Kerry Logistics rides on e-commerce boom in China, ASEAN
In the 3PL (third-party logistics) industry, logistics providers are racing to stake a claim in the booming cross-border e-commerce business, from China to ASEAN region. Kerry Logistics, a leading logistics service provider in Asia, has undertaken several initiatives to corner the competition and looks set to emerge as a major player.
April 3, 2017
Cross-border e-commerce is growing rapidly around the Asian region. In China alone, more than 15 percent of the population was expected to make overseas purchases worth US$87.76 billion in 2016, according to the first-ever estimates of the consumer trend by eMarketer, a global market research firm. By 2020, more than a quarter of the Chinese population will be shopping digitally for foreign products.
Following in China’s footsteps, total revenues from B2C e-commerce in the six largest Southeast Asian states – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – are poised to grow at a compound annual growth rate to reach US$34.5 million by 2018, according to a recent survey by Frost & Sullivan.
Rising social affluence, a new generation of tech-savvy young consumers, and the proliferation of online retail sites and e-payment platforms have all fuelled the e-commerce frenzy. Gary So, deputy managing director, Kerry Logistics is optimistic about the growth potential of the e-commerce
market in China and the ASEAN region.
“The global e-commerce market has shown considerable growth, with strong cross-border activities across the emerging markets. Th e e-commerce boom in China and the ASEAN region, alongside the ever-increasing trade activities in the region, have spurred cross-border logistics activities, creating immense opportunities for logistics service providers like us in the region,” he remarked.
“As a leading 3PL providing highly customised logistics solutions and equipped with an extensive network and strong regional express capabilities across ASEAN, Kerry Logistics is poised to capture a larger market share from the burgeoning e-commerce growth,” he added.
Last-mile delivery, which entails moving goods from a hub to the final destination, is vital to e-commerce growth. “As the final step in the logistics process, it calls for the fast and punctual delivery of usually small consignments in large numbers. Kerry Express has been established as our dedicated express delivery platform to tap into the region’s e-commerce opportunities,” said Gary So.
With an integrated regional express platform and a growing number of Southeast Asian countries, Kerry Express offers a prompt and reliable last-mile delivery for customers. “We continued to capture growth opportunities arising from increased e-commerce volume and cross-border logistics activities through our express platform across Thailand, Vietnam, Malaysia and Cambodia,” remarked Gary So.
“Demand and growth in Thailand were particularly strong. The larger quantities of parcels we handle made the last-mile delivery service we operate in the country financially profitable. As for the rest of Southeast Asia, our network coverage is still growing unabated. When the economy of scale is fully realised, Kerry Express will not only become more competitive but also able to translate into faster deliveries, reduced transportation cost, flexible service options and a more satisfying purchasing experience for online shoppers,” he added.
Kerry Express will play an increasingly pivotal role in the company’s e-commerce strategy in Asia. “A sizeable share of e-commerce business will come from our integrated logistics clients. The lastmile delivery services of Kerry Express will ultimately draw the interest of the company’s existing integrated logistics customers on the lookout for value addedservices. I remain confident that the growth potential from this segment will be enormous,” he continued.
The burgeoning e-commerce business in the ASEAN region will continue to propel demand for cross-border logistics services as well as last-mile delivery. Plans are afoot to expand the company’s express platform into other Asian countries to tap into the booming B2B, B2C and C2C online businesses. With more than 600 offices, 8,000 self-owned vehicles and 600,000 boxes delivered per day, the company maintains a robust capacity for regional express delivery solutions.
Extensive China-ASEAN network
Kerry Logistics’ trans-border logistics coverage is hard to rival in scale and this puts the company ahead of the game. Under its KART initiative is a crossborder road transportation network that covers China and ASEAN in providing long-haul trucking, sea-land, air-land and door-to-door delivery services even in the most remote areas. Riding the wave of growing Southeast Asian overland trade with China, the company’s cross border road transportation network KART has well positioned itself to provide a cost efficient door-to-door solution in the market which only a few could match. “KART connects China to the ASEAN market to facilitate seamless and cost-effective road transportation. It has also given us a strong and unique edge in providing cross-border logistics solutions and capitalise on the opportunities from the growing China-ASEAN trade,” said Gary So.
Thanks to an asset-ownership model it adopts, the regional facility portfolio of Kerry Logistics is equally robust and still expanding. The company operates logistics facilities of 15 million square feet on mainland China, including e-commerce logistics centres in Ningbo, Shenzhen Futian, Chengdu Longquan and Xi’an. In Thailand, the Kerry Bangna Logistics Centre serves as a fulfillment centre for e-commerce customers, along with the Kerry Siam Seaport, which is slated for expansion into a key cargo gateway for the ASEAN region.
In addition, the company has a new Kerry Worldbridge Logistics Centre in the Free Trade Zone in Phnom Penh, Cambodia, focusing on import logistics services. Together with the inland ports in Yangon and Mandalay, the company is well positioned to capture the increasing cross-border trade in the Greater Mekong Region (‘GMR’) and across ASEAN.
Given this portfolio of regional facilities under its control, Kerry Logistics is better able to execute warehousing, transportation, fulfillment and other logistics plans with certitude and cost efficiency, which can be further enhanced through IT applications.
Information technology is central to the performance of 3PLs in the e-commerce arena where time-to-market is critical. “It has become imperative for Kerry Logistics to leverage integrated platforms to deliver visibility across the entire supply chains in order to keep productivity and service levels high,” said Gary So.
Kerry Logistics is one of the first 3PLs in Asia to adopt robotic technology for upgrading its fulfillment efficiency and accuracy. The company has introduced seven fully automated and programmable robotic butlers two year ago at its Hong Kong flagship facility PC3, which currently serves as a regional distribution centre. The robotic butlers can pick at a rate four times quicker than manual labour, providing a faster turnaround, making it possible for fast, punctual deliveries to be made.
Cross-border e-commerce growth in Asia will no doubt bring a fair share of challenges but the opportunities are just as abundant. Gary So envisages, “Expanding the Kerry Express network to capture the growth of e-commerce are what we will be doing next. The market is ready and so are our plans to build a more integrated regional express platform and strengthen our express capabilities across ASEAN.” Gary So added, “E-commerce is an important part of Kerry Logistics’ strategic plans that we want to focus on over the next three to four years as we aspire to become a major logistics player benefiting from the growing e-commerce market. We will grow in tandem with increasing e-commerce trade to provide integrated cross-border logistics solutions for a new era of strategic commercial partners.”