Transportation and logistics improvements in Thailand
to combat rising oil prices
By Jon Fernquest |
As oil prices rise transportation costs rise.
Transportation and logistics has risen from 19% to 23.9% of Thailand's GDP since 2006.
Cutting transportation costs by 1% could reduce the price of goods produced in Thailand by as much as 5% to 8%.
Developing the Western Seaboard of Thailand on the Bay of Bengal may be one way to cut the costs of Thai goods and make them more competitive on international markets.
Moving goods by sea on routes in the Gulf of Thailand such as Laem Chabang-Songkhla and Bangkok-Surat Thani may also be a way to save on transportation costs.
Rail to China via northern Thailand is also a potential cost saver.
The Bangkok Post business section carried an article on possible future logistics developments in Thailand this week.
See photo on right of the largest container ship (MV Maersk Kalamata) to dock and use the container facilities of Laem Chabang port on Thailand's Eastern Seaboard in 2003. 3,500 twenty-foot containers were loaded "for a 19-day direct transit to US ports, marking a new era for Thailand's shipping industry. The 304-metre ship has a total capacity of 6,400 TEU (twenty-foot equivalent units). The LCB1 terminal...can load 160 TEU per hour."
Here is the article in full:
'Western Gateway' proposed
Seminar seeks ways to cut logistic costs NAREERAT WIRIYAPONGWednesday April 30, 2008
Thailand needs to build a deep-sea port and marine motorway on the west coast to cut logistics costs, former finance minister M.R. Pridiyathorn Devakula said yesterday. M.R. Pridiyathorn, also a former central bank governor, said the so-called Western Gateway would complement the congested Laem Chabang port in the Eastern Seaboard.
The project would help save costs for exporting goods from Thailand to Europe and the Middle East, which are currently shipped from Laem Chabang, he said. Potential locations of the West Gateway were Ranong, Phangnga, and Krabi, M.R. Pridiyathorn said, adding that the project would also stimulate the long-delayed development of the Southern Seaboard.
"Now Thailand's logistics cost is higher than that of our rivals in Asia and we need to bring it down to make Thai goods more competitive in the global market," he told a logistics seminar held by the Board of Trade and the Federation of Thai Industries (FTI).
On the marine motorway, M.R. Pridiyathorn said the government should welcome participation from the private sector to offer services for moving goods on routes in the Gulf of Thailand such as Laem Chabang-Songkhla and Bangkok-Surat Thani.
Marine shipments now account for 12% of the overall transport usage in the kingdom, with 85% from road transport. The shares of rail and air transport were 2% and 0.9%, respectively.
The government should speed up the development of a dual-track rail system across the kingdom with a total length of 832 kilometres and connecting onward to mainland China.
The cabinet has planned to invest two trillion baht to build domestic train routes linking Thailand with China.
The International Freight Forwarders Association said Thailand's logistics costs as a share of GDP have soared to 23.9%, up from 19% in 2006, mainly because of high oil prices.
The latest figure contrasted with the 15-16% that the National Economic and Social Development Board had set as a goal for logistics costs, said the association's president, Suwit Ratanachinda.
"Thailand's logistics costs have been rising, even though we have tried to bring them down. The failure was mainly because the government has not done anything," Mr Suwit said.
The sharp increase in oil prices has pushed marine freight charges up by 30% over the past 12 months to $460 per tonne and they would rise to $535 next month, he said.
Thanet Sorat, the vice-president of V-Serve Group, a logistics service provider, said every 1% cut in logistics costs could reduce the overall cost of Thai-made products by 5% to 8%.
Voratat Tantimongkolsuk of the Thai Airfreight Forwarders Association (TAFA) said that Thailand's utilisation of its two biggest airports had also not been optimised to improve logistics efficiency.
(Source: Bangkok Post, business section, 30-04-08, page B3, NAREERAT WIRIYAPONG, temp-link)
Vocabulary:
the Eastern Seaboard - the industrialised area to the southeast of Bangkok near Chonburi, Pattaya, Rayong, and Laem Chabang
the Western Seaboard, Western Gateway - Thailand's coast on the Bay of Bengal with easier shiiping access to India, the Middle East, and Europe, avoiding the Straits of Malacca, the Western Seaboard is not yet developed
the Straits of Malacca - the narrow stretch of water between Malaysia and Singapore and the Indonesian island of Sumatra, most ships have to pass through these straits on their way from India to India, the Middle East, and Europe (See Wikipedia)
the Southern Seaboard - Thailand's coast stretching from Hua Hin, past Surathani and Nakhon Sri Thammarat to Songkhla and Pattani
logistics - transportation and storage of goods, from the factory to stores and wholesalers or between factories (See Wikipedia)
cut logistic costs - reduce transportation and storage costs
a deep-sea port - an ocean port that larger ships can dock at
X complements Y - X goes well with and adds value to Y
congested - crowded (because too many ships are using it)
Laem Chabang port - port near Bangkok on Eastern Seaboard with facilities for container ships
container ships - cargo ships that carry all of their load in truck-size containers (See Wikipedia on container ship and containerization)
stimulate - encourage, increase activity
stimulate development - encourage and increase development
Board of Trade - promotes cooperation with the Chambers of Commerce, Trade Associations, State Enterprises and Co-operatives, in promoting and regulating trade, advises and provides information on trade, industry, agriculture, finance, and taxation in Thailand (See website of Thai Chamber of Commerce and Board of Trade and information about the organisation, and info source)
Federation of Thai Industries (FTI) - an industry association in Thailand that has been operating since 1967 (See website, website)
International Freight Forwarders Association - (See list of members, and presentation, address: 10/1 Soi Farmwattana Rama 4 Road Prakhanong Klongtoey Bangkok, tele: 662 3913437)
National Economic and Social Development Board -
Thai Airfreight Forwarders Association (TAFA) - the industry association for air freight forwarders in Thailand (See website)
freight forwarders - firms that make all the necessary arrangements for transporting goods to a destination (usually international) including booking space in ships, trucks, trains, or airplanes, preparing the necessary documentation (See Wikipedia on freight forwarder and international freight forwarder)
dual-track rail system - a train system with two tracks running in opposite direction, like the Skytrain in Bangkok
logistics costs as a share of GDP have soared - more money is being spent on transportation of goods in the economy
the latest figure - the latest reported amount
contrasted with - compared with
marine freight charges - prices for transporting goods by ship
utilisation (noun) - the use of something
optimised - adjust a system so that it reaches the highest levels of efficiency and smooth operation
