What's keeping logistics operators upbeat?

November 18, 2015 17:27
E-commerce flows between China and Russia are expected to keep expanding after a cooperation agreement between their postal services. Photo : HKTDC

Logistics operators serving China face two major headwinds.

One is the slowing mainland economy; the other is rising costs that are forcing more manufacturers to shift their production lines to other parts of Asia.

Samsung and Microsoft were previously reported to be shifting their handset making operations to Vietnam.

Taiwanese touchscreen manufacturer Wintek closed its two factories in Dongguan last year.

The good news is Chinese consumers are spending more. Their appetite for global brands is increasing.

The jump in cross-border shopping on Alibaba’s platforms on Singles’ Day last week is the latest evidence of this emerging trend.

Hopefully, the growth in logistics demand from China’s import trade is going to make up for the softness in exports.

Another consumption trend -- shortening of product life cycle -- will provide some tailwind to the aviation sector in particular.

Against such backdrop, vendors typically want to avoid getting stuck with unwanted, outdated inventory when new models hit the market.

As companies tend to order in small quantities, ship them to the market quickly and replenish their stocks at a higher frequency, this pattern works to the advantage of air cargo operators.

Much lower jet fuel prices are also going to boost the aviation sector’s bottom line.

The e-shopping boom across China, India and Russia is another bright spot.

Russian Post said parcels sent from China has shown robust gain in the first half.

Bilateral e-commerce between Russia and China is tipped to reach US$36 billion this year and expected to grow at an annual rate of 30 percent in the next few years.

-- Contact us at [email protected]


EJ Insight writer