Market Trends of ASEAN Warehousing And Distribution Logistics Industry
Increase in Warehousing Space in Thailand
Warehouses are not just storage rooms. They house value-added operations such as just-in-time packing, assembly, product customization, etc. Over the past five years, Thailand has seen incredible growth in e-commerce. The e-commerce warehousing cluster is between 15 and 23 km along Bang Na-trat Road in Bangkok.
Thailand has seen massive growth in the retail market in recent years. There has been a steady rise in organized retail or contemporary shopping nationwide. The increasing disposable income of the people in Thailand, the large youth population, and the booming tourism industry have attracted a lot of foreign brands. This has led to an increase in warehousing services.
During the forecast period in Thailand, operators of leased warehouse space will continue to experience business growth in line with a gradual economic upturn, driven mainly by an upturn in the export industry and a recovery in domestic retail. Investment in new supply tends to increase over the next three years. Large players will be at the forefront of this, leading to oversupply in some local markets, increasing competition on pricing, and limiting operators’ ability to increase rents.
Currently, the majority of operations are modernizing their facilities to provide modern warehousing solutions, which, in turn, allows them to expand their client base and generate revenue through additional services. Players are also modernizing their facilities through other means, such as upgrading their warehouse buildings to meet industry standards (for example, the LEED scheme), investing in energy efficiency and environmental protection, and installing facilities that enhance resilience to natural disasters, such as flooding and earthquakes. Warehouses have expanded their floor and ceiling space, increasing the speed and ease of goods movement.
E-commerce Growth in the ASEAN Region is Driving the Market
The current phase of e-commerce in Southeast Asia is about more than just increasing value. Consumers in the region increasingly purchase a wider range of products online through various channels. The region's supply chains will likely require new logistics capabilities to meet this growing demand for fulfillment. Those who already possess these capabilities and those new to the market will benefit the most from these changes.
Southeast Asia is a patchwork quilt of economies at various stages of development; it is only natural that e-commerce penetration rates vary from country to country. Indonesia and Singapore account for approximately 30% of the region’s e-commerce penetration, with the Philippines, Thailand, and Vietnam trailing at around 15% each. The largest Southeast Asian economy, Indonesia, accounts for 51 of the region's GMV growth due to its large consumer market.
As Southeast Asia's e-commerce market moves into the next phase of growth, customers will make more digital purchases across all product categories and channels, and they will also demand and pay more for new and advanced logistics solutions. On the other hand, merchants will be less reliant on Chinese imports and expand their sourcing channels to more Southeast Asian countries as they migrate their supply chains. As a result, they will look to extend their upstream capabilities to access a wider value mix, which will open up more channels for logistics providers.
