DHL sees the continued importance of road freight in Southeast Asia as companies build supply chain resiliency

Note to editor: Find out more on how companies can build supply chain resiliency through omnisourcing and multimodal transportation strategies on Logistics of Things.

BANGKOK, THAILAND - Media OutReach Newswire - 12 November 2024 - DHL Global Forwarding (DHL), the freight specialist arm of DHL Group, said that road freight will continue to play an important and increased role in Southeast Asia, as companies look to build more resilient supply chains. In a new white paper titled "Highway to the Future: Navigating the Road Freight Opportunities in Southeast Asia", DHL outlines the role of road freight as a single or in a multimodal solution, as businesses look to more agility and flexibility in transportation modes for their shipments.
 

"Over the last few years, we have seen strong export growth in Vietnam, Thailand, and Malaysia. Vietnam is Southeast Asia's largest exporter currently, while Malaysia has strengthened its position as a semiconductor hub. Thailand has made great strides in automobility, particularly in the electric vehicles (EV) sector.
 

The new DHL International Multimodal Hub at Suvarnabhumi Airport Free Zone 3 will also see Thailand emerge as a regional trade hub. The simplified process will allow goods to be shipped through multiple transport modes, making the country even more attractive for companies looking to expand or move part of their production into Southeast Asia.
 

While our last whitepaper focused on the emerging use of road freight during the pandemic, our new whitepaper highlights why it remains important even as we see air and ocean freight normalize globally," said Thomas Tieber, CEO, DHL Global Forwarding Southeast Asia and South Pacific.
 

Countries such as Vietnam, Thailand, Malaysia, and Singapore are set to benefit, especially with their connectivity options, as trade can happen through either road, air, or ocean. These countries also have favorable trade agreements with major economies globally.
 

Digitalization and improved infrastructure to drive road freight forward
 

The growing importance of building a resilient supply chain has called for greater agility and transparency with real-time visibility and insights into shipment statuses and road conditions, amidst concerns about security, safety, and stability. Southeast Asia's advanced cellular networks have enabled real-time monitoring of road freight via sensors and GPS units, providing customers with accurate predictions of cargo location and arrival times¹.
 

While global companies are diversifying their supply chain, Chinese companies are also expanding their manufacturing base into the region. In 2023, China's investment into Southeast Asia reached US$24 billion, according to a report by McKinsey. These investments highlight the region's growing importance as a global manufacturing hub, especially with markets such as Cambodia, Laos, Thailand and Vietnam. These countries have announced or implemented improvements or expansions of transportation infrastructure that are vital for logistics. For example, in 2021, Laos opened a new railway linking Vientiane to Kunming in China. Thailand has also opened the new DHL International Multimodal Hub, making it easier for shipments to move in, out, and through Thailand across different transportation modes.
 

"These investments into making rail or road infrastructure better in Southeast Asia means that it is often cheaper and faster than air to ship from China into Southeast Asia. Road freight plays an important role in a multimodal solution. Moving goods through a combination of transport modes can result in faster Door-to-Door (DTD) lead time compared to ocean freight, with substantially lower cost than air freight," said Bruno Selmoni, VP, Head of Road Freight and Multimodal Solutions, Southeast Asia, DHL Global Forwarding.
 

Government policies help to streamline cross-border freight
 

Government initiatives in the Southeast Asia region have provided opportunities to streamline shipments across borders. Countries within the region are also attempting to resolve border issues, collaborate on improving infrastructure, and streamline procedures.
 

Initiatives like ASEAN's Customs Transit System, ACTS, aim to streamline the processes and reduce paperwork further. The Customs Administrations of all ten ASEAN Member States collectively endorsed the ASEAN Authorized Economic Operator Mutual Recognition Arrangement (AAMRA) in 2023. This agreement establishes a consistent and transparent trading environment within the member states. AAMRA aligns certification standards with the World Customs Organization (WCO) SAFE Framework, ensuring expedited cargo clearance and priority treatment for certified AEOs within ASEAN.
 

Other than regional agreements, countries in the region have also taken steps independently to facilitate the cross-border movement of goods. Cambodia and Vietnam, for example, have worked together to add lanes to one congested checkpoint.
 

Growing shift to sustainable road freight in Asia
 

In a report by International Data Corporation, it is said that 45% of Asian-based organizations will operationalize integrated sustainability in the supply chain by 2026. Freight transportation, including trucks, planes, ships, and trains, contributes approximately 8% of global greenhouse emissions.
 

DHL is the leading global brand in the logistics industry. Our DHL divisions offer an unrivalled portfolio of logistics services ranging from national and international parcel delivery, e-commerce shipping and fulfillment solutions, international express, road, air and ocean transport to industrial supply chain management. With about 395,000 employees in more than 220 countries and territories worldwide, DHL connects people and businesses securely and reliably, enabling global sustainable trade flows. With specialized solutions for growth markets and industries including technology, life sciences and healthcare, engineering, manufacturing & energy, auto-mobility and retail, DHL is decisively positioned as "The logistics company for the world".
 

DHL is part of DHL Group. The Group generated revenues of more than 81.8 billion euros in 2023. With sustainable business practices and a commitment to society and the environment, the Group makes a positive contribution to the world. DHL Group aims to achieve net-zero emissions logistics by 2050.