Over the past few years, the Malaysian eCommerce market has undergone a remarkable transformation. With an estimated GDP of 10.19 billion USD in 2023, it is one of the fastest-rising economies in Southeast Asia. This exponential growth can be attributed to the nation’s high number of active internet and social media users.
The eCommerce sector is gradually surpassing the traditional markets in Malaysia. Online purchases are fast becoming the norm among the younger generation, particularly teenagers. The global COVID-19 pandemic brought about an increased awareness of internet marketing. With a complex and dynamic eCommerce market, understanding the logistics in Malaysia is vital to online business success in the country.
Recent years have seen a significant evolution in the Malaysian logistics sector. Improved infrastructure for logistics, rising freight volumes, and structural expansions to accommodate eCommerce have contributed to its growth. Modern developments in the logistics industry have been fueled by a concentration on specialized markets like cold chain as well as the need to expand network and scale. More logistics providers have chosen to focus on eCommerce businesses.
There are many players in the current market landscape across the value chain. Market consolidation will lead to the emergence of two main categories of logistics providers. Companies that specialize in niche markets and large integrated logistics players that are capable of leveraging their scale and reach.
An Overview of the Logistics in Malaysia
To understand how logistics in Malaysia works, we must first look at the leading industry it supports, eCommerce. In 2004, eBay launched in Malaysia, marking the beginning of the growth of eCommerce in the country. Shopee, Lazada, and Zalora debuted their online shopping marketplaces within a few years. Shopee emerged as the eCommerce marketplace of Malaysia.
Malaysia has emerged as a hub for online enterprises due to its rapidly expanding economy and infrastructure development.
For various reasons, Malaysia achieved one of the world’s quickest rates of eCommerce growth. From 2023 to 2027, the country’s eCommerce industry is expected to expand at a CAGR of 6%. Millions of internet users power Malaysia’s e-commerce economy. Malaysia had 32.07 million active internet users as of 2022. The number is expected to increase by 35.33 million by 2028, allowing businesses to grow online and meet consumer demand.
Numerous government initiatives are also in place to assist foreign investors hoping to participate in Malaysia’s expanding eCommerce market. These same initiatives also benefit local companies looking to expand their online presence.
But naturally, there are risks and obstacles associated with the eCommerce industry. eCommerce fraud and other cybercrimes have become commonplace with the surge in online traffic. The Malaysian government is attempting to combat these growing illicit activities to make the online shopping environment secure for users and businesses.
Malaysia’s e-commerce businesses offer food and personal care items to electronics, fashion, and furnishings. Based on market share, the fashion industry leads Malaysian e-commerce with over 31% of the total eCommerce market.
Malaysia offers more affordable manufacturing services compared to industry giants China and Singapore. This has prompted companies to move their manufacturing operations there. Because of the shift in manufacturing, firms also relocated their procurement and supply chain departments to Malaysia.
Many major international logistics firms decided to consolidate their supply chain and procurement support operations in Malaysia. Logistics companies such as DHL, Maerks, and Kuehne + Nagel increased efficiency, lowered employment expenses, and optimized company procedures.
Malaysia’s logistics sector includes a broad range of operations related to transportation and warehousing. It also provides for the administration of commodities within regional supply chains. Being a peninsula, the country relies on several different modes of transport when it comes to freighting.
With a total length of 290,099 kilometers, including 2,016 kilometers of expressways, Malaysia boasts a vast road network. The use of land freight dominates domestic logistics. The nation’s primary route stretches more than 800 km from Singapore to the Thailand border. Whereas East Malaysia’s road system is less developed, Peninsular Malaysia boasts a vast network of roads. Peninsular Malaysia’s primary means of transportation include passenger vehicles, buses, and trains.
Airports and seaports connect Malaysia to the rest of the world and, most importantly, its Asian neighbors. Malaysia’s inland ports are essential to the country’s freight transportation network. These serve as the ports of entry for both importers and exporters. As a result, Malaysia’s logistics sector is growing and contributes 4-6% of the country’s GDP. The food and beverage, manufacturing, electronics, automotive, and pharmaceutical industries are significant revenue generators for Malaysia’s logistics industry. Among the principal inland ports are Nilai, Batu Pahat, and Ipoh.
