Economic Integration of ASEAN Countries Fosters New Logistics Expansion Plans in Thailand
The logistics industry, along with trade expansion and foreign capital inflows, are quickening the pace of Thailand’s economic growth, according to a recent report from Frost & Sullivan.
The evolution of the Association of Southeast Asian Nations (ASEAN) Economic Community (AEC) within the region and the impact of free trade agreements on key manufacturing markets outside the region are the two distinct forces shaping the nation’s logistics landscape.
The Frost & Sullivan report found that the market earned revenues of $71.7 billion in 2014 and estimates this to reach $96.5 billion in 2019.
“The government plans to position Thailand as the trade and service hub of the Greater Mekong sub-region and as the gateway to Asia are opening up opportunities in the logistics and transport industry,” said Frost & Sullivan consultant Jeff Tan. “Thailand’s road transport plays a key role in connecting the landlocked countries of Indochina.”
Increasing foreign direct investment in Myanmar, Cambodia, and Laos will support cross-border trucking activities and accelerate road network development in Thailand. Modernization programs, including basic infrastructure improvements, new equipment installations, and security and hardware upgrades are underway in the country’s two key ports. In addition, the current policy focus on high-tech manufacturing will support growth in air cargo services.
While new leadership is driving advancements in overall logistic capabilities, global uncertainties such as stagnation in the Eurozone and Japan pose a threat to Thailand’s export outlook and could derail transportation and logistics projects. Possible delays in government spending and the failure to invest optimally in logistics infrastructure can hamper freight movement and lower Thailand’s productivity.
“Restructuring the supply chain and logistics framework to capitalize on industrial agglomeration will facilitate efficient logistics management,” said Tan. “Moving forward, developing a holistic strategy encompassing network coverage, infrastructure setup, human resources, and service quality will enable logistics service providers to strengthen their foothold in Thailand’s logistics industry.”
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