How Thailand logistics and Warehousing
Market Evolved?
Logistics
Service in Thailand comprises a
range of activities that look over at the procurement as well as final delivery
of raw material and finished products. These services include freight
forwarding, warehousing and other value added services such as customs
brokerage, inventory management, order fulfillment and product repair.
According to the World Bank data available for 2014, there were ~ logistic
operators in Thailand out of which majority are small scale operators. Majority
of the local logistics companies in Thailand constitute trucking fleet
operators which pickup products from one location and drop-off to another.
Thailand is one of those six countries in Greater Mekong Sub-region which is
trying to strengthen its transportation linkages among other member countries,
which is expected to improve the cross-border transportation connectivity.
Market size for logistics and warehousing has enhanced from THB ~ billion to
THB ~ billion in 2017.
Traditionally,
road transport was observed to be the primary mode of conveyance for Thailand’s
exports and imports. The country is situated in the center of Southeast Asia
and share border with Myanmar, Laos, Malaysia and Cambodia, thereby
facilitating cross-border trade activities between countries. Presently,
roadways are considered as the most preferred mode for transporting freight
owing to the country’s vast road network. The logistics sector picked up the
growth with a CAGR of % in the review period (2012-2017). Thailand is expected
to generate long-term FDI flows into technology driven manufacturing segments
such as electronics and automotives thereby creating pressure on existing
logistics players to upgrade their capabilities in near future
Thailand Freight Forwarding Market and
Segmentation
Freight
forwarders specializing in arranging storage and shipping of merchandise on
behalf of its shippers are called freight forwarders. They usually provide a
full range of services such as tracking inland transportation, preparation of
shipping and export documents, booking cargo space, negotiating freight
charges, freight consolidation, cargo insurance, and filing of insurance
claims.
By Normal and Express Delivery
The
normal / standard delivery segment dominated Thailand freight forwarding market
with a massive revenue share of ~%, whereas the remaining revenue share of ~%
was captured by the express delivery segment in the year 2017. Normal delivery
services are generally preferred where there is no urgent requirement for
orders. Major companies operating into normal delivery include SCG Logistics,
DB Schenker, Yusen Logistics, CEVA Logistics and others.
By International and Domestic Freight
Forwarding
International
freight forwarding accounted for majority of the revenues for overall Thailand
freight forwarding market by capturing massive revenue share of ~% in the year
2017.
By Freight Movement Mode
The
road freight segment dominated Thailand freight forwarding market by capturing
revenue share of ~% in 2017 despite an overall decline in the market share of
road freight in Thailand during the review period. The sea freight was the
second largest mode that contributed to the overall freight forwarding market
in Thailand. It accounted for ~% by revenue share. The air freight segment
captured a relatively low revenue share of ~% in Thailand freight forwarding
market in 2017. The remaining ~% revenue share was captured by other segments
collectively in 2017.
Thailand Freight Forwarding Market
Segmentation
By Flow Corridors
Asia
flow corridor was observed to be the largest contributor in terms of revenue in
Thailand freight forwarding market by capturing revenue share of ~% in the year
2017.China Japan and Malaysia feature in the top five list of major export
destinations and import sources for Thailand thus contributing highly to the
sea freight movement. The Thailand-Europe flow corridor followed Thailand-Asia
with a revenue share of ~% in the year 2017. Other major flow corridor includes
the NAFTA countries which are the emerging trade partners of Thailand.
By International and Domestic
Companies
International
companies operating in Thailand freight forwarding market dominated by
capturing revenue share of ~%, thus evaluated at THB ~ billion in the year
2017. Targeted entities for international freight forwarding companies are the
international MNCs as such they always seek to make alliances with
international freight companies backed by extensive service network and brand
image in the market.
Most
of these companies follow asset light model in Thailand and do not own fleets.
FDI investment applications exceeded the BOI’s targets in 2016, totaling THB ~
billion. The domestic companies operating in Thailand freight forwarding market
captured the remaining ~% revenue share thus, evaluated at USD ~ billion in
2017.
