The Asia-Pacific (APAC) region has emerged as the growth engine of the world and its cargo shipping market is expanding at the fastest rate globally. With 75 per cent of the region's cargo movement being intra-Asia, it translates into immense growth opportunities for ECU Worldwide. In an exclusive interview, Uday Shetty, regional CEO - APAC, shares his views and vision on the group's forays in the pivotal market.
Q. APAC is witnessing a new wave of growth and consolidation. What is your reading of the region's geo-political and economic factors?
Answer: This year has shown positive surprises in Asia's export data despite the relatively soft global growth. The recent surge is driven by an inventory bounce as firms scramble to meet better demand after years of running with very low inventories. Simultaneously, the growing domestic demand in some of the APAC markets has cushioned the region against high degree of openness to external trade. There have also been improvements in the business environment, job creation, and consumer confidence.
The growth drivers vary from country to country — be it the big housing programme in Hong Kong, the extensive infrastructure plans in Thailand, or the new government in South Korea. On the other hand, some other markets like the Philippines and Vietnam which are already running at full steam may need to watch for over-heating that could trigger a surge in inflation and trade deficits. This may lead to further currency depreciation. Meanwhile, the Australia and New Zealand markets are likely to maintain steady growth.
Overall, countries in APAC are in different phases of transformation and development. Each of them faces unique sets of political challenges, yet possesses vast amount of opportunities that could potentially broaden the economic fronts.
Q. Do you see any country-specific developments that are contributing to APAC's growth?
Answer: Japan has entered a mild recovery. Most of the gain was helped by strong exports, higher private consumption, and corporate capital spending. The emergence of these growing signs shows that Prime Minister Abe's stimulus programme, coupled with pro-growth reform policies, is showing good results.
Indonesia is experiencing a similar lift in growth as exports and local demand improve. The Jokowi administration has enacted positive reforms to improve the business climate. Pharma and healthcare products, as well as food products, have led industrial growth over the past two years.
Meanwhile, in Philippines, an infrastructure boom, favourable demographics, steady business process outsourcing and overseas foreign-worker incomes are ensuring that it remains one of Asia's fastest growing economies.
Q.The APAC market is driving world trade, both in terms of volumes and profitability. With Allcargo being a dominant player in this market, what is your assessment of the opportunities ahead?
Answer: APAC is the growth engine of the world, thanks to the major manufacturing hubs in the region. The increasing internal consumption within the countries is further driving the growth. A good 75 per cent of the business is intra-Asia. In terms of numbers, 40 per cent of our ECU's global volumes and 35 per cent of profitability come from the APAC markets.
With five of our hubs in APAC and supportive partners putting in their weight behind ECU Worldwide APAC, a large part of the global cargo passes through our shores and we are perfectly poised to tap this growing market.
Q. More than 75 per cent of the cargo movement in APAC is intra-Asia. What is Allcargo's strategy to tap the big routes and markets?
Answer: APAC as a region is in a continuous and consistent state of growth. Some of the markets are evolving faster than the others. This gives us more opportunity to diversify our portfolio. Among the promising markets are Japan, China, Southeast Asia and of course, the hubs — Singapore, Port Klang, Hong Kong, Shanghai and Busan.
Our main focus is still on consolidation and intra-Asia business gives us a lot of opportunity to do that. In some markets, having a strong CFS capability gives us a distinct edge.
Q. Allcargo has an impressive footprint in the region. What has been the strategy to gain this strong foothold?
Answer: ECU Worldwide APAC moves close to four million freight tonnes annually. It has been one of the leading players in the region for the past 29 years. This makes us a veteran in the logistics industry in this part of the world.
Over the years, we have increased the number of our own offices multi-fold and built on our strong relationships with our long-standing partners. We currently have 43 offices and through our network, we provide well-rounded and extensive service coverage in APAC.
Q. In the volatile cargo business, it's a big advantage to have a strong, stable team. Since Allcargo has always invested in its people, does it give you a distinct edge in the market?
Answer: Our strong USP is our dynamic workforce; 65 per cent of our employees are less than 35-years-old. Simultaneously, our senior-level management brings diversity and years of global experience to the table. Some of our employees have been with us for over 15 years, who have been maintaining long-standing relationships with our customers in this region. This makes us agile, aware and well-equipped to deal with the constant ups and downs of the logistics industry.
Q. What will be the likely impact of China's One Belt, One Road (OBOR) initiative to APAC logistics?
Answer: For the APAC region, the OBOR initiative will be a key long-term growth driver. The new road will accelerate the development of many inland Chinese provinces as well as boost growth of the Greater Mekong sub-region as a new global manufacturing hub. This will benefit many countries in Southeast and Central Asia.
OBOR will bring its own set of challenges, but also opportunities. Though some of the logistics will become road-bound, that too can be turned into a business opportunity. We can build on our trucking capabilities and engage with markets which till now have not been on our radar.
Q. APAC is a unique region with a mix of countries, with each having its own cultural and business ethics. Does that pose a challenge for business?
Answer: ECU Worldwide has had a strong presence in APAC for 29 years, and this is a big advantage for us vis-a-vis new entrants who face entry barriers. We have a strong network which leverages the diversity these markets provide. Because of geographical diversity, advantageous trade treaties and young talent pool, we have access to diverse products, diverse needs and a perennial flow of young and talented work force. Geo-political associations such as ASEAN and treaties like Asia-Pacific Trade Agreement ensure free flow of ideas, products and economic integration. This creates a conducive eco-system in which companies can flourish.
But on the flip side, challenges such as weakening currency and political unrest can lead to a fall in business, especially imports.
Q. On a personal note, how does a busy executive like you unwind?
Answer: I like to spend quality time with my wife and two children, my 13-year-old daughter and 8-year-old son. During my free time, I enjoy watching movies and reading books. I also love photography. I love to drive around the countryside and have taken road trips in Asia, Europe and America.
Information on global and regional outlook is based on the findings published in Asia Pacific Executive Brief - May 2017 by IMA Asia.