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Business

Shipping shortcuts put Southeast Asia in the express lane

Nippon Express, Hitachi group help reduce the wait for local producers

Trucks using this depot in the Myanmar border town of Myawaddy form part of a ground-sea shipping service provided by Japan's Nisshin Transportation.

YANGON/BANGKOK -- New types of cross-border ground shipping services are emerging in Southeast Asia to support the growing multinational production networks here.

Many Japanese automotive and electronics companies have supply chains spanning the Greater Mekong region, which has seen a rapid increase in the outsourcing of manufacturing processes once concentrated in China. Better courier services within the Association of Southeast Asian Nations are likely to speed up this division of labor.

Japan's Nippon Express, for instance, has launched regularly scheduled truck transport -- a rarity in the region -- originating from Bangkok. The service connects points on a 1,600km route between Bangkok and Kuala Lumpur, and a 1,500km route between Bangkok and Hanoi.

Each truck carries goods from multiple customers, accommodating low-volume consignments from small and midsize companies. The trucks operate on a set schedule, departing even if not full of cargo, so customers can ship goods regularly for a predetermined price.

Until now, trucks in the region have normally operated when orders are available for shipment rather than on a fixed schedule. Customers with only small consignments would have to wait for irregular consolidated shipment services.

Thailand is home to many Japanese automotive and electronics factories. As Thai labor costs rise, manufacturers are moving some operations with lower added value to neighboring countries, aided by the ASEAN Economic Community arrangement, which eliminates most tariffs within the region.

Sumitronics, a subsidiary of trading house Sumitomo Corp., ships materials used to make electronics parts from Thailand to a new plant in Cambodia for processing, then sends them back. Automotive wire harness producer Yazaki also processes wires and other materials procured from Thailand in Cambodia. Nippon Express seeks to cater to this trend.

Western logistics companies also offer ground transportation between Vietnam and Thailand as well as Thailand and Cambodia, eager to capture business opportunities in the regional supply chains of Southeast Asia.

Shortcut for garment industry

Other new shipping services provide support for supply chains extending beyond the Mekong. Nisshin Transportation, a unit of Hitachi Transport System, launched this month a logistics service that combines ground and sea transportation. Goods go by land between Yangon and Bangkok and over water to China and Japan. This cuts the shipping time between Yangon and Japan or China to one month -- half as long as the sea-only route via the Strait of Malacca.

The service is geared to the textile industry. Labor-rich Myanmar has a booming contract sewing industry making clothing from Chinese-supplied fabric. Faster transportation can bolster Myanmar's position as a sewing hub for women's apparel and other trend-sensitive offerings that require quick delivery.

Nisshin Transportation has created a transshipment site to rearrange cargo on trucks in the Myanmar border town of Myawaddy near Thailand. The company will use its own container trucks to ensure the quality of its shipping.

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