As the COVID-19 pandemic shuttered physical stores throughout the country, consumers and businesses alike had little choice but to turn to online marketplaces, resulting in a major boost for e-commerce. According to Analytics Company GlobalData, sales through e-commerce sites in Malaysia amounted to RM31.9 billion in 2021. However, the fulfillment of online purchases is not possible without a reliable logistics ecosystem to deliver goods to consumers. Malaysia Cross Border e-Commerce Association president Chin Chee Seong said the pandemic catalyzed the surge in e-commerce purchases and logistics activities. As Chin pointed out, while e-commerce led to the growth of the logistics industry, it would not have taken off either if not for the presence of a good logistics ecosystem. He said that as consumers became more comfortable with purchasing items online, and their confidence in the system grew, it became crucial for logistics companies to provide efficient, reliable, and speedy services. Malaysia Logistics Supply Chain Association president Veera Pandiyan Kaliani Sundaram said the logistics sector had “evolved” to meet the needs of the economy and changing market trends. Veera said e-commerce has prompted logistics companies to invest in technology and infrastructure to improve their delivery capabilities, thereby playing a pivotal role in the expansion of the logistics sector. 

He said that even before the Covid-19 pandemic, globalization and increases in trade volumes and e-commerce activities had already led to the growth of the logistics industry. “Logistics companies have gained valuable experience and insights from managing the challenges of the pandemic, leading to improved operational efficiency and agility,” he said. Veera said industry players have already begun investing in technology to improve their operational efficiency. However, he noted that logistics players may face new challenges such as evolving consumer expectations, increased competition, and the need for sustainable practices. Chin said that moving forward, logistics companies, especially third-party logistics (3PL) providers, need to have numerous warehouses closer to consumers to enable faster or same-day delivery, which would be key to the growth of the industry as well as e-commerce. 3PLs are companies that offer one-stop solutions for enterprise supply chains in packaging, warehousing, transportation, and order fulfillment. However, greater industry support and economic opportunities are required to realize this.

(a) Discuss in what way(s) e-commerce affects the logistics industry in Malaysia versus Indonesia. 

(b) Identify the challenges logistics industry may face in the above case study.

Answer rating: 100% (QA)

Solution a Ecommerce has had a significant impact on the logistics industry in both Malaysia and Indonesia as it has led to an increase in demand for ... View the full answer