Logistics will transform into technology to meet new demands.

Asia’s logistics sector is booming. And it’s technology — whether it’s used to measure global shipping lines or plan customer deliveries — that’s helping to fuel growth at companies large and small.

From shipping teams to warehouse owners, logistics businesses are often slow to embrace digitalization. But global supply chain disruptions during the pandemic have forced a rethink as companies turn to technology-based solutions for sourcing and shipping goods.

Nowhere is this more apparent than in Asia, where the rise of ecommerce sales and Western uncertainty around Chinese suppliers is putting pressure on logistics teams.

Online sales in Asia will reach $3tn by 2021, according to research group Insider Intelligence. China is by far the largest market, but sales are expanding rapidly in countries around the world and logistics startups are increasing to meet demand.

Singaporean startup uParcel launched in 2015. In 2015, it launched a crowdsourcing model for drivers, using AI to match locations and deliveries. In the year With an annual revenue growth rate of 64 percent between 2018 and 2021, it is ranked among the fastest-growing companies in Asia-Pacific this year by FT/Statista.

Co-founder and chief operating officer Wee Leong Ng said high demand for online supplies meant his company struggled to fulfill orders at peak times. He often couldn’t find drivers and had to deliver the packages himself — “but doing that made me want to build better technologies,” he says.

The startup, which focuses on same-day delivery for goods, has expanded to Malaysia and plans to launch in India this year, according to Leong Ng.

Growth in the region’s logistics industry is driven by new technologies to map shipping routes, track inventory, operate warehouse robots and manage fleets, analysts say.

According to logistics data provider Mordor Intelligence, Asia’s $231.2 billion contract logistics market is expected to grow at a compound annual growth rate of 5 percent between 2019 and 2028.

“All the big logistics companies are giving high volume [of cash] Vicky Kekarovska, research manager at Transport Intelligence, a logistics consultancy based in the UK, to digitization because of the need for visibility. [of company operations] It has increased pressure on logistics companies to invest in real-time visibility.

Tracking shipments and operations for the automotive sector, one of the largest users of logistics teams worldwide.

Logistics operations must adapt as industry trends require product shifts, including a shift to electric vehicles and increased exports from China.

“All supply chains that are structured and structured in a certain way – all logistics services – now have to be rethought and restructured,” said Tim Foster, a logistics consultant at Cushman & Wakefield.

According to Steve Saxon, a partner in McKinsey’s Shenzhen office, logistics companies must be flexible enough to connect new components with manufacturers in new locations. “Japan has a lot of high-tech components in cars and the tires are from Southeast Asia, or at least the tires are,” he said. “People involved in the automotive supply chain are doing well.”

Elsewhere in manufacturing, analysts expect logistics groups to benefit as Western companies find more suppliers outside China amid tensions between Beijing and Washington.

Supply chains will increasingly bypass China, says Kekarovska, and “South-East Asia and India will become more attractive products and destinations.”

“Companies diversify because they have to,” Saxon said. The risk of relying solely on manufacturing in China is very high. But the logistics companies are “playing a little behind the manufacturers,” he said, focusing on the growth of India, Indonesia, Pakistan, Bangladesh and Vietnam.

Saxon also cautions that some of the growth in logistics revenue may be “temporary,” as limited capacity due to the pandemic-induced increase in container cargo volumes has driven up prices.

He argues that companies with “few assets such as container ships and aircraft” have increased revenues and profits, but this is not sustainable.

As ecommerce continues to rise, opportunities remain for logistics teams, Kekarovska says — but companies must “dedicate more resources” to technology to keep up with growth.