Four pain points of logistics in Southeast Asia and their solutions

Southeast Asia is the fastest growing cross-border e-commerce market in the world. Established Southeast Asian cross-border logistics companies have local expertise to speed up customs clearance and distribution, provide more affordable logistics costs, and ensure more efficient customer service. Even so, there are still pain points in cross-border logistics in Southeast Asia. How should we solve them?

First, the logistics market in Southeast Asia is fragmented and the geographical environment of each country is complex

Southeast Asia is a diversified market made up of several countries. The complex and dispersed geographical environment of each country brings greater challenges to the development of logistics. Indonesia, for example, is an island nation of more than 17,000 islands, but many have small ports and limited cargo handling capacity. Even in Indonesia, many islands take the last kilometre; Vietnam is a long, narrow coastal country with two-thirds of its land in the countryside and a wide variation in the level of infrastructure between urban and rural areas.

Solution: Subdivide the logistics level and rate to the level of the ZIP code, on the one hand to help merchants calculate more accurate freight costs, on the other hand, through our system automatically dispatch to the most efficient adaptation logistics partner.

Second, logistics cost in Southeast Asia is still at a high level

Southeast Asia’s complex geographic terrain and poor road, rail and ferry networks pose huge challenges for cross-border logistics and last-company distribution, making logistics operating costs about 60 percent.

It is known that due to the highly developed economy and perfect logistics facilities in developed countries, logistics costs account for about 5%-6% of GDP in the United States, 7%-8% in Japan and 13%-15% in China. Logistics cost in Southeast Asian countries is about 20% higher than the average level of GDP, that is, a quarter of the economic value is consumed by logistics. The cost of cross-border logistics is also rising during the height of the pandemic.

Solution: Work with technology companies to provide systemic solutions to local logistics partners to make package delivery information transparent.

Four pain points of logistics in Southeast Asia and their solutions3. The timeliness of logistics in Southeast Asia has been accelerated, but it still needs to be improved

According to the survey data, it takes 1.3 days to transport goods in Singapore, 1.7 days in Thailand and two days in Indonesia, while it takes 20.6 days in Malaysia. If there were no movement control orders during the outbreak, cargo transport times could be even shorter. But at the same time, traffic congestion in Southeast Asia continues to hinder the timeliness of logistics.

In the Top10 of the world’s most crowded cities, Manila and Jakarta are no surprise. According to Google’s navigation app, Waze data shows that in Manila, the capital of the Philippines, traffic congestion can reach four hours at a peak, greatly hampering the economic development of the country’s logistics and distribution industries.

Solution: Create a complete logistics network system, whether through API or self-built background, to help merchants to manage all logistics routes in Southeast Asia in a one-stop manner.

4. Southeast Asian customs regulations are complicated

Customs regulations in Southeast Asian countries are not consistent, and import tax systems in different countries are not uniform. Customs policies in some countries are still immature, which also adds to the difficulty of import logistics.

For example, many importers complain that the customs clearance process in the Philippines is too long. In some cases, it took some importers 25 days to complete customs clearance due to inefficiencies, traditional manual operations and low machine utilization.

Solution: Establish an exclusive Southeast Asian customs common system, through cargo identification and the adoption of HS Code common customs Code, make the overall customs clearance process more smooth; At THE SAME TIME, WE ALSO PUBLISH THE “Southeast Asia CUSTOMS CLEARANCE Manual” from time TO time to help merchants KEEP abreast of the latest customs clearance requirements such as customs duties and restricted items.

Future cross-border logistics companies should be able to provide integrated services, including warehousing, cross-border transportation, “last mile” distribution and help merchants get their products onto various e-commerce platforms. Such a comprehensive logistics company will be the development trend of the future market. E-commerce and logistics are interdependent and exist. When good cross-border e-commerce logistics can be established, it will also promote the regional e-commerce environment to develop more vigorously.

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