When expanding into the express and logistics market in Southeast Asia, the primary and inevitable challenge that needs to be addressed is how to reduce costs. The operating cost of logistics in Southeast Asia is as high as 60%, and logistics costs account for approximately 20% of the GDP, ranking among the highest globally. In contrast, the figures are 5% in the United States, 7% in Japan, and 13% in China.

The high costs require enterprises to continuously invest a large amount of capital in infrastructure construction to achieve economies of scale and thus reach a break-even point.  After acquiring Kerry Logistics in 2021, it finally shook off the impact of the price war after three years, with its international business reaching a scale of 70 billion yuan.

Southeast Asia, mainly composed of the Indochinese Peninsula and the Malay Archipelago, has an extremely fragmented and complex terrain. There are numerous islands, and the terrain within the islands is complex. The ports there are relatively small, with extremely weak carrying and handling capacities. Moreover, backward transportation facilities and vehicles also limit the speed of cross-border logistics and last-mile delivery. The difficulty of parcel delivery is extremely high, and the timeliness is low, which in turn leads to low customer satisfaction.

On the market side, price competition in the Southeast Asian express market has intensified, and the market development trend has not formed a virtuous cycle. In addition, Southeast Asian countries do not have unified customs regulations and import tax systems, resulting in cumbersome approval procedures and complex restrictions on commercial activities.

This is also a major factor restricting the development of the express and logistics industry. For example, the customs in Vietnam and the Philippines, which still use traditional manual operations, and the Indonesian customs, known as the strictest customs with “three crackdowns a year,” make the import logistics of cross-border goods extremely difficult.