With the face of the world-changing over these recent decades, the number of global shipments continues to increase. One of the most widely used methods of international transport for personal and business use is freight forwarding. There are large freight forwarding companies that coordinate the shipment of goods from one destination to another with the help of a range of carriers. This business is booming in Thailand mostly because of the fact that the country is turning into a business and production hub in recent years. If you are doing business in Thailand you can take advantage of this development.
Shipping abroad is complex. Sometimes the investment of building and expanding the logistics team of a company becomes undesirable. This is mostly because the cost is too high. Most companies like to focus on keeping the business running. A freight forwarder is a business that helps to organize the shipments for corporations as well as individuals. They send the goods from the manufacturer to a customer or the final point of distribution. Freight forwarders specialize in lowering costs and facilitates the logistics of transportation. You can take help with this from a startup business consultant too.
These freight forwarders have become pretty common in Thailand due to the market conditions that exist now. They act as an intermediate between the shipper and the final point of distribution. Though the forwarder does not move the freight itself, they arrange the various transportation services, like road transport, ocean shipping, and air transportation. You would need to find more about them if you start a business in Thailand. They use their relationships with carriers – trucking companies, air freighters, and ocean liners to negotiate the best possible price to move the goods along the established trade routes through bids. They choose the most optimized path and reliability. One of the reliable freight forwarders in Thailand is Care Containers Thailand, who practices ethics and build up trust with their customers.
Freight forwarders take advantage of Thailand’s unique supply chain management as Thailand is emerging as a regional supply chain management hub. This means that the transport business is booming in the country. This is definitely a great place for the freight forwarders to move in and help manufacturers and supply markets to connect to each other. Even overseas companies are finding great opportunities in Thailand. Thailand gains a lot of help due to its wonderful position. It sits in the center of South-East Asia and has become one of the key ASEAN logistics and transport hubs. Business opportunities in Thailand are definitely booming at the moment.
Production costs are surging in China and the other developed ASEAN countries. Foreign manufacturers are looking to set up bases in the countries that have lower production costs, like Vietnam and Myanmar. Many companies are looking for manufacturing bases in South-East Asia. Thailand is offering that opportunity and with the development of production bases, the freight forwarding business in Thailand is becoming more and more prominent. Thus, Thailand is becoming a regional manufacturing powerhouse and fulfilling the role of a key logistics hub. A consulting startup can help you spread your business here.
More than half of the GDP of Thailand is from exports. The manufacturing sector in the country offers more than 80% of the exports from Thailand. Setting up a business in Thailand has proven very profitable for a lot of businessmen and traders, but there is tough competition too. The services include transporting parts, machinery, and components, in addition to the supply chain functions. Even the country is putting in a lot of effort to improve the present transportation system. There is a huge plan in place which is expected to be completed in the coming 2 or 3 years, which will improve the road and railways from its capital, Bangkok to the other areas in the country.
Thailand is the second-largest exporter in the ASEAN Region. The exports from Thailand to other ASEAN countries have increased by 12% on an average during 2009-2014. There has been a more rapid growth in exports to the neighboring GMS (Greater Mekong Sub-region) countries. Exports to these countries have increased by about 20% annually. Thailand has become the largest exporter of electronics. It exports mainly computer parts, along with integrated circuits and other related electrical items. Trade and commerce in the country are boosting and it is investing to further straighten out the transportation system.
Many foreign logistics companies like UPS, DHL, and Kerry Logistics have made it into Thailand to take advantage of the emerging opportunities in the country. The political situation of the country has also stabilized. This has improved the prospects of Thailand as a destination for market diversification and market expansion. Thus, situations are improving gradually. The freight forwarders are taking complete advantage of the situation to further improve the scenario for them. Hence, the logistics industry and transportation are growing very rapidly in the country.
Improved Logistics Infrastructure and good Regional connectivity
With continual development in the transport infrastructure and the efficiency of the customs, the cost of Logistics in Thailand has come down over the last few years. Thailand was ranked 32 on the Logistics Performance Index of the World Bank. It ranks second among the ASEAN countries and outperforms most ASEAN peers, like neighboring Malaysia, Laos, Cambodia, and Myanmar. Thailand has shown significant improvement in trade and transport-related infrastructure over the previous years.
The logistics sector of Thailand is dominated by road transport. It accounts for about 80% of the total freight volume. The roadways in Thailand are very developed. About 98% of the highways in Thailand have been paved. There are 13 highways that connect Thailand to its neighboring countries, which is the highest among the ASEAN highway network. At present, the major highways that link Thailand to the other GMS countries are the Southern Economic Corridor, the North-South Economic Corridor, and the East-West Economic Corridor. These corridors are the backbone of the GMS transportation infrastructure.
