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Nomura study: ASEAN last-mile courier revenue to double in three years

JAPANESE Nomura investment bank has published a report citing opportunities for 3PLs in South East Asia in last mile deliveries where courier revenues are expected to double by 2020, reports Lloyd's Loading List.

3PLs and last-mile couriers will be the big winners in logistics demand resulting from rapid e-commerce growth in South East Asia, the report said.

With online shopping surging, Nomura estimates ASEAN online retail sales - both C2C and B2C - will grow 34 per cent a year to hit US$36.1 billion by 2020.

The report also concludes that ASEAN's B2C retail market is still at a nascent stage compared to Japan and China and has plenty of e-commerce potential.

"While ASEAN's post and parcel numbers are nowhere near the billions of postal mails and parcels handled in Japan and the US, they suggest a similar story," said the report.

"With surging internet and smartphone penetration and higher online spending propensity, we foresee ASEAN's parcel [market] size to see a CAGR [compound annual growth rate] of 23 per cent by 2020, from 396 million to 1,104 million.

"We estimate both Vietnam and Philippines will see the highest growth rates over the next five years, within ASEAN," said the study.

Most of the world's leading couriers and 3PLs have been expanding in South East Asia in recent years in a bid to access the region's fast-growing consumer markets.

Global integrators will face strong competition from Asian companies already boasting a strong foothold in ASEAN, most notably SingPost, LBC Express, GD Express and Pos Malaysia, according to Nomura.

"The revenue opportunity for courier players should double to US$7.54 billion by 2020, from the current US$3.69 billion in 2015 - a 15 per cent a year over 2015-20," reported Nomura.

The main driver of revenue growth would be online shopping, with Nomura forecasting that e-commerce shipment revenues would translate to 7-8 per cent of total online retail sales.

"On the improved economies of scale from the higher volumes handled, we expect the incremental earnings for courier players to grow," said the report.

"Although we expect all last-mile players to benefit from this growing revenue potential, we believe cost efficiencies will prevail to win sizeable business. Those with economies of scale, which can effectively enable them to compete on a low-cost structure, will continue to win sizeable market share over the years to come."

Logistics analysts say rising e-commerce demand in Asia also means growth of heavy freight movements - for example, parts for mobile phones trucked from Vietnam to China for assembly, then forwarded to RDCs, then shipped out by air or truck, leading eventually to last-mile deliveries - with 3PLs in the region emphasising how e-commerce will increase total transport demand in Asia.