Case Study: Linfox

Logistics and supply chain specialists span ASEAN economic area

Linfox

Founded in Australia over 60 years ago, Linfox International Group (Linfox) is the largest privately owned supply chain company in the Asia-Pacific region, transporting everything from fuels to fast-moving consumables. Linfox began operating in Malaysia in 1992 and quickly expanded across Southeast Asia, supplying logistics expertise to large commercial operations and building fleets of trucks and distribution centres.

According to James Evans, Linfox's Director of Legal and External Affairs for Asia, the opportunities for logistics companies are growing. 'For Linfox, the exciting thing is that many ASEAN markets are reaching the stage where companies want large-scale, long-term logistics contracts,' he says. 'For example, in Thailand we see the Tesco Lotus supermarket joint venture, which wants to replicate UK-style supply chains.'

Evans observes that a typical pattern for expansion sees logistics companies follow existing clients into new countries. Linfox's largest customer in Southeast Asia is Unilever, and having built up a support business for Unilever in Thailand, Linfox has gradually replicated that service in Vietnam and Indonesia. Under the terms of the 2010 ASEAN-Australia-New Zealand Free Trade Agreement (AANZFTA), Vietnam relaxed foreign ownership rules for road-haulage companies.

'Vietnam is currently very welcoming towards overseas investors,' Evans says. 'The Vietnamese Government has set up special economic zones and parks to foster foreign direct investment. Linfox operates from one of the seven Vietnam–Singapore Industrial Parks that have been set up as joint ventures throughout the country.'

Mining and resource projects are spurring expansion into smaller ASEAN nations. In May 2017, Linfox became the first foreign logistics company to open commercial operations in Laos with the signing of a joint venture with the Lao Logistics Group in Vientiane. The joint venture enables Linfox to provide transport and warehousing services throughout Laos.

'Laos is small, but rich in minerals with numerous mining projects in the pipeline,' Evans says. 'These projects should present great opportunities for Australia's world-class mining logistics companies.'

A trade specialist and former trade advisor, Evans believes the ASEAN Economic Community will expedite the movement of goods across Southeast Asia borders. Infrastructure, such as cold storage or warehousing, will need to be built, but he says the right economic and legal framework is in place, and that increased trade will provide opportunities for companies like Linfox. He is also confident trade in services will grow.

'ASEAN has encouraged member countries to put in place specific levels of protection for trademarks and intellectual property,' he says. 'Member countries have taken this advice very seriously. Now, almost all ASEAN countries have created the legislative framework for IP protection, or are committed to doing so. This should give overseas services companies the confidence that their intellectual property is secure and the incentive to invest.'

Linfox is also witnessing increased trade following the ASEAN-Australia New Zealand Free Trade Agreement (AANZFTA). The agreement progressively lowered tariffs on foodstuffs, including Australian meat, dairy, fruits and wine. 'Since the FTA was signed, we've seen an increase in the amount of foodstuffs coming in to Southeast Asia,' Evans says. 'It creates the potential for Australia to be a huge supplier of food to Southeast Asia.'