Jump in non-group clients sought

Braced for fiercer competition under the Asean Economic Community, SCG Logistics Management targets doubling its income derived from non-SCG Group customers to 30 per cent within the next five years, managing director Nithi Phatrachoke said yesterday.

SCG Logistics has been preparing for upcoming liberalisation under the AEC single market, due to become effective in 2015, for more than eight years, laying down the necessary groundwork in its information-technology, human-resources and warehouse-management systems.

This intensive preparatory work means the company is now ready to compete and venture out for additional growth in other Southeast Asian countries, Nithi said. 

The company normally starts its overseas business by exporting to the market in question and then putting a logistics system in place to ensure the lowest and most effective cost structure, he said. 

Over the past five years, it has ensured the readiness of transport service providers in countries such as Cambodia and Vietnam where SCG Group has invested in manufacturing facilities, making sure all of them comply to a single standard. 

The company will expand further to other countries in which SCG Group has invested in factories, such as Indonesia, Myanmar and southern China, which will become an important gateway after the completion next year of the fourth Thai-Lao Friendship Bridge being constructed in Chiang Rai’s Chiang Khong district. 

“Entering the AEC in 2015 provides both an opportunity and a challenge for Thai logistics service providers, which have to prepare and upgrade the quality of their services because larger-scaled, larger-capitalised and better-managed competitors will come in,” Nithi said. “Thanks to the geographical advantage of Thailand, which shares its border with many countries, foreign competitors have also seen this opportunity” and are making inroads.

SCG Logistics is a distribution arm of SCG Group, one of Thailand’s largest manufacturing conglomerates. 

Under the company’s five-year investment plan, SCG Logistics will invest more in strategic warehouses as well as in IT and hiring more personnel. It is seeking an approval from the SCG board for this investment, said the managing director. 

SCG Logistics reported revenue of Bt13 billion last year, up 10 per cent from 2010. About 15 per cent of its income is derived from non-SCG customers. 

The company targets sales from non-SCG companies to increase to 30 per cent within the next five years, and to account to half of revenue within 10 years.

Speaking at the “Safety We Care” event organised by SCG Logistics, SCG Group chief executive Kan Trakulhoon said that in preparing for the AEC, Thai logistics companies could increase their competitive advantage partly through developing their human resources and giving importance to the issue of work safety. 

The event was organised to unite the force of a network of more than 200 logistics and transport operators that are business partners of SCG Logistics jointly to declare their determination to achieve a “zero accident” environment in their operations through the creation of a work-safety culture known as “COACH”, which is an acronym for Care, Observe, Analyse, Communicate and Help.