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Building Trust in Cross-border Logistics through a Tech-enabled, Asset Light Model

Junkai Ng

Building Trust in Cross-border Logistics through a Tech-enabled, Asset Light Model

I’m really grateful to have the chance to speak at this year’s Leaders in Logistics conference. The topic of ‘Innovation in Post and Parcel Delivery’ is particularly pertinent in today’s fast-paced logistics and eCommerce industries. It helps to take stock of where these industries are today and where they are heading to.

In Google and Temasek’s1 2019 report, the six major ASEAN economies’ eCommerce gross merchandise value is expected to be USD 39 billion in 2019, and grow to USD 153 billion in 2025, a compound annual growth rate of more than 21.53 per cent. 40 per cent of this eCommerce market will be cross-border, according to a report by Mordor Intelligence. Indonesia in particular will be a major contributor to the eCommerce market.

But there’s a catch. In most parts of the world, eCommerce demand undergoes systematic cyclicality with the year’s fourth quarter having the highest demand compared to the other three quarters. This naturally has a spill over effect on logistics companies that are serving a market that is fragmented makes heavy asset ownership a major challenge.

On one hand, companies in a high growth phase can attempt to build capacity for peak period demand in Q4. However, bearing cyclical risk, the remaining three quarters sees most of the capacity struggling to be fully utilised and continuously depreciating during these periods. On the other hand, attempts to optimise and fully utilise capacity for most of the year, companies often find themselves losing out revenue when demand peaks during Q4, since they lose out in coverage, delivery capacity and service quality.

The issue of high end-to-end costs for cross-border shipments unsurprisingly ties in with two other major pains of cross-border deliveries in Southeast Asia – coverage and customs.

Southeast Asia is known for its diversity. Diverse cultures, diverse food, but more importantly, in this case, diverse geography. These include massive archipelagos like Indonesia and The Philippines, meaning that getting adequate shipping coverage in this region is challenging.

What we usually see is that businesses who want to solve this issue usually need to work with multiple partners in different countries to get good coverage. And all this hasn’t even factored in the varied customs regulations and documentation just to get your products across countries’ borders in this region.

Traditional methods of integrating one’s supply chain with multiple partners could be time-consuming and labour intensive, such as countless man-hours spent on calls and emails between different shipping partners.

Keeping Things Modular, Flexible and Scalable

Many companies opt to outsource their logistics operations to save themselves the headache of managing their supply chain and infrastructure assets. That provides a great opportunity for technology to bridge the gaps between maintaining high service quality and operational efficiency, with high maintenance costs and control. 

To bridge this gap, we provide a 4PL logistics solution that brings on board shipping partners who specialise in different stages of the delivery process in hundreds of different geographies. Through a single access points, we are able to provide end to end services and maximum geographical coverage at the most affordable rates.

Leveraging data for our optimisation engine to build trust in the industry

If we can find a way to create continuous improvement to our logistics systems, we can build greater trust in the industry.

You can’t improve what you can’t measure, and trust is built on a good track record of delivering what’s been promised. Through a tech-powered platform, data such as high-traffic lanes, volumes, the percentage of shipments meeting service level agreements and more can be collected.

This data can be leveraged to create a positive feedback loop of greater efficiency. One instance of this is data can help the development of best-in-class SLA’s shortening the time it takes to fulfil cross-border deliveries in the region. For example, by looking at delivery trends and seasonal changes we can more accurately forecast delivery times for different regions, reducing delivery delays and staying within SLAs. With greater efficiency in the region’s logistics comes greater trust from those who use these logistics services.

The asset-light model in action

We are firm believers of growing with our clients, and that means scaling reliably with their logistics requirements and complexity. This can take the form of evolving from a straightforward dropshipping model to a regional cross-docking solution that caters specifically to different countries’ unique operating models through a single operating system. We pride ourselves in providing a fluid and customizable solution for enterprises of all sizes, covering multiple modes of transportation across Southeast Asia.

Technology has mostly been seen as a force that disrupts industries, but it also has the potential to be a force for collaboration. It’s one thing to build a platform that combines the capabilities of best-in-class shipping partners in the region, it’s another to continuously help improve them as well by leveraging the data generated by the entire system. And through optimising the whole system, we can start building trust in Southeast Asia’s cross-border logistics.

If you’re interested in our work in Southeast Asia, reach out to us here!

References

  1. Temasek: Google, Temasek, Bain & Company e-Conomy SEA 2019 Report
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