The State of Freight
Trains, boats, containers, warehouses, customs, planes and trucks – logistics is nothing if not complex. Certain issues in Thailand make the whole industry even more complicated. Jim Preen takes a look under the hood.
Logistics is big business. From the huge container ships that dock at Laem Chabang and Bangkok Port to the trucks that straddle the highways, the stately barges making their way along the Chao Phraya River pulled by brightly coloured tugs, right down to a man with a van, it’s all freight. The diversity is astonishing.
This year the industry has an estimated value of around USD 4.5 billion with some pundits predicting it could grow annually by up to 12%. Freight accounts for half of the total sum with warehousing, distribution services and customs making up the rest. Small local firms populate much of the industry, but around 26 of the big global players operating here handle the lion’s share of the market.
One of these is TNT who operate their Asia Road Network, connecting over 127 cities across Southeast Asia. Their spokesperson said that rail can be the greenest and most cost effective method of transport, but in Thailand the railways were “not completely efficient.” Another pundit was less kind, and said trains were in the “dark ages.” All of which means a larger proportion of freight hits the roads than in some neighbouring countries and when the price of oil spikes, so does the cost of freight.
Unseen Costs
At first sight, recent government figures appear to bear this out. Aat Pisanwanich, an adviser to the Minister of Commerce, claims, “Logistics in Singapore and Malaysia are more advanced than Thailand with logistics costs to GDP at 7% and 13%-14% respectively, compared with 19% in Thailand.”
But not everyone agrees with this analysis. Dennis Berkompas, managing director of independent shipping agent PB Agencies, says, “The problem to me is the same with many government figures - the composition of whatever they take into account to derive those numbers is never defined. Nobody says what’s included.”
He claims that when it comes to sea freight Thailand has very competitive rates and adds, “If you take the (freight) costs as relative to the value of the cargo, that, to me, is a more realistic way of deriving the percentage of your logistics cost.”
But he has concerns, particularly over internal freight. Barges run goods between Bangkok Port and Laem Chabang, thereby getting trucks off the road and providing a green and efficient transport solution. But according to Berkompas, the charges are higher than moving a container from Laem Chabang to Singapore. “Everything is full tariff - they don’t make concessions to take containers off the road. It becomes very costly."
