How Southeast Asia is Becoming The Logistical Hub of the World?

If you are in business, then you know that logistics are essential. After all, how else will you get your products to your customers? In the past, companies have had to rely on slow and expensive shipping methods, but that is all changing thanks to the rise of Southeast Asia as a logistical hub.

Reasons For the Logistics Growth in SEA

Southeast Asia is home to some of the world’s busiest ports, quickly becoming the go-to region for businesses that need access to efficient and cost-effective logistics solutions. As a result, the area is one of the highest contributors to the logistics industry’s growth worldwide. It contributed about 57% of the overall market’s growth. Here are some reasons why Southeast Asia is poised to become the logistical hub of the world.

1. The Changing Global Economy

The global economy is changing, and Southeast Asia is poised to become one of the biggest beneficiaries. Thanks to its strategic location and growing infrastructure, Southeast Asia is fast becoming the go-to region for businesses that need access to efficient and cost-effective logistics solutions.

Southeast Asia consists of 11 countries located between China and India. This makes it the perfect location for businesses that need to ship their products to markets in both countries. The region is also home to some of the world’s busiest ports, including Singapore, which handled a record 34 million TEUs (twenty-foot equivalent units) in 2017.

2. Rise of Southeast Asian Economy

The rise of Southeast Asia as a logistical hub has been driven by many factors, including the region’s growing population and middle class and its increasing integration into the global economy. These factors have resulted in a boom in e-commerce activity, with Alibaba’s Singles’ Day sales reaching $25 billion last year. Moreover, this growth is only set to continue, with the e-commerce platform Shopee predicting that its sales will reach $1 billion by 2019.

3. Strategic Location

Southeast Asia’s strategic location makes it an important logistical hub. The region is located at the crossroads of some of the world’s busiest shipping routes, and its ports tend to be less congested than those in other locations. This makes them excellent options for businesses looking to send or receive goods quickly and efficiently.

For example, shipments to Alaska take about seven days from the US West Coast but only five days from Singapore. Southeast Asia is a desirable option for businesses that need fast and reliable shipping services. In addition, it’s a much cheaper option than shipping from the US to Asia.

The region also has many excellent infrastructure projects underway, including the Belt and Road Initiative (BRI). This will connect Southeast Asia to Europe through land-based corridors, helping businesses in the region to increase their trade volume.

4. The ASEAN Economic Community

One of the driving forces behind Southeast Asia’s rise as a logistical hub is the ASEAN Economic Community (AEC). The AEC is a regional economic integration initiative that seeks to promote economic growth and cooperation among the ten member states of the Association of Southeast Asian Nations (ASEAN). The AEC came into effect in 2015, and since then, there has been a significant increase in trade and investment in Southeast Asia. As a result of the AEC, logistics companies are consolidating their operations in Southeast Asia to take advantage of the increased trade and investment opportunities.

5. Infrastructure Improvements

In addition to the AEC, Southeast Asia is becoming a logistical hub because of the improvements in infrastructure. In particular, there has been a lot of investment in port infrastructure in recent years. For example, Singapore has invested heavily in its port facilities, and as a result, Singapore’s port is now one of the busiest in the world. In addition to ports, there has also been investment in roads, railways, and airports in Southeast Asia. These infrastructure improvements make moving goods around the region more accessible, which is essential for logistics companies.

6. The Oil Industry

Additionally, oil is an essential component of the global economy, and Southeast Asia is home to many of the world’s largest oil refineries. As a result, it has become a significant hub for the transportation of crude oil. Many companies are utilizing this infrastructure to transport crude to markets worldwide, increasing the region’s status as a logistical hub. For example, a tanker truck in the Philippines is much cheaper than in other locations worldwide. As a result, these trucks can transport oil much more affordable, making it an efficient choice for various oil transportation companies.

Overall, Southeast Asia is poised to become one of the biggest logistical hubs in the world thanks to its strategic location, growing economy, and improved infrastructure. With businesses flocking to the region for cost-effective logistics solutions, it seems likely that Southeast Asia’s status as a logistical hub will continue to grow in the years ahead.