Thailand Freight Transport Report Q4 2009

In July, it was reported that the restructuring of the inefficiently run State Railway of Thailand (SRT) was key to ensuring that the government's large infrastructure investment plans were not derailed. However, the issue remained contentious, with the labour unions still suspecting that the modernisation plans were part of a cloaked effort to privatise the company. The fate of the chronically loss-making and ungainly State Railway of Thailand (SRT) remains somewhat hazy, with the government and management itching to restructure but the unions doggedly resisting change out of fear that it is part of a stealthy plan to auction off the more-than-century-old enterprise to the private sector. On June 3, the cabinet approved an ambitious modernisation plan, which ran into serious turbulence towards the end of the month. Incensed by the decision, the unions staged protests across the country, leaving hundreds of thousands of travellers stranded. The authorities' efforts to reassure that the proposed measures were aimed at 'rehabilitation', and not divestment, fell on deaf ears. That the SRT is in need of an overhaul is evident to most, as the company has been haemorrhaging money for years and built up an onerous debt pile as a result.

Across all modes, total freight will grow by an annual average of only 0.7% in 2009-2013. We expect the average to be pulled down by the steep recession in 2009 and in particular by its impact on maritime freight. Road freight will grow by 2.5% per annum, held back by lower demand and the limitations of the highways network. Airfreight is taking time to recover from the chaos of late 2008, when political protests led to airport closures. We project average annual airfreight growth of 2.3% in the forecast period. We estimate Thailand's maritime cargo to contract by an annual average of 1.5% during the forecast period. This negative number is the result of a sharp contraction in 2009, when Thailand's foreign trade will slump by almost a quarter (24%), followed by subsequent years of moderate growth.

Railway freight traffic will expand at 1.3% per annum over the five-year forecast period.

BMI's freight transport index for Thailand comes out at 51.8 (out of a theoretical maximum of 100.0).

Prior to the current recession Thailand's best performance has traditionally been in areas such as freight growth, infrastructure growth and the transport intensity index (a measure of the dynamism of foreign trade). Areas in which it could do better include long-term political and economic risk and the regulatory environment.

BMI expects transport and communications GDP to rise to US$33.7bn in nominal terms by 2013, or 8.8% of Thailand's GDP. The transport and communications sector employed 1.03mn people, or 3.0% of the labour force, in 2008. We see this rising to 1.08mn by 2013, remaining at 3.0% of the labour force.