Asia is forecasted to become the global center of the logistics industry


According to McKinsey, Asia is forecast to gradually become the center of logistics activities in terms of both growth and investment.

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To stay competitive, many logistics companies have realized the potential of the Asian market. According to McKinsey, a global management consulting firm, Asia is forecast to recover faster than other regions economically and gradually become the center of logistics activities in terms of both growth and investment. .

In terms of growth, Asia will contribute about half of the world's trade growth by 2030. The Asian e-commerce logistics market will account for 57% of the total market growth in the period 2020-2025. GDP growth in Asia is expected to reach 4.5%, more than double the world average of 2.0%. In which, many Asian countries are expected to have a sudden growth rate.

By 2025, 30% of world consumption will be in Asia. China, Japan and India will remain the largest logistics markets in Asia. At the same time, other markets such as Indonesia, Vietnam, and Thailand have gradually demonstrated great development potential. Therefore, logistics businesses need to reshape their logistics network if they do not want to miss growth opportunities.

Over the past 12 months, the global logistics market has outperformed many other sectors. Mergers and acquisitions and startups attracted about $25 billion in the first quarter of 2021 alone in Asia, surpassing the annual figure from 2016 to 2019.

Investment activities have created impetus for businesses in the logistics industry to dominate the market by mergers and acquisitions (M&A). As the scale of large corporations in the logistics industry is expanding, this creates a big challenge for small and medium-sized companies in the same industry.

McKinsey predicts that global logistics companies that already have a presence in Asia or those with plans to focus on Asia will outperform their conservative peers. Missing the opportunity in Asia is not only missing out on growth potential, but at the same time, these businesses will miss the right fit when approaching the needs of customers because Asia will play an integral role in global supply chain.

To seize the opportunity, McKinsey offers four solutions to help logistics companies in Asia: mergers and acquisitions, corporate IPOs, strategic investments...

Accordingly, mergers and acquisitions in logistics activities allow businesses to quickly enter the market, expand business portfolios and improve competitiveness.

Enterprise IPO helps to raise money from investors to optimize operations. In Asia, Kerry Express raised $278 million from its Thailand IPO in December 2020. Mahindra Logistics achieved a P/E ratio of 51.5 when it IPOed in India in 2017, nearly double compared with international companies.

Over the past five years, private equity (PE) and venture capital (VC) have made approximately $37 billion worth of investments in Asia. Leveraging strategic investments will help logistics companies grow stronger.