Asia’s freight landscape is incredibly diverse. Each country has evolved its own freight cost model suited to local realities. However, whether it’s a Chinese factory or an Indonesian distributor, manual planning practices often struggle to optimize within these models.
Let’s look at a few key markets, how different transport outsourcing models with different freight rate structures, different risk sharing profiles impact transport planning practices and where the opportunities are.
China: LTL Networks and Shipper Convenience
In China, domestic freight often runs on large LTL networks (less than truck load). Carriers quote rates by units like per ton or per cubic meter, even if loads would normally warrant FTL (full truckload). This model pushes the burden of filling trucks onto carriers – risk is “downstream” with brokers and trucking companies. Historically, this model was enabled by diverse truck sizing combined with overloading, diverse cargo flows across the country enabling backhauling and co-loading opportunities for the carriers & brokers creating multi-level outsourced LTL networks that facilitated risk transfer to smaller subcontractors.
The upside for shippers is convenience: you can hand off 200 kg or 200 tons of goods and pay a set unit fee, while the carrier consolidates it with other loads. However, the pragmatism of China’s model hides potential inefficiencies. Service levels in LTL network are often not transparent. Shippers will also overly on incumbent carriers, granting them exclusive contracts for long contracts at fixed rates. With most Chinese logistics teams being lean (few in-house planners) , manual oversight is minimal – which is a double-edged sword. It saves internal labor, but any missed optimization by the shippers indirectly inflates freight cost.
Without digital analysis of rates and loads, without multi-carrier dynamic allocation, without system-based freight billing shippers are often overpaying for convenience & risk management. Selecting new carriers, even if they offer lower rates is risky, since it’s often done on exclusive/replacement basis for specific territories.
Indonesia & Philippines: FTL Trips and Milk Runs
In places like Philippines and Indonesia, the freight model flips toward FTL moves – freight rates are often trip-based. Here, it’s common for a shipper to pay for an entire truck – that truck will make multiple delivery stops and come back empty on backhaul even from a long distance route. Think of a “milk run” route delivering to several stores or distribution points. In these markets, responsibility for planning and truck utilization sits upstream with the shipper or an asset-light LSP, not with the carrier . In other words, the shipper has effectively taken on most of the risk, except for unloading delays – if the truck isn’t full or efficiently routed, the cost still incurs.
Many Southeast Asian countries favor this approach because geography, economic output and demand patterns allow a single carrier or fleet to cover the key volume routes without a need of building shared LTL network. Same time, there is not enough backhaul freight from remote areas and islands for carriers to accept risk of one-way LTL rates. Cultural differences between China and Southeast may also contribute to this.
The challenge is that manually planning multi-stop routes is like a giant puzzle for which they have very limited daily time to complete, with far too many dimensions to consider. . Just consider a typical large consumer brands delivering to multiple sales channels, different product categories, different delivery windows, allowed truck types, unloading requirements etc, Can you optimally plan 1,000-10,000 sales orders a day in just 2-3 hours timeframe? Can you then allocate shipments to often ~100 available small carriers?
Without a digital route optimization tool, it’s hard to know if today’s plan is truly optimal or just “the way we’ve always done it.” The result? Wasted fuel, time, and capacity – and higher costs.
Thailand: Captive Fleets Paid by Kilometer
Thailand (especially large conglomerates) takes the FTL model a step further. Most of large shippers and LSPs operate captive or dedicated fleets, where trucks are essentially reserved for one client’s use. Cost is frequently calculated per kilometer (KM) driven. This KM-based model means a shipper pays for every kilometer the truck runs – whether loaded or empty. Here, the risk has shifted entirely to the shipper. If a truck isn’t utilized fully or has to return with undelivered cargo (especially true for manufacturers, who cannot control unloading efficiency at retail points), that’s the shipper’s cost to bear. This model gives great control and often better service quality, but it demands high planning discipline.
Unfortunately, manual processes make it tough to achieve that. I’ve seen companies in Thailand with dozens of their own trucks still planning routes manually or even leaving this job to the carriers (who in this model have zero motivation to reduce their own income); the inevitable result is suboptimal routing and a lot of empty miles.
In theory, owning the fleet should save money for a large shipper with high delivery volumes and high shipping point density (no middleman margins). In practice, without route optimization and load planning technology, captive fleets can quietly bleed money through inefficient use.
India, Vietnam & Malaysia: Straddling Models in Growing Markets
Although we don’t have live customers in these countries yet as oTMS, we have participated in some projects and POCs as well as discussed with local experts to understand these somehow sit in between LTL networks of China and FTL/KM trip rates of Southeast Asia.
Vietnam, for example, an emerging manufacturing hub, exhibits a mix of these models. Domestic distribution often relies on hiring trucks for runs (like the FTL model), but as the market grows, LTL services are appearing on busy corridors. Some large firms run their own fleet or long-term contracted trucks paid by KM. Vietnam basically presents a microcosm of broader Southeast Asian practices – shippers are increasingly responsible for planning and utilization, but many still lack modern systems to support that role. As a result, whether they are dabbling in LTL or running milk runs, Vietnamese companies too face the planning paradox: growing complexity managed with basic tools.
Of course in each of these countries there will be pockets of all of the above models, such as unit-based rates would be commonly used in e-commerce/B2C deliveries and certain retailers with large density of stores such as convenience stores / coffee shops would utilize KM or FTL based rates, irrespective of the country.
My point here was to illustrate that despite the diversity of freight outsourcing methods challenges and opportunities remain in each model that can be addressed by effective digitalization strategies.
