By Datuk Ts Dr. Hj Ramli Amir, former President of the Chartered Institute of Logistics and Transport (CILT) Malaysia and Vice-President of CILT International for Southeast Asia
KOTA KINABALU: The dawn of the 21st century has revolutionised logistics and supply chain management worldwide.
The digital era, shifting global trade flows, and higher standards for transparency, efficiency, and sustainability are reshaping the way goods and services move. Sabah, with its strategic location on Borneo’s northern tip, stands at a unique crossroads—literally and figuratively.
To stay relevant and thrive as a logistics powerhouse in the decades ahead, the state must rise to evolving challenges through ambitious reforms, bold investments, and a culture of innovation. This essay discusses the critical areas Sabah must focus on to remain an integral player in regional and global logistics.
Harnessing the Power of Location and Upgrading Core Infrastructure
Sabah’s greatest asset is its geography. Sitting at the mouth of the South China Sea, the state is in an enviable position to serve as a gateway for goods flowing between ASEAN, East Asia, and the global marketplace.
The Sapangar Bay Container Port (SBCP) is the cornerstone of Sabah’s logistics strategy, undergoing a major expansion that will more than double its handling capacity from 500,000 TEUs to 1.25 million TEUs by 2026.
This move, backed by collaborations such as the partnership with DP World, signals to global shipping lines and shippers that Sabah is serious about transforming into Southeast Asia’s key transhipment hub.
However, such ambitions mean little if not matched by robust, modern infrastructure throughout the state. The efforts to upgrade ports in Kota Kinabalu, Sandakan, and Lahad Datu, alongside continuous improvements at Kota Kinabalu International Airport (KKIA), are crucial.
On land, investments in road and highway networks—like the Pan Borneo Highway—are tackling long-standing bottlenecks and linking industrial and rural areas to major logistics hubs. With RM2.6 billion earmarked in Sabah’s Budget 2025 for infrastructure and utilities, and RM424.53 million directed specifically at road projects, the commitment from both the state and federal governments cannot be understated.
Still, Sabah’s underdeveloped and often poorly maintained road network remains an Achilles’ heel. Regular and strategic road maintenance, drawing on best practices from states like Selangor, must be embedded in the state’s long-term infrastructure plans. Unless these systemic weaknesses are addressed, high logistics costs and unpredictable delivery times will persist, undermining Sabah’s competitiveness.
Driving Digital Transformation and Embracing New Technologies
The logistics transformation sweeping Sabah is not just about more ships, trucks, and planes—it’s about technology. In the 21st century, digitalisation is the backbone of every high-performing logistics ecosystem. Sabah’s forward-looking approach, including the integration of digital tools like Internet of Things (IoT) sensors for real-time tracking, blockchain for secure transactions, and artificial intelligence for predictive analytics, is setting the stage for a new era of seamless information flow and smart decision-making.
Digital systems cut down on bureaucratic red tape, minimise data entry errors, and provide unprecedented visibility across the supply chain. They also support the development of smart cities by integrating logistics and urban management, allowing for more responsive and resilient operations. The establishment of the Sabah Utility Corridor (KUS), with its unified mapping system and digital asset database, is a practical example where digitalisation delivers efficiency dividends across both logistics and broader infrastructure projects.
To fully unlock the benefits of digital transformation, the state must not only invest in hardware and software but also focus on digital literacy. Building digital skills among public servants, logistics workers, and business owners will ensure new systems are fully utilised and innovative practices become embedded in everyday operations.
Creating Cohesive Long-Term Planning and Stronger Institutional Leadership
One persistent challenge in Sabah’s logistics sector has been fragmented, reactionary planning. Too often, efforts have only kicked off when problems—like traffic gridlock or supply chain delays—reach crisis point. The Chartered Institute of Logistics and Transport Malaysia (CILTM) has repeatedly called for a shift away from such a reactive culture towards anticipatory, data-driven planning that is coordinated, practical, and forward-looking.
A central plank of this reform should be the creation of a dedicated Ministry of Transport in Sabah. Unlike in neighbouring Sarawak, where the ministry has delivered accountability and clear direction, Sabah’s logistics oversight is divided across multiple agencies, making it challenging to marshal resources, implement reforms, or align strategies.
An independent ministry could champion a Sabah Logistics and Transport Masterplan, covering short-term fixes and long-term gamechangers—such as rural logistics development, decarbonisation of freight, and mapping 50-year transport corridors.
This dedicated structure would empower funding channels, foster cross-sector integration, and maintain ministerial-level accountability, ensuring logistics remains a top policy priority.
