Logistics is the movement of goods from one place to another. The logistics of Asia and Europe are different because there are two different types of economies. Asia is more focused on manufacturing, while Europe is more focused on services. Asia has more of a production-oriented economy, while Europe has a consumption-oriented economy. This means that Asia’s economy relies more heavily on exporting goods than on importing them, while Europe imports more than it exports. As a result, the logistics industry for Asia is much different than the logistics industry for Europe. Here, are some interesting facts about each region’s logistic industry that may help you understand the differences better.
Logistics in Asia
Asia’s logistic industry is more dependent on exporting goods than importing them. However, it’s not just about exporting goods, but about exporting goods and importing other products that support the industry.
For example, just as you don’t ship bananas from Europe to Asia, you don’t ship electronics or mobile phones from Europe to Asia, which in turn is not a huge driver of the Asian economy. Instead, the most important drivers are exporters of other types of goods, such as apparel. The Asia Pacific region also has more of an emphasis on the exporter-supplier relationship rather than that of consumers. In the Asia Pacific region, two thirds of the trade is accounted for between exporters and importers. That means that the Asia Pacific region is primarily a buyer economy.
The logistics industry in Asia is dominated by small and medium-sized companies which transport goods such as electronic goods from China, Japan, or Korea, to Germany, or the United Kingdom. Transportation by sea, air, and road dominate Asia’s transportation sector. The majority of Asian companies in this sector are small and medium-sized companies because they rely on less investment in the infrastructure and logistics sector. The average freight company in Asia carries 40% more volume than the average freight company in Europe, and 35% more volume than the average freight company in the Americas. These high volumes are created by the demand in Asia and Europe.
By far, the Asian logistics industry has become more automated than it has in Europe. The number of transport trucks, for example, in China is a lot higher than in Europe. China’s 27.83 million transport trucks made up nearly half of all the trucks on the roads in Asia and the Pacific in 2019, while Europe only had 6.2 million trucks in 2021. On average, two trucks travels by road for each car in Europe, while in China, one truck travels by road for every person. To put that into perspective, this is about four times as many trucks as there are people in Europe.
While there are a lot more trucks in Asia, the amount of cargo carried by transport trucks in Asia is also much more than in Europe.
Additionally, many Asian countries can expect extraordinary growth in their domestic economies. GDP growth in Asia is expected to be 4.5 percent, more than double the world’s average of 2.0 percent. By 2025, 30 percent of world consumption will be in Asia. While China, Japan, and India will remain the largest logistics markets in Asia; India, Indonesia, Vietnam, and Thailand show the highest growth potential in the region.
Logistics in Europe
While goods moving through the world’s busiest ports in China are the workhorses of the world’s supply chains, the Port of Antwerp in Belgium is considered the largest and most modern of the ports in the world. The port is one of the oldest in the world, but it has changed greatly in the past several decades, to become even larger, more complex, and more efficient.
Europe’s ports are built in sections that stretch for miles. The docks are connected by a maze of underground tunnels, and some of them even stretch under the sea.
Traditionally, Europe’s logistics industry has been focused on physical movement of goods. This means that goods have to be shipped from one location to another. A significant portion of Europe’s goods are transported by ship. The speed at which goods can travel depends on their intended destination. Typically, Europe’s shipping speeds range from four to eight days. Other products that travel through the region’s logistics system include textiles, apparel, foodstuffs, chemicals, and consumer electronics. The rise of e-commerce and the growth of large online retailers in Europe have increased the amount of freight in Europe’s transportation system.
Logistics in Europe is more developed than in Asia because of the fact that it is a much more developed economy than in Asia. One reason why Europe is more developed is because of the presence of a union. Essentially, union countries such as Germany have more resources and employees to work with than the countries in Asia. Another reason is that Europe has more sophisticated industries than Asia. An example of a more sophisticated industry is aerospace in comparison with automobile or electronics.
The supply chain system of Europe is very long. This means that shipping is much more expensive in Europe. In other words, if it costs more to ship a unit of a particular good from Asia to Europe than it would to ship that same unit from Europe to Asia. Then, that extra shipping cost is passed on to the consumer in the form of higher prices. For example, if you were to ship a car from Japan to Europe, it would take a longer amount of time to ship than if the car was shipped from Europe to Japan. Therefore, the final cost would be much higher for the consumer.
The Europe Freight and Logistics market is anticipated to register a growth rate of more than 3% during the period of 2021-2026.
Logistics investments in Europe went up to 38.64 billion euros in 2020. This is driven by the massive growth of e-commerce in Europe. Key parameters promoting the market growth include economic growth, growing population, and growing industrialization. However, lack of the government’s commitment to the development of seaports or road networks and reconfigured supply chains, with the growing local production and consumption units are thereby hampering the market growth.
Freight rates on European roads rose in October 2020 and passed pre-crisis levels. The European road freight spot rates price index in October 2020 was 1.2% higher than October 2019. It was also 3.6% higher than in September 2020.
Conclusion
For the last fifteen years, China has been growing rapidly as the world’s manufacturing capital. Even though China does not have the same labor laws as Western countries, the booming manufacturing industry has forced many Western companies to relocate their production facilities in China. Even with this, China still lags behind Europe’s logistics market in some aspects, but is catching up quickly.
Despite their differing logistics market’s demographics, Asia and Europe are facing similar issues with delivery delays and costly prices. Both regions are trying to find new solutions to this issue and are coming up with their own solutions.
As you can see from this post, each region in the world has its own distinct logistics industry. The key thing to understand is that even though the logistics industry is a diverse field, there are some similarities among the global market leaders of each region. Therefore, it is important for you to understand the differences and the similarities so that you can make the best business decisions for your own business.
Asia is the second-largest global economy after the U.S. While Asia is the most important economy for many global companies, Europe is where they need to establish their global footprint, and the European logistics industry is one of the strongest in the world. The continent is known as “The Old Continent,” but it is one of the most rapidly developing areas in the world, according to the Organization for Economic Co-operation and Development (OECD). The continent’s low population, high standard of living, and superior transportation infrastructure make it an ideal place for companies to establish their logistics footprint.
