Analyst says Thai logistics industry will be worth $100 billion

Thailand is emerging as a major logistics hub in the region and its logistics industry should be worth nearly $100 billion a year by 2019, according to a report released recently by Frost & Sullivan, an international consulting firm.

Geographically positioned at the heart of mainland Southeast Asia, Thailand’s strategic location makes it a logical hub for transport as well as manufacturing. In addition, Thailand adopted open trade, investment and free market economic policies decades before many of its neighbors, and so has had a significant head start in developing its infrastructure and logistics capabilities.

The current Thai government will partner with the private sector to invest over $60 billion in new infrastructure beginning this year. Most of that infrastructure involves transport and logistics, such as new and upgraded rail lines, ports, airports and roads. The investments will extend Thailand’s logistics advantages in the new ASEAN (Association of Southeast Asian Nations) Economic Community, or AEC, a 10-nation free trade and investment zone.

“Government plans to position Thailand as the trade and service hub of the Greater Mekong sub-region and as the gateway to Asia are opening up opportunities in the logistics and transport industry,” said Jeff Tan, automotive and transportation senior consultant for Frost & Sullivan. “Thailand’s road transport plays a key role in connecting the landlocked countries of Indochina.”

Frost & Sullivan is a United States-based consulting firm with offices in over 40 countries that provides market research and analysis, growth and transformational change strategy advice, and began expanding into Asia in the 1990s.

The report by Frost & Sullivan estimated that Thailand’s logistics industries brought in earnings of $71.7 billion in 2014. The firm forecast that the industry should produce earnings of $96.5 billion by 2019.

The report said that cross-border trucking and transport will be supported by increased foreign investment in Myanmar, Cambodia and Laos, accelerating road network development in Thailand. Thailand is investing with Cambodia, for instance, to connect the two countries’ capitals, Bangkok and Phnom Penh, by rail by the end of this year.

Frost & Sullivan cautioned, however, that a weak global economy could hamper Thai government investment in the near term and possibly derail transportation and logistics projects.

Thailand’s economic Deputy Prime Minister SomkidJatusripitak, has said, however, that the new projects will go forward on time, as they are a key element in his stimulus program to boost economic growth this year and in years coming.