Global logistics has been instrumental in ensuring efficient and timely distribution. Typically, a logistics business is responsible for connecting the crucial components of the supply chain associated with the point of origin to the end of consumption. In 2016, according to the World Trade Organization (WTO), the global volume of logistics business or merchandise trade was around $16 trillion.
The cross border logistics business demands explicit collaboration among the host of business partners. Airlines, shipping companies, trucking services, and railroads move well with the consent of business owners and make sure the delivery of these goods at where they are to be consumed.
Influence Factors of Present Global Logistics Market
World merchandise trade volume is relying upon to grow by 8% in 2021 after going down by 5.3% in 2020 due to COVID-19. But still, the pandemic has not had as much impact on global logistics shipping as it has on some other sectors. Then the question is, what are those factors that influence the global logistics market? Considering that, here we discuss those factors:
1. Consumers' Demand
The increasing consumer demand requires robust supply chains. To come up with the buyers' expectations, the manufacturers need to expedite the just-in-time manufacturing process. But meanwhile, the supply chain also has to be even more efficient than ever before.
The logistics business will hugely benefit from the technological advancements that might help preserve the records, ensure timely deliveries, and provide the position tracking facility. Accordingly, the mainstreaming of technology will be helpful.
Sustainability has been a significant concern for the supply chain and logistics business. Major logistics corporations vigorously emphasize adapting a sustainable mechanism of transporting goods that could eliminate the causes of greenhouse gases.
South Asia is a New Point of Growth in Logistics
South Asia is a new face of rapidly emerging economies. Over the past few decades, the region maintained a robust growth index, lifting its people from poverty to prosperity. As per World Bank report, South Asian countries' growth rate expanded from 6.2% to 7.5% from 2013 to 2016.
Similarly, considering the economic growth trajectory of these counties, the World Bank believes South Asian countries will maintain their growth rate from 2020 to 2021 at 6.3% and 6.7%, respectively. As the growth rate is related to regional and intra-regional trade, the logistics business has several lucrative options to grow within the region.
The mainland is expected to represent 57% of the development of the worldwide online business (eCommerce) logistics market from 2020 to 2025. At the same time, China, with a giant economy of $14.34 trillion, is involved in rejuvenating the growth of logistics after a long time in the region.
Factors Affecting South Asia Logistics
Usually, the factors hindering the growth of the logistics business are almost the same in every part of the world. However, still being a region of many developing countries, South Asia has some additional issues. But then again, the region's rapid growth is a positive sign for stakeholders of the logistics business. Some of the problems are as follow:
l The lack of infrastructure and roads. Nevertheless, the Chinese investment in countries of regions such as Pakistan and Sri Lanka can prove helpful for regional logistics business.
l Most of the countries in the South Asian region are developing, and the level of education is comparatively lower. Subsequently, talent hunting appears to be challenging too.
l Technologically, South Asian countries are still considered unindustrialized. This factor massively affects the ability of the supply chain.
How to Seize the Logistics Opportunity in South Asia?
Per a COVID-19 retail-recovery survey, online penetration is presently prone to stay 6-13% above pre-COVID-19 levels. Though it squeezes global logistics, it also offers a colossal opportunity. The reason is that retail and consumer goods contribute to practically 50% of the logistics market. While talking about the opportunity, seizing the logistics prospects in South Asia is quite possible in complying with the given suggestions:
1. Merger and Acquisition (M&A)
Both local and global logistics business associated people have been active in M&A to add value to their South Asian network. Typically, M&A provides companies with the competitive advantage of entering the market and expanding it.
2. Going Public
Public awareness regarding the complexity of logistics operations is necessary to grasp the market. Capital investment may be captured by providing interested people with the essential knowledge regarding the whole process. There might be a few benefits to going public or IPOs:
ü Companies are needed to fulfill strenuous guidelines and go through strict reviews and audits. Thus, IPOs (initial public offerings) impart more prominent trust in financial backers and customers and open up additional funding options at less expensive rates.
ü The chances of losing control are significantly reduced since the company gains from a bigger pool of investors.
ü An initial public offering can infuse a more significant level of liquid equity in a short timeframe. It enables company leaders to deal with their company without an excessive number of requirements.
3. Strategic Investment
Strategic investment can also play a pivotal role in adding to the growth of the logistics business in South Asia. China, Japan, and India are the glaring examples of such countries pouring billion dollars per their strategic investment plan. Similarly, tech players move towards various strategic investments through direct investments, VC (venture capital) arms, and start-up accelerator projects to participate in the logistics network.
YunExpress is among the leading companies that are providing services related to cross-border eCommerce logistics. The notable feature is that YunExpress can carry out the fastest and safest delivery of your parcels across the border. Our products incorporate cross-border B2C lines, FBA transfer, postal parcel, and international express. Therefore, if you are new to your business, you might grasp potential benefits related to the delivery of your eCommerce logistics.
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