Market Trends of ASEAN Warehousing and Distribution Logistics Industry
This section covers the major market trends shaping the ASEAN Warehousing & Distribution Logistics Market according to our research experts:
Increase in Warehousing Space in Thailand
Warehouses are more than just storage rooms as it houses different value-adding operations such as just-in-time packing, assembly, and product customization. Over the last five years, Thailand has experienced a phenomenal e-commerce surge. An e-commerce warehouse cluster may be found between 15 and 23 kilometers along Bang Na-Trat Road in Bangkok. Thailand has witnessed a tremendous retail market expansion in recent years, with a steady increase in organized retail or modern shopping all across the country. The improving level of disposable income in Thailand, the country's large young population, and the thriving tourism industry have all attracted a slew of foreign brands, driving up demand for warehousing services.
In H1 2021, Thailand's total supply of ready-built warehouses climbed by 2.5 percent Y-o-Y to 4.65 million square meters. In this half-year (H1 2021), new projects accounted for only 12% of the total supply added, showing that developers largely expanded within existing projects. Unless they obtain obvious and strong interest from tenants ahead of time, logistics property players stay dedicated to maintaining and improving current stock performance over initiating new initiatives. As a result, speculative construction is limited on the market.
In June 2020, Volvo Cars Thailand in collaboration with the WHA group invested over USD 27.9 million to officially launch an innovative new dedicated Volvo warehouse for the first time in Thailand. This warehouse is spread over an area of 23,331 square meter and is set to become Volvo's one-stop hub for the ASEAN region.
E-commerce Growth in ASEAN region is Driving the Market
Malaysia's industrial market has been steadily growing in recent years, owing to high e-commerce penetration, which has resulted in increased storage space requirements to accommodate the surge in last-mile delivery and the structural move towards omnichannel retailing. International retailers are progressively developing warehouses in Malaysia to improve delivery times, customer service, and product availability. IKEA, Nestlé, Tesco, Zalora, and Lazada are among the global firms investing in Malaysian distribution hubs to grow their e-commerce footprint in the country.
It could be anticipated that the ASEAN region will continue to lead the world in e-commerce through the forecast period. Early in 2021, approximately 60% of all online retail sales worldwide were made in Asia, with Chinese consumers alone accounting for more than a third of all online purchases worldwide. Since the start of the pandemic, online shopping has experienced phenomenal development, with an additional 70 million digital consumers added in Southeast Asia alone. Retailers, both large and small, are now better prepared to use digitization for success and not simply survival after vacillating between lockdowns and negotiating the difficulties of purchasing in the pandemic era.
COVID-19 has accelerated the growth in e-retailing businesses in both the warehousing and logistics sectors, and investors are actively looking at this strong asset class as an all-time favourite investment. Warehousing continues to be supported by the logistics sector and storage needs, and it is expected to see a strong pickup as e-retailing businesses continue to improve further. Further, brands continue to leverage the infrastructure and capabilities of local and international e-commerce players while driving the market in the ASEAN region.
