Within the world of logistics, the signals that moderate traffic from Asia are turning amber and, in some cases, red. DHL, the air freight and logistics operator, is hearing a new message from its Asian customers: where manufacturers were once concerned only about speed and efficient transport from Shanghai and Shenzhen to Los Angeles, London and Frankfurt, the present priority is proximity to markets.
According to Scott Price, chief executive of DHL in Europe, the global supply chain is in turmoil. Where manufacturers previously would think nothing of shipping finished goods from China to the United States and Europe, they are now looking for shorter supply chains. DHL is faced with upheaval as its clients rip apart a logistics and supply chain crafted over the past decade that was based on low-cost transport.
Mr Price reckons that the world is moving from globalisation to regionalisation. In a recent business review with high-tech companies, the customers said that rather than supply out of Asia, they were looking at assembly in Europe.
Foxconn, a Taiwanese electronics company that makes Nokia and Acer brand handsets and laptops, caused uproar this year when rumours circulated in the Czech Republic that a large PC plant was to be relocated in Hungary. In fact, Foxconn has been enlarging its footprint outside Asia, having bought assembly plants in Mexico and Hungary from Sanmina-SCI. It is shifting production out of the hotspots on China's eastern seaboard to remote provinces in northern China, while expanding assembly on the edge of European and North American consumer markets.
For DHL, that means less intercontinental freight as companies change the way in which they do business. It means product assembly close to consumer markets and the need to create new logistics hubs. According to Mr Price, the largest air freight lane last year was from China to Mexico: “Four to five years ago, nobody would have questioned their assumptions about oil. Now the price of oil forms the basis of big decisions about where to locate a factory.”