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Industry Ministry undertakes scheme to slash logistics costs

Nov 14. 2013
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The Primary Industries and Mines Department will spend Bt147 million to develop six key industries this fiscal year to lower logistics costs by Bt3.5 billion.

Meanwhile, the Federation of Thai Industries (FTI) urges Thailand to adopt the German model to increase this country’s advantages from being the regional centre with the highest reduction of logistics costs.

Witoon Simachokedee, permanent secretary of the Industry Ministry, told an Industrial Supply Logistics Conference yesterday that Thailand’s master plan for industrial logistics targeted a 15-per-cent reduction in logistics cost for manufacturing and a 10-per-cent increase in efficiency of logistics and supply-chain management by 2016.

 Panitan Jindapoo, director-general of the department, said the logistics development programme for manufacturing consisted of 30 projects targeting 501 businesses with the aim to lower logistics costs by at least Bt3.5 billion, train at least 7,500 people and improve the linkages of at least 30 supply chains.

Last fiscal year, the department received a budget of Bt110.8 million under the strategic plan for development of the country’s logistics system.

About 30 projects have been completed, targeting 501 business operators, logistics-cost reduction of at least Bt3 billion, human-resources development of at least 6,575 people and linkage improvement of at least 28 supply chains.

The six target industries are food, petrochemicals, electrical appliances and electronics, automobiles and parts, textiles and garments, and rubber and rubber products. These industries hold 70 per cent inventory.

The strategic plan consists of three main thrusts – producing logistics-management professionals for manufacturing sites, promoting cooperation and linkages among business units in manufacturing supply chains, and supporting factors to raise the competitiveness of supply chains in the targeted industries.

Chen Namchaisiri, FTI vice chairman, said that based on a recent survey, Thai logistics costs hovered at 17 per cent of production costs, while the European Union averaged 8-9 per cent.

Thailand may employ the European model, as Germany is the regional centre in Europe and Thailand in Asean. This advantage could be used to manage logistics costs efficiently through railways, roads, vessels and aviation. The Asean Economic Community will take shape in 2015 and Thailand is moving ahead with the Bt2-trillion transport-infrastructure project.

Rail accounts for 2 per cent of Thailand’s total transport costs, water for 10 per cent and roads for 82 per cent.

“Once the AEC takes shape, Thailand should focus more on water and rail transport to deliver products to other Asean countries,” Chen said. “Pak Bara Port in Satun should be developed. Road transport wastes time loading products on to trucks at destination countries. [Thailand’s] state agencies for international transport may need to hold talks with their counterparts in neighbouring countries so that business operators will be able to deliver products in time,” he said.

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