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Logistics - New Facilities, Technology to Streamline Logistics Processes

Source: Thailand Board of Investment's Investment Review Publication

The BOI Investment Review is a monthly publication of the Thailand Board of Investment.  www.business-in-asia.com and Runckel & Associates believe that much of this information needs wider dissemination.  We are therefore working with the BOI to help promote these useful articles and index them into categories that are easy to find.

— By Susan Crawford       

Thailand is upgrading logistics facilities and technology infrastructure to increase the nation’s 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 Thailand’s 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 nation’s growing air cargo needs will be met by the new Suvarnabhumi International Airport, one of the world’s 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 Bangkok’s 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 Airport’s 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 airport’s 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. “The 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,” said Mr. Suwit Ratanachinda, president of the Thai International Freight Forwarders Association (TIFFA).Improvement in Sea Freight Capacity

Laem Chabang, Thailand’s leading deep-sea international container port, located on the Eastern Seaboard, is expanding to meet the nation’s mounting sea freight needs. “Demand for shipping is expected to increase rapidly due to Thailand’s free trade agreements with ASEAN, China, Australia, New Zealand, India and Japan,” 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. 

 

Customs Adopts RFID Technology for Paperless Free Zone Operations

 

The Custom’s Department Free Zone Division announced this month that it has adopted radio frequency identification (RFID) electronic container and seal systems in order to achieve paperless Free Zone operations by 2008. As part of this initiative, customs declaration forms from firms operating in the nation’s 23 Free Zones will be submitted on-line via electronic data interchange (EDI) to the Customs Department within three years. Free Zones allow for duty-free imports of items used in the production of exports, although duties must be paid on items that are removed from the free zone or that are used to produce goods for local sale. Customs will use RFID to track cargo brought into a Free Zone.

Using RFID seals, containers for export can be checked from the zone through to the port without the need for Customs officials to re-open them. The RFID technology will help to ensure the security of cargo, enabling Customs to monitor the cargo during transport and help determine whether any tampering has occurred. This system is expected to be implemented with exporters in 2006, and with importers the following year.

A pilot project utilizing RFID seals was implemented with leading hard disk drive manufacturer Western Digital. TIFFA EDI Services Co., Ltd., led by Managing Director Anusorn Lovichit, served as system integrator and software consultant for the project. “With this technology, Customs can use the Internet to track the real-time progress of Western Digital’s cargo shipments between Free Zones,” Mr. Anusorn said. Western Digital invested in both electronic seals and RFID readers at Customs checking posts. In addition to using electronic seals, cargo packing lists, invoices and Customs Declarations are being submitted electronically. The RFID hardware was supplied by Identify Co. Ltd. and epcSolutions was responsible for the software. Customs will evaluate the pilot project results in October, for possible implementation in Free Zones nationwide.

For more information, see www.tiffaedi.com

 


Investment Opportunities

According to Mr. Suwit, advances have been made in Thailand’s 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 Thailand’s 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 Thailand’s 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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