ETP Implications on Potential for Supply Chain & Logistics ...vietnamsupplychain.com/assets/upload/file/... · Transportation & logistics market in Malaysia: The Evolution Years Growth

ETP Implications on Potential for Supply Chain

& Logistics Sectors

Presented at:

Global Logistics & Cargo Symposium 2012, KL

Presented by:

Gopal R

Vice President, Asia Pacific

Transportation & Logistics Practice

June 27, 2012

2 Economic Transformation Program

3 Segments with Potential for Supply Chain & Logistics

5 Growth Projection & Way Forward

4 Competencies to Explore Potential Segments

Agenda

2

1 Malaysian Economy & Logistics Market

Economic growth momentum likely to be sustained

• Malaysian economy is expected to

maintain positive real GDP growth with

approximately around 5 percent in 2012

• Services and manufacturing will be the

main growth engines of the country’s

GDP

• Service segment is estimated to

contribute RM 370.20 billion to the

economy, representing 44 percent of GDP

• Service sub-segment - transportation,

storage and courier is expected to grow at

the rate of 6.4 percent year-on-year in

2012

Growth of Service Segment, 2007 - 2012

Source: Department of Statistics Malaysia (DOSM); Budget 2012, Analysis: Frost & Sullivan

Gro

wth

(%

)

Years -10.0%

0.0%

10.0%

20.0%

2007 2008 2009 2010 2011 (e) 2012 (f)

Services Transport, storage & courier

3

Growth of GDP and Service Segment, 2007 - 2012

Years

Gro

wth

(%

)

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

2007 2008 2009 2010 2011(e) 2012(f)

Norminal GDP Services Real GDP

Agriculture, forestry & f ishing

12.1%

Mining & quarrying

12.2%

Manufacturing25.7%

Construction3.0%

Telecommunication3.0%

Services40.7%

Transport, storage & courier

3.3%

Transportation, storage and courier market accounts for

RM 28.05 billion which is 3.3 percent of the total GDP

Malaysian Economy, 2011 Malaysia Transportation, Storage and

Courier Segment Distribution (RM 28.05 billion)

Transportation makes up 58.0 percent of the total

transportation, storage and courier market

Others included: Stevedoring services, cargo handling services, storage

& warehousing services, freight forwarding and shipping agents services

Land transport19.5%

Water transport

21.4%

Air transport17.1%

Port and airport

operation

13.0%

Highway operation

11.5%

Courier3.8%

Others13.7%

Source: Department of Statistics Malaysia (DOSM); Analysis: Frost & Sullivan

4

Potential market for the outsourced / contract logistics

service providers in Malaysia

Total transportation & logistics market in Malaysia

estimated at RM 117.80 billion in 2011

Transportation,

storage and

courier

(RM 28.05

billion)

Logistics Expenditure is hidden in:

Tra

ns

po

rta

tio

n &

Lo

gis

tic

s

Ma

rket

Ma

rket

Va

lue

RM 28.05 billion RM 89.75 billion

Trade

(RM 14.13 billion)

Government

services

(RM 6.06 billion)

Telecommunication

and other services

(RM 6.81 billion)

Mining

(RM12.26 billion)

Manufacturing

(RM 21.57 billion)

Agriculture, forestry

and fishing

(RM13.26 billion)

Construction

(RM 2.98 billion)

Finance

(RM 10.52 billion)

Energy

(RM 2.16 billion)

Source: Department of Statistics Malaysia (DOSM); Analysis: Frost & Sullivan

5

62.0169.43

80.3973.51

82.9889.75

21.14 23.71 25.59 24.65 26.76 28.05

83.1693.14

105.9898.17

109.73117.80

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

2006 2007 2008 2009 2010 2011 (e)

RM

, B

illi

on

s

Logistics costs Transport, storage and courier Transportation & logistics market

Transportation & logistics market in Malaysia: The

Evolution

Years

Growth (%)

