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Frost & Sullivan Predicts Malaysia's Logistics Revenue to Increase 11.5 % Year-on-Year to RM 121 Billion in 2011 - The Malaysian logistics industry is expected to grow 11.5 per cent to RM121 billion in 2011 as compared to RM108.5 billion a year ago, supported by the country's strong external trade and stable economic outlook, says Frost & Sullivan
Frost & Sullivan Predicts Malaysia's Logistics Revenue to Increase 11.5 % Year-on-Year to RM 121 Billion in 2011

 

NewswireToday - /newswire/ - Kuala Lumpur, Malaysia, 2011/01/25 - The Malaysian logistics industry is expected to grow 11.5 per cent to RM121 billion in 2011 as compared to RM108.5 billion a year ago, supported by the country's strong external trade and stable economic outlook, says Frost & Sullivan.

   
 
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Mr. Gopal R, Vice President, Transportation & Logistics Practice, Asia Pacific and Country Head for Malaysia at Frost & Sullivan said that external trade for Malaysia is expected to increase 10 per cent year-on-year to RM1.28 trillion in 2011 as compared to RM1.16 trillion in 2010.

"High technology and capital intensive projects under the 10th Malaysian Plan and Economic Transformation Program (ETP) are expected to create opportunities for the nation's logistics market, " he predicts, adding that foreign direct investments are likely to flow into the electronics & electrical, oil & gas, healthcare and solar-related industries.

In 2010, the third party logistics market (transportation, storage and courier services) were valued at RM 27.5 billion, while in-house logistics costs/spending in the Malaysian economy - manufacturing, mining, agriculture, telecommunications, construction, energy, finance, trade and government services- were valued at RM81 billion.

The Malaysian logistics industry is forecast to grow at a compound annual growth rate (CAGR) of 12.6 per cent to reach RM196.5 billion in 2015, Mr. Gopal said.

He said that the investment-friendly environment created by the Malaysian Government will also boost subsectors of the logistics industry such as import-export forwarding, shipping and airfreight related businesses.

However, he cautioned that growth in the Malaysian logistics industry could be hampered by the lack of skilled logistics professionals, fragmented nature of the logistics sector and lack of emphasis in value-added services by logistics service providers.

Mr. Gopal forecasts Malaysia's total cargo volumes to increase 12.4 per cent to 498.4 million tonnes in 2011 as compared to 443.4 million tonnes in 2010. "Sea-freight is the most popular mode of transport for cargoes in Malaysia, handling more than 95 per cent of total volumes in 2010, " he said.

Mr. Gopal said that cargo volume by sea is expected to grow 12.5 per cent to 493.7 million tonnes in 2011. He added that Port Klang, Malaysia's busiest container port, contributed 37.8 per cent of total sea throughput in 2010 while Port of Tanjung Pelepas contributed 22 per cent.

He also predicts cargo volume by air to grow 12 per cent to 1.03 million tonnes in 2011 as compared to 918,100 tonnes. He said that Kuala Lumpur International Airport contributed about 73 per cent to the total cargo volume by air in the country. Meanwhile, cargo volume by rail is expected to increase 3.7 per cent to 5.5 million tonnes in 2011.

Mr. Gopal said that classic outsourcing activities such as transportation, freight forwarding and warehousing are the most sought after logistics activities in Malaysia in 2010.

"Value-added services such as packing & labeling, reverse logistics, quality assurance & control and information management are the top 10 logistics functions outsourced in Malaysia in 2010, " he added.

Mr. Gopal said that currently, the use of technology in the logistics industry is mainly focused on warehousing, bar coding and transportation management systems. "The adoption of visibility tools such as RFID (radio-frequency identification) or smart labeling system and GPS (global positioning systems) or vehicle tracking systems are still at its infancy stage with an average of 35 per cent using the technologies, " he added.

He said that based on a survey conducted by Frost & Sullivan in 2010, logistics end-users in FMCG, automotive, retail, pharmaceutical, consumer goods and high tech electronics sector, said they have plans to increase the usage of technology especially in visibility tools such as RFID or smart labeling, bar coding systems and GPS or vehicle tracking systems in the near future.

Mr. Gopal said that for third party logistics service providers to be successful in Malaysia, they need to be able to offer diverse logistics services with well built infrastructure and competitive pricing.

"Logistics end-users surveyed said the reasons that prompted them to engage with more than one logistics service providers or change logistics service providers were due to limited service offering, increase in cost and limited geographical coverage, " he added.

He also said that logistics end-users are looking for comprehensive value-added services with focus on long term relationship with their logistics service providers.

"End-users values flexibility and value additions in their services without additional costs and are likely to move away from ad-hoc services, " he said, advising logistics service providers to expand its range of services and focus on quality to attract more clients.

Mr. Gopal said that green logistics practices and the development of halal logistics are likely to help Malaysia to transform itself into a regional logistics hub in the future.

"The highly recognized halal certification system in Malaysia has given the country an advantage to develop and position itself as the halal logistics hub in the region, " he added.

He also said that Malaysia has the necessary infrastructure such as halal logistics parks and warehouses at its ports, which will further aid the growth of the halal logistics sector.

Mr. Gopal said that logistics service providers in Malaysia have also built green warehouses, incorporating environmentally-friendly features such as optimizing the usage of natural light, advanced air circulation to maintain a constant warehouse temperature and a systematic rain harvest systems.

He also predicts that the transportation of green and renewable products such as solar panels will increase once the feed-in-tariff scheme is implemented in Malaysia.

Under a feed-in tariff scheme, power utilities are required to purchase renewable energy at a fixed premium price for a specific duration.

Mr. Gopal expects the logistics industry to consolidate due to the fragmented nature of the sector. He added that major logistics service providers are likely to increase their market share by mergers and acquisitions.

"The fragmented nature of the industry and unhealthy price wars also led to inconsistency of the quality of logistics services in Malaysia, " he said.

About Frost & Sullivan

Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents.

 
 
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Frost & Sullivan Predicts Malaysia's Logistics Revenue to Increase 11.5 % Year-on-Year to RM 121 Billion in 2011

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