CHINA AND INDIA – DRIVING FUTURE DEMAND

Logistics Insight Asia, 1/11/2007

India and China will “change the landscape” of the global logistics market in the coming years, said Essa Al-Saleh, President and CEO of Agility Global Logistics, at September’s Air Freight Asia eventin Hong Kong.

“These two very important countries represent 40 percent of global population but currently only seven percent of GDP,” he told delegates. “That status is bound to change, and they will demand sophisticated solutions for their supply chain requirements.” Today, he pointed out, China is only US$300 billion of the $3.43 trillion global logistics market and India even less, accounting for just $60 billion. That compares with $1.04 trillion for Asia as a whole, $1.12 trillion for Europe and $1.17 trillion for the US.

Of the $3.43 trillion total, $400 billion was outsourced logistics – that is freight forwarding and contract logistics – but this was growing rapidly, at some 10 percent a year. In all, the outsourced logistics market was expected to reach $590 billion in value by 2010. “It is China as a major manufacturer that is driving a lot of that demand,”Al-Saleh said.

GLOBAL & LOCAL
Reviewing some of Agility’s logistics customers, he pointed to Wal-Mart for whom Agility provides order and vendor management, consolidation services, air freight movements from Asia to stores in Latin America, and other value added services.

Another customer is Lite-On in Taiwan, for which Agility provides automated warehousing at manufacturing sites, Web-based transport and inventory visibility, time-definite global transportation, and packaging, alleviation and product customization.

Al-Saleh also pointed out that there were also other clients with more local needs, such as India’s Metro Group, where Agility picks up products from farmers, transports them to central warehouses, performs various tasks to get them ready for stores, and then manages distribution of the finished product.