Slowly but surely the key to Asia expansion
TNT regional MD Onno Boots
Trade liberalisation in Asia is expected to significantly boost intra-Asia regional traffic this year and in the future, following Asean trade deals with China and India that became active on 1 January.
TNT has been building up its road services across south-east Asia, China and India to boost the volumes moving through its global network, partly in anticipation of this, says regional MD Onno Boots.
“My focus over the last few years has been to anticipate the further evolution of these trade agreements,” he says. “We expanded the road network – we now cover most of the Asean countries – and we link them to China by road and air, and with Europe via air.
“Market reforms don’t happen overnight, but they spur things on. Intra-Asia trade is growing as a whole. Three to five years from now we’ll look back and say these reforms have had a a big effect. The stats will prove it. Look at the EU -- that took a long time.”
Last summer, the company deployed a leased 16-tonne capacity B737-300 freighter on a twice-weekly service from the TNT hub in Singapore to Balikpapan, in the mining region of East Kalimantan, Indonesia.
“We’re looking at how to run more of our own air services on intra-Asia lanes,” he says. “We are also expanding our road links further into China, looking at how to link India more to the rest of Asia and setting up new lines to Cambodia, Chang Mai in Thailand and Penang in Malaysia.
“We want more volume, so we’re looking to increase the catchment of our network and increase our ability to consolidate at gateways and optimise the use of the network. The core is already there. Now we’re looking at more connectivity on intra-Asia trades, where we expect a significant upturn this year. “
Boots expects India’s legislators to agree the details of the new countrywide Goods and Services Tax, originally scheduled to be introduced on 1 April. This is forecast to revolutionise logistics strategies, allowing them to become national instead of state-based.
“It will happen,” he says. “The need for time- and day-definite secure services will explode, and that will drive the maturing of the India market and the consolidation of the logistics sector.”
Part of the planning for this change will see TNT introduce air links from India to Europe this year.
“It’s a lengthy process in India, but we’re looking at a second half launch. We’re expecting a lot of growth in our Indian business.”
Boots says demand for forwarding and express services picked up dramatically at the tail end of 2009 and continued through the first two months of 2010.
“It wasn’t like the huge previous peaks, but it was a considerable upturn and it has been sustained so far this year,” he says.
“If we go back to last year, I think we started seeing the impact of the global economic troubles from early January or even late December 2008. But TNT in Asia still performed really well. Year-on-year growth was less than I expected, but it was still in double-digits.”
TNT’s full-year results for 2009 show revenue fell by 6.7% and ebit by 34%, year-on-year.
Boots says Asia’s performance helped the group offset the severe downturn in Europe, which started to show signs of recovery in the final quarter.
Growth in Asia was achieved by expanding TNT’s capability and infrastructure network to attract new business to compensate for the drop in organic growth as economic conditions deteriorated. The same business model, insists Boots, will stand the company in good stead in 2010.
“We took up considerable market share in Asia last year. With the economy picking up, the additional business that we found last year, plus our existing customers, will all grow, so we expect an excellent performance this year.
“We didn’t expect it to peak the way it did [in the final quarter], but even if there’s a decline, it will still be way above this time last year.”
TNT started a new B747-400ER freighter service between Hong Kong and its air hub in Liege, Belgium, in September just before the peak season kicked in, offering shippers in the Pearl River Delta, the Philippines, Thailand, Vietnam and Taiwan a direct link into TNT’s European trucking and air network three times a week.
“We were seeing high utilisation of that aircraft, and of our Shanghai service to Liege. Even Singapore and south-east Asia was looking up at the end of the year.”
TNT has been building up its road services across south-east Asia, China and India to boost the volumes moving through its global network, partly in anticipation of this, says regional MD Onno Boots.
“My focus over the last few years has been to anticipate the further evolution of these trade agreements,” he says. “We expanded the road network – we now cover most of the Asean countries – and we link them to China by road and air, and with Europe via air.
“Market reforms don’t happen overnight, but they spur things on. Intra-Asia trade is growing as a whole. Three to five years from now we’ll look back and say these reforms have had a a big effect. The stats will prove it. Look at the EU -- that took a long time.”
Last summer, the company deployed a leased 16-tonne capacity B737-300 freighter on a twice-weekly service from the TNT hub in Singapore to Balikpapan, in the mining region of East Kalimantan, Indonesia.
“We’re looking at how to run more of our own air services on intra-Asia lanes,” he says. “We are also expanding our road links further into China, looking at how to link India more to the rest of Asia and setting up new lines to Cambodia, Chang Mai in Thailand and Penang in Malaysia.
“We want more volume, so we’re looking to increase the catchment of our network and increase our ability to consolidate at gateways and optimise the use of the network. The core is already there. Now we’re looking at more connectivity on intra-Asia trades, where we expect a significant upturn this year. “
Boots expects India’s legislators to agree the details of the new countrywide Goods and Services Tax, originally scheduled to be introduced on 1 April. This is forecast to revolutionise logistics strategies, allowing them to become national instead of state-based.
“It will happen,” he says. “The need for time- and day-definite secure services will explode, and that will drive the maturing of the India market and the consolidation of the logistics sector.”
Part of the planning for this change will see TNT introduce air links from India to Europe this year.
“It’s a lengthy process in India, but we’re looking at a second half launch. We’re expecting a lot of growth in our Indian business.”
Boots says demand for forwarding and express services picked up dramatically at the tail end of 2009 and continued through the first two months of 2010.
“It wasn’t like the huge previous peaks, but it was a considerable upturn and it has been sustained so far this year,” he says.
“If we go back to last year, I think we started seeing the impact of the global economic troubles from early January or even late December 2008. But TNT in Asia still performed really well. Year-on-year growth was less than I expected, but it was still in double-digits.”
TNT’s full-year results for 2009 show revenue fell by 6.7% and ebit by 34%, year-on-year.
Boots says Asia’s performance helped the group offset the severe downturn in Europe, which started to show signs of recovery in the final quarter.
Growth in Asia was achieved by expanding TNT’s capability and infrastructure network to attract new business to compensate for the drop in organic growth as economic conditions deteriorated. The same business model, insists Boots, will stand the company in good stead in 2010.
“We took up considerable market share in Asia last year. With the economy picking up, the additional business that we found last year, plus our existing customers, will all grow, so we expect an excellent performance this year.
“We didn’t expect it to peak the way it did [in the final quarter], but even if there’s a decline, it will still be way above this time last year.”
TNT started a new B747-400ER freighter service between Hong Kong and its air hub in Liege, Belgium, in September just before the peak season kicked in, offering shippers in the Pearl River Delta, the Philippines, Thailand, Vietnam and Taiwan a direct link into TNT’s European trucking and air network three times a week.
“We were seeing high utilisation of that aircraft, and of our Shanghai service to Liege. Even Singapore and south-east Asia was looking up at the end of the year.”
Click here to email the editor and comment on this story
Receive our FREE news email bulletin click here
- 13 − 15 March 2012
- 22 − 23rd March 2012
- 25th April 2012 for 12 weeks.
- 12 − 14 June 2012
