The Asian eCommerce boom is driving major changes in logistics developments and networks across the region, according to CBRE’s latest Global & Emerging Logistics Hubs report.
“With a trickle-down effect to inventory management, this is leading to changes in the global supply chain network,” said Dennis Yeo, regional head, industrial & logistics services with CBRE Asia.
“Speed-to-market is more important than ever. The service demands brought about by eCommerce – for example, shorter delivery times to consumers – has changed the entire retail supply chain of getting goods to consumers, including regional distribution strategies. The technical ability of locations and buildings to support the ever-increasing demands for both scale and speed of output is an ever-more important determinant of market position.”
In Asia, the eCommerce and e-tailing market has been particularly strong, with eCommerce upending the traditional bricks-and-mortar distribution networks, forcing retailers and third-party logistics firms to adapt to an increasingly demanding consumer.
“eCommerce shipments are smaller in size and require more technology and expertise to execute efficiently. As a result, modern logistics facilities are being developed in the traditionally strong logistics hubs of Tokyo, Seoul and Taipei. Besides the developed markets, the new consumer class in the emerging markets is creating opportunities for logistics development in in China, India and Vietnam,” said Yeo.
Hong Kong under threat
Meanwhile, the report concludes that while Hong Kong will remain one of the top global logistics hubs in the world, for the next decade, the territory will be in strong competition with several emerging Asia hubs including China’s Beijing, Hangzhou, Nanjing, Suzhou, and South Korea’s Busan.
“Hong Kong has maintained its global logistics hub status due to its efficient transportation network and highly developed logistic services. It ranks third in the World Bank’s Logistics Performance Index,” said Darren Benson, executive director, industrial & logistics, brokerage services, CBRE Asia.
“As the traditional global gateway to China, Hong Kong is likely to remain the hub for global distributors, due to its local trade and transport regulations and its ease of connectivity via seaports.“
Hong Kong is currently the fourth largest global seaport by container volume, while emerging hubs such as Shanghai, Shenzhen and Busan rank first, third and fifth respectively. These emerging locations share a number of characteristics, including significant investments in infrastructure, new trade policies and agreements, and more advanced supply chains and technologies. As these cities continue to improve their regional transportation infrastructure so their viability for international trade increases.
The shift in global supply chain dynamics and creation of new logistics hubs in Asia may also be spurred by China’s plans to revive the Silk Road trade route.
In 2013, China launched a new strategic initiative, known as “one belt, one road,” which aimed to revive the importance of the Silk Road. The new Silk Road has two parts: the Silk Road Economic Belt, a land-based route that will connect central China to the Middle East and Eastern Europe, and the Maritime Silk Road, a sea-based path that will link South China to Southeast Asia, East Africa and Europe.
In Asia, low-end manufacturing – such as garment and textiles production and electronics component assembly – has steadily been moving from Southern China to Western China and Southeast Asia. Southern China, encompassing the Pearl River Delta, has traditionally been the light industrial manufacturing center of the world, however, as wages continue to rise and China attempts to move up the manufacturing value chain, there has been a shift to more sophisticated heavy industry manufacturing.