Transportation & Logistics Market Size, 2006 - 2011

Transportation & logistics market in Malaysia has grown by a Compound Annual

Growth Rate (CAGR) of 7.2 percent between 2006 to 2011

Source: Frost & Sullivan

Note: (e) = estimate

12.0 13.8 (7.4) 11.8 7.4

6

Malaysian transportation & logistics market is

fragmented in nature

Road Freight Transport 1,898

Logistics Sub Segments No. of Business

Establishments

Sea Freight Transport 306

Air Freight Transport 8

Towing and Pushing

Services at Seaports 37

Support Activities for

Transportation 41

Courier Service 184

• High number of business

establishments signify

fragmented market

• Fragmented market makes

Logistics end users very

sensitive on price

• Fragmented market pushes

smaller logistics service

providers to go for economic

pricing strategy rather than

focusing on service quality and

breadth of services offered

Source: Department of Statistics Malaysia (DOSM,), Economy Planning Unit (EPU); Analysis: Frost & Sullivan

7





Agenda

8


Economic Transformation Program (ETP) A comprehensive effort to transform Malaysia into a high-income nation by

2020

9

The 12 National Key Economic Areas (NKEAs) are engines of future economic growth

Source: EconomicTransformation Programme (ETP), 2010 - 2020

Oil, Gas & Energy Palm Oil Financial Services Business Services Electronics &

Electrical

Education Greater Kuala

Lumpur Agriculture

Communications,

Content & Infrastructure Healthcare

Tourism

Wholesale & Retail

2 0 2 0

6% Growth per annum

RM 23,700

GNI: gross national income

2 0 0 9

GNI per capita

RM 48,000 GNI per capita

http://etp.pemandu.gov.my/Overview_of_NKEAs_-@-Palm_Oil.aspx

http://etp.pemandu.gov.my/Overview_of_NKEAs_-@-Financial_Services.aspx

http://etp.pemandu.gov.my/Overview_of_NKEAs_-@-Business_Services.aspx

http://etp.pemandu.gov.my/Overview_of_NKEAs_-@-Electronics_and_Electrical.aspx

http://etp.pemandu.gov.my/[email protected]

http://etp.pemandu.gov.my/[email protected]

http://etp.pemandu.gov.my/article_go.aspx?id=d5f61f88-507b-44d6-bb58-b0b53d8fba17

ETP boosts the development of transportation and

logistics infrastructure

10

Government has committed to:

building and improving ROADS

developing the RAIL network

upgrading MARITIME infrastructure

improving AIRPORTS


To support the success of the ETP, government will upgrade existing infrastructure and construct new

logistics infrastructure to facilitate the efficient movement of goods





Agenda

11


Growth in the industries

under NKEAs will boost

demand for transportation

and logistics services

NKEAs create huge business opportunity for

transportation & logistics market

12

Oil, Gas &

Energy

Palm Oil

Electronics &

Electrical

Wholesale &

Retail

Healthcare


Oil, Gas & Energy

13

Opportunities for Logistics Service Providers

• Building a regional oil storage and trading hub

• Making Malaysia the number one Asian hub for oil

field services

Oil, Gas & Energy NKEA

Project

Cargo/Logistics

Supply Chain

Management

Spare/Service

Parts Logistics

Distribution &

Storage (Lubricants)

Palm Oil

14


• Upstream productivity and sustainability

• Downstream expansion and sustainability

Palm Oil NKEA

Procurement

(Service parts)

Inventory

Management

Spare/Service

Parts Logistics Distribution & Storage

(Service parts)

Electronics & Electrical

15


• Increasing the number of producers for silicon, wafer,

and solar module

• Building a home appliance manufacturing hub and

international distribution network

Electronics & Electrical NKEA

Value Added

Services

Supply Chain

Design & Analysis Transportation

Management

Warehousing

(ambient/temperature

controlled)

Wholesale & Retail

16


• Supporting the expansion of large retail businesses

• Removing import duties

• Transforming KLIA into a retail hub

Wholesale & Retail NKEA

Value Added Services

(Specialty Packaging &

Seasonal Promotions)

Reverse Logistics

(Product Recall)

Transportation

Management

Warehousing & Order

Fulfillment

Healthcare

17

• Developing Malaysia into medical devices and

equipment manufacturing hub

• Pursuing generics export opportunities

• Creating a Supportive Ecosystem to Grow Clinical

Research

Healthcare NKEA


Cold Chain Logistics Pharmaceutical

Logistics Clinical Trial Logistics Hospital Logistics





Agenda

18


Supply Chain Competencies required to explore the

Potential segments

19

Extensive network across Malaysia Wide network coverage is necessary for the distribution in Wholesale

