Fedex flying high on Thailand’s logistics sector

Small and medium size businesses are one of three sectors expected to deliver a big lift to Thai logistics, according to the chief of Federal Express’s Thai unit. Growth in the Kingdom’s logistics sector this year will outpace the country’s overall economic growth, David Carden, managing director of the United States-based company, told the Bangkok Post newspaper last week.

“These SMEs (small and medium size businesses) have products that have a lot of appeal to foreign customers and we expect very strong growth in this segment,” Carden said.

SMEs are key to the Thai economy. They account for 98.5 percent of all businesses, but contribute just 37 percent to gross domestic product, indicating they have greater potential than is now being realized. Reducing barriers and constraints, and increasing the capacity of SMEs to reach new markets through exports would result in deeper and more sustainable growth for the country as a whole.

Carden added that the medical industry and e-commerce would be two other sectors that would see a strong expansion and drive Fedex’s business in the Kingdom this year. While he would not predict a growth rate for the Thai logistics sector in 2016, he said it would easily surpass the 3 to 3.5 percent gross domestic product growth most analysts have forecast the country will achieve.

The three sectors Fedex is focusing on are among those that Thailand’s national planners consider important components of Thailand 4.0, the national strategy to transform Thailand to a more advanced economy over the next 20 years. The logistics sector is one foundation of the new economic structure, supporting Thailand’s goal to upgrade and advance its trade and trading mechanisms. Thailand’s geographic location and infrastructure make it a natural regional hub for logistics.

Carden said that, to boost his own company’s growth, Fedex wants to help Thailand’s small and medium sized businesses grow by facilitating cross-border transportation and customs procedures. Reforming and streamlining customs procedures is a goal of the current government, as businesspeople and investors have cited their complexity and variability as a competitive weakness in trade and ease of doing business.

Carden also said Thailand is on the cusp of “an e-commerce boom.” But the potential to unleash explosive growth in e-commerce is also being hindered by trade barriers, and he called on the government to go further in removing them.

“The government is lowering barriers by reforming the customs procedures and so on, which is a step in the right direction. But we think it has to do more in order to support international trade,” Carden told the Post.

The medical industry also has great potential for Fedex’s Thailand business, Carden said, because Thailand imports a great deal of equipment and devices to serve the growing medical sector.

“We have a number of customers who import medical devices and send them on to other countries for repairs, so that is another area that we will focus on,” he said.

Such machinery and technology often must pass through complicated customs steps, and he said FedEx is equipped to handle them and the transport those products require.

The Board of Investment (BoI) concurred that the medical sector has been robust. New investment in medical services and equipment soared in the first seven months of the year, according to the BoI.

Board Secretary-General Hirunya Suchinai said investment value through new applications in medical services and equipment was over $150 million, a 251 percent increase over the first seven months of 2015.

Image credit: Fedex Thailand