In the face of tariff threats from new U.S. President Donald Trump, Vishal Sharma, Asia-Pacific chief executive of global freight forwarder DB Schenker, said, "Any disruption that may occur will lead to higher demands for resilience from our customers."
Db Schenker sees a growing demand from customers to establish a presence in the region around China in order to expand their presence and future-oriented business in Asia.
In fact, the issue of resilient supply chains has been on the agenda for some time in the context of companies calling for a "China +1" strategy, which means it is too risky to bet on the Chinese market alone. Both in terms of production and in terms of supply chain selection.
Now, with Donald Trump once again in the White House, the German logistics giant, which was recently acquired by Denmark's DSV, has customers working to further protect their Asian supply chains outside of China to mitigate the impact of higher US tariffs.
Vishal Sharma recalls how supply chains were "relatively simple" over the past 20 or 25 years.
"You produce mostly in China and ship to the rest of the world. But now you need to produce and ship in at least 10 different countries, whether it's in Latin America, Europe, Southeast Asia or India."
Vishal Sharma joined DB Schenker in 2018 and became CEO of DB Schenker Asia Pacific a year ago, having previously served as CEO of Greater China and the Indian Subcontinent. His career has included executive positions in logistics and shipping, primarily in Southeast Asia, Europe and India.
But what used to be predictability has now become "multifaceted complexity," requiring the logistics company to invest in new facilities across a wider area of China. With a potential trade war involving China, more countries in the region have been included in the flexibility measures.
Vishal Sharma commented: "We need to be really strong to secure our geographic location in Southeast Asia, India, Singapore, Malaysia, and our investment in infrastructure capabilities is very solid because the business will come from a place where the business is concentrated, and we are already very strong."
"But now we have to replicate this advantage in different clusters in maybe seven countries." It definitely has to do with the geopolitical tensions we've seen before and the lessons of economic sanctions."
In response to this, DB Schenker launched a strategic initiative early last year to look at all its regions to explore potential demand in terms of air cargo hubs, seaborne capacity and inland product capabilities, including markets and customers in Asia and within Asia.
The aim is to identify their need for logistics company services that allow customers to move products between different business units.
Malaysia, Thailand, India, Vietnam and, to a lesser extent, Singapore are among the countries in the region that have benefited and will benefit further. Ultimately, it also depends on the labor and technological capabilities available in each country.
"Thailand and India will clearly benefit if the automotive supply chain is withdrawn from China, as Japan (in Thailand) and South Korea (in India) have built up extensive supply chains and huge manufacturing capabilities over the past few decades," Sharma explained.
Even before taking office, Donald Trump announced higher tariffs on goods produced in China.
According to the BBC, Donald Trump said back in November that he would impose new tariffs on China, Mexico and Canada. This week, he reiterated his call for a 10 percent tariff on Chinese imports.