The future of cross-border logistics in Southeast Asia with Janio COO Ali Madihid and Head of B2B George Oliver13 min read

“It’s very important that you shouldn’t be putting your eggs into one basket…It’s very important [to] diversify your source of manufacturing, but more importantly work with a strong, robust, flexible logistics provider, such as Janio…”

About the episode
In the second part of our series on cross-border logistics in Southeast Asia, supply chain experts Ali Madihid and George Oliver take a deeper look into the opportunities for medium-sized businesses and SMEs amidst supply chain diversification. They also give their take on what cross-border logistics will be like in the next few months as economies reopen, markers for recovery, and maintaining agile operations in the midst of crisis. Both Ali and George have had extensive careers in logistics, and are now working with Janio, a 4PL solutions platform for Southeast Asia. This call was recorded May 12th.

Timestamps

00:17 Introduction;
1:14 Goods impacted by supply chain diversification;
2:53 Impact of supply chain diversification on manufacturing and exports in Southeast Asia;
4:19 How to manage supply chains moving forward for mid-size companies and SMEs;
7:09 Thoughts on COVID19 impact on Ramadan;
9:20 Markers and indicators for recovery;
11:55 Keeping operations agile in a state of constant flux;
13:30 Recommendations on great content picked up over the lockdown;

About Janio

Janio is a cross-border logistics service provider that simplifies e-commerce deliveries in Southeast Asia. Combining technology with market knowledge, Janio provides an effective end-to-end logistics solution, including international cash-on-delivery and customs clearance, where shippers can manage international shipments on a single platform. For more information, please visit https://www.janio.asia

About our guests

Ali Madihid
Ali has over a decade of management experience in areas of business development, corporate strategy, global supply chain and operations management. He has held senior management roles in Expeditors International, SATS, Reebonz and Zalora. Currently, he serves as Janio’s COO, developing the company’s networks and capabilities.
George Oliver

George was brought on to manage the B2B business at Janio. This comprises of furthering Janio’s already strong Air offering while building out our new Sea and Land capabilities across Janio’s ASEAN and wider global network. Prior to Janio George was CBO of Kargo, the first technology-enabled full-service trucking fleet in Myanmar. As CBO George was in charge of driver and customer acquisition, successfully building a fleet of 2,800 fully trackable trucks and winning long term contracts with MNC’s which included Coca Cola, Adidas, Mitsubishi, Nestle and K+N. Before this, George co-founded the first EU focused rice exporter in Myanmar trading at the peak of 2,500 tons per month, and in an earlier life worked as a financial technology consultant in London.

Paulo: In terms of this manufacturing, what goods or products would be more viable in terms of diversification? Is there that distinction in terms of products? 

George: I think the easiest place to start is garments, and the most obvious. Vietnam, Indonesia, and Thailand to a very basic extent, have very active and very highly skilled garment ecosystems, and I think you’re going to see a lot more that even in Myanmar moving out of the traditional Shenzhen, Guangzhou, around up north around Shanghai, moving into Southeast Asia. And I think the Indonesian, Vietnamese, and Thai governments are ready and they’re very keen on bringing that business into their own countries, and have already started a lot of programs to try to track the medium-sized business, not the SMEs, but the medium-sized fashion labels, with local Asian brands. 

Paulo: Apart from garments are you seeing anything else in the next few years that would take up? 

Ali: I think anything fashion will slowly — at least basic fashion will slowly move out from China. A lot of basic wear is being manufactured out of Indonesia, so I think this will continue on growing. That said, I realized that many Chinese companies are investing in Southeast Asia, so perhaps basic high tech, like you said, simply assembly works can definitely move out of China, while China still remains focused on the high tech portion. 

Paulo: And what does this mean — I would like to get your insight on what this means for local. brands, would they be able to source things cheaper, be able to lower costs in terms of their own goods and selling it within their own country and even exporting it?  

