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Thailand Freight Transportation Report Q2 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: April 2008 Product Code: R302-3179 Description The Thai road haulage industry was in January reported to be in something of a dilemma over how fastand how far to pursue the officially sanctioned policy of converting trucks from diesel to natural gas forvehicles (NGV). Rising diesel costs have reduced profitability over the last two years. But ChumpolSaichuer, chair of the Logistic Alliance lobby group, said in January that only the larger road haulagecompanies with sufficient capital had been able to change the diesel engines on their lorries to run onNGV. The industry’s overall aim was to convert 200,000 of Thailand’s 700,000 lorries to NGV, which ifachieved could save the country THB500mn (US$16.1mn) a day in energy costs. The current cost ofdiesel was THB30 (US$0.96) a litre, compared to THB8.50 (US$0.27) per kilogramme for NGV. Onelitre of diesel is the equivalent of around 1.2kgs of NGV. Chumpol said the cost of converting engines toNGV was high, but could be recovered in around 10 months of operation. Truckers were resistant tomaking the change-over for three reasons: the high capital cost of making the change, the fact that therewere not yet enough service stations around the country selling NGV, and because the NGV on sale wasof somewhat unstable quality. Chumpol called on oil and gas conglomerate PTT to do more to spread theavailability of NGV, and for the government to provide loans to facilitate engine conversion. In thisreport, BMI concludes that domestic political and investment uncertainties will hold back road haulagegrowth somewhat in our 2008-2012 forecast period, although due in part to regional developments, it willstill hit an annual average of 5.7%, measured in tonne-km. BMI’s forecast is based on a variety of factors. Our Thai GDP growth outlook is for an average annualexpansion rate of 5.1% over the next five years, down from 5.4% previously. Although road haulagetraffic will grow faster than the economy as a whole, our latest figure has been trimmed a little to reflectthe slowdown in the road-building programme - due to budget uncertainties, ongoing congestion and highpetrol prices. Pushing in the other direction is the fact that Thailand remains an intensive user of roadfreight versus other transport modes, and will continue doing so as demand remains strong. Road haulagewill be driven upwards as the development of highway links across the Mekong delta open up new roadbasedexport routes. Across all modes, total freight will grow by an annual average of 6.1% in 2008-2012. This is quite abullish figure. Even taking into account the negative impact of ongoing disruption following the switch inSeptember 2006 to a new international airport in Bangkok, high jet-fuel costs and other issues, we stillexpect the strongest growth to be registered in air freight turnover. This is based on what we see as the bigsurge in the regional air cargo business, driven by the expansion of new commercial lines andderegulation of routes and airport slots. Air freight turnover should grow by an average annual rate of8.7% in the forecast period. We estimate Thailand’s maritime cargo to grow by an annual average of6.0% during the forecast period. Container traffic is expected to expand somewhat faster, with the totalnumber of 20-foot equivalent units (TEUs) handled growing at an average annual rate of 8.6%. Railwayfreight traffic should expand at a lower rate of 5.5% per annum. BMI’s freight transport index for Thailand comes out at 55.9 (out of a theoretical maximum of 100.0).Thailand’s best performance is in areas such as freight growth, infrastructure growth and the transportintensity index (a measure of the dynamism of foreign trade). Areas in which it could do better includelong-term political and economic risk and the regulatory environment. BMI expects the total value of transport and communications GDP to rise to US$29.4bn in nominal termsby 2012, representing 8.7% of Thailand’s GDP. The transport and communications sector employed1.04mn people, or 3.0% of the labour force, in 2007. We see the figure rising to 1.10mn by 2012,remaining at 3.0% of the labour force. Table of Contents
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