The route that is most frequently used for the cross-border logistics companies in the East-West Economic Corridor. The network is very highly appreciated as it helps to connect the other countries. The freight forwarders make very intense use of the logistics and transport services in the region to ensure a good point of trade and commerce here. This corridor connects the port city of Danang in the east to that of Mawlamyine in Myanmar in the west. The corridor also passes through north-eastern and central Thailand.
The route allows very fast access to the port cities of Vietnam from Laos and Thailand. This offers freight forwarders with a great way to improve the business and these are the reasons why the business has boomed so much in recent times. With advancements in technology, transportation and logistics in the country have been fine-tuned. The East-West Economic Corridor stretches for about 800 kilometers in Thailand. More than half of this stretch is a 4-lane highway and it has been maintained in very good condition. This is very ideal for every business and can help you too for your business in Thailand.
Opportunities that arise from regional integration
Since Thailand is very close to the emerging manufacturing hotspots in the ASEAN Region, Thailand has become a major source and hub of components and parts. These are supplied for manufacturing in assembly plants situated throughout the place. Thailand is the largest exporter of automotive parts in ASEAN. The country has more than 2300 suppliers of such parts. No doubt the freight forwarding business is so popular in the country. About half of the output that the suppliers generate is shipped to production bases in different countries in South-East Asia.
Thailand is the most developed country among the GMS nations. The capital of the country – Bangkok – is a huge commercial center and a key metropolis in South-East Asia. The city has earned a lot of popularity in terms of lifestyle products. Thus, the market attracts a lot of international traders that target this regional consumer market. The leading logistics companies say that an increasing number of ASEAN and Chinese businesses and exporters – mainly from Laos, Myanmar, and Vietnam prefer the deals to end in Bangkok. This is because it would be very convenient for the freight forwarders to manage shipments to this market.
Also, extensive regional integration by the ASEAN Economic Community or the AEC would ensure a lot of fresh business opportunities. It had been completed a few years ago. The main aim of the AEC is to create a single production base and market in the ASEAN Region. Once this is done, there can be a free flow of capital, services, goods, and skilled labor. Not only this, but there would also even be tariff cuts for Laos, Cambodia, Vietnam, and Myanmar. So, these barriers have already been removed. The freight forwarders use this to their benefit and help manufacturers to connect to suppliers and consumers. Along with simple customs procedures, the AEC would be boosting trade between Thailand and other countries in the association.
With the help of these intra-regional trade patterns and industrial development, the demand for logistics services is increasing too. The freight forwarders in Thailand manage this by connecting with multiple shipping services and helping to ship products at the minimum prices. This helps manufacturers to reach their customers easily, maintaining a good demand and supply chain. The MNCs are expanding their reach to the ASEAN countries. The freight forwarders are doing a great job by providing opportunities in offering customized supply chain management.
The freight forwarders contributors to trade with the neighbors
The high level of manufacturing processes and the ever-increasing customer markets in the region are boosting the trade between Thailand and its neighbors. Border trade is very common in Thailand as the freight forwarders prefer road transport. The well-built road network in Thailand helps to boost the trades. Malaysia is the largest trade partner of Thailand among the border countries and accounts for half of all border trades done by the country. The countries that follow are Myanmar, Laos, and Cambodia. The logistics industry plays a huge role in this trading industry.
As Myanmar and Laos continue to be economically liberated, the border trade of Thailand with these countries is expected to flourish further. The formation of the AEC is helping many distributors and retailers to expand border trades in the north and north-eastern parts of Thailand. This would help the country capitalize on the great economic integration of Myanmar and Laos.
Considering all of this, it can be said easily that the freight forwarding business is competitive but very well-developed in Thailand. There are lots of such companies – both domestic and foreign – that are taking benefit of suitable trading conditions and flourishing production and businesses. Care Containers Thailand is such a firm which is reputable.
Contact the Startup Specialists for doing business in Thailand
Startup in Thailand is the only company in Thailand to provide a single-window solution for all business startup and expansion requirements: Startup Consulting | Thailand Market Entry | Legal assistance | Serviced Office | Factory Setup | Representation | Recruitment Services | Accounting | Operations | Buying & Sourcing | Distribution | Sales & Marketing | Regional Business Development | Management
Interesting Reads :
- Representation in Thailand
- Thailand Startup Business Options
- Is it Worth Investing in Thailand this year?
- What makes Thailand a great startup hub
- Setting up your Thai Company – Initial thoughts
- Growth of Startups in Thailand and Future Outlook
- What you should consider before doing business in SE Asia
- A Challenging Baht for the Thai Economy in 2020