Dramatic growth of global trade and logistics hubs: CBRE

28 Nov '15

5 min read

But strategic routes are not immune to trade polices.

“As governments continue to draft new trade agreements and amend labor laws, new trade routes are becoming more accessible and more integrally connected with existing strategic routes,” said Dr Henry Chin, Head of Research, CBRE Asia Pacific. “The Trans-Pacific Partnership (TPP) is a potential trade agreement that will have drastic effects on global trade routes and manufacturing demand in Asia.”

As living standards around the world continue to rise, new markets and customer segments are opening to global suppliers. Rapid population and economic growth around the world, especially in emerging Asia markets, has altered the shape of consumption and the distribution networks in place to serve these populations. The most notable transformation of the past few decades has been the rise of the middle class in the emerging markets; the major driving force behind this growth is in Asia, where the middle class is expected to grow six-fold, from 525 million in 2009 to 3.3 billion in 2030.

“The new consumer class in emerging markets like India is creating opportunities for logistics development. This trend has also seen express transportation companies taking up spaces exclusively to cater to online retailers, indicating the prominence of e-commerce as a dominant driver of logistics demand across the country,” said Jasmine Singh, Head of Industrial & Logistics Services – India, CBRE South Asia.

Larger trends in the global supply chain can shape the emergence of global hubs. In Asia, low-end manufacturing—such as garment and textiles production and electronics component assembly—has steadily been moving from Southern China to Western China and Southeast Asia. Southern China, encompassing the Pearl River Delta, has traditionally been the light industrial manufacturing center of the world, however, as wages continue to rise and China attempts to move up the manufacturing value chain, there has been a shift to more sophisticated heavy industry manufacturing.

“E-commerce continues to be one of the main driving factors for modern logistics developments and networks across the region. With a trickle-down effect to inventory management, this leads to changes in the global supply chain network,” said Dennis Yeo, Regional Head, Industrial & Logistics Services, CBRE Asia. “Speed-to-market is more important than ever. The service demands brought about by e-commerce—for example, shorter delivery times to consumers—has changed the entire retail supply chain of getting goods to consumers, including regional distribution strategies. The technical ability of locations and buildings to support the ever-increasing demands for both scale and speed of output is an ever-more important determinant of market position.”

In Asia, the e-commerce and e-tailing market has been particularly strong, with e-commerce upending the traditional brick-and-mortar distribution networks, forcing retailers and third-party logistics firms to adapt to an increasingly demanding consumer. (SH)

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