Thailand plans to slash logistics costs for rubber industry

ERJ staff report (TP)

Bangkok – Thailand’s Primary Industries and Mines Department will spend Bt147m (€3.4m) to develop six key industries, including rubber, this fiscal year to lower logistics costs by Bt3.5bn (€81.7m), reported Watchara Pussayanawin for The Nation.

Meanwhile, the Federation of Thai Industries (FTI) urges Thailand to adopt the German model to increase the country's advantages from being the regional centre with the highest reduction of logistics costs.

Witoon Simachokedee, permanent secretary of the Industry Ministry, said that Thailand's plan for industrial logistics targeted a 15 percent reduction in logistics cost for manufacturing and a 10 percent increase in efficiency of logistics and supply chain management by 2016.

Panitan Jindapoo, director general of the department, said the logistics development programme for manufacturing consisted of 30 projects targeting 501 businesses with the aim to lower logistics costs by at least Bt3.5bn (€81.7m), train at least 7,500 people and improve the linkages of at least 30 supply chains.

Last fiscal year, the department received a budget of Bt110.8m (€2.6m) under the strategic plan for development of the country's logistics system.

The six target industries are food; petrochemicals; electrical appliances and electronics; automobiles and parts; textiles and garments; and rubber and rubber products.

The plan consists of three main thrusts − producing logistics-management professionals for manufacturing sites, promoting cooperation and linkages among business units in manufacturing supply chains, and supporting factors to raise the competitiveness of supply chains in the targeted industries.

Chen Namchaisiri, FTI vice chairman, said that based on a recent survey, Thai logistics costs hovered at 17 percent of production costs, while the European Union averaged 8-9 percent.

Thailand may employ the European model, as Germany is the regional centre in Europe and Thailand in Asean. This advantage could be used to manage logistics costs efficiently through railways, roads, vessels and aviation. The Asean Economic Community (AEC) will take shape in 2015 and Thailand is moving ahead with the Bt2-tn (€46.7bn) transport-infrastructure project.

Rail accounts for two percent of Thailand's total transport costs, water for 10 percent and roads for 82 percent.

"Once the AEC takes shape, Thailand should focus more on water and rail transport to deliver products to other Asean countries," Chen said. "Pak Bara Port in Satun [southern Thailand] should be developed. Road transport wastes time loading products on to trucks at destination countries. [Thailand's] state agencies for international transport may need to hold talks with their counterparts in neighbouring countries so that business operators will be able to deliver products in time," he said.

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Full story from The Nation