Domestic Demand, E-Commerce Boom Drive Malaysia’s Logistics Sector – Kenanga Research

KUALA LUMPUR, Jan 5 (Bernama) -- Malaysia’s logistics sector continues to fare better, supported by resilient domestic demand and e-commerce activity, despite a moderation in overall trade growth, according to Kenanga Research. 

The research house stated in a note today that Malaysia’s total trade expanded by 5.4 per cent year-to-date to October 2025, compared with 9.2 per cent growth for the full-year of 2024.

Meanwhile, the trade surplus remained elevated at RM125 billion, slightly below the RM139.1 billion recorded in 2024.

The sector’s resilience is primarily driven by the domestically oriented third-party logistics segment, which faces fewer external challenges, bolstered by on-shoring trends and robust growth in e-commerce.

“Industry experts project the local e-commerce gross merchandise volume to expand at a compound annual growth rate of five per cent from 2024 to 2027, reaching RM1.5 trillion by 2027 from RM1.2 trillion in 2024,” it said. 

However, Kenanga Research said local logistics players such as SWIFT continue to face intense competition from Chinese players, which limits their ability to capitalise on Malaysia’s strong trade activity.

It added that e-commerce growth is expected to drive demand for distribution hubs and warehouses, supporting just-in-time delivery, reshoring and nearshoring, greater automation and system connectivity, and warehouse decentralisation to lower costs and reduce supply-chain risks.

Kenanga Research maintains a neutral outlook on the sector, naming Westports Holdings Bhd as its top pick due to resilient earnings backed by long-term contracts, growth prospects from the Westports 2 expansion, and lower transshipment tariffs compared with key peers.

Kenanga Research cautioned that the sector continues to face external uncertainties amid an unclear global tariff outlook, noting that higher trade tariffs and prolonged shipping diversions from the Red Sea have weighed on global trade, particularly along the Asia-Europe route.

The diversion from the Suez Canal to the Cape of Good Hope has lengthened voyage times, reduced port call frequency and disrupted schedules. The World Trade Organisation has also reduced its projection for global merchandise trade volume growth in 2026 to 0.5 per cent from 1.8 per cent previously.

The research house said Malaysia is among the “connecting economies” benefiting from trade diversion linked to US-China tensions, alongside Singapore, India and Vietnam, which could help cushion the impact of trade fragmentation.

“Presently, the United States is Malaysia’s third-largest export destination after Singapore and China, and we believe Malaysia will benefit from the trade diversion as global trade repositions around higher US tariff barriers,” it said. 

-- BERNAMA