Market Trends of asean road freight transport Industry
ASEAN's transportation and storage sector recorded 26.02% growth in 2022, driven by rising infrastructure demand
- In 2022, the transportation and storage sector saw a substantial 26.02% YoY growth, primarily attributed to the rising demand for transportation infrastructure. The economic growth in ASEAN nations over recent decades has boost the trade and investment activities, consequently increasing the need for transportation and storage services to facilitate the movement and storage of goods. Malaysia has made significant strides in enhancing its logistics industry to position itself as a regional logistics hub and an ASEAN gateway.
- Foreign direct investment (FDI) inflows in ASEAN surged by 42% in 2021, reaching USD 174 billion. The key drivers behind this increase were investments in manufacturing, finance, and select service sectors linked to the rapidly expanding digital economy and Industry 4.0 initiatives. Among these, manufacturing experienced the most substantial growth, with a 134% increase to USD 45 billion, particularly in industries like electric vehicles (EVs), electronics, biomedical, and pharmaceuticals. However, the foreign direct investment in vehicle and other transportation industries in Indonesia amounted to approximately USD 1.5 billion in 2022.
- Logistics costs in certain ASEAN member countries can make up as much as 20% of the total cost of finished products, nearly twice the worldwide average. Indonesia has plans to invest around USD 240 billion in enhancing its infrastructure between 2022 and 2024. However, the country's main emphasis on infrastructure development is the transportation sector. Within this category, ongoing and upcoming road, rail, and port infrastructure projects make up 29%, 22%, and 23% of the total value of these initiatives, respectively.
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Impact of the Ukraine-Russia war on ASEAN countries led to increased fuel prices and supply chain disruptions
- The price of diesel has gradually fallen since February 2023 to THB 32 (USD 0.92) a liter in response to declining global oil prices. Thailand’s Oil Fuel Fund decided to maintain the current retail price of diesel at USD 1.01 per liter in an attempt to help mitigate the high living cost amidst global oil price fluctuations. As part of Malaysia's goal to construct the oil refining and storage hub to meet the domestic demand for refined petroleum products, Petronas has invested about USD 16 billion in the Refining and Petrochemicals Integrated Development Project (RAPID) in Johor. The RAPID facility will be the country's first refinery to produce diesel and gasoline that meet the Euro V standard, which lowers carbon dioxide emission levels.
- The YoY growth of natural gas prices was recorded at 34.3%, and the YoY growth of gasoline prices stood at 12.8% in 2021. With the rising fuel costs, trucking carriers and operators across the region are struggling to keep up with the increasing prices, and the cost of diesel is affecting freight rates and trucking capacity. Many of the current measures in Southeast Asia were implemented in response to the energy market dynamics in the second half of 2021 and are yet to incorporate the impact of the Russia-Ukraine war.
- To reduce growing subsidies, the Indonesian government increased subsidized fuel prices by approximately 30% in September 2022 despite the potential risk of mass protests. The price of subsidized gasoline was raised from IDR 7,650 (USD 1.18) per liter to IDR 10,000 (USD 0.67) per liter, while the price of subsidized diesel rose from IDR 5,150 (USD 0.35) per liter to IDR 6,800 (USD 0.46) per liter.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- ASEAN economies are promoting the manufacturing sector by introducing several strategic initiatives to stimulate growth
- ASEAN's e-commerce market is expected to grow rapidly, registering a CAGR of 11% during 2023-27
- Construction of new expressways, coupled with significant road expansions and infrastructural investments, are driving market growth in the region
- Huge reliance on wheat imports has become a major concern to food security for ASEAN countries
- Increasing fleet production and sales of commercial vehicles witnessed in Indonesia, Vietnam, and Malaysia
- The primary focus of Thailand's government within the ASEAN region is on infrastructure projects, with an investment exceeding USD 45 billion
- ASEAN countries are improving connectivity via various infrastructure projects for all modes of transport
- Indonesia, Malaysia, and Thailand are leading oil and gas GDP growth in the ASEAN region, followed by the manufacturing sector demand
- The GVA of the manufacturing industry in the region grew by over 10% YoY in 2022, led by food and beverages sub-segment
- ASEAN economies anticipates growth in exports by 2030 led by development in manufacturing sector
- Vietnam aims to reduce the country's logistics costs and bring it between 16% and 20% of GDP by 2025
- ASEAN's truck volume is expected to reach 1.7 million units by 2030, registering a CAGR of 7.9% during 2020-2030
- Countries in the ASEAN region are aiming to reduce road freight costs via various initiatives during 2023-2030
- ASEAN countries witnessed a significant rise in producer and consumer prices due to increases in fuel and food costs