Competitive Landscape in Thailand
Freight Forwarding Market
The
freight forwarding industry in Thailand was observed as highly fragmented with
the presence of both domestic as well international freight forwarders in the
country. According to the membership record of customs broker and Transport
association of Thailand there are around ~ large scale international freight
forwarders that provide all types of services including LCL, FCL and others
whereas around ~, large scale operators exist which provide fewer services thus
totaling ~large scale international freight forwarders in the country. On the
basis of revenue, major freight forwarding companies providing air freight
services include - Kerry Logistics, DHL
Express, CJ Express ,Thai Post, DHL Post, Nikos Logistics, FedEx, TNT and UPS.
Thailand Warehousing Market and
Segmentation
Warehouses
operating in Thailand are not just simply storage spaces, but instead host
multiple value-adding processes, like just-in-time packaging, assembly, product
customization and others. In the past, warehouse was known as a cost center but
now organizations in Thailand use warehouse as a place to add value by doing
many related jobs such as labeling and packaging. Due to lingering price
disparity in the country, the modern way of handling warehousing or
distribution centers is commonly targeted for premium products and the conventional
way is frequently utilized and is used by the rate-conscious firms.
By Warehouse Space
Most
of warehouse space is located in Samutprakarn province, with a total area of
~sqm or ~% of entire market. Samutprakarn still remain the most popular location
for logistic service providers. This is mainly because this province is located
not far from Bangkok, the capital city of Thailand, and the Suvarnabhumi
Airport. Chonburi takes the second highest amount of warehouse area in Thailand
contributing almost ~ sqm which equals about ~% of the overall warehousing
market in Thailand mainly due to the lower rates for warehousing compared to
the city of Bangkok and the convenient location of Chonburi. Ayyuthaya
contributes the third highest share in terms of warehouse area available In
Thailand with a share of about ~%.
By End User
The
FMCG sector drives significant investment and value for Thailand warehousing
market by capturing revenue share worth ~% in the year 2017. The fast moving
consumer goods sector in Thailand has had a slow pace recently in terms of
growth. The marginal growth it has had over the last 5 years has been caused
mainly due to the increase
The
second major sector contributing to the warehousing sector is automotive. The
growth in the number of passenger vehicles has led to an increased demand for
vehicle parts and service equipment leading to the automotive sector having a
market size of THB ~ Billion. The electronics sector takes the next highest
market share as the demand for high grade electrical and electronic equipment
is constantly on the rise in developing countries. Remaining sectors varied
from textiles to consumer durables to pharmaceuticals cumulatively contributing
THB ~ Billion to the Warehousing industry in Thailand.
By Business Model
The
industrial / retail freight segment dominated overall Thailand warehousing
market with a massive revenue share of ~% in the year 2017. The rising retail
sector in Thailand has elevated the requirement of warehouses in the country
majorly due to increasing demand for storage of processed packaged foods and
beverages, as modern food retailing businesses expanded their operations in
order to meet the consumer requirements. The use of containers in export
shipments makes the transport and goods handling easier and faster.
Additionally, the containers are designed to facilitate the carriage of goods
without intermediate reloading. The cold storage segment in Thailand
warehousing market captured revenue share worth ~% in the year 2017 owing to
the rise in products requiring cold storage. Major selling cold storage
products in Thailand include the pharmaceutical products such as vaccines and
injections which have a requirement of being stored in a temperature controlled
environment. The agriculture and other segments collectively captured the
remaining revenue share worth ~% in Thailand warehousing market.
The
market encompasses a mix of unorganized and organized players. The companies in
the country are competing with each other on the basis of the size and location
of the warehouse. The location of the warehouse has to be appropriate to the
needs of the customer which reduces extra cost of transportation and increases
time efficiency. The other important factors which influence the choice of
warehouse are technologies/automation used in the warehouses; value added
services, GDP-certified temperature and humidity-controlled environment and
others. Though there is high initial cost in terms of investment while adopting
these technologies, players know that it will reap huge benefits in the long
term in terms of competitive advantage over other players and efficiency in
operations.
