Logistics - New Facilities, Technology to Streamline Logistics Processes
Source: Thailand Board of Investment's Investment Review Publication
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ó By Susan Crawford
Thailand is upgrading logistics facilities and technology infrastructure to increase the nationís freight handling capacity and assure faster, more efficient cargo movement. A number of projects are underway, including the construction of a new international airport, the expansion of Thailandís premier deep-sea port, improvements in multi-modal linkages, the proliferation of e-logistics and a move toward paperless customs procedures. These logistics advances are crucial to boosting the competitiveness of manufacturing-based operations that utilize imported materials to produce goods both for domestic and export markets.
Advances in Air Freight
The nationís growing air cargo needs will be met by the new Suvarnabhumi International Airport, one of the worldís largest single terminal complexes with a total floor area of 500,000 square meters. It is expected to be fully operational in approximately mid-2006. Suvarnabhumi Airport will have a cargo capacity of 1.46 million tons per year, double the capacity of Bangkokís current international airport, Don Muang. In 2004, 748,000 tons of cargo passed through Don Muang, a 12% increase over 2003. The new facility, located 30 km. east of Bangkok, will consist of a 190,000 square meter cargo terminal, which will allow for faster cargo clearance and easier access to cargo, while minimizing loss and damage.
The new terminal will have a 100,000 square meter Customs Free Zone with an annual capacity of 1.26 million tons. An additional 50,000 square meters have been allocated for future expansion. The Free Zone will enable firms to import cargo, store it and pay duties only when the items are removed from the zone for domestic use. This is particularly beneficial for distribution centers that must stock expensive spare parts and components to supply to both local and regional subsidiaries when needed.
The Suvarnabhumi Airportís proximity to Bangkok will help to control logistics costs, as will the multi-modal linkages for sea, rail and road transport that are available in the airportís vicinity. The government plans to expand these linkages, and has earmarked approximately 400 billion baht (US$ 10 billion) for constructing double-track rail lines to serve both passengers and cargo. ďThe location of the new airport is good for multi-modal transportation because it enables us to move cargo efficiently from sea to air via rail or truck. Our logistics costs for multi-modal connections will therefore be less expensive compared to other nearby countries,Ē said Mr. Suwit Ratanachinda, president of the Thai International Freight Forwarders Association (TIFFA).Improvement in Sea Freight Capacity
Laem Chabang, Thailandís leading deep-sea international container port, located on the Eastern Seaboard, is expanding to meet the nationís mounting sea freight needs. ďDemand for shipping is expected to increase rapidly due to Thailandís free trade agreements with ASEAN, China, Australia, New Zealand, India and Japan,Ē Mr. Suwit said. Container throughput at Laem Chabang totaled 3.6 million TEUs in 2004, up from approximately 3.2 million TEUs the previous year. Laem Chabang port, located 100 km. from the new airport, currently consists of 11 terminals:
- 7 container terminals
- 2 roll-on roll-off (RORO) terminals for automotive cargo
- 1 break bulk terminal solely for sugar
- 1 empty terminal Seven additional terminals will be developed, including six container terminals and an additional RORO terminal, with the first scheduled for completion in approximately June 2006.
Developments in E-Logistics
In addition to developments in physical logistics infrastructure related to air, sea and rail transportation, improvements have also been made in e-infrastructure. The implementation of electronic data interchange (EDI) has enabled the industry to automate a significant percentage of invoices, packing lists, shipping documents, customs clearance documents and customs declaration forms. The Customs Department has also recently adopted a policy to use radio frequency identification (RFID) technology in a move toward paperless operations in Free Zones.
According to Mr. Suwit, advances have been made in Thailandís logistics capabilities, but the nation is still in the early stages of implementing logistics-related technology. Therefore there are many investment opportunities available to strengthen Thailandís efficiency, particularly in the areas of:
- Warehouse management technology
- Air and sea freight software
- Cargo packing software
- Trucking control software to monitor the movement of delivery trucks The upgrading of Thailandís logistics sector is a government priority and the Board of Investment offers special promotions to logistics-related activities including:
- Maritime training institutes
- Distribution centers
- Enterprise software
- Air transportation services
- Maritime transportation services Investment incentives for these activities range from corporate income tax holidays to machinery import duty exemptions.
For more information on investment incentives, see www.boi.go.th
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