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Is Thailand ready to be ASEAN’s Logistics Hub ?
Solidiance latest paper provides a snapshot of the current logistics market in Thailand, and points out the opportunities and challenges faced by this industry during the AEC integration and economic development — which put Thailand in a spotlight to become the logistic and transportation hub of ASEAN.
The impending changes in its competitive landscape of the transportation, logistic and trade industries are fueling a strong growth momentum on all trades via Thailand linkage with CLMV (Cambodia, Lao PDR, Burma, and Vietnam) countries.
This paper demonstrates what are the key drivers and root strategies for both international and local logistic and transportation businesses, in order to gain a solid foothold in the future competition led by the liberation of goods flow under AEC.
The logistic hub of Asean ?
Given its centralized geographic position, much attention has been given to Thailand’s prowess to become the logistic hub in ASEAN.
And in the light of the upcoming ASEAN Economic Community (AEC) by 2015, the country of which logistic competency ranks the 3rd in Southeast Asia region as of 2012 (just behind Singapore and Malaysia) is expected to experience a change in the competitive landscape of the transportation, logistic and trade industries in the country – fuelling a strong growth momentum on all trades via Thailand linkage with CLMV (Cambodia, Lao PDR, Burma, and Vietnam) countries.
Thailand’s Decreasing Logistic Costs
Thailand’s logistics sector potentially generates about 300 billion baht added value to the economy annually, and the country has been witnessing a decline of share of logistic costs to GDP over the last few years.
Logistics Firms in Thailand : Trends
Another trend is also shown by a number of logistics firms in Thailand through the increasing needs of outsourcing logistics services to the 3rd Party Logistics (3PL) to maximize cost efficiency. The players taking part in this trend include multinational logistics, petrochemicals mining, food and beverages (F&B) companies, as well as construction material and automotive & electronic assembly manufacturers.
Large companies outsourcing their fleet usually work with multiple providers to diversify the risks. Meanwhile, the numerous small fleet local logistics firms may align to the following strategies in order to survive in the market :
- Be the outsourced business units of a global logistic company
- Consolidate among themselves to form a larger network
- Or be driven out of market or acquired due to fiercer competition after AEC
And local logistic companies’ are suggested to improve efficiency in terms of business operations through the following strategies:
- Keep full truck load services for both headhaul and backhaul, in order to reduce transportation cost
- Enhance efficiency of the supply chain management, for instance, by adopting the “Just in Time (JIT)” technique, to reduce the inventory carrying cost
The transportation market in Thailand remains highly fragmented, but all logistics firms are trying to leverage on transportation market growth according to their capabilities and competencies. More detailed insight and strategies are pointed out in the complete version of this white paper, which aims to outline how Thailand’s goal to become the logistic and transportation hub in ASEAN is being put into realization in the light of upcoming AEC.
Download the full report here.
Note: This article was written by Solidiance consultancy firm. The views and opinions expressed in this article are those of the authors and do not necessarily state or reflect the views of Thailand Business News
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