New Straits Times

30 Dec 2004

Logistics sector to gain impetus

By ONG CHIN YET

AS MALAYSIA moves towards a developed nation status, all indications are that the logistics sector will fare favourably in 2005.

Central to powering the logistics sector’s growth is the country’s trade with other nations.

International trade has become a critical component of the logistics sector’s growth engine.

Given the importance of international trade to Malaysia, local logistics players are increasingly looking at improving efficiency and productivity measures to enhance the industry’s competitiveness.

Changing food consumption patterns, the sharp increase in global trade and investments in food-related businesses over the years, as well as the growing awareness of logistics as a strategic tool for companies to manage the distribution and storage of their products have resulted in surge in demand for specialised logistics solution such as temperature-controlled logistics services.

Although the potential of temperature-controlled logistics is not yet fully recognised in the market. Demand for such specialised services is expected to grow in tandem with the growth in international trade.

Rising household disposable incomes and the increasing demand for consumer food products have resulted in temperature-controlled logistics emerging as a vital link in the transportation of frozen. Chilled and perishable food products.

The government’s policy to reduce food imports and increase and production has to be lauded as the overall growth of the agriculture sector registered a 3.2 per cent surge in the first half of 2004.

This surge was largely attributed to the increased output of food commodities such as fish, livestock and fruits.

Temperature-controlled logistics, or cold-chain logistics, management essential thought out the supply chain of food and food-based product such as fruits, poultry, sea food and dairy products, where the temperature-controlled environment optimises the freshness as well as the quality of such perishable products.

Ong Chin Yet Haisan Resources Bhd MD

One of the objectives set out in the Third National Agricultural Policy (1998-2010) is to make Malaysia the regional reference centre for halal food products.

For this, the logistics framework needs to be in top form to manage the distribution, procurement, processing as well as the storage of products in the halal market.
In the Budget 2005 announcement, the Government outlined the various incentives to boost the development of efficient and competent support services with emphasis on research and development, marketing and logistics services- all of which are critical if Malaysia is to be positioned in the forefront of the regional halal hub development on par with its regional or global counterparts.

Arising from the government’s concerted efforts in making the halal hub a reality, specific measures, including the call for quality standards in the production of halal food products, have been implemented.

Under the Malaysia Standards MS1500 “General” Guidelines on the Production, Preparation, Handling and Storage af Halal foods”. The need to comply with Good Manufacturing Pracitices and Good Hygiene Practices will further strengthen the credibility of the logistics sector in handling Halal food products in the region.

Jakim’s (Department of islamic Development Malaysia) widely recognised halal certification coupled with the Goverment's strong drive towards services quality excellence in the logistics industry and the vast potential for growth in the halal food market will position Malaysia in the centre of the global halal food chain
As Malaysia moves up the industrialisation path, the management of logistics becomes critical in order to support the rapid growth of domestic and international trade.

However, there are still some challenges facing the industry.There ia a need for a central monitoring body with an in-depth understanding of the logistics industry.

Such a central monitoring body will help coordinate and chart the future growth of the entire logistcs industry.

It will also be able to provide a database, monitor current and emerging trends and assist in decision-making for companies involved in logistics services as well as policy formulation at the government level.

For the industry to grow, the adoption of best practices in the industry should be encouraged. Best practices such as benchmarking and quality services standards will have a beneficial effect on the industry by reducing costs and enhancing trust and integrity in the customer-supplier relationships.

Moving forwards, the logistics industry needs to adopt a more concerted approach to resolving these challenges.

With greater emphasis on research and development, service quality as well as industry professionalism will be raised.

This would ultimately improve the competitive edge of local logistics services in the international markets.

The writer is the managing director of Haisan Resources Bhd, provider of integrated temperature-controlled logistics services.