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Strategic Analysis of the ASEAN 3 Third Party Logistics Markets

Frost & Sullivan
February 1, 2006
91 Pages - SKU: MC1282698

Abstract Table of Contents Related Reports

Countries covered: Asia

Research Overview

Inadequate Infrastructure Poses a Multitude of Problems

The third-party logistics (3PL) market in the Association of Southeast Asian Nation (ASEAN) is gradually gaining ground due to the growing need for companies to cut costs and focus on core competencies. The removal of trade barriers between ASEAN member countries is creating strong opportunities for 3PL service providers and helping them offer more comprehensive and integrated services while encouraging multinational companies (MNCs) to increase investment in the region. Free trade also eases the burden of procuring raw materials and intermediate goods elsewhere, driving manufacturing companies to be more cost-competitive and enjoy economies of scale. However, these developments are possible only if infrastructure in ASEAN countries - such as roads, communications, ports, and airports - expands at a corresponding pace. This may not happen uniformly as the levels of development in the region differ and countries with relatively poor infrastructure such as Indonesia, Thailand, and the Philippines are likely to face greater difficulty in addressing logistics-related challenges. Thus, the success of the ASEAN 3PL market is very much dependent on the rate of infrastructure development in the region.

This Frost & Sullivan research service explores the potential of 3PL in the total ASEAN market as well as in individual countries such as Malaysia, Indonesia, and Thailand. It provides detailed coverage of key drivers, restraints, and challenges governing this market and also offers in-depth competitive analysis and revenue forecasts.

Increasing Foreign Investment: Gateway to the ASEAN Trading Zone

The ASEAN region presents a highly attractive investment destination to companies. The creation of the ASEAN Investment Area (AIA) has not only ensured a free flow of investments into the region, but has also fully exploited the advantages offered by these countries to maximize efficiency. Southeast Asia is well on its way to economic recovery and there has been a significant rise in manufacturing supply from this region to the global market. "With foreign investment increasing in the ASEAN region, there is likely to be a phenomenal increase in the need for 3PL in the future," says the analyst of this research service. "The shift of many manufacturing companies to the ASEAN region indicates that 3PL is here to stay in the region."

There is also a growing trend among MNCs in the principal country of ASEAN to pressurize affiliates in other Southeast Asian nations to outsource their logistics to 3PL service providers and focus on their core business instead. This is likely to promote market growth further and is expected to be one of the major drivers of the 3PL industry in Southeast Asia.

Focus on Core Competencies and Higher Logistics Requirement Accounts for Increased Demand

The trend among companies in developed countries is to focus on their core competencies and outsource all non-core activities to professionals with expertise in these business functions. Manufacturing companies that take advantage of the resources of such professionals with proven domain expertise can not only enjoy higher efficiency, but also achieve cost reduction in the long run.

The increasingly higher requirements of the supply chain such as the availability of the just-in-time (JIT) delivery system has further encouraged manufacturers to outsource logistics activities due to their limited expertise in supply chain management as well as the need to maintain cost competitiveness. "Improved logistics can considerably increase the competitiveness of companies, especially in time-based competitive industries such as electronics or electrical products," says the analyst. "The ability to utilize existing resources effectively and maximize efficiency is driving businesses to identify this key area for improvement."

Benefits of this Service

Comprehensive Analysis for Three Individual Countries Identifies Lucrative Market Opportunities

ASEAN countries have diverse economic and geo-political dynamics and therefore, it would be insufficient to analyze them by considering the entire group as a single entity. Hence, this Frost & Sullivan research service has identified three key countries that offer expansion and growth potential for 3PL logistics service providers. Analysis of each of the countries is identically structured to easily compare and contrast the market scenario.

End-user Analysis Helps Formulate Customer-specific Strategies for Expansion

The research service also covers the market from the perspective of key end-user segments such as automotive, retail, fast moving consumer goods (FMCG), hi-tech, textiles, and so on. It discusses the revenue contribution by each of these segments to the 3PL industry, which can help service providers formulate strategies to capture region-specific customers and expand their market suitably.

Comprehensive Research Enables Companies to Identify New Market Opportunities for Growth

The research service provides detailed information on major drivers, restraints, and challenges facing the 3PL market as per the local conditions prevalent in the countries covered in the study. This can help clients plan their future strategies to fully capitalize on the local market.

