DSV takeover target UTi has opened two new multimodal hubs in Kuala Lumpur, Malaysia, and Ho Chi Minh City, Vietnam, to service its gateways in Europe and the US.
A number of factors were behind the choice of location for the two hubs, not least because Asian consolidation hubs provide faster, more reliable transits for goods, plus excess, short-haul air capacity and established road feeder routes, the company said.
The firm's managing director for Singapore and Malaysia, Mudasar Mohamed, was cited as saying in a report by London's Air Cargo News that the choice of hub was determined by analysis of shipper location and the forwarder's operational capabilities. Lower operating costs in Malaysia drove the company's decision to locate there instead of neighbouring Singapore.
In terms of Vietnam, where UTi has seen a huge growth in export traffic across a range of goods, the forwarder chose Ho Chi Minh City because of its connectivity to Phnom Penh in Cambodia, allowing it to consolidate demand in one place.
But demand has also to be married with air cargo supply, added Mr Mohamed: "We also factored in capacity and looked at what [air] carriers are operating in these locations and what kind of capacity they have."
With the development of the ASEAN Economic Community, the company has seen more and more customers shift away from air to road freight, especially for shorter haul journeys.
Mudasar Mohamed cites the example of sending goods from Singapore to Kuala Lumpur: "You could air freight it, with a flying time of around an hour, but you still need to have the cargo ready and to go through customs clearance, and then at destination it has got to be cleared and delivered.
"So, the end to end lead time for using road freight is often faster and also cheaper. It all depends on the routes, but most people are doing it for cost."
There are multiple reasons behind the switch in modal choice, said Mr Mohamed: "We are seeing people move to trucking from Singapore all the way to Shanghai, for example, with trucking becoming a preferred option to the South of China."
The rapid growth in local Southeast Asian exports and the pressure this puts upon air freight logistics are also contributory factors in the switch in modal choice.
"Southeast Asia does not always have coordinated activities across receiving, clearing and handing over freight to the carrier and doing it in a planned manner.
"Often the freight is booked just when the logistics team have got clearance and they hand it over to the 3PL and may not have many options for the uplift."
WORLD SHIPPING
09 February 2016 - 22:18
UTi opens multimodal hubs in Kuala Lumpur, Ho Chi Minh to link, Europe, US
DSV takeover target UTi has opened two new multimodal hubs in Kuala Lumpur, Malaysia, and Ho Chi Minh City, Vietnam, to service its gateways in Europe and the US.
WORLD SHIPPING
09 February 2016 - 22:18
UTi opens multimodal hubs in Kuala Lumpur, Ho Chi Minh to link, Europe, US
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