Thailand has witnessed the logistics costs growth of 5.2 percent in 2008 compared to that of last year, reflecting the fast growing logistics business that have expanded in the direction corresponding to the nation’s overall economic activities with the growth rate of 6.4 percent. It is fascinating to observe that Thailand’s logistics costs have demonstrated a smaller growth rate for 2 years in a roll since 2006 and it is also smaller than that of the GDP. This implicitly reflects the nation’s more effective efforts to reduce the seemingly high logistics costs during the past 2 years.
By and large, it can be seen that the 5.2 percent logistics costs growth has been significantly contributed by the 8.8 percent transportation growth, which was comparatively close to the 9.3 percent growth of last year. Furthermore, it can be noticed that the nation’s inventory holding costs have demonstrated an apparently significant smaller growth rate of 1.3 percent in 2008, compared to that of 4.2 percent in previous years. The total value of logistics costs of Thailand for 2008 was approximately 1.7 trillion Baht, equivalent to 18.6 percent of the Gross Domestic Product (GDP), composing of 823 billion Baht of transportation costs (9.1 percent of the GDP), 705 billion Baht of inventory holding costs (7.8 percent of the GDP) and 153 billion Baht of logistics administration costs (1.7 percent of the GDP).
Logistics Cost Components
Transportation costs made up to 49 percent of the total logistics costs in 2008, followed by inventory holding costs which have made up to 4 2 percent of the total costs, while administration costs have only contributed 9.1 percent to the total cost. When comparing to the previous year, the proportions of logistics cost components in 2008 demonstrated quite a similar trend in which transportation costs were still a cost component contributing the largest to the total logistics costs. The reason behind such trend is because transportation costs have experienced a faster growth rate than that of the total logistics costs, resulted in a higher proportion of the transportation costs from 47.3 percent to 49 percent in 2007 and 2008 respectively. In contrast, inventory holding costs showed a reduction of the 1.6 percentage points from 43.6 to 42 percent of the total logistics costs in 2007 and 2008 respectively.