Asias trade revolution is just getting started

General Press Releases Thursday February 6, 2014 11:10
Bangkok--6 Feb--Grayling (Thailand)
Asia Pacific trade has undergone dramatic changes in the last two decades, but the reality is the trade revolution in Asia is just getting started.
Twenty years ago,when I first moved to Asia, FedEx was fueled by electronics. Trade was all about the so-called “tiger” economies – Hong Kong, Japan, Taiwan, Singapore and South Korea.

The first, mass produced PCs were spreading like wildfire, “personal communicators” – dubbed “bricks” due their size and weight – were starting to take off, and complex supply chains were coming into their own.

Then, it was all about the big corporations – the multinationals who were driving export growth and trade out of Asia. At FedEx, we were quite literally “running in front of the parade” by helping them get their revolutionary products to market.

Fast forward to 2013 and there are some things that don’t change.
The kind of freight that we move today illustrates, broadly speaking, the macroeconomic trends that have spurred our growth.

We’re still running right out in front of the biggest trends in the world – the digital revolution, the globalization of trade, the development of the Internet and e-Commerce. We’re still shipping a huge amount of high-tech. Industry estimates say anywhere between 18-25% of the entire airfreight business is composed of electronics in the broadest sense, although it’s now built around product launches and new devices.

Yet take a closer look and it is much more than that. The contents on our planes are as diverse as the countries we deliver to – it’s now a huge amount of luxury goods, e-commerce, or aerospace. In addition, there’s significantly more healthcare and pharmaceutical shipments than ever before – clinical trial samples, biotech and medical devices.

Another remarkable change has been the emergence of new players. Small business now has more global clout, and the power of the individual is growing. Even the electronics and high tech sector is dominated by that change – no longer just the larger firms, now there are many smaller companies tapping in to those sectors. .

Change runs even deeper if you consider the ways in which global transportation has been transformed in recent years. Because we transport by air, land and sea, we bear witness to global trends affecting our industry. And what we’re seeing is a shift in transport modes, an evolution of our industry in which air express and air cargo is just one player.

Ocean freight is an increasingly important part of a shipper’s overall equation, with large commodity consignments often going by sea, and dedicated express networks capturing urgent, lightweight shipments.

The geography is also shifting. Malaysia, the Philippines, Vietnam andThailand are helping lead the charge. In 2013 for example, according to Thai Ministry of Commerce data, Thai-US exports surged 29.10% to total $11.2 billion,accounting for 9.92% of Thailand’stotal exports; while imports from the US totaled $7.9 billion, or 6.1% of Thailand’s total imports.

As dramatic as it may seem, some of the most significant shifts in Asia’s trading landscape have happened over the past five years. For instance, China's evolution into the world’s biggest exporter, a “mega trader” on the world scene, and a driving force in world trade.

Yet what is often overlooked in this realignment of global trade is the interplay, and the interconnection between all countries, not just major economies. Manufacturing today requires a very sophisticated supply chain, in which hundreds of critical parts are spread across suppliers, often not just in several countries in Asia, but several continents[1].

Take the now ubiquitous smartphone as a prime example. It might be designed in California, with parts made in Taiwan, assembled in China, shipped through Singapore, loaded with apps from Korea, and sold in Indonesia[2].

Yet what’s most interesting is the question of where we will be in another five to 10 years from now. In many ways Asia is just getting started in this global trade revolution. So who will emerge as the "tigers of tomorrow" in Asian trade?

Extremely rapid technological innovation is enabling a smart trading world. A smart trading world where the winners will be those who can adapt best and fastest to new technology.A world where efficiency and innovation come together in fully optimized, super sophisticated global supply chains[3].

That's why my money is on the "tigers", whether it be economies or businesses, who are the most agile in capitalizing on that change, most of which is yet to come.
For further information, please contact:
Stephen Meng-yee or Benjarat Limpasurat of Grayling (Thailand)
Tel:+66 2635 7151, Fax: +66 2635 7155
Emails: stephenMeng-yee@grayling.com or benjarat@grayling.com
[1]IATA publication Air Cargo Focus interview with M Ducker, Spring 2013
[2]US Secretary of State John Kerry referenced this same example as part of his keynote speech at the APEC CEO Summit, Oct 2013.
[3]M Ducker, Air Cargo World, May 2013

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