Global connections
The proximity to hubs such as Hong Kong, Taipei, Seoul and Tokyo, however, give the region another selling point: access to global markets.
Speaking in defense of Hong Kong’s third runway plan, DHL Express Asia Pacific CEO Jerry Hsu described how the express carrier felt the need to expand its air network across Southeast Asia to boost their connectivity and shorten transit times in response to the surge in e-commerce traffic. “We have launched a new intra-Asia flight that connects Bangkok, Hanoi and Hong Kong five times per week and increased the frequency of a service connecting Penang, Ho Chi Minh City and Hong Kong from five to six days per week, thereby increasing capacity on the route by 20 percent,” he said.
Vietnamese exports to the United States are some of the key issues being discussed in the proposed Trans-Pacific Partnership (TPP), which would remove trade barriers for more than a dozen Pacific Rim countries and, at press time, was still being hotly debated. “There is potential growth opportunity in exporting frozen seafood, as well as fresh fruits and vegetables, from Vietnam,” Castle said.
According to Castle, the TPP, if ratified, would have a huge positive effect on the Vietnamese economy, since it would slash major trade protections against its exports to the U.S., one of Vietnam’s largest trading partners. Annual seafood shipments to the U.S. are worth US$1.5 billion, or 22 percent of Vietnam’s total seafood exports.
“In Southeast Asia, declining air freight yields and growing competition are some of the challenges that freight forwarders face,” Damgaard said. “Despite the growth opportunities in Asia, the air cargo industry continues to face a tough operating environment due to the global economic uncertainty and reduced demand for airfreight.”
Changing trade patterns are also causing challenges in Southeast Asia, he added. “Where before, most production was for export to the developed markets, an increasing proportion is now staying within Asia. This means that forwarders also have to provide solutions at a [national] and regional level. Increasing levels of income and the rise of a consuming middle-class are driving domestic consumption, and forwarders need to overcome the challenges that come with domestic distribution in countries such as Indonesia and the Philippines.”
Who’ll be next?
Just as trading patterns can change, so can labor patterns. Right now, Vietnam may seem like the world’s cheap labor capital, but forwarders would be wise to pay attention to what the workers say. At that very same Pou Chen Group factory in Ho Chi Minh City, a massive strike was held last spring – an action practically unheard of in the tightly controlled country – to protest a possible change in plans.
The strike was resolved peacefully after six days and the workers were reassured that a new law would not affect their retirement payments. But if labor unrest spreads to the other mega-factories, another “It Country” may be needed to fuel the massive global logistics engine. And there are only so many emerging countries left untapped.
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