To attract enterprises and promote economic progress, logistics in Malaysia has strategically developed industrial parks and free trade zones (FTZs) across the country. Online merchants can enjoy several advantages provided by these zones. Doing business in these special economic areas provides access to modern infrastructure, streamlined customs procedures, and tax breaks.
One of the biggest container ports in the nation and a prominent free trade zone is Port Klang, located near the capital city of Kuala Lumpur. It offers companies a prime location and logistical benefits for global trade.
The growth of eCommerce has significantly impacted Malaysia’s logistics operations. Efficient last-mile delivery has become essential to satisfy online shoppers’ expectations. Regional logistics companies are continually modifying their operations to meet the unique requirements of online retailers.
Businesses like J&T Express have used inventive last-mile delivery options, such as digital tracking systems and easily accessible pickup locations.
Four Key Trends of Logistics in Malaysia
International retailers and brands can find profitable commercial prospects in the Malaysian market. Most of the country’s well-known eCommerce sites are powered by foreign funding. It is a prime opportunity for international merchants to invest in Malaysia’s eCommerce industry due to the government’s strong support and the market’s rapid growth.
Malaysia offers various product trends and prospects for online merchants of any scale. Malaysia’s economy and multicultural population are developing, making it an excellent place to grow your online business.
1. Government Initiatives and Support
The National Logistics Master Plan, the Digital Free Trade Zone, and the Third Industrial Masterplan (IMP3) are flagship programs the Malaysian government has implemented to assist the freight and logistics sector. The country has prioritized the logistics industry to encourage industry growth. With the help of these initiatives, the logistics industry is expected to thrive as trade procedures are streamlined. Digitalization is encouraged, and infrastructure is improved.
2. Adoption of Modern Technology and Techniques
Logistics in Malaysia has adopted many new technologies due to the growth of several industries. Consumer goods, electronics, food, and beverage, among others, have seen rapid modernization using cutting-edge technology and software. For example, cloud-based platforms allow for the seamless connection of crucial elements of the logistics supply chain. Different digital workflow solutions have helped Malaysia’s logistics industry grow. Logistics companies can benefit from digital technologies like blockchain, artificial intelligence, and the Internet of Things (IoT). These technologies can increase operational effectiveness, optimize routes, and improve supply chain visibility.
3. Emerging Global Market Leader
The proximity of Malaysia to powerful economies like China and India offers substantial prospects for international trade. Creating economic corridors and free trade agreements has increased trade volumes, raising the need for effective logistics and freight solutions.
There is an increasing need for specialized logistics services catered to the particular needs of online retail. Companies must have comprehensive eCommerce logistics solutions, such as order fulfillment, reverse logistics, and warehousing, to become successful.
4. Push for Sustainability
In the freight and logistics sector, sustainable practices are becoming increasingly important. Malaysia is working to provide green logistics solutions because it understands the value of environmental sustainability. Logistics firms with a competitive edge in the market are those who use environmentally friendly procedures and provide carbon-neutral services.
A deep understanding of the local supply chain landscape, transportation infrastructure, eCommerce dynamics, regulatory compliance, and talent development are essential for navigating Malaysia’s logistics market. Online merchants can improve their logistics operations by identifying and applying best practices tailored to Malaysia. They’ll be able to satisfy client demands, and contribute to the country’s growth.
Success in Malaysia’s dynamic logistics sector requires ongoing education, keeping up to date with industry developments, and cultivating partnerships with reliable logistics partners. Malaysia boasts an advantageous location, robust infrastructure, and a growing eCommerce sector. Logistics in Malaysia offers eCommerce enterprises exciting prospects to succeed in a dynamic supply chain ecosystem.
ZhenHub gives you a clear path to expanding into the Malaysian eCommerce market. Logistics in Malaysia can be hassle-free with our vast network of fulfillment centers powered by cloud-based software systems. Sign up at our website and explore all our eCommerce logistics services.