Ocean Network Express (ONE) said the intra-Asia market presents “significant opportunities” for trade amid ongoing supply chain challenges in many parts of the world driven by the region’s booming economy, increasing regional integration and growing demand for reliable shipping services.
Louis Tang, managing director and regional head of East Asia, ONE, told Asia Cargo News that the global economy continues to face headwinds as a result of high inflation, interest rates and energy costs – resulting in consumer demand remaining subdued and customer inventory levels adjusting to more conservative levels.
“We observe that period of stronger growth has passed in the post-Covid stage,” he said, adding that the industry has also seen a “noticeable increase in freight rates” since ocean shipping disruptions ensued in the Red Sea region amid continuing attacks of Houthi rebels on commercial vessels.
The ONE executive noted that a slowdown in the global economy affects business performance across a wide range of industries, including the logistics and shipping sectors.
“However, based on the analysis from different sectors, Intra-Asia trade performance still looks positive,” Tang added, noting expectations of ongoing trade diversification worldwide.
ONE said that based on its performance in 2023, the company had seen the overall export volume of China, Japan and South Korea increase, especially in EV-related products.
There was also an uptick in oversized cargo shipments.
“The intra-Asia market presents significant opportunities due to its vibrant economic growth, expanding regional trade, and the increasing demand for efficient and reliable container shipping services within the Asia Pacific region,” Tang told Asia Cargo News.
He noted that deals such as the Regional Comprehensive Economic Partnership (RCEP) and other free trade agreements support further trade development in the Asia Pacific region.
RCEP is a free trade agreement (FTA) between China, Japan, South Korea, Australia, New Zealand and the 10 ASEAN member states of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam — dubbed as the world’s largest free trade deal, accounting for 29% of global trade.
“The RCEP and other free trade agreements have the effect of fostering new trade agreements among Asian countries and enhancing the region’s economic development and regional collaboration,” Tang said.
“The agreements have also encouraged companies to focus more on Asia and Intra-Asia trade when making important supply chain decisions,” Tang added, noting that these agreements will also boost the economic cooperation between North and Southeast Asia in various fields, including manufacturing, technology, agriculture and natural resources.
For ONE, a significant part of its expansion plans in Asia is enhancing its existing services and launching new ones.
Tang said to provide customers with more comprehensive service coverage and improved service quality, ONE and its partners have also enhanced present services and launched new ones in response to Asia’s trade development.
ONE introduced service enhancements to its PS6 (Asia to Pacific North) route, PN2 (Asia to Pacific North), EC1 (Asia to U.S. East Coast), and FE3 (Asia to Europe) in 2023. Last year, it added four new services: KCS2 connecting Korea to Southeast Asia, KCI connecting East Asia to Indonesia, NPI connecting Northeast Asia to Pakistan and India, and JTC connecting Tokyo (Japan) to Taipei/Taichung (Taiwan).
In 2024, ONE will introduce a new service, AP1 (Asia Pacific 1), connecting Asia and the U.S. West Coast. The service is scheduled to launch in late Spring with direct routes from Taipei and Shekou to the U.S. West Coast.
Meanwhile, Tang said the Japanese container transportation and shipping company will stick to providing container liner services despite moves by several ocean carriers to offer end-to-end logistics services through expansion into freight forwarding or air cargo.
“At ONE, we are always looking to provide more comprehensive and efficient ways to support the movement of cargo. In addition to providing connectivity via our global shipping network, we also collaborate with business partners to provide various inland transportation services,” he told Asia Cargo News.
In China, for example, ONE partnered with Guangzhou Port Group Co. to launch a new intermodal rail service, Zhuzhou-Nansha Sea-Rail, in response to customer needs in South China.
“ONE is consistently looking for opportunities to improve our services, expand our capabilities, and meet the evolving needs of our customers,” Tang said.
“To provide seamless logistics services, we recognize the importance of providing end-to-end solutions and integrating various modes of transportation [but] at this stage, ONE’s strategic approach is focused on delivering quality container liner services to our customers,” he added.
The ONE executive said while there has been some industry-wide observation of shifting volume to air cargo in some instances, Tang pointed out that the suitability of shipping versus air transport still depends on various factors like cargo characteristics, urgency, cost considerations, and capacity availability.
Despite unpredictable supply chain challenges, ONE will continue improving its services and optimizing its service network.
“As the market dynamics change, ONE recognizes the importance of adaptability and agility. As we navigate through the challenges in various trade lanes, including the ongoing disruptions, our focus remains on enhancing our service offerings and operational efficiency with the expansion of our core fleet,” Tang told Asia Cargo News.
“In terms of growth, ONE maintains a comprehensive approach that encompasses both intra-Asia operations and other trade lanes,” he added.
By Charlee C. Delavin
Asia Cargo News | Hong Kong