Tipping point: Three Ways the APAC E-commerce Supply Chain Must Evolve in 2021
Baby clothes, fashion, cosmetics, even grocery items. Chinese consumers’ zeal for buying overseas products online has whet the appetites of European and US retailers and express parcel operators.
In fact, cross-border e-commerce attracted an incredible 211 million Chinese shoppers in 2020, according to iiMedia Research. Put in context, that’s about half the European Union’s population.
Chinese cross border e-commerce transactions were estimated to be worth 12.7 trillion yuan (US$1.96 trillion) at the end of 2020, but let’s not forget the rest of this region. APAC countries from India to Laos are seeing cross border e-commerce proliferating because of improving infrastructure, investment in logistics facilities, easier payment options, and rapidly rising disposable incomes. What’s more, many Asian countries and territories actively promote trade agreements and regional development strategies, suggesting that further integration and stronger connections can be expected within the Asian supply chain in 2021 and beyond.
Key growth markets include Australia, Japan, Hong Kong, South Korea, Malaysia, India and Bangladesh, Singapore, Vietnam and Thailand.
Courier, express, and parcel service providers and retailers are focusing on localising the language experience to suit their customers, conscious that this growing cross-border trade is a vital market driver, and central to their future success. To cope with rising demand, the international supply chain is under pressure to evolve at pace. What changes are urgently needed?
Technology investment to deliver speed, resilience and trust
The pressure cooker nature of the pandemic has undoubtedly altered the e-commerce business model. It’s forced faster developments in business and customer communication, logistics automation, collaborations between 2PLs and 3PLs, and robotics.
Today new technologies such as integrated digital platforms and blockchain are emerging. Geofencing and machine learning techniques can be applied to data so that it strengthens, for instance, the capacity to predict the delivery time, or to inform the next party in the supply chain of when the parcel is expected to arrive at their location.
Multiple efforts are made also to enhance the security of trading documents and accuracy of description of the goods, such as certificates of origin and commercial invoices, in the context of stricter customs rules introduced across the globe. New customs regulations include the Synthetics Trafficking and Overdose Prevention (STOP) Act in the USA, and Brexit red tape following the late trade agreement signed with the EU. There are also incoming e-commerce VAT rules applied as of July for goods into the European Union.
Locally in Asia there are examples of collaborative networks designed to ease bureaucracy, such as Singapore’s Global eTrade Services blockchain network. This has helped promote transparency and trust between shippers, freight forwarders and customers since 2018.
The use of IoT in the industry, such as digital sensors, will become more prevalent in logistics, enabling a higher degree of transparency, from inventory tracking to RFID tags which measure location, temperature or humidity. This increased visibility will speed up reaction times and improve decision making. By analysing demand for goods and delivery services, supply chain companies can streamline their services and plan efficiently for both known peaks in demand, and the unexpected.
Carbon emissions reduction to meet consumer and regulatory pressure
Commercial growth is not always good for the planet. Retailers, shippers and parcel operators will need to find ways to meet Environmental, Social and Governance (ESG) responsibilities, while running their businesses. With the UN Climate Change Conference, COP26, taking place in the UK in November 2021, governments and business leaders can expect intensifying pressure to go green – reflecting the surge in consumer interest in carbon reduction we’ve seen in recent years.
Leading postal operators across the globe, including Asendia, are already engaged in efficiency drives and off-setting to become carbon neutral. The ocean freight industry is now complying with the IMO’s new sulphur cap while warehousing companies are developing innovations to enhance operations efficiency, labour management and waste management.
The requirement to report statistics on the carbon footprint of long-haul consignments will assuredly benefit maritime shipping, known to be the most carbon-efficient means of transporting goods, although time sensitive products do require air freight. The creation of more international sea-air and sea-rail transport products have been predicted by supply chain experts, as a potential compromise.
More choice in delivery options and cost structures
APAC consumers crave reliability and will expect a more sophisticated range of delivery solutions, depending on the value of their purchase and their needs regarding speed and convenience. This will include low cost or free options in the mix, postal and commercial, home delivery and Pick Up Drop Off networks.
Locally, we will see a proliferation of one-hour deliveries—such as Vivo phones being delivered within one hour via the JD.com platform in China—as order volumes and technology work together to make this possible in more and more sub-sectors of e-commerce. On a cross-border level, 3 to 5-day deliveries will become more demanding, with unpredictable customs processes and costs to be factored in.
More than ever, clarity of communication and service excellence from carriers and shippers will be vital to ensure customer satisfaction and those all-important repeat purchases.
ABOUT THE AUTHOR
Lionel Berthe is Head of Asia-Pacific for Asendia, and based in Singapore. He is responsible for the company’s Hong-Kong, Singapore, and Oceania subsidiaries, overseeing the strategic development for the whole APAC region.
Previous to this, he was Chief Strategy and E-commerce Officer—Head of Asia at Asendia Management headquarters. Before joining the company in August 2012, he occupied the position of International Operations Director in the French B2C parcel division of La Poste, Coliposte, for six years.