Thailand Express Logistics Market and
Segmentation
By International and Domestic Express
The
international express segment contributed Thailand express logistics market
with a massive revenue share of ~% in the year 2017. International express
delivery companies operating in Thailand were the first to start investing in
modern technology in order to meet the increasing demand in the delivery of
goods through E-commerce. On the other hand, domestic express services in
Thailand express logistics market captured ~% revenue share in the year 2017
majorly owing to the growing internal demand in the country backed by rising
e-commerce and express delivery services.
By B2B, B2C and C2C
The
B2B segment followed with a revenue share of ~% in Thailand express logistics
market in the year 2017. B2B includes the delivery of trade samples, contracts,
and other time sensitive deliveries transported through a scheduled network
with door-to-door track-and-trace of individual items /consignments. The B2C
and C2C segments followed with revenue shares worth ~% and ~% respectively in
2017.
By Air and Ground Express
Aviation
is one of the top priority sectors for development by the government of
Thailand as it is critical to the country’s economic growth. Air express
logistics services dominated Thailand express logistics market with a revenue
share of ~% in the year 2017. On the other hand, ground express logistics in
Thailand express logistics market captured the remaining revenue share worth ~%
in the year 2017. Thus just as in the normal delivery segment, the air freight
takes a back seat when it comes to the revenue share of the Thailand express
logistics segment.
How Thailand E-Commerce Logistics
Market is positioned?
Thailand
E-commerce logistics market generated revenues worth THB ~billion in the year
2012 owing to the country’s increasing access to internet and smart phones
coupled with the emerging trend of online shopping. The market is primarily
dominated by third party logistics providers such as Kerry Logistics, DHL, CJ
Logistics and SK Logistics followed by E-commerce merchants such as Lazada
Thailand, Shopee, 11Street and JIB and others. There are also pure-play
ecommerce logistics providers like Shippop, aCommerce Co, Giztix, SME Shipping
Co. which provide on-demand delivery services for small ecommerce players who
do not have their own shipping infrastructure. The gradual shift in the
preference of customers from physical shopping (store based) to online shopping
has exponentially increased the number of online orders.
Social
commerce in Thailand is driven by social networks in Thailand like Facebook,
Instagram and LINE. This is a business model unique to Thailand and hence
merchants here set up ‘shops’ on the social network sites and they post videos
or images of their product along with specifications. Average ecommerce order
size in Thailand is pegged at THB ~ to THB ~. Share of logistics cost in the
ecommerce order is estimated at ~% of the average order size. Non-cash payment
technologies coupled with increasing trend of cross-border sales have created a
positive impact the Thailand’s E-commerce industry.
The
revenue generation increased to THB ~billion in 2017, thus displaying massive
growth with CAGR of ~% in the review period 2012-2017
Thailand E-Commerce Logistics Market
Segmentation
By Channel
3PL
companies in Thailand E-commerce logistics market have dominated E-commerce
logistics market with the share of ~% in terms of number of orders received
during 2017. Some of the major 3PL companies include Kerry Logistics, DHL, CJ
Logistics and others which provide end to end services i.e. from securing
inventory in a warehouse to transporting goods from one place to another.
E-commerce merchants via their in-house logistics team captured the remaining
market share of ~% in terms of number of orders in the year 2017. Major Major
E-commerce companies in Thailand include Lazada Thailand, Shopee, 11Street and
JIB which have their own well established distribution channel in the country.
By Speed of Delivery
The
1 day delivery, commonly known as express delivery segment was observed to be
chosen as the most preferred shipping choice for Thailand’s digital buyers
owing to the rise in availability for free shipping among many e-retailers in
the country and e-logistics service providers.
