AMID the imposition of current total lockdowns to contain the spread of COVID-19, the transport and logistics sector is ironically thriving with exponential volume growth in sight.
Zooming in on seaport operators, AmResearch expects the players to benefit from growing containerised cargo movements worldwide, supported by:
- Recovery in demand for consumer and industrial goods such as apparel, accessories, machinery parts and automotive parts in the West;
- Re-stocking activities by big retailers (such as Amazon and Walmart);
- Increased semiconductor production in response to the acute chip shortages worldwide (especially in the automotive industry).
“Looking beyond the pandemic, the outlook for the port sector in the region (Malaysia included) is resilient, underpinned by global trade and investments in the manufacturing sector that generate tremendous inbound (feedstock) and outbound (finished product) throughput for ports,” observed the research house in a sector update.
“There have been significant relocations of the manufacturing base by multinational companies out of China to the region due to the rising labour and land costs, exacerbated by the US-China trade war.”
As for the parcel delivery segment, AmResearch expects industry players to ride on the exponential volume growth as the pandemic has altered consumers’ shopping habit to a combination of visiting physical stores and browsing online channels.
“We believe consumers have permanently shifted part of their shopping to online, having experienced the convenience and price competitiveness without a significant compromise on product quality,” noted the research house.
“Meanwhile, the moratorium on new courier service licences will prevent the already crowded playing field from growing bigger.”
AmResearch further foresees existing players gravitating towards the crowd-sourcing model (ie outsourcing the last-mile delivery fulfillment to third-party contractors) and the asset-sharing model introduced under the National Courier Accelerator Plan (PAKEJ) as a step in the right direction.”
“Under the crowd-sourcing model, it allows for flexibility in terms of accessibility to additional capacity during the peak period without having to carry the fixed overheads during the off-peak period, while the asset sharing model optimises players’ capex plans,” the research house pointed out.
“The crowd sourcing model also helps groom self-employed entrepreneurs in the gig economy.”
As for the air travel industry, AmResearch expects prospects to remain unexciting even as international borders are poised to re-open with more economies in the world reaching herd immunity on the back of the robust vaccine roll-out.
On this note, the Malaysian Aviation Commission (MAVCOM) has projected air passenger traffic in Malaysia to contract between 22.9% and 29.1% year-on-year (yoy) in line with the research house’s assumption of 20% contraction yoy.
“The airlines and airport operators see opportunities in increased demand for freight services and the survival instinct has prompted them to innovate and develop new income stream while containing their cost to a bare minimum,” added AmResearch. – July 14, 2021
