DHL Global Forwarding (DHL), the freight specialist division of DHL Group, said that road freight would continue to play an increasingly important role in Southeast Asia as companies strive to build more resilient supply chains.
In a new white paper titled "Highway to the Future: Navigating the Road Freight Opportunities in Southeast Asia," DHL outlined the role of road freight as a single multimodal solution as businesses seek more agility and flexibility in transportation modes for their shipments.
"Over the last few years, we have seen strong export growth in Vietnam, Thailand, and Malaysia," said Thomas Tieber, CEO of DHL Global Forwarding Southeast Asia and South Pacific.
He noted that Vietnam is currently Southeast Asia's largest exporter, while Malaysia has strengthened its position as a semiconductor hub.
Meanwhile, Thailand has made great strides in automobility, particularly in the electric vehicles (EV) sector. The new DHL International Multimodal Hub at Suvarnabhumi Airport Free Zone 3 is also set to position Thailand as a regional trade hub.
Tieber noted that the hub will simplify the process of shipping goods through multiple modes of transport, making the country even more appealing to companies looking to expand or relocate parts of their production to Southeast Asia.
"While our last whitepaper focused on the emerging use of road freight during the pandemic, our new whitepaper highlights why it remains important even as we see air and ocean freight normalize globally," he added.
The report noted that countries such as Vietnam, Thailand, Malaysia, and Singapore are set to benefit, especially with their connectivity options, as trade can happen through either road, air, or ocean.
These countries also have favourable trade agreements with major economies globally, DHL said.
Digitalization, infrastructure to drive road freight forward
DHL said the growing importance of building a resilient supply chain has called for greater agility and transparency with real-time visibility and insights into shipment statuses and road conditions amidst concerns about security, safety, and stability.
It noted that Southeast Asia's advanced cellular networks have enabled real-time monitoring of road freight via sensors and GPS units, providing customers with accurate predictions of cargo location and arrival times.
While global companies diversify their supply chains, Chinese companies are also expanding their manufacturing base in the region. According to McKinsey, in 2023, China's investment in Southeast Asia reached US$24 billion.
DHL said these investments highlight the region's growing importance as a global manufacturing hub, especially with markets such as Cambodia, Laos, Thailand and Vietnam.
These countries have announced or implemented improvements or expansions of transportation infrastructure that are vital for logistics.
"These investments into making rail or road infrastructure better in Southeast Asia means that it is often cheaper and faster than air to ship from China into Southeast Asia. Road freight plays an important role in a multimodal solution," said Bruno Selmoni, VP, Head of Road Freight and Multimodal Solutions, Southeast Asia, DHL Global Forwarding.
"Moving goods through a combination of transport modes can result in faster Door-to-Door (DTD) lead time compared to ocean freight, with substantially lower cost than air freight," he added.
Government policies boost cross-border freight
Meanwhile, DHL said government initiatives in the Southeast Asia region have provided opportunities to streamline shipments across borders. Countries within the region are also attempting to resolve border issues, collaborate on improving infrastructure, and streamline procedures.
Initiatives, such as ASEAN's Customs Transit System (ACTS), aim to streamline processes and reduce paperwork further. In 2023, the Customs Administrations of all 10 ASEAN Member States collectively endorsed the ASEAN Authorized Economic Operator Mutual Recognition Arrangement (AAMRA) — which establishes a consistent and transparent trading environment within the member states.
DHL also noted the growing shift to sustainable road freight in Asia.
Citing a report by International Data Corporation, DHL pointed out that 45% of Asian-based organizations will operationalize integrated sustainability in the supply chain by 2026.
Freight transportation, including trucks, planes, ships, and trains, contributes approximately 8% of global greenhouse emissions.
However, achieving this requires aligned efforts from shippers, vehicle manufacturers and government roadmaps.
"Governments need to set the appropriate policies and infrastructure, automotive manufacturers need to give viable commercial options, and logistics players like us need to adopt these solutions," Selmoni said.
For instance, the statement said DHL Global Forwarding has recently launched a fleet of electric vehicles in Bangkok, Thailand, aimed at reducing CO2 emissions by 85,000 kilograms each year. These vehicles are expected to travel over 28,000 kilometres each month and deliver around 1,000 tons of shipments to customers.
"The discussion on road freight is now shifting away from its relevance and cost, but to other challenges on infrastructure and policies which will smoothen the road ahead. Yet, at the same time, many of our customers recognize road freight as a key component of their multimodal strategy. This is why it is essential for logistics firms, including DHL, to adapt and anticipate regional trends proactively," Tieber added.
