NEW YORK -- Thailand, Indonesia and Japan are the biggest growth markets in Asia for UPS, as supply chains quickly adapt to the U.S.-China trade war, a senior executive at the global logistics company said Wednesday.
In an interview with the Nikkei Asian Review, Chief Operating Officer Jim Barber said there is "no question" that cargo volume from China to the U.S. has significantly shrunk. "It is down for everyone, everywhere."
But with manufacturers adjusting their supply chains and moving production out of China to avoid tariffs, some markets have emerged as winners, he said.
"It is very clear to me that Thailand was the early beneficiary of some of the tariffs that were imposed in China. Our customers, many of whom had manufacturing facilities in Thailand, immediately could shift production there," Barber said. "We had a front-row seat to see how supply chains moved."
Widely considered an economic bellwether, UPS released second quarter earnings Tuesday that showed the revenue of its international business, outside the U.S., declined 2.7% year-on-year. The company cited "global macroeconomic pressure" for the decline, which marked a significant reversal from the 9.5% growth posted in the same period a year ago.
Operating profit, meanwhile, increased more than 7%, as the company benefited from its "flexible network and by targeting growth markets within the company's diverse revenue base," UPS said.
Thailand, Indonesia and Japan were the top three Asia growth markets in the second quarter, replacing previous leaders Vietnam and Taiwan.
"If you are a manufacturer that has a dual or more nodes in your manufacturing, you just shift to the other one, because it will take at least a couple of years to build a new plant and get the employees trained," Barber said. "Thailand and Indonesia were clearly two of those nodes."
Looking forward, Barber said, Vietnam and India are likely to emerge as long-term winners. "We are doing a lot of work in Vietnam. The other one is India. We are really anxious to grow our footprint and connect India differently in the next five to 10 years."
