Major research project to aid logistics planning effort

A series of research projects on transport logistics in the context of the Asean Economic Community (AEC) to be launched over the next 12 months are expected to provide local logistics firms with the information they will need to plan their future.

For the first two studies, funding contracts worth a combined Bt40 million provided by the National Research Council of Thailand (NRCT) and the Thailand Research Fund (TRF) are expected to be signed in November.

Comprising 13 individual studies, the project is broadly divided into three fields: infrastructure management, supply chain industry redesign and meta-analysis.

All studies will collect data inside and outside the country, using a wide range of methodologies. The first of the three series, led by Narong Pomlaktong, research director for transport and logistics at the Thailand Development Research Institute, will focus on reliability and stability in the management of infrastructure networks.

"The series of studies will benefit not only those private logistics firms involved in the production and transport logistics supply chain, but also the government, as it seeks to create a strategic logistics development plan for the country," Narong said.

Private firms will be able to use the information to make decision about which [Asean countries] they should focus on, and to estimate the returns they can expect, he said.

The research will also consider logistics networks' vulnerability to disasters, especially floods, in a bid to find ways to efficiently manage transport logistics when networks are flooded. The outcomes will be submitted to the government for use in designing networks in the future.

The second series of studies, led by Apichat Sopadang, an associate professor of financial and planning affairs at Chiang Mai University, will try to predict how specific industries and areas in the region will adjust to the AEC, based on simulation studies.

Apichat said the studies would try to determine which defensive or offensive strategies would be most appropriate for the country for specific changes in the supply chain in the context of the AEC. An example can already be seen in Laos, where China now accounts for about 50 per cent of foreign direct investment (FDI), having replaced Vietnam as the No 1 source of FDI. Thai consumer products have lost 70-80 per cent of their market share to Chinese goods there.

"Now, the context is not limited to Thailand, but to all 10 Asean member countries," Apichat said.

He added that management and decision-making by large manufacturers would likely cause other firms to make adjustments after the AEC becomes a single market. When they move their production bases from one country to another, for example, the firms that comprise their supply chains will need to decide whether to follow them or utilise their transport logistics instead.

 Apichat said the studies would likely focus on sectors such as auto manufacturing, electronics, textiles and logistics service providers. Based on the outcomes of the studies, the Board of Investment may reconsider its strategy by promoting outbound investment rather than inbound investment, he said.

 The last field of research, meta-analysis, led by Assoc Prof Dr Ruth Banomyong of the Department of International Business, Logistics and Transport at Thammasat Business School, will aggregate the outputs of the first and second series of studies to analyse the continuity of the impacts on Thailand. The analysis will focus on the competitiveness of Thai transport logistics firms, compared to those of other Asean members. The results will inform the government's decision-making when it draws up the country's strategic supply-chain development plan.