivered door-to-door using secure trucks.
We have been working with customs for many years to streamline procedures and paperwork,” Tieber said. “A few years ago, you had to change trucks, licenses and permits if, for example, you trucked between Thailand and Malaysia. All this has gone now.
“I’m convinced that this is only the beginning for intra-Asia trucking,” he said. “We’ll eventually have routes into countries such as Myanmar.”
In July, Swiss forwarding giant Panalpina entered the fray when it launched a new trucking service linking China with Vietnam, Laos, Thailand, Malaysia and Singapore with truckload, LTL and customs clearance packages. Using third-party facilities and equipment, Panalpina’s service operates under bond with the box sealed throughout the journey and trailers exchanged at borders where required.
Panalpina said door-to-door transit times are days faster than by ocean and up to 50 percent cheaper than air. A daily LTL service from Shenzhen to Bangkok takes just four days, for example. The company also offers direct links between Southeast Asia and booming western China cities such as Chengdu and Chongqing.
“Panalpina will add more routes depending upon customers’ needs,” a spokesman said.
Still, not everyone is convinced about the merits of intra-Asia trucking services, at least for now. Peter Orange, regional manager for freight sales in the Asia Pacific and Indian subcontinent at global logistics provider GAC, said Southeast Asia still has “unaddressed issues” relating to borders, customs, road infrastructure and general reliability that were preventing a mass modal shift of cargo to road.
“While there has been considerable improvement, it is still early days for this sector and as demand for this service is experiencing slow growth, we continue to use third-party services at this stage,” he said.
GAC considered hub concepts near airports such as Kuala Lumpur, Singapore and Bangkok with a view to trucking cargo between airports to lower air freight costs, he said, but concluded the cost savings weren’t significant enough to justify the increase in transit time.
“Our current practice is to use air carriers such as Singapore Airlines in Malaysia,” Orange said. “They will truck or fly the cargo to their Singapore hub, where they start the long-haul leg of the journey. “This has proved to be more cost-effective than appointing a direct carrier operating from Malaysia.”
But for TNT, rapid expansion of trucking services is inevitable. The company already is piloting a project to move cargo around Southeast Asia, and monitoring it with the latest radio-frequency identification technology. “This contains the data for everything in the truck, which reduces the processing time,” Stenberg said.
As demand grows, he sees truck or trailer services eventually linking countries and islands across the oceans of Asia using roll-on, roll-off services.
“I’d say we’re probably where Europe was 15 or 20 years ago,” Stenberg said. “But it is improving rapidly and getting more efficient at borders. There have been some giant leaps in the last few years, and it is now becoming a more accepted mode of transport with regulatory authorities. As processes get more streamlined, transit times will improve, and more customers will adopt it.”
Contact Mike King at email@example.com.