South East Asia is building on its status as a major production hub. In an unsettled year for global trade led by US tariffs, South East Asia is showing signs of stability and growth. A few years previously, the Chinese Mainland’s cautious reopening after the pandemic had fuelled a “China+1” strategy, which saw manufacturers spread supply chains and production across secondary sites. South East Asia, already well versed in high tech manufacturing, was one of the beneficiaries, and now it is growing again – even with most of the region facing a US tariff rate of 19 per cent.
“The story here is that this is 30 per cent less than the tariffs imposed on the Chinese Mainland’s exports to the US,” says Ashish Kapur, Regional Head of Cargo South East Asia and Oceania. “There was already expertise here, and while it’s easy to build a factory, it’s difficult to build expertise.”
Kapur say that in his conversations with shippers and forwarders, South East Asia also offers certainty with its negotiated tariffs. “For example, around 30 per cent of Vietnam’s exports go to the US, so getting a deal was vital,” says Kapur. “Companies want certainty, and more are committing to expanding their operations in this part of the world.”
The Chinese Mainland, meanwhile, has successfully diversified its export markets, increasing volumes to Europe and ASEAN among others, and its export growth bounced back by 8.3 per cent in September, ahead of projections.
Kapaur notes the biggest growth areas in the region are Vietnam – Hanoi in particular – Penang in Malaysia and Thailand, although other territories are also faring well. A lot of the focus is on high-tech industries, and as the AI revolution commences, that means components for server racks for data centres alongside high-end consumer goods.
Here are the key stats on South East Asia’s exports and how Cathay Cargo is serving those needs.
Cambodia
Stations served by Cathay Cargo: Phnom Penh (KTI)
Principal exports: Garments
Kapur notes: “Cambodia is home to many global high-street and premium fashion manufacturers. It offers a stable environment and lower tariffs than some of its competitors. Meanwhile, Phnom Penh’s new airport, Techo International Airport, opened officially last month. Our upgauged wide-body passenger bellies serve this market well.”
Indonesia
Stations served by Cathay Cargo: Denpasar, Jakarta, Surabaya
Principal exports: Perishables and high tech
Kapur notes: “Alongside Indonesia’s traditional perishables market, there is a small Indonesian island just off Singapore – Batam – which produces a lot of goods with lithium-ion batteries for shipments out of Singapore.”
Malaysia
Stations served by Cathay Cargo: Kuala Lumpur, Penang
Served by HK Express: Kuala Lumpur, Kota Kinabalu, Penang
Served by Air Hong Kong: Penang
Principal exports: Stepper machines, server racks, data centres, semi-conductors
Kapur notes: “Penang is becoming a hub for data centres and the semi-conductors that power them, as well as a base for Bitcoin mining machines. Companies like Bosch and Dyson are also expanding their production. Another big theme in Penang is medical AI equipment, for diagnostics and surgeries.”
Philippines
Stations served by Cathay Cargo: Cebu, Manila
Served by HK Express: Clark, Manila
Served Air Hong Kong: Cebu, Manila
Principal exports: Perishables, garments and beauty products
Kapur notes: “The Philippines is bouncing back for us, but still very heavily dependent on perishables.”
Singapore
Stations served by Cathay Cargo: Singapore
Served by HK Express and Air Hong Kong: Singapore
Principal exports: None
Kapur notes: “Singapore has done very well for us this year – not as a producer, but as an overflow from Malaysia and the neighbouring Indonesian island of Batam. Singapore offers a lot of capacity. We moved close to 300 tonnes of cargo this year from Penang using a dedicated truck service.”
Thailand
Stations served by Cathay Cargo: Bangkok, Phuket
Served by HK Express: Bangkok, Chiang Mai, Phuket
Served by Air Hong Kong: Bangkok
Principal exports: Perishables, laptops, server racks, EV-related products
Kapur notes: Exports of traditional perishables – mangoes, flowers, seafood, chilled meat – to the Chinese Mainland have increased quite a bit. Then, giants like HP have built up bases for server racks and laptop production. Other companies are producing next-generation hard drives, plus a lot of EV-related auto products which fly between there and Penang.”