Decision Support Database Aids in Better Understanding of Local Infrastructural and Trade Figures

A comprehensive database has been presented that can help logistics service providers get an idea of the existing infrastructure as well as the trade figures in the regions. This can help them understand the market potential better and also estimate the impact of the challenges that they face in terms of infrastructure.

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research service:

By Geographic Region:

ASEAN
Indonesia
Malaysia
Thailand

By Service Type:

Classic outsourcing
Advanced services
Full services

By Customer Constellation:

Automotive
Retail
FMCG
Hi-tech
Healthcare
Textile
Mining, oil and gas

Technologies

The following technologies are covered in this research:

Third-party Logistics (3PL):This is the integration of transportation, warehousing, and distribution services coupled with information technology (IT) and infrastructure that enables the tracking of goods and other management systems, thereby providing a one-stop solution for shippers in need of such services. In this study, the entire 3PL market can be defined as consisting of market participants from the unorganized segment to highly technology-savvy and process-driven service providers with high levels of expertise in the area of logistics management. There are many unorganized small and medium service providers offering basic services such as transportation management, warehousing and distribution, as well as custom brokerage for outbound logistics. Many multinational 3PL service providers are involved in the complete value chain of logistics management including inbound/outbound logistics, supply chain management, tracking and data reporting, warehousing and inventory management, just-in-time (JIT) deliveries, as well as other value-added services.

Service Type:

Classic Outsourcing: This includes outsourcing of freight management, warehouse management, as well as distribution and is the basic mode of outsourcing. It is widely used by both small and medium-sized firms, particularly local ones that do not require complicated logistics services. There are many service providers for this module, ranging from the large to medium multinationals to regional or local providers.
Advanced Services: This category covers the basic services mentioned under classic outsourcing supplemented with broader services such as picking and packing, labeling, testing, returns, and light assembly.
Full Service: This includes system integration, consulting, orders processing, order planning, and shipment tracking.

What's Included

Market trends, drivers, and restraints
Industry challenges
Revenue forecasts

1. Executive Summary
        1. Market Overview
                1. Overview
                2. Market Segmentation
        2. Summary of Major Findings
                1. Market Trends
                2. Revenue Forecasts

2. Strategic Analysis of the Total ASEAN Third Party Logistics Market
        1. Market Overview and Definitions
                1. Market Overview
                2. Market Definition and Segmentation
                3. Industry Challenges
                4. Market Drivers
                a. Liberal Trade Opportunities Driving 3PL Opportunities
                b. Strong Economic Growth Fuelled by Foreign Investment
                c. Strategic Advantage Derived from Geographical Location
                d. Focus on Improved Supply Chain Efficiency
                5. Market Restraints
                a. Unwillingness to Outsource Total Value Chain in Logistics
                b. Government Regulations and Bureaucracy
        2. Forecasts and Trends
                1. Revenue Forecasts

3. Strategic Analysis of the Indonesian Third Party Logistics Market
        1. Market Overview
                1. Market Overview
                2. Market Segmentation
                3. Industry Challenges
                4. Market Drivers
                5. Market Restraints
        2. Forecasts and Trends
                1. Revenue Forecasts
                2. Competitive Analysis

4. Strategic Analysis of the Malaysian Third Party Logistics Market
        1. Market Overview
                1. Market Overview
                2. Market Segmentation
                3. Industry Challenges
                4. Market Drivers
                5. Market Restraints
        2. Forecasts and Trends
                1. Revenue Forecasts
                2. Competitive Analysis

5. Strategic Analysis of the Thailand Third Party Logistics Market
        1. Market Overview
                1. Market Overview
                2. Market Segmentation
                3. Industry Challenges
                4. Market Drivers
                5. Market Restraints
        2. Forecasts and Trends
                1. Revenue Forecasts
                2. Competitive Analysis

6. Database of Key Industry Participants
        1. Key Industry Participants in the Indonesian Third Party Logistics Market
                1. Market Participants
        2. Key Industry Participants in the Malaysian Third Party Logistics Market
                1. Market Participants
        3. Key Industry Participants in the Thailand Third Party Logistics Market
                1. Market Participants
        4. Key End User Industries
                1. Comparative Tabulation of Trade Figures

7. Decision Support Database
        1. Comparative Tabulation of Infrastructural and Trade Figures
                1. Tabulation of Infrastructural Figures
                2. Tabulation of Trade Figures
                3. Tabulation of Industrial Figures

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Strategic Analysis of the ASEAN 3 Third Party Logistics Markets

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