Thailand is seeing its logistics costs remain high as the country struggles with transporting goods around its geography. The nation is now looking to rail as a way to address costs and shipments. The nation currently sees 83 percent of moves delivered within the country while rail accounts for only 2 percent.
The country’s National Economic and Social Development Board recently gave a seminar on data for logistics development where its deputy secretary-general Arkhom Termpittayapaisith said logistics costs as a percentage of gross domestic product (GDP) dropped to 15.2 percent last year from 18 percent in 2010, and are expected to sit at 15 percent this year.
Transportation costs represent 47 percent of total logistics costs, Termpittayapaisith said, urging the government to speed up its rail development since the cost of rail shipments are put at about 20 percent of the price of moving goods by road.
Termpittayapaisith also said private companies should make investments such as in logistics and supply chain management software.
The Thai government has approved a 170-billion-baht ($5.5 billion) investment plan to upgrade the nation’s railroads. The main issue here is that no new locomotives have been introduced. Local media even reports that the State Railway of Thailand has not purchased locomotives for 20 years.
The Association of Southeast Asian Nations (ASEAN) is set to become a single market in 2015, but the fear is that Thailand’s rail logistics systems will make it hard for the nation to take part in the market. Thailand has taken the first steps to participate in the ASEAN grouping by preparing Customs software that allow for a single document submission for the region. Thailand will test its system in May.
After rail is addressed the country will likely move on to secure funding and partners for updates to its ports. Termpittayapaisith has previously spoken about plans for the Laem Chabang Port to address concerns over losing trade to Vietnam.
Thailand industry seeks better rail
