LF Logistics has opened a 1-million-square-foot logistics facility in Singapore, the largest automated and customs bonded distribution warehouse in the city state that will target surging e-commerce growth in Asia.
The nine-story center is located in West Jurong and is the company’s largest distribution facility in Southeast Asia, able to store up to 130,000 pallets with a throughput of 550 pallets per hour, aimed at meeting the fast-changing needs of brands and retailers in the region.
“Our logistics business has been a bright spot with double-digit growth,” said Spencer Fung, the CEO of Li & Fung group. He did not provide an investment amount.
According to the recent Asia Pacific Online Retail Forecast, 2015 To 2020, total online retail revenue will nearly double in Asia Pacific from $733 billion in 2015 to $1.4 trillion in 2020, a compound annual growth rate of 14.3 percent over the next five years.
The total online retail revenues in just five markets of Asia Pacific — China, India, Japan, South Korea and Australia — surpass the combined figure for online retail in the U.S. and Western Europe combined.
Joseph Phi, president of LF Logistics, said cross-border trade was expected to rise even faster with the establishment of the Association of Southeast Asian Nations Economic Community and the pending Trans-Pacific Partnership.
“Our new logistics facility is well positioned to serve Singapore, as well as the broader Asia region and beyond. We see this facility as a gateway to the world,” he said.
Although China dominates the e-commerce headlines, Southeast Asia is one of the markets of the future, said Steven Li, director of strategic partnerships for Cainiao, the logistics platform of Chinese online giant Alibaba Group.
“Alibaba merged with Lazada recently, the largest online marketplace in Southeast Asia, and we believe the e-commerce market in the Philippines, Indonesia and Thailand will explode in two or three years,” he said at the Cargo Facts Asia conference in Hong Kong.
Following the opening of the LF Logistics facility, Beh Swan Gin, chairman of the Singapore Economic Development Board, also highlighted the potential of the region.
“The burgeoning middle class in Southeast Asia will drive consumer demand for more sophisticated products and services,” he said. “This new LF Logistics facility in Singapore is well-placed to address this opportunity. It will also enable the company to harness Singapore’s strong base of supply chain expertise to build differentiating competencies in e-commerce and omni-channel logistics.”
Singapore Post has been quick to jump on the e-commerce train, and over the past two years, the group has been ramping up its regional logistics capabilities with new or expanded facilities, including the development of a $145 million fully integrated regional e-commerce logistics hub in Singapore that is expected to start operating in mid-2016. SingPost currently has more than 20 warehousing and fulfilment centers in the region.
Alibaba Group has invested more than $200 million in a partnership with SingPost through a series of initiatives aimed at expanding its e-commerce logistics platform across Asia-Pacific. Alibaba increased its equity stake in the group to 14.51 percent.
In a second initiative, Alibaba last year acquired a 34 percent stake in SingPost subsidiary Quantium Solutions International for $68 million, with SingPost holding the majority 66 percent share. QSI is a provider of end-to-end e-commerce logistics, warehouse and fulfilment services in Asia Pacific with a network spanning 10 countries.