Ali: I’ve always been a proponent of buying local, buy ASEAN. I think with this COVID, it shows again that our dependency on China is too much already. We should definitely export first and foremost in sourcing, in production, in ASEAN. I wouldn’t say in your local country also but in ASEAN itself. We are a bloc of 10 countries, we have 650 million people, there are definitely huge opportunities for us to spur each other’s economies better. So that’s why in Janio we always have bet highly on the intra-ASEAN trade to increase accordingly. Sadly it took COVID for the impetus to grow much faster, but with that said also we seriously believe that the intra-ASEAN trade in terms of B2B will grow tremendously, especially countries like Indonesia, Vietnam, Thailand, Malaysia, and the Philippines to a certain extent with regards to being manufacturing sources. I think eventually countries like Laos, Cambodia, and Myanmar will follow suit to becoming manufacturing hubs. 

Paulo: Given this — I think George also mentioned a while ago, that it took COVID19 for a lot of businesses to realize that they need to really put diversification on the table. So with these shifts, what would your advice be to businesses handling their supply chains, managing their supply chains moving forward and what would the role be of going digital and digitalisation in all of this? 

George: I think the first easy hurdle they can get over is that a lot of the smaller guys had only one freight forwarding partner, not saying bad about the other freight forwarding partners. But I was really surprised that they only had one and that they had only been speaking to one for quite a while, which meant then that when we got the call because they were like, “Our guys have shut down, they only had one partner in China or they only had one partner in Indonesia, we’ve managed to get capacity in the factory now, but we can’t move it because our freight forwarder got a COVID event in their warehouse, so can you help us?” So that was another good opportunity for us. Because we’re not a 3PL, we’re a 4PL or even 5PL, our network is so flexible, and because we’re linked in technically to all of the different warehouses, it meant that we could just open up a new warehouse for them to drop off in Shenzhen and open up a new warehouse for them to receive in Indonesia. So what I would say is open up your networks and meet more freight forwarders, go meet more guys in the logistics industry because if anything like this happens again, your supply chain team inside your mid-size company needs to react quickly and needs to have a lot of different options on the table. 

Ali: Especially calling George now to find out how Janio can help. 

Paulo: Any advice for SMEs or for smaller players? 

Ali: Like George said, at the end of the day, look into your supply chain accordingly. It’s very important that you shouldn’t be putting your eggs in one basket. It’s a good learning point, this COVID, so I think it’s very important that you make sure you diversify your source of manufacturing, but more importantly work with a strong, robust, flexible logistics provider such as Janio that can adjust our ways accordingly to meet the new requirements from a macroeconomic point of view. I think that’s what’s important. The beauty of the Janio solution to be very honest, while we also own strategic assets, we’re not only a 3PL, we’re a 4PL and 5PL. We pretty much cater our solution based on your supply chain requirements accordingly. 

Paulo: Ever since Ramadan started, what has been the experience been like working with brands over this period? Has there been any significant change? Are you seeing any specific trends in this period in terms of cross border logistics? 

Ali: To all our Muslim viewers, wishing you a blessed Ramadan, first and foremost. With Ramadan, I think, and with COVID coinciding, I think the challenges we have seen is pretty much that the peak is at all levels. Be it modest Muslim brands and all who traditionally focus on Ramadan offerings, we see general brands as I mentioned earlier throwing their marketing dollars online. So the surge, while we were expecting 2 to 3 times increase, went up 4 to 5 times because everyone is now focused on selling online. 

Paulo: And in this transition moving online, is it something that these sellers are able to do easily? 

Ali: I don’t want to provide a bleak truth, but truth be told I think we haven’t seen the worst, with regards to the impact on the economy. Now with the lockdown only going two months, I think, people are still spending, purely because Ramadan is coming, so they’re still in festivity mode. But when everything is sunken down, where companies are starting to cut costs or control costs as a whole, spending starts to go down, definitely, the impact will be felt much worse. Even us in Janio, we are enjoying the tide right now, but we have to prepare for what comes next, because eventually if this lockdown extends itself and we don’t go back to a new normal, I think eventually we will experience a huge slowdown in the economy that all of us have to be prepared. 

