Time to get moving : Thailand needs to act quickly if it wants to meet targets to reduce logistics costs and spur the economy

ASIA FOCUS

Time to get moving : Thailand needs to act quickly if it wants to meet targets to reduce logistics costs and spur the economy.

UMESH PANDEY

Logistics has become the mantra for Thailand and the region as China, the new Asian powerhouse, continues to see high demand for raw materials and export routes.

In an attempt to take advantage of its central location in the 10-member Asean grouping, Thailand wants to become a hub for logistics services.

"The vision of Thailand is to have a world-class standard logistics system to be the business and trade hub in Indochina," Suchart Chantaranakaracha, the chairman of the Thai Federation of Logistics, said in a recent interview.

The aim, he says, is to focus on improving the competitiveness of various industries, and to improve logistic management in the real sector.

As part of its efforts, the Thai Federation of Logistics is backing efforts to produce quality products and improve the process of transporting raw materials.

Other issues under discussion include clustering industries so they can make use of modern logistics management techniques; encouraging SMEs to group together to increase their bargaining power; urging executives of enterprises large and small to outsource logistics to minimise costs; and supporting traceability through the entire supply chain system.

The Thai government has also been looking to develop e-logistics, set up logistics centres in customs-free zones and special economic zones, create one-stop services and single-stop inspections at border checkpoints and amend rules to help facilitate imports and exports.

The ambitious target set by the National Economic and Social Development Board to reduce logistics cost to 13% of gross domestic product (GDP) by 2010 from 23% now can only be achieved if concrete steps are taken now, Mr Suchart said.

Even after this reduction, Thailand's logistic costs in proportion to GDP would continue to be much more than Singapore (8%), the United States (8.7%), and Japan (11.3%). Even so, Thailand would be more competitive than both India (20%) and China (35%).

But companies looking to expand their operations beyond Thailand need to look at both the facilities present in the country they want to operate, and also the customs regime.

"Issues such as travelling speed, customs regulations and surface conditions of the transport network available have to be looked into," Ryuichi Yoshimoto, senior researcher at the Japan Institute of Logistics Systems, told a recent seminar in Bangkok.

He said companies should rate various means of transport such as road, rail, port and air in categories of good, fair or poor. This would indicate what service providers can expect to see if they enter these Asean markets. Companies should also assess lead time for transport, customs clearance, unit cost of transport per tonne and ways to decrease costs.

He said that issues such as reliability of services and bottlenecks in customs clearances are important, and that Asean should try to develop a synchronised system to streamline the process.

"The future of the Asean region's logistics is dependent on various issues, and among the keys is the pace at which the region can adapt to changes in consumer demand and respond to it," he said.

Bangkok Post
Sunday January 14, 2007