• Green logistics has become an essential sector in Asia as countries look to meet emissions targets
• Transportation remains the largest source of logistics emissions with warehouse energy consumption another factor
• Opportunities for foreign investment are widespread, although market needs vary significantly  

Asia has become the largest global logistics market. Shifting trade flows and uncertainty surrounding the global economy won’t alter the region’s status as a hub. This has created a need to not only expand transport and logistics infrastructure but also ensure that goods move efficiently with minimal to no emissions. Asian Insiders Managing Partner, Jari Hietala, provides an overview of green logistics in Asia and potential areas for investment.

The sheer size of the Asian logistics industry cannot be ignored. It is projected to surpass USD4 trillion in size this year and could reach USD10.5 trillion by 2033. The rise of e-commerce and the region’s status as a manufacturing powerhouse have fuelled demand to store and transport goods.

Speed and efficiency have been historic priorities for the sector. However, sustainability has become an equally important consideration. As firms face pressure to reduce emissions, logistics operations are under greater scrutiny.

From fleets of vehicles handling last-mile orders to sprawling warehouses requiring massive amounts of electricity, the industry has considerable room for improvement. Asia has developed some capabilities but still lacks many of the technologies and services necessary to rein in emissions.      

These efforts will eventually span the region from Central Asia to ASEAN and Japan. Some markets, such as India, have limited logistics infrastructure and will be looking to build this with green innovations. Elsewhere, countries like Indonesia are seeking solutions to introduce sustainability into existing capabilities.

An overview of green logistics in Asia

The concept of green logistics in Asia is not a new one. A small handful of companies are already leveraging it as part of widespread sustainable supply chain management. However, its adoption has been uneven due to a combination of high investment costs and a lack of clear regulations.

The situation came into greater focus during the pandemic when there was a surge in demand for storage, monitoring and transportation of goods as well as infrastructure to make it happen quickly. This led to an uptick in emissions output. With the majority of Asian countries having climate targets in place, there became an urgent need to reduce carbon and greenhouse gas emissions caused by the logistics industry.

To that end, green logistics in Asia will have a far-reaching impact even if the region remains far from reaching its adoption goals at the present moment.

Transportation is still the largest source of emissions across the sector. The goal here is to replace high-pollution methods with environmentally friendly ones. Swapping out internal combustion engine vehicles (ICE) for electric or hydrogen-powered cars, trucks, and trains is a notable example.

A rising demand for storage space has led to greater electricity usage. Building energy-efficient warehouses and having existing and future facilities utilising renewable energy is critical to reducing emissions.

Green logistics is also being powered by various innovations that can optimise the entire process. These ensure goods are moved more efficiently, reducing the number of shipments and required storage time.

Finally, reverse logistics strategies are becoming important, especially in e-commerce. Many businesses and countries are developing circular economies. That means collecting, reusing and recycling products are now as much of the process as shipping them to consumers.

What opportunities are available?

One of the most significant opportunities available in Asia involves the deployment of EV logistics for last mile deliveries. This includes operators as well as sustainable delivery solution providers who can assist existing players in converting their fleets. Additionally, electric two-wheelers and their battery charging infrastructure are of interest in areas with a high population density.

For long-haul shipments, several markets are exploring ways to support a transition from diesel semitrucks to electric models. Developing capabilities will require a large investment in infrastructure. In Japan and South Korea, hydrogen-powered semitrucks have hit the roads. Both nations are looking to scale up their use.

Supply integration innovations are now being sought after by many organisations in Asia. These offer both emission reduction benefits as well as the potential to reduce more widespread costs by enhancing efficiency. Artificial intelligence offerings capable of providing optimal route planning and improved delivery scheduling are among the tools being leveraged. Demand is likely to increase in the future.

Opportunities involving warehouses run the gamut. Overseas companies with expertise in building green facilities have successfully entered several countries in Asia. The cost viability of projects varies from country to country.

Existing warehouses are starting to install energy management systems. The ability to reduce electricity consumption at cold storage facilities, in particular, is extremely valuable, as it reduces both expenses and emissions.

The implementation of renewables at warehouses is another emerging trend. Solar remains the most prominent option due to falling costs and the ability for on-site installation via rooftops or adjacent land.

A growing number of firms are seeking digital solutions capable of reporting third-party assurance and certification of green logistics efforts. This is especially true for companies that export directly to markets with ESG regulations or are part of larger supply chains.

Final thoughts

There are numerous opportunities for green logistics in Asia. Finding the right markets is crucial for successfully tapping into these. Not only must overseas companies choose the country or region where demand exists, but they must establish the necessary connections or have the right sales channels in place.

For firms without a local presence, a market entry services specialist can carry out this work on your behalf. At Asian Insiders, we have on-the-ground experts who can guide you throughout the entire process. From selecting the best market to identifying partners and even conducting a market test drive, you can remove the guesswork.

Green logistics is a sector primed for growth across Asia. Entering the market today ensures your business can gain an early foothold and scale up alongside the industry.  

Is your company considering Asia? Get in touch with us to learn more about logistics opportunities in Asia and assess your readiness to enter the market. Schedule a no-obligation call with Jari Hietala, Managing Partner: jari.Hietala (at)asianinsiders.com