Paulo: And speaking of going into a new normal and recovery, what are the things that you guys are Janio are looking at — what indicators that you are looking at that things are recovering or going into a new normal, what are the macro indicators or other things you are looking at? 

George: For me the first obvious thing coming into a new normal is the airlines starting again, for everyone in logistics in Southeast Asia. The moment those airlines — and this is the low-cost carriers, not the large, national airlines — the moment they start going and when we can see how they’re going to operate, that’s when we can really know what the new normal is. Until that happens, there’s no way of really assessing how the Southeast Asian air freight’s going to happen. 

For sea freight, it’s been wonderful. That’s proven that it’s robust as it always has been. Rates didn’t really increase that much. I think that the great thing that people realized is that across Southeast Asia you can ship with sea freight without adding that much time. Apart from that, it’s quite difficult, if we could predict exactly what was going to happen or see what the markers of the new normal is, we would all be millionaires. No one’s really opened up fully yet, so I’m reticent to guess because it would be taking a big shot in the dark. Even looking back in the West they don’t seem to have a strategic plan yet to come out of lockdown. Even if they’ve shown one, it’s left everyone in some confusion, so I’d probably be a bit more cautious in saying a broad statement. 

Ali: I hope we’ve seen the worst and all but truth be told I doubt so. The impact will only be felt three months down the road to six months down the road and unlike other potential blips such as SARS and recession, I think recovery with regards to COVID will take a longer time. 

George: And that’s also not discounting if we have another flare-up, I think that’s the scary thing and we got straight back into lockdown again. And you can see this has already happened in Northern Italy, it has happened again in Spain, it probably has happened in China, but you know sadly I know that Singapore the moment there is a flareup they’ll close down as fast as they did last time, and that would make it weirder. 

Paulo: How would you tell your customers and even within Janio how to deal with this constant state of flux? Will we always have to make these adjustments or is there a way to operate without making these adjustments as much? 

George: We’re operating like that now. In a way, we’ve all learned how to do it. The learning curve won’t be there hopefully next time if we come back to lockdown, we’ll just go back to what we’re doing now. 

Ali: I think it’s very important during this period, being flexible is important — flexibility in managing our operations and commercial requirements — but more importantly as I highlighted earlier, we’ve been very transparent, we communicate openly to all our customers on what’s happening, and I think that’s something we’ll continue on doing. 

Paulo: In terms of being transparent and communications, how has it been like within the company, working within your own teams? How have you been managing working remotely and all these new conditions? 

George: Oddly I think we speak to each other even more. 

Ali: Strangely enough, from a personal point of view, working from home is much tougher than working from the office. 

Paulo: Just to wrap things up I wanted to get some recommendations from you guys since all of us have been spending time more at home, are there any books you guys have been reading or catching up on, or any form of content really podcasts videos that you’d like to recommend to our listeners? 

George: For me, it’s the Economist. I’ve been listening to every single Economist podcast. I just think they’re the best in their small snippets of breaking down what’s going on around the world. They’ll find a topic, they’ll go right in the details of it, but not so much that it bores you. They have a wonderful way of all the different parts because I think if you’re watching the normal news or reading the normal newspaper, it’s quite quickly you can get depressed or quite scared, whereas the Economist has done a bit of the pre-digesting phase, so for me, it’s really reinvigorated my love for the Economist, podcast and magazine. 

Paulo: Any topic in particular? 

George: For me, it’s sort of a side thing I’m interested in, but it leads into logistics and the whole supply chain, it’s fund management, and how everyone’s savings and even country’s savings are going to look after this and how we address our portfolio management both as countries and our personal funds. Is it going to be a continued investment into passive investing, which is proving to be a bit scary because there doesn’t seem to be any stop to the selloff, but that’s now bounced back so I think that part I find most interesting, and the Economist is probably the strongest at helping the layman digesting it. 

Paulo: Ali, any recommendations? 

Ali: Truth be told I’ve just been catching up on work and email and trying to make sure we survive. Survival is key. 

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