The recent formation of the Sabah Logistics Council (SLC) is a positive step, but more must be done to integrate efforts, break down silos, and keep stakeholders—from rural communities to multinational shipping lines—engaged and invested in the state’s ambitions.
Expanding and Integrating Multimodal Connectivity
No 21st-century logistics hub can function with ports or roads alone. Sabah must embrace multimodal transport—integrating sea, road, air, and potentially rail to ensure efficient cargo movement across the state and into global markets. The expansion of Sapangar Bay Container Port, alongside upgraded airports and industrial parks like the KKIP, is already boosting the state’s profile as a nodal point for distribution and warehousing, not just for Sabah, but for the wider BIMP-EAGA region and Indonesian Kalimantan.
A key to seamless multimodal logistics is ensuring each mode of transport connects intuitively and efficiently with the others. For instance, port and airport upgrades should be designed with complementary road infrastructure in mind, minimising last-mile costs and delays. Industrial and logistics hubs must be sited within accessible corridors, and connectivity to rural areas expanded so all Sabahans, from grassroots farmers to global exporters, have equitable access to logistics services.
Promoting Inclusive and Sustainable Growth
Logistics reform in Sabah must be rooted in an ethos of inclusivity and sustainability. As the state modernises, there is a vital need to ensure rural communities, local SMEs, and underprivileged groups are not sidelined. Sabah’s integrated industrial hubs, such as KKIP, are setting the pace here—creating jobs, supporting local suppliers, and targeting hiring of marginalised populations. Similar principles should be applied throughout the logistics sector, so growth is broad-based and inclusive.
Sustainability, meanwhile, is both a market demand and a strategic imperative. Enhancing green logistics by investing in energy-efficient fleets, clean port operations, and climate-resilient infrastructure will not only shrink Sabah’s carbon footprint but also appeal to environmentally conscious investors and partners. The upcoming Sabah Logistics and Transport Masterplan should weave environmental, social, and governance (ESG) criteria into every aspect of transport and logistics planning, from fleet upgrades to infrastructure design.
Building Human Capital for the Logistics Revolution
All the hardware, technology, and policy reforms in the world will fail without human talent. Sabah’s future as a logistics leader hinges on building a skilled, agile, and tech-savvy workforce. The rapid expansion of logistics and distribution hubs across the state, including major new facilities in Kota Kinabalu, signals expanding employment opportunities for Sabahans—from warehouse operators and truck drivers to IT managers and logistics strategists.
To grow this talent pool, partnerships between government, industry, and educational institutions are essential. This includes upskilling existing workers, embedding logistics and digital technology understanding in school and university curriculums, and ensuring training opportunities reach urban and rural communities alike. These investments lay the foundation for sustainable, home-grown growth that adapts rapidly to future trends and shocks.
Accelerating Rural and Last-Mile Logistics
For Sabah, a state with a sprawling geography and many rural communities, effective logistics must bridge urban-rural divides. Rural logistics matter—not just for social equity, but also for expanding economic opportunities and speeding up poverty reduction. This means investing in rural transport links, promoting digital platforms that connect farmers and rural SMEs to wider markets, and tackling the “last mile” problem that often sees deliveries stall before they reach remote destinations.
Addressing rural and last-mile logistics requires creative public-private partnerships, flexible infrastructure solutions, and policies that incentivise logistics firms to serve outlying areas. These efforts will connect every part of Sabah to new markets, greater prosperity, and global opportunities.
Enhancing Governance, Transparency, and Collaboration
Lastly, robust governance and transparent, collaborative planning are non-negotiable for 21st-century logistics. Sabah’s journey so far has shown the value of cross-sectoral bodies like the Sabah Logistics Council and the need for even stronger, more transparent leadership anchored in clear metrics and regular stakeholder engagement. The state’s commitment to open data, digital mapping, and unified asset databases, as seen in initiatives like the Utility Corridor, adds layers of clarity and accountability that will prevent costly missteps and foster greater public trust.
Conclusion
Sabah’s logistics future is remarkably bright, but it can only be realised through unwavering commitment to infrastructure reform, bold adoption of emerging technologies, anticipatory and inclusive planning, and the relentless pursuit of excellence across every facet of the supply chain. By harnessing its geographical and economic advantages, building strong institutions, integrating cutting-edge technology, and investing in people and sustainable growth, Sabah is set not simply to stay relevant—but to lead—as a logistics hub for Malaysia, ASEAN, and the global community.
The success of the state’s logistics ambitions will demand enduring partnerships, creative thinking, and a determination to overcome legacy challenges. With strategic vision and collective effort, Sabah can and will transform its logistics landscape for the 21st century and beyond.
