Roland Berger's recent report into the prospects for Asia-Pacific infrastructure extrapolates what it sees as long-term trade trends in the region and highlights the key transport hubs for the region in 2030.
According to their analysis, China will consolidate its position as the economic and manufacturing powerhouse of the region during the next fifteen years. New manufacturing heartlands, such as in and around Chongqing, will emerge and lie at end of main trade routes linked with trade hubs in India, Thailand, Malaysia, Singapore, Indonesia, Seoul and Tokyo.
Asia-Pacific's Main Trade Routes, 2030
Source: Roland Berger & Barclays: Global Logistics Markets (August 2014)
These outcomes will be driven by the following key trends:
Manufacturing migration: The Asia-Pacific region will continue to see relocations from the developed world and existing manufacturers in the region will move out of higher costs areas such as Eastern China and Singapore to cheaper locales such as Indonesia, India, Vietnam and Western China.
Infrastructure investment: governments and companies across the region are either pouring funds into trade infrastructure or are planning significant upgrades in the coming years. We have covered China's ambitons for the South East Asia region elsewhere, but countries such as Singapore, Indonesia, India and Thailand are actively building new capacity to be able to both handle increased trade flows in the future and try to establish transport hubs capable of capitalizing on increased trade flows.
Influx of third-party logistics companies: major companies such as DHL and UPS are investing heavily in preparation for increased trade flows in the future. Thier key customers, many of whom are multi-national companies, will demand that they follow them to the region since local logistics companies often don't work tothe same standards.
Lengthening of supply chains: cheap labor costs in newly-industrializing countries, infrastructure improvements and upgraded logistics services will allow firms to further fragment operations across the region, raising intra-regional trade volumes between key hubs.
Trade Liberalization & Energy Concerns Will Also Shape Trade Networks
On the trade liberalization side, numerous agreements, such as the ASEAN Free Trade Area, the Trans-Pacific Partnership and the Regional Economic Compact, are under discussion. While an individual analysis on each agreement is outside of the scope of this piece, these deals speak to the wider trend of increased integration in the region as countries and companies look for ways to lower logistics costs and increase trade volumes.
Trade Deals in Asia-Pacific, Signed & Under Discussion, 2000-2013
Source: Asian Development Bank, 2013
Energy supply chains will also shape trade lanes. China is lengthening its energy supply chains to diversify its supply sources and mitigate against the risk of disruption in the event of conflict. Singapore and Eastern Thailand/Myanmar will be important sources of energy supplies for China.
Of course, the report features many high level trends which feature their own specific complexities - trade negotiations are a prime example - but they offer a glimpse into key drivers for the region over the next 15 years. In our next report, we will look at the specific hubs that will benefit from these trends and where corporates would do well to consider in their strategic plans.