Malaysian Logistics, Pioneering Growth in 2025

By Michelle Goh, Director of GWL Consolidation (M) Sdn Bhd

In 2025, Malaysia’s logistics industry is enjoying a moment of transformation that is both exciting and challenging. With a current market value of USD 33.68 billion expected to flourish to USD 53.17 billion by 2034, the industry boasts an annual growth rate of 5.20%. The booming e-commerce sector, proactive government strategies, and adoption of advanced technology are driving this expansion.

Breaking Down the Market Structure

The Malaysian logistics market consists of three main segments: freight transport, courier/express/parcel (CEP) services, and warehousing. Although freight transport holds the largest portion due to manufacturing output and cross-border trade, CEP services are growing at a rapid pace. This growth is stimulated by the increasing demand for faster, more reliable delivery options stemming from the rise in e-commerce.

Several industry players are heavily investing in infrastructure enhancements to gain greater market share. Despite investments, the market remains fragmented—top firms hold under 9%, revealing clear opportunities for consolidation and future growth.

E-Commerce: The Growth Engine

The surge in online shopping has been a powerful driver for logistics growth. Malaysia’s e-commerce retail market will grow from USD 12.26 billion in 2025 to USD 23.93 billion by 2030. That's an annual increase of 14.32%. Chinese platforms like AliExpress and Shein drive demand for efficient cross-border logistics and streamlined customs to meet growing transaction volumes.

Moreover, shoppers' expectations continue to shift, emphasizing the need for quicker delivery services. Contemporary consumers now prefer platforms that offer same-day or next-day delivery. Companies, such as Locad, are adapting by implementing sophisticated fulfillment strategies and processing 95% of orders within 24 hours through collaboration with major platforms like Shopee and Lazada.

Government’s Influence on Industry Growth

The Malaysian government plays a critical role in shaping the logistics industry. Recently, a set of fiscal policies introduced a 60% tax incentive for investments aimed at creating modern logistics complexes with automation and IoT capabilities. 

This commitment isn't merely on paper—infrastructure development also receives a boost from the Islamic Development Bank’s investments, aimed at enhancing port connections and railway systems. Such efforts are set to boost Malaysia’s standing as a logistical hub in the region.

Technological Advances Reshaping Operations

Technology is becoming ever more critical in logistics, leading to improvements in efficiency and service delivery. The implementation of artificial intelligence and automation is producing better demand forecasting and more efficient warehouse operations. Regions like Klang Valley have seen a marked increase in operational performance, although smaller facilities face challenges in affording the initial costs.

Sustainability is now a priority for many logistics companies. There's a commitment to switching to electric vehicles for deliveries and using advanced route planning systems to cut fuel use. This transition aligns with Malaysia’s commitment to reducing greenhouse gas emissions by 45% by 2030, showcasing how these efforts are intertwined with broader environmental goals.

Overcoming Workforce and Regulatory Obstacles

Despite robust growth prospects, the sector contends with certain obstacles. A major challenge lies in a shortage of skilled personnel, particularly in data analytics and automation, with only 12% of workers receiving formal training. To address this, companies are forming alliances with educational institutions like Universiti Kuala Lumpur to provide targeted training programs.

Regulatory complexities also pose significant challenges. Malaysia’s de minimis threshold helps simplify low-value import procedures, yet varying standards across ASEAN countries complicate compliance efforts, raising costs. The National Export Strategy Roadmap seeks to harmonize these processes, though progress has been gradual.

Opportunities in Last-Mile and Cold Chain Expansion

Despite these challenges, the industry offers numerous opportunities for advancement. Innovations in last-mile delivery, such as the establishment of micro-fulfillment centers and crowd-sourced delivery systems, can extend services into previously under-served areas. 

Additionally, the demand for cold chain logistics is growing rapidly due to increased trade in pharmaceuticals and perishables. As a result, companies are channeling significant resources into expanding temperature-controlled facilities to meet rising market needs.

Malaysia's Strategic Role within ASEAN

Malaysia has climbed the World Bank Logistics Performance Index, ranking second in ASEAN and highlighting its growing regional logistics significance. Strategic investments like the Belt and Road strengthen Malaysia’s trade role, leading Port Klang to expand for rising Asia-Europe demand.

Looking ahead, the logistics sector in Malaysia is poised for robust growth, supported by technological advancements and strategic alignments. While e-commerce and government initiatives drive expansion, AI tools and sustainability practices are redefining operations. The sector still faces challenges in workforce development and regulatory compliance, but the potential for growth in last-mile delivery and cold chain logistics is undeniable.

As the sector evolves, industry leaders will need to strike a balance between agility and investment in workforce development while leveraging Malaysia’s unique geographical strengths. Companies that embrace innovation and systematically address challenges will be well-positioned to thrive, contributing to the broader prospect for economic growth within the region.

Freyt Consol Blog Contributor

Michelle Goh

Director, GWL Consolidation (M) Sdn Bhd, a member of the Freyt Consol Network

Freyt Consol is a global network for LCL consolidators and NVOCCs dedicated to excellence and long-term growth. We create an environment where members thrive by collaborating with trusted partners and accessing essential resources.