The Southeast Asian logistics market holds great potential for growth, but its difficulties and challenges cannot be overlooked. Particularly, as the infrastructure in Southeast Asia is still being improved, new entrants must be well-prepared to face the current pain points in the logistics market.

Fragmentation and Complex Geography.Southeast Asia is a diverse market composed of multiple countries, each with a complex and fragmented geographical environment, posing significant challenges for logistics development. For example, Indonesia is an archipelago of over 17,000 islands, but many of these islands have small ports with limited cargo handling capacity. Even within Indonesia, the numerous islands mean that last-mile delivery takes more time. Vietnam, on the other hand, is a long coastal country with two-thirds of its territory in rural areas, where the infrastructure level varies greatly between urban and rural areas.

High Logistics Costs.According to Rocket Equities, the complex geographical terrain and poor road, rail, and ferry networks in Southeast Asia create significant challenges for cross-border logistics and last-mile delivery, resulting in logistics operating costs accounting for about 60%. For comparison, in developed countries with highly developed economies and well-established logistics facilities, logistics costs account for about 5%-6% of GDP in the US, 7%-8% in Japan, and 13%-15% in China. In contrast, logistics costs in Southeast Asian countries average around 20% of GDP, meaning that one-fifth of economic value is consumed by logistics.

Logistics Speed Improving but Still Needs Enhancement.According to a Q1 2021 survey by Parcel Monitor, the average delivery time for goods in Singapore is 1.3 days, 1.7 days in Thailand, 2.0 days in Indonesia, and 2.6 days in Malaysia. However, traffic congestion continues to hinder improvements in logistics efficiency in Southeast Asia. Data from Waze, Google’s navigation app, in September 2019 indicated that peak traffic congestion in Manila, the capital of the Philippines, can last up to four hours, significantly obstructing logistics deliveries and economic development in other industries.

Complex Customs Regulations.Customs regulations in Southeast Asian countries are inconsistent, with varying import tax systems among different countries. In some countries, immature customs policies further complicate import logistics. For instance, many importers have complained about the lengthy customs clearance process in the Philippines. In some cases, due to inefficiency, manual operations, and low machine utilization rates, it can take importers up to 25 days to complete customs clearance.