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24 March 2017 20:32PM

Shipping lines have new strategy

08 Dec 11 ,  Logistics Digest
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Local shipping companies are striving to expand their market share in China & India to offset declining export and import demand from and to the USA & EU. Although Asian countries have higher purchasing power, Thai ports are still not ready to accommodate potential trade expansion within the Asian Economic Community.

Mr. Krirkkla Sonthimas, President of Thai Federation on Logistics and Executive Chairman of Evergreen Container Terminal (Thailand) Co., Ltd., noted that the local shipping industry is going through a difficult phase. Unemployment figures in the USA have hit record highs while the European public debt crisis has adversely affected the EU credit rating. As a result, transportation demand has dropped drastically, forcing local shippers to explore potential markets in Asia, particularly Indonesia and the Philippines.




Although freight rates have not declined as much as in 2008 when a large number of ships had to be moored, prevailing fuel prices have dropped to USD 80/barrel. Assuming crude oil prices remain at its current level, transportation costs should be sustainable. However, shippers cannot afford to be complacent because global economic conditions are subject o various unpredictable factors. Shippers who manage to retain their customer base in the current market conditions deserve to be congratulated.


“One thing that shippers can do is to adjust the shipping routes and re-focus on markets that have high export potential. To offset declining shipping demand in the USA and EU, shippers can explore new routes, starting with the one from China to India, with stopovers in ASEAN countries to fill up cargo space,” said Mr. Krirkkla.


To prepare for potential trade expansion within the ASEAN Economic Community, construction of new ports needs to be expedited to meet demand for transporting cargo to/from Western and Eastern countries as well as the Middle East.  With a total population of 400million, Indonesia and the Philippines rely mainly on shipping services to transport goods to numerous outlying islands.


The main problem facing the Thai shipping industry is inadequate port facilities. Even when a location is appropriate, local communities could oppose construction of new ports, such as happened at Pak Bara. If new ports are not built, the local shipping industry has a dim future. The public sector should organize observation tours to Laem Chabang which has been in operation for 18 years without adverse impact on tourism in nearby Pattaya and Bangsaen.


“As Pak Bara is strategically located on the main shipping route through the Malacca Strait, ships docking at the new port can bypass Malacca and minimize lead time. The Thai government is well advised to develop Pak Bara as an international port and a container depot on the western coast. In the future, empty containers could also be stored and repaired at Pak Bara, saving the cost of transporting empty containers to Laem Chabang and Bangkok Ports. Maintenance of empty containers will also generate additional income and employment opportunities,” Mr. Kirkkla added.