Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam are leading economies in a group known as the Association of Southeast Asian Nations (ASEAN). Although these countries are at vastly different states of development, all share immense growth potential. They and the other less developed members of the bloc – Brunei, Cambodia, Laos and Myanmar – collectively comprise the world’s seventh largest economy, with a population larger than that of North America or the European Union and with a workforce second in size only to China and India.
Southeast Asia is home to nearly 650 million people. Many of them belong to a growing middle-class that is expected to reach more than 400 million in 2020, over twice the size in 2012. They are young and tech-savvy with greater disposable income, creating an attractive demographic and increasingly digital dividend.
Some big challenges remain, however. Among them is an online payment scene that is still weak and fragmented in most of the bloc. According to the e-Conomy SEA report, less than one in every two internet users has adopted digital payment services.
Transport logistics is another complex issue. Indonesia alone is a nation of 17,000 islands sprinkled across an area bigger than the European Union, requiring multi-modes of transportation. Despite its many geographical barriers, however, the country has made huge improvements over the past few years – so much so that it has jumped 17 positions to 46th place out of 168 countries covered in the World Bank’s biannual Logistics Performance Index.
Several industry players have come forward with their own solutions. E-commerce giant Lazadavhas built up its own warehouse network and delivery operations in Indonesia to ensure timely deliveries. Shipper, a tech startup, has created a first-mile logistics aggregator platform that offers pick-up and delivery services. And Waresix, a Jakarta-based start-up, provides an on-demand warehouse service through its software.
Nippon Express and Deutsche Post DHL Group are among the logistics companies expanding in the region to meet the growing needs of manufacturers and e-retailers. The winning players in booming Southeast Asia will be those with the capacity to move products reliably and quickly, according to Ben Xia, Executive Vice President and Head of APAC of the Interroll Group. “When the number of parcels exceeds a certain amount, say 5,000 per day, workers simply can’t keep up, as we’re observing in the region,” he says. “Add to that the same-day delivery service that Chinese consumers now expect – it’s spreading into Southeast Asia. For all of this, you need automated systems.”
Not surprisingly, the millennials are the biggest adopters of e-commerce in the region. Valued at $38 billion, up from $5.5 billion in 2015, the sector is on track to hit $150 billion by 2025, according to the e-Conomy SEA report.
Such flourishing online purchasing has, in turn, created rising demand for logistics services. The amount of deliveries across Southeast Asia has grown from about 800,000 per day in 2015 to more than 3 million in 2018, according to the TMO Group. Much of that activity is in Indonesia, the region’s biggest e-commerce market, where courier JNE alone delivers on average 4 million parcels per month.
The surge in deliveries is also creating the need for greater warehouse space. CBRE Research has calculated that every $1 billion in e-commerce sales requires around 1.25 million square feet of distribution space.
Interroll has been operating in Southeast Asia since 1988 when the company opened a plant in Singapore. Expansion in the region continued in 1993 with a production facility in Thailand, in the greater Bangkok metropolitan area. Responding to growing demand, the company relocated its Thai production operations in 2019 to a larger location about 35 miles outside Bangkok. The new facility manufactures Roller, RollerDrive, Pallet Flow and Drum Motor products. The expansion included a production line for the Modular Conveyor Platform (MCP).
Over the years, Interroll has established local operations in a number of other key Asian markets as well: Japan (2000), China and South Korea (2005), Australia (2008) and a new headquarters for Asia in Shanghai (2014). Demand for the company’s products has also grown substantially in the Philippines, Vietnam, Malaysia and Indonesia.