Asia logistics to undergo 'intense uncertainty'

Asia - The Asia-Pacific transport and logistics market is expected to enter a period of intense uncertainty as it suffers the effects of the global economic slowdown, said a new report.

Transport Intelligence's (Ti) latest report, Asia Pacific Transport & Logistics 2008, predicts the Asian logistics market to shake as it feels the effects of the global economic slowdown. The two sectors most likely to suffer are the freight forwarding and the contract logistics market, the report said.

According to the report, the freight forwarding market in Asia has been one of the most affected sectors, with annual growth having contracted sharply in 2007 from 17.3% the previous year to 12.1%. The decline has been attributed to a weakening demand in the North American market as well as falling freight rates caused by overcapacity, the report said.

The contract logistics market saw a less severe drop in growth, from 13% in 2006 to 11.4% in 2007.

In spite of the impact from the slowdown Ti CEO John Manners-Bell believes Asia remains best placed to ride out the economic storm.

"The Asia-Pacific region has the potential to see out the global economic crisis, although it will not be easy," says Manners-Bell. "Distributing product across such a contrasting mix of markets presents challenges which are unheard of and little understood in North America and Europe. Congestion at ports, airports and on roads, as well as a variety of barriers to trade, has led to increasing supply chain costs."

Manners-Bell further said rising prices may fuel manufacturers to rethink their supply chain policies.

"With the rising cost of fuel, many global manufacturers are being tempted to reassess their global supply chain strategies. China, in particular, will have to considerably reduce its logistics costs if it is to remain competitive against countries such as Vietnam, or near sourcing locations such as Mexico, eastern Europe or even North America," he said.