Willy Lin, Chairman

Today, we are in the midst of a global economic crisis that characteristically, serves to highlight both the faults and strengths of a region. As Patrick Low, World Trade Organization's chief economist, said at a press conference in Bangkok last month, "The crisis has changed the world." The world economic crisis is expected to shift more economic power to Asia, where signs of recovery are showing sooner than elsewhere.

Low acknowledged that the world financial crisis has not been as severe in Asia as anticipated, particularly in the region's largest economies such as China and India. He believed the balance of relative power will shift to Asia precisely because of the manner in which this region is recovering.

But as I see it, the shift is a natural consequence of patterns established from the earliest times, from the times of the Romans to the Greeks, to modern day power shifting among nations, be it economic, political, or financial power.

Asia perhaps will not take over the world, but its power will rise, as today we see from China and India, where strengthening economic fundamentals now put them at par with Western counterparts.

The power of Western economies may become diminished but they will surely not be over-run by Eastern dominance. While economies in Asia strengthen, assisted by globalization and the rise of manufacturing centers in the region, the expansion and progress brought about by e-commerce, the rising affluence and consumerism, we will begin to see the traditional flow of products to Western markets come back to Asia. More products will be distributed in markets like China, India and other Asian economies, which will alter the flow of logistics and see the rise of more local distribution companies.

Asia will continue enjoying higher economic growth than its traditional markets, and goods will move more within Asian markets, providing opportunities for local logistics operators in areas where global operators are not entrenched.

It's not a zero sum game. Expanding Asian markets does not mean a contraction of traditional markets. What is critical as far as traditional markets are concerned is whether the prosperity of the past decade will still exist in these markets. We do not see the loose money supply, with relaxed credit and low interest rates, continuing even after recovery from the market recession.

If the US property market fails to recover, it's highly unlikely that the US market will be able to continue or repeat high growth present in the past decade.

An important point to consider is another factor that accounts for the high growth in Asian economies: whether it is heavily reliant on the US or Europe in trade or if the region can generate its own momentum. This momentum kicked off when globalization brought manufacturing to China, India and other Asian countries, and the ensuing commercial multiplying effects all contributed in boosting Asia as an economic powerhouse.

According to the World Bank, the value of traded goods in dollars has fallen by 30% between September 08 and March 09, with the contraction more severe in December 08 to January 09, followed by a period of stabilization. Transport Intelligence's Global Freight Forwarding 09 report published last month, said that this has resulted in a massive reduction in demand for all forwarding services, and that the sector is undergoing a systemic change. The report points out specifically that inter-continental sea container and air freight markets on routes in and out of China have been the worst affected, mainly because they are the trades that provided the growth for the freight forwarding market over the past decade, although other markets have also played a significant role. The drop in export traffic from China has impacted the forwarding sector with high levels of overcapacity, due to the nature of the business, which is 'consolidation'.

The Ti report notes that there is a restructuring going on in the forwarding sector which shows lower value goods being moved by container ship while higher value goods making up a larger proportion of cargo moved by air. Velocity, the report points out, has taken a backseat to lower transport costs, a situation influenced no doubt by low interest rates.

For the airfreight industry, one of the major trends in the past two decades has been the rise of integrators who have increasingly established hubs in Asia and greater China mainly because of the nature of the products being produced, such as hi-tech, quick-to-market electronics. The innovative logistics service providers also came in and focused on developing supply chain services. After establishing Asia-wide operations, they cleverly harnessed all parts together to form one smooth supply chain that makes it possible to have manufacturing bases in Asia while getting the finished product to the end user in record time.

Even while China, and then India, fuelled world trade and the growth of transport and logistics industries, the development hinged on the vibrancy of their traditional markets in the West. Other markets are emerging, including Asia itself, but an immediate power shift is definitely not in the near future. But perhaps the shift has begun with the restructuring of markets and industries because of the global economic tsunami. The signs may be clearer in a few months.