Thailand,
average ecommerce order size is found to be around ~ USD; thereby companies
here go the extra-mile for fast delivery. Growing expectations of consumers
towards fast shipping from e-retailers has led to rise of same-day delivery
option in Thailand. The segment captured a market share of ~%, thus evaluated
at ~ million orders in Thailand E-commerce logistics market in the year
2017. The 2 day delivery segment also
known as the standard delivery segment, followed with a market share of ~% in
terms of number of orders, thus evaluated at THB ~ million in Thailand
E-commerce logistics market in 2017.
By Payment Method
The
Cash on Delivery (COD) segment established itself as market leader in Thailand
E-commerce logistics market with a massive revenue share of ~% in the year
2017. COD remains the dominant means of payment method accepted by merchants in
the country owing to low consumer confidence in online payments and limited
card penetration. Thai consumers
appreciate the simplicity and value of COD, which comes without additional
charges. Other payment modes such as bank transfers, payment cards, e-wallets
and scratch cards collectively captured the remaining share ~% in Thailand
E-commerce logistics market in 2017.
By Area of Delivery
The
intra-city segment within Thailand E-commerce logistics market established
itself as market leader with a massive market share of ~% in terms of number of
orders, thus evaluated at ~ million orders in the year 2017. The reason for the
capture of the E-commerce logistics market has been the growing number of
investments in the intra-city logistics sector and launch of logistics firms
like Ninja Van, Lalamove, Skootar, Alpha, SCG Express and Others.
The
intercity segment within Thailand E-commerce logistics market accounts for USD
~ million worth of deliveries and account for the rest ~% of the market.
Comparative Landscape in Thailand
E-Commerce Logistics Market
The
E-commerce logistics market in Thailand was observed to highly concentrate with
the presence of major players such as Kerry Logistics, DHL, CJ Express, SK
Logistics, Shippop, aCommerce, FedEx, TNT and Others in the year 2017. These logistics
companies in Thailand compete on the basis of shipping points, coverage area,
delivery boys, prices, payment collection methods and associations with
E-commerce merchants.
The
e-commerce logistics companies either have their own fleet of shippers or have
employees act as shippers or outsource the delivery aspect to a third party.
Since the E-commerce business environment has become more dynamic and
competitive, the companies tend to demand better logistics services which are
flexible and cost effective in nature. The e-commerce logistics companies
either have their own fleet of shippers or have employees act as shippers or
outsource the delivery aspect to a third party.
Thailand logistic and Warehousing
Market Future Outlook and Projections
Thailand
logistics market is currently at its growth stage and is expected to transform
in the coming five years with an anticipated single- digit CAGR growth during
the period 2018-2022 in terms of value. Freight will continue to dominate the
market owing to extensive road network and development of mass transit rapid
railway network which will support numerous numbers of industries in the coming
years. Growing E-commerce industry has given opportunities to logistics players
to expand their business across the nation and it will further enhance the
demand of logistics in coming years.
The
expansion of the rail network does not mean that the road haulage sector is no
longer needed. On the contrary, there will be even more demand for road haulage
because of the growth of both the population and the connectivity of businesses
within the region. “Thailand will continue to develop itself into an industrial
nation, and we’re seeing more production plants popping up in provinces further
away from Bangkok.
The
Action Plan on Transport in 2016 under the Office of Transport and Traffic
Policy Planning (OTP) will cover three motorway projects, five dual track rail
system projects (meter gauge), five dual track rail system development projects
(standard gauge), expansion of mass rapid transit networks, and an expansion of
capacity for air and maritime transport both at Suvarnabhumi Airport and Lam
Chabang Port
The
general-purpose warehousing sector will see stable conditions over the next
three years. Although demand for warehouse space is likely to grow on
increasing investment in industry and expansion in the domestic commercial and
service sectors, especially for businesses involved in e-commerce, in some
regions, ongoing investment in new warehouse space may feed an over-supply to
the market with the result that it may be difficult for operators to raise
rental rates
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