Kenanga sees Malaysia’s logistics sector benefits from e-commerce boom, trade shifts

Malaysia’s domestic logistics sector fared better amid Middle East tensions as the country is a beneficiary of booming e-commerce and trade diversion on US-China trade tensions, Kenanga Research said Thursday. The research house said in a note that the on-going Iran war has scaled back global trade growth to the negative zone as port congestions worsen, however, it sees Malaysia’s logistics sector to stay resilient. According to Kenanga Research, Malaysia’s total trade rose 5.4 percent in the cumulative period from January to October 2025, compared with 9.2 percent growth for the full year of 2024. The trade surplus remained elevated at MYR 125 billion ($31.78 billion) during the period, versus MYR 139.1 billion ($35.37 billion) in 2024. The domestic third-party logistics (3PL) sector benefited particularly from this trend, supported by the on-shoring of business activity and a booming e-commerce market. “Being largely domestically driven, the 3PL segment is less exposed to external headwinds, helping it maintain resilience amid softer global trade growth,” said the research house. Kenanga also highlighted that the industry experts project the local e-commerce gross merchandise volume to grow at a compound annual growth rate (CAGR) of 5 percent from 2024 to 2027, reaching MYR 1.5 trillion ($380 billion) by 2027 from MYR 1.2 trillion ($310 billion) in 2024. However, it opined that some local players are faced with intense competition from Chinese players which constrain theirm ability to fully leverage on Malaysia’s strong total trade growth. This situation arises due to the irrational pricing set by Chinese logistics players despite the rising logistics operating costs (manpower and stricter weight limit regulation) and Chinese logistics players typically coming in as a package from the new entrant of China’s foreign direct investment (new plants). Kenanga also noted the booming e-commerce will spur demand for distribution hubs and warehouses to enable: just-in-time (JIT) delivery, reshoring/nearshoring to bring manufacturers closer to end-customers, efficient automation system, including interconnectivity with the customer system, and warehouse decentralization to reduce transportation costs and de-risk the supply chain. There is also strong demand for cold-storage warehouses on the back of the proliferation of online grocery startups, it added. cited World Trade Organization (WTO), Kenanga noted there is an emerging trend of connecting economies or countries that benefited from the trade diversion on US-China trade tensions. It highlighted Malaysia, Singapore, India and Vietnam’s growth are surging due to their emerging role as “connecting” economies, trading across geopolitical blocs, thereby potentially mitigating the risk of trade fragmentation. Based on the latest Malaysia’s external trade in January, Malaysia’s exports to the US recorded a strong growth of 33.9 percent year on year despite higher US tariff. It is noted that the US remained Malaysia’s second largest export destination behind Singapore during the month. “We expect domestic logistic sector growth to remain steady in 2026, which is a beneficiary of the booming e-commerce, supported by the global tech up-cycle led by artificial intelligence (AI) demand, a resilient US economy, and potential trade diversion amid US-China trade tensions,” said Kenanga. Teleport’s revenue up 10 percent on year in the fourth quarter of 2025