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Home > Business/Finance > Diversified Services > Shipping & Logistics
Thailand Freight Transport Report Q3 2007
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Thailand’s freight transport industry still faces a degree of uncertainty, as the military government set up
after the September 2006 coup continues to work out its policies. At one level, in the road haulage sector,
it is business as usual. Thailand and Laos opened a 1.6km bridge in December, connecting the two South
East Asian neighbours as part of a project to improve transportation and trade among countries across the
Mekong Delta region. Another bridge across the Mekong, the third, was announced in June with
completion expected in 2011. These links say officials will ‘improve transportation of goods, strengthen
economic co-operation and trade ties’ across the Mekong region. At another level, however, as the new
administration seeks to improve fiscal discipline, there has been some uncertainty over the road-building
budget and over which projects are continuing and which are to be shelved. To that must be added a tense
security situation, particularly in the south of the country, where rail services continue to be intermittently
interrupted. In BMI’s newly-released Thailand Freight Transport Report we conclude that road haulage
growth will be held back somewhat in our 2007-2011 forecast period, although it will still hit an annual
average of 4.8%, measured in tonne-km.
BMI’s forecast is based on a variety of factors. Because of political uncertainty we recently made a
downward adjustment to our Thai GDP growth outlook, trimming it to an average of 4.3% over the next
five years, down from 4.4% previously. Although road haulage traffic will grow faster than the economy
as a whole, our latest figure has been trimmed a little to reflect the slowdown in the road-building
programme due to budget uncertainties and ongoing congestion and high petrol prices. Pushing in the
other direction is the fact that Thailand remains an intensive user of road freight versus other transport
modes, and will continue doing so as demand remains strong. Road haulage will be driven upwards as the
development of highway links across the Mekong delta open up new road-based export routes.
Across all modes, total freight will grow by an annual average of 5.0% in 2007-2011. This is quite a
bullish figure. Even taking into account the negative impact of ongoing disruption following the switch in
September 2006 to a new international airport in Bangkok, high jet-fuel costs and other issues, we still
expect the strongest growth to be registered in airfreight turnover. This is based on what we see as the big
surge in the regional air cargo business, driven by the expansion of new commercial lines and
deregulation of routes and airport slots. Airfreight turnover will grow by an average annual rate of 6.7%
in the forecast period. Thailand’s maritime cargo will grow by an annual average of 5.0% during the
forecast period. Container traffic will expand somewhat faster, with the total number of 20-foot
equivalent units (TEUs) handled growing at an average annual rate of 7.2%. Railway freight traffic
should expand at a lower rate of 4.3% per annum.
BMI’s freight transport business environment composite score for Thailand comes out at 41.0 (out of a
theoretical maximum of 70.0), which places in a second tier among its regional peers, just behind the top
scorers, Australia, China, Malaysia and Singapore. Thailand’s best performance is in areas such as freight
growth, infrastructure growth and the transport intensity index (a measure of the dynamism of foreign
trade). Areas in which it could do better include long-term political and economic risk and the regulatory
environment.
The total value of transport and communications GDP will rise to US$26.2bn in nominal terms by 2011,
representing 8.7% of Thailand’s GDP. The transport and communications sector employed 1.03mn
people, or 3.0% of the labour force, in 2006. We see the figure rising to 1.09mn by 2011, remaining at
3.0% of the labour force.
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