The land of opportunity for the logistics industry over the next decade? Look no further than Asia

That was the key takeaway from Ti’s Emerging Markets Logistics Conference held in Singapore this week which featured a star speckled roster of leading executives from the world of logistics and many of their key account customers.

Almost 200 delegates heard that the ‘New Asia’ will be very different from the old one. China’s focus on internal development will create new opportunities for those able to piggyback global networks to enter the domestic market. Although this has proven a difficult task for many, those able to navigate the numerous regulatory and competitive obstacles in their path will find ample reward as state companies and China’s millions of SMEs look for partners able to decrease their supply chain’s costs, not least because China’s logistics burden now accounts for an unhealthy 18% of GDP.

Of course, China’s rising labour costs, a surging Renminbi and the desire by many OEMs to diversify supply chain risk are also prompting shifts in Asia’s industrial landscape. Within China some manufacturers have moved inland or are investing in robotics to protect profits. But others are looking further afield.

Delegates heard that Mexico is now an increasingly viable location for many producers serving North America. In Europe, the pull factors evident in near-sourcing for US markets are less clear. The consensus view was that much of this production will remain in Asia, where companies in key verticals will look to plug into the rising tide of Asian consumers while simultaneously servicing Europe’s more mature markets.

Other locations in Asia are also becoming more attractive. In South East Asia this means that Vietnam, the Philippines, Myanmar, Cambodia and Indonesia are all likely to attract more international investment, although more effort will need to be made to reduce barriers to entry and improve infrastructure, training and education if they are to successfully move up the manufacturing value chain.

A more sophisticated New Asia will mean more complex markets and this will continue to drive intra-Asia trade by all modes. Indeed, delegates heard that the regionalisation of trade and the logistics solutions that support it will be a global phenomenon, and one most visible in emerging Asia. While this does not signal the death knell for the East-West trade on which globalisation was built, panellists agreed that as a lead driver of logistics growth its days are numbered. In its place will be multiple niche markets. Serving their logistics requirements will mean a strong focus on flexibility, both by vertical and by geography.

Early adapters and entrants will be well placed to succeed and this will be true for traditional forwarders as well as for those from outside the industry. One of the latter is Singapore Post which is investing S$182m to develop a regional e-commerce hub. e-commerce in Asia currently represents a very low percentage of retail sales – less than 1% – and is very much in its infancy. But domestic sales are rising and the opportunities for cross-border models at least for higher value products could be aided by free trade initiatives such as the Asean Economic Community, which is due to reduce tariffs in South East Asia when it is launched next year.

Delegates also heard that soft skills will be critical to success. As well as adapting CSR strategies to local markets, this will mean logistics companies investing in developing the best talent available in Asia while simultaneously drawing down the experience available in more mature markets.

In the New Asia a global logistics network will still be a major plus. But unless it is adapted for regional and, increasingly, local markets in the shape of the continent’s rapidly growing megacities, then efforts to expand will likely flounder.

In the Asia of the next decade, a continent which will see the number of people in its middle class rise from 500m now to 1.75bn by 2020, one size most definitely will not fit all.