The intra-Asia trucking market retains huge growth potential if inefficient border processes and excessive bureaucracy can be improved, according to one leading logistics executive.
Morten Damgaard, CEO Malaysia and Southeast Asia at Agility Logistics, said cross-border road freight is proving increasingly attractive to customers because of improved shipper transparency and security, and the ability to offer trucking as part of a multimodal solution or as a time-definite door-to-door service. The mode also offered more flexibility than air on cut-off times and a speed advantage vis-a-vis ocean.
“Given that some of the emerging markets in Asia face issues with infrastructure, including port congestion, lack of air freight capacity and poor development of rail infrastructure, trucking has become a viable alternative,” Damgaard said. “We see opportunities from the high-tech, automotive, aerospace, and high-end industrial and retail sectors for growth in the future.”
But he told The Journal of Commerce that more investment in Asia’s road infrastructure, both in physical terms and also through improved customs procedures to reduce waiting times at borders, is needed to accelerate take-up of international trucking services. If the highway network were further opened up across Southeast Asia and into China and border services improved, the time differential between trucking and air freight between major cities would become negligible and the cost of trucking would significantly lower.
“Trucking offers additional options to air and ocean and makes it attractive in the region,” Damgaard said. “Some of the local markets are capacity constrained, in particular, at certain times of the year, and trucking gives providers an option to offer a road/air or road/ocean options.”
Agility, which already offers international daily trucking services covering China and Southeast Asia, views these routes as offering the most growth potential. For example, manufacturing clusters have now been established in Vietnam, and more recently in Cambodia as a result of improved road access to the Thailand and China borders.
“This has created economic corridors along the route connecting ASEAN and into China,” Damgaard said. “Manufacturing clusters are setting up along the highways taking advantage of the improved road access to the growing number of consumers in the region.
“Investment in manufacturing is moving ahead very quickly in Vietnam as the country has lower land and labor costs than China.
“Plans are in place through the Asian Development Bank and Japan to fund major road building projects in Cambodia and Laos, which will then connect up all of the major conurbations in the Greater Mekong Delta region,” he added.
Contact Mike King at firstname.lastname@example.org.