SOUTHEAST
ASIA TRADE
of labour within Asean, to
create a more favourable
business environment.”
CH Robinson’s Castle
agrees that the potential for
growth is being held back.
The experience of many of his
customers has been frustrating
at times because few factory
owners in Vietnam have
much excess capacity. “The
tendency is for manufacturers
to get into a bit of a staring
match,” he says. “They go
to Vietnam from China
and say ‘I want to move my
manufacturing here’. And
the reply is ‘well I’m at 100%
capacity so I am happy to
support you, but we’ll have
to make a big investment
in our production facility
and we need a long-term
contract to make the heavy
capital investments’.” Even
when an agreement is struck
and manufacturers move
production over from China,
it takes time to get everything
up and running.
“Capacity won’t magically
appear overnight so there’s
inevitably a lag period for a lot
of operations,” Castle adds.
Horst points out, too,
that the simplistic belief that
a China-US trade war will
automatically continue to
benefi t countries in Southeast
Asia in the long-term is
questionable. Trump has
called Vietnam the “single
worst abuser of everybody”
in response to the country
allowing Chinese companies
to reroute exports to the US.
In July, the US Department
of Commerce imposed 400%
duties on Vietnamese steel,
arguing that the products
may have origins in other
countries. And, earlier, in
May, the US Treasury added
AN INTERNET-BASED ECONOMY
Research fi rm Temasek has predicted that Southeast Asia’s Internet economy will more than treble in size between 2018 and 2023 to
reach US$240bn. The authors speak about a “drastic market acceleration”. In December 2018, Asean Economic Ministers signed the
Asean agreement on e-commerce to facilitate electronic transactions, as well as accessing and moving data cross-border with ease.
Vietnam, Singapore and Malaysia to its watchlist for currency
manipulation. Future US policies, assuming Trump stays in
power, may extend this protectionist approach.
On a roll
Despite the words of caution, there is little doubt that the air
cargo industry in Southeast Asia is thriving on China’s travails.
Changi has long been a shining example and in April this year,
the airport authorities announced their intention to nearly
double annual cargo handling capacity from 3m to 5.4m tonnes
by 2030, when Terminal 5 opens. The new terminal is part of the
infrastructure developments at Changi East, where the airport
group is creating an industrial zone with automated and datadriven
air freight terminals.
“Our Singapore operations are another major focus for CH
Robinson because it is such a thriving trans-national hub for all
markets, whether inner Asia, the rest of Asean, Oceania, the US
or Europe and India,” states Castle. “Although there’s not a lot
of manufacturing in Singapore, we’re confi dent it will be able to
sustain its rapid growth.”
Singapore will benefi t from the explosion of e-commerce in
Southeast Asia, which is one of the biggest drivers of air cargo
growth there. Changi Airport Group has been collaborating
with agencies like the Economic Development Board,
Enterprise Singapore, Singapore Customs and the seaport
operator PSA to encourage cross-border e-commerce cargo fl ows
into the island republic.
Another driver of air cargo trade in Southeast Asia will be the
Comprehensive Air Transport Agreement (CATA) between the
EU and Asean. There have been eight rounds of negotiations, the
most recent being in Salzburg, Austria, at the end of 2018. When
concluded, the Asean-EU CATA will relax limits on air transport
growth on both sides, enabling better connectivity.
“Negotiations have proved easier for cargo than passenger
fl ights. They have already agreed to unlimited third, fourth and
fi fth freedom rights for air cargo, but there are still sticking points
on the passenger side,” says Horst. “When the agreement comes,
it will have a major impact on air cargo fl ows, as it will really
open up general rights for carriers.”
Also vital for Southeast Asia is the e-ATIGA Form D, which
is more important than its cumbersome name implies. “It’s the
Asean Trade In Goods Agreement, which is a key enabler of more
effi cient cargo processes, spurring trade and competitiveness,”
explains IATA’s Goel. “It will move the region closer to achieving
the Asean Single Window, for customs clearance expediting
electronic exchange of customs data.”
Goel adds that the agreement is almost in place right across
the region. Indonesia, Malaysia, Singapore, Thailand and
Vietnam have already either implemented it, or are piloting it.
The other Asean members, namely Brunei, Cambodia, Laos,
Myanmar and the Philippines, have existing National Single
Window programmes or have been working towards integrating
with the rest of the ASW.
Capacity won’t
magically appear
overnight so
there’s inevitably a
lag period for a lot
of operations
Matt Castle, Vice President
Global Forwarding, CH Robinson
Most airports
already operate
way beyond their
stated capacity,
both airside and
landside
Vinoop Goel, Regional Director Cargo &
External Relations - Asia Pacifi c, IATA
40 December 2019 www.airlogisticsinternational.com
/www.airlogisticsinternational.com