& Retail industry. LSPs also need to extend their network into East

Malaysia where Palm Oil and Oil & Gas industry is significant

Ability to customize warehouse space Ability to provide Build-to-Suit (BTS) warehouses is a big advantage

for LSPs catering to specialty industry such as Healthcare, E&E, and

Oil & Gas

Trained and experienced workforce to handle

specialized shipments Temperature-sensitive / time-sensitive / high value shipments in

Healthcare and Oil & Gas industry require specialized handling during

storage and in transit

Supply Chain Competencies required to explore the

Potential segments

20

Upstream and downstream integration of

technology Integrating IT services across vendors, suppliers, customers with

LSPs being the key point of collecting, maintaining and

disseminating information to establish smoother supply chains

Certifications and regulatory compliance Certain certifications / licenses / regulatory compliance such as Good

Distribution Practice (GDP) and Halal certificate are important for

handling shipments for industries like Healthcare, Wholesale & Retail

and Oil & Gas





Agenda

21


Transportation & logistics market in Malaysia is

estimated to reach RM 203.71 billion in 2016

Government support on logistics related development

Sustainable economic growth aided by Economic Transformation Program (ETP)

and foreign investments

Strategic advantage derived from geographical location

Focus on improved supply chain efficiency

DR

IVE

RS

R

ES

TR

AIN

TS

Fragmented nature of logistics market

Lack of skilled logistics practitioners

Lack of security measurements

Lack of emphasis on Value Added Services

Source: Frost & Sullivan

22

Moving forward…

23

Next

Step

• Specialized logistics solutions for specific industries

(e.g healthcare / hospital logistics)

• Emphasis on information / inventory / vendor

management by logistics end users for supply chain

optimization

• Logistics end users move from decentralized to

centralized supply chain

• Implementation of advanced technology across supply

chain to improve visibility and traceability at the item

level (e.g RFID, GPS)

• Major logistics service providers expand market share

by merger and acquisition

• Focus on basic logistics services with common value-

added services

• Emphasis on on-time delivery, safety of goods, and service

flexibility (e.g ad hoc logistics services request)

• Logistics end users engage multiple logistics service

providers for different logistics requirements and

competitive pricing

• Technology implementation limited to infrastructure

management systems (e.g WMS, TMS) and supply chain

management tools (e.g SCM)

• Fragmented market with inconsistent service quality and

unhealthy price war among smaller logistics service

providers

Logistics industry in Malaysia

M o v i n g t o w a r d s Current

Any

Questions?

24

The Frost & Sullivan Story

25

Pioneered Emerging Market

& Technology Research

• Global Footprint Begins

• Country Economic Research

• Market & Technical Research

• Best Practice Career Training

• MindXChange Events

Partnership Relationship

with Clients

• Growth Partnership Services

• GIL Global Events

• GIL University

• Growth Team Membership™

• Growth Consulting

Visionary Innovation

• Mega Trends Research

• CEO 360 Visionary Perspective

• GIL Think Tanks

• GIL Global Community

• Communities of Practice

Our Industry Coverage

26

Automotive &

Transportation

Aerospace & Defense Measurement &

Instrumentation

Information &

Communication Technologies

Healthcare Environment & Building

Technologies

Energy & Power

Systems

Chemicals, Materials

& Food

Electronics &

Security

Industrial Automation

& Process Control

Transportation & Logistics

Automotive

Consumer

Technologies

Minerals & Mining

Transportation & Logistics Practice Competencies

27

Supply Chain Services

Freight, Infrastructure

and Facilities

Rail Transportation

Urban Transportation

Maritime

Intelligent

Transportation

Systems

Contract Logistics

Services Transportation

Supply Chain

Technologies

Forwarding,

Express and

Support Services

Infrastructure Equipment Services

Solutions &

Systems Aftermarket

Solutions &

Systems Support Services

Systems

Air Ocean Land

Training

M&A Analysis

Best Practices

Growth Strategy

Business Planning

Customer Assessment

Technology Benchmarking

Competitive Benchmarking

Market Opportunity Analysis

Addressing Trends & Issues

Process Improvement & Audits

Customer Satisfaction Surveys

Growth Coaching & Workshops

Product / Service Concept Testing

Documents

ETP Implications on Potential for Supply Chain & Logistics ...vietnamsupplychain.com/assets/upload/file/... · Transportation & logistics market in Malaysia: The Evolution Years Growth