2013-02-19 10:16:19 - New Transportation research report from Business Monitor International is now available from Fast Market Research
BMI View: Moderate Freight Growth Expected in 2013
BMI expects Thailand's GDP to grow by 4.4% in 2013 (no change on our earlier projections), but we have lifted our estimate for growth in 2012, the preceding year, to 4.3% (up from 4.0% previously). In essence, we have been impressed by greater-than-expected strength in domestic consumption and investment in the second half of 2012, but although this is encouraging, we don't think it will build much-increased momentum in 2013. This is because Thailand is still facing strong headwinds from the global economy and there are concerns over domestic political risk factors.
As for industry-specific factors, the main story is that the freight sector will be broadly in line with the pace of GDP
and foreign trade growth. We note, however, that in 2013 GDP will accelerate marginally, while foreign trade growth will slow down marginally. Of those two opposed trends we think the slowdown in trade will have more of an impact on ports, shipping, and airfreight activity. Road and rail freight will be more greatly influenced by the domestic economy.
Full Report Details at
- www.fastmr.com/prod/536571_thailand_freight_transport_report_q1_ ..
Headline Industry Data
* Gross tonnage at Laem Chabang, the country's largest port, set to rise by 6.5% to 60.94mn tonnes in 2013 (slