Outsourcing of Business Logistics Growing in Asia

Outsourcing of logistics began in the United States and Europe, where it is now prevalent, with many organizations turning to dedicated third-party logistics providers that offer better costs control and more efficient customer response, alongside shorter delivery times, to match the required product cycle. They are able to develop customer-specific logistics solutions that meet the requirements of individual customers.

In the US today, approximately 400 of the 500 largest manufacturers (or 80%) use third-party logistics. This represents tremendous growth in the outsourcing of logistics services from, say, a decade ago when fewer than 185 of the largest manufacturers engaged third-party logistics providers.

In Asia, the outsourcing of logistics is still in its infancy, but the trend is definitely beginning to take shape. In the forefront of this new wave are multinational companies (MNCs), with larger local manufacturers close on their heels. Particularly in Malaysia, many organisations have begun to utilise third-party experts to manage their storage, processing and distribution activities.

What is interesting about logistics outsourcing in Asia is the growth of a niche sector, namely that of the provision of temperature-controlled logistics services. This caters mainly to products such as perishables that require relatively low and stable temperature throughout the supply chain – from the point of source to the end customer. By maintaining “no break in the cold chain”, product freshness is assured and product life extended.

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