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Factory relocations stemming from the US-China trade war are proving good business for cross-border road freight in South-east Asia.

According to Gursimran Singh, regional business development manager at road freight specialist Kart Asia, machinery exports from China have increased considerably this year.

“The general market is quite decent for cross-border trucking, and I think the major reason is the trade war,” he told The Loadstar.

“Because of the tariff dispute there are a lot of factories moving from China to Vietnam and Thailand. That’s played in our favour and we’ve been relocating a lot of machinery.”

Kart operates one of the largest road freight networks in ASEAN: more than 260 self-owned container trucks making up to 2,000 trips each month. It acts as a neutral, asset-based service provider to many of the large 3PLs operating in the region.

Mr Singh explained that, instead of moving a whole factory, many manufacturers opt to keep a major base in China while shifting some machinery to alternative locations. For example, Kart recently transported an assembly line machine from China to Thailand’s Rayong province.

“Just one machine needed around 13 45ft containers,” noted Mr Singh. “And all had to move together due to tax purposes, all 13 containers had to cross the borders at the same time under one customs clearance, which was quite challenging.”

And the shift in supply chains looks set to continue, following President Trump’s surprise decision on Thursday to levy a new 10% tariff on an additional US$300bn of Chinese goods. In a series of tweets, he claimed Beijing’s failure to purchase large quantities of US agricultural products was the reason.

“The trade war outcome is still up in the air and nobody knows what the conclusion will be,” noted Mr Singh. “Therefore factory relocations are ongoing and the manufacturers are still deciding what to do in terms of production.

“If one thing’s for sure, it’s that Vietnam is the biggest beneficiary of all this. Vietnam is getting more and more into manufacturing, whereas before it was mostly processing cargo.”

As a result, he said, cross-border trucking between Vietnam and Thailand was seeing strong growth.

This observation was backed up by research published last month by Thailand’s Siam Commerical Bank that said cross-border logistics to Vietnam was an “opportunity not to be missed”, and projected the trade to grow by 30% over the next three years.

“Key drivers of this growing trend are an expansion of manufacturing sector and the growth of domestic consumption in Vietnam,” the report says. “However, problems concerning road conditions, differences between transportation laws in each country, and complexities in customs procedures remain important obstacles.”

Mr Singh added: “What we’ve started seeing with a few customers is raw materials going from Thailand into to Vietnam, where finished electronic products, for example, are prepared and then shipped out. So it’s the assembling industry that’s really taking off.”

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  • Andreas Kout

    August 05, 2019 at 2:03 pm

    we are not aware if you know tht KART is a subsidiary of KLN