Asia Pacific market trends
After a volatile start to 2023, the Global Purchasing Managers’ Index has shown promising signs as growth momentum increased throughout the first quarter of 2023. This improvement can largely be attributed to China’s continued reopening and low energy prices. The global manufacturing orders-to-inventory ratio also remained stable in April and manufacturing exports rose slightly, indicating positive trends in global production.
What are some key challenges globally?
The inflation rate in Europe remains at a record high, and its peak is uncertain. Meanwhile, in the United States, although the inflation rate appears to have reached a peak, core inflation — excluding food and energy— remains sticky. Furthermore, it is uncertain whether the target of a 2% inflation rate that the US Federal Reserve had earlier set for 2023 can be achieved.
Beyond concerns regarding inflation rates, the automotive industry is also expected to be affected by a shortage of chips and potential disruptions to supply chains. The chip shortage will affect electric vehicle production more than the production of vehicles with internal combustion engines because electric vehicles require approximately 30% more chips to be produced compared to their internal combustion counterparts. Threats to the stability of the supply chain will also increase the financial pressure on enterprises, which could potentially cause business interruptions.
Asia Pacific ocean update
Market demand has shown signs of stability in multiple trade lanes, namely
APAC-North Europe
APAC-Latin America (especially in APAC-West Coast South America and APAC-Mexico networks)
APAC-West Central Asia (especially in the networks connecting APAC to the Middle East, India and Pakistan).
Regarding the availability of space, you will be able to find available space in the following trade lanes:
APAC-Mediterranean
APAC-Latin America (specifically, in APAC-East Coast South America network)
Import-APAC trade lanes.
In the APAC-North America trade lane, space is available in the APAC-United States West Coast network, but the APAC-United States West Coast network is imbalanced, meaning that there is excessive demand for some services and a lack of demand for others.
Finally, it should also be noted that disruptions or uncertainty also plagues some of the trade lanes in the APAC region.
In the APAC-Africa trade lane, while market demand is growing, high inventory levels, high inflation ratio and political unrest signal a high degree of uncertainty
In both the APAC-Oceania and intra-Asia trade lanes, demand has declined. This phenomenon can be attributed to the negative impact that increased interest rates had on household spending in Oceania and the early May holidays in Asia. Nevertheless, market demand in both trade lanes is expected to rebound soon.
In North America, while previously reported delays in waiting time have significantly been reduced, the Panama drought season has caused draft issues in the canal and reduced the Panama string capacity. We are also closely monitoring the labour shortage risk in theLos Angeles and Long Beach termina, which is presently operating normally.
Asia Pacific inland service updates
Inland services in the APAC region have remained fairly stable overall. Services from China to Intra-Asian Countries have faced little disruptions. Similarly, in Japan, capacity for container drayage and demand for inland transportation have stayed constant. No major changes are expected in the coming months. Meanwhile, in the Philippines, the total container traffic for the first quarter of 2023 rose 5.6% from the same period last year. However, in Vietnam, issues in production and a decrease in export orders that had earlier been reported in the first quarter of 2023 persisted as problems in April.
What are the gamechangers in the logistics industry?
E-commerce is on the rise
The growth of e-commerce has made a notable dent in the logistics industry. E-commerce grew swiftly during the pandemic and marked a shift in customers’ habits as many customers increasingly preferred shopping online. Even as we emerge from the pandemic, it seems that the preference for purchasing products online is not fading away. This phenomenon is particularly acute in the APAC region, where the growth in e-commerce is expected to outpace the rest of the world by 2026.
This development has placed enormous stress on supply chains as 75% of the customers in Asia who shop online expect a product ordered before midnight to be delivered the next day. The need to meet customers’ expectations of a quick delivery means that agility in the supply chains has become increasingly important. The rise of intermodal transportation in the logistics industry is thus a timely and welcome response to the changing demands of customers. Indeed, many companies have relied on intermodal transportation to navigate logistical difficulties in the APAC region, given that it constitutes a cost-effective means of nimbly and carefully handling cargo.
5G Internet of Things: a huge gamechanger
Looking ahead, 5G Internet of Things (IoT) is also expected to also have wide implications for the logistics industry. The astronomical rise of IoT is evidenced by expectations that there could be 3.25 billion IoT connections by 2025, marking a compounded annual growth rate of 87.9%. What does this mean for the logistics industry? With 5G IoT, we can expect increased efficiency in our supply chains and enhanced customer service through superior digitization. Be prepared as 5G IoT is on its way.
How should you respond to these recent developments?
With the increased need for quick deliveries and agility in the supply chains, you can enjoy a peace of mind when you make a booking on the Twill platform, our one-stop digital solution where you can easily plan and make a booking. Simply choose the route your cargo will take, and Twill will take care of everything you need from planning to booking to tracking. Indeed, Twill’s end-to-end capabilities is the perfect logistics solution for all your import and export needs.
Stay informed about the latest ongoing in the supply chain industry and get regular market updates with Twill. For more insights and updates like this, take a look at our Knowledge Hub!
