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Industry Overview: Malaysia Transport and Logistics Industry

Transport and Logistics is a significant growth market in Malaysia and providing customers varied services ranging from individual transport and storage solutions to integrated supply chain management (SCM) services. The overall logistics industry is expected to grow 10.3 per cent to RM129.93 billion in 2012 as compared to an estimated RM117.8 billion a year ago, due to strong government support on logistics-related development and economic growth fuelled by foreign investments in the country. The Malaysian logistics industry is forecast to grow at a compound annual growth rate of 11.6 per cent to reach RM203.71 billion in 2016, says Frost & Sullivan. Malaysia's strategic advantage due to its geographical location and its focus on improving supply-chain efficiency will also drive growth in the local logistics industry. External trade for Malaysia is expected to increase 5.9 per cent to RM1.42 trillion in 2012, compared with RM1.24 trillion in 2011. The introduction of several initiatives, such as the Government Transformation Programme and the Economic Transformation Programme (ETP), provided a conducive business environment for the logistics market to grow. 

Freight forwarding, transportation, and warehousing services will remain as the main revenue stream for logistics service providers as these key functions are most likely to be outsourced by logistics end users. The value-added services such as information management and vendor management are likely to be outsourced more in the future.
In terms of cargo volumes, Malaysia's total cargo volumes is expected to increase 10.1 per cent to 545.13 million tonnes in 2012, compared with 495.29 million tonnes in 2011. Sea freight is the most favored mode of transport for cargoes in Malaysia, handling more than 90 per cent of total freight traffic in 2011, adding that total cargo volume by sea is expected to grow 10.1 per cent to 538 million tonnes in 2012. Foreign direct investments (FDIs) surged to RM21.3 billion in the first half of 2011 as compared to RM12.1 billion in the corresponding period in 2010, reflecting the growing investors' confidence following the Government's initiatives to stimulate economic growth. 
Port Klang, Malaysia's busiest container port, contributed 39.2 per cent of total sea throughput in 2011, while Port of Tanjung Pelepas contributed 22.7 per cent. Cargo volume by rail is expected to increase to 6.2 million tonnes in 2012, compared with 5.9 million in 2011. The cargo volume by air is expected to grow 3.9 per cent to 925,000 tonnes this year. Steady growth in the economy and external trade will contribute to the growth of air cargo volume in 2012. 
Frost & Sullivan foresees logistics service providers in Malaysia to focus on specialized logistics solutions for specific industries such as healthcare and pharmaceutical segment in the future as compared to basic services currently. Logistics end-users are also expected to centralize their supply chain needs as compared to the current trend of engaging multiple logistics service providers for different logistics requirements.
In the near future, logistics companies are expected to implement advanced technology across supply chain to improve visibility and traceability at part level than just management of transportation assets. Consolidation will be a growth driver for the industry and this would help in transforming the fragmented industry to be a strong economic growth driver for Malaysia.
(Source: Insight Alpha)

Malaysian logistics industry