Facing obstacles to expansion globally, the logistics industry is moving east, evidenced by major investments in port infrastructure developments in Asia.
Boyden's perspectives on the news and trends that are transforming industries
Growing demand is putting pressure on ports worldwide to manage more cargo with less space while also addressing environmental concerns. Their response is reshaping the global logistics industry, making it leaner and more high-tech, and shifting its major hubs to Asia. This is exemplified by PSA Tuas Mega Port in Singapore. It opened in 2022, and by completion will be the largest container port in the world, according to its owner, Singaporean port operator PSA International. It will also be fully automated, and sits mostly on reclaimed land.
It is becoming increasingly difficult to expand seaports, as there is not enough space in appropriate locations, and developments are being met with opposition, especially from environmentalists. Some operators are instead focusing on improving efficiency by streamlining their supply chains, mainly through acquisitions. Last year PSA acquired BDP International, a U.S.-based global logistics firm with a specialty in supply chain management. Emirati port operator DP World has purchased two supply chain companies in as many years.
Organizations are taking various approaches to the problem of land scarcity. One is land reclamation, which is expensive and damaging to the environment. Another option is to expand vertically, though this means shuffling through stacked containers to get to the right one. This can take more time than moving them around the port and onto vessels, says Mathias Dobner, CEO of BoxBay. His company developed an automated container handling system which addresses this problem. At Jebel Ali Port in Dubai, it is used to stack up to 11 containers.
The need to develop land portside can be overcome by locating operations inland at “dry ports”, which are gaining popularity, particularly in Southeast Asia. They allow operators to store goods in containers elsewhere and move them to the port when ships arrive for loading. The Economist reports that in 2016, PSA formed a joint venture with Chinese state-owned rail operators to run a network of dry ports located at inland rail terminals in China. Last year, International Finance Corporation, the private sector arm of the World Bank, along with Singaporean logistics firm YCH Group and Vietnamese conglomerate T&T Group, agreed to develop an inland container depot in Vietnam.
Along with investments in maritime port infrastructure, the proliferation of dry ports in Asia denotes the industry’s eastward shift. For decades most Asian trade was outbound. Now, Asian countries are big markets and nearly 60% of exports flow within the region. Money is also being poured into warehouses for storage, distribution and fulfilment in the region, driven by anticipated growth in ecommerce. Shipping giants such as Mediterranean Shipping Company (MSC) and Maersk are also developing post infrastructure in Asia and expanding intra-Asian services. These developments bring broader global trends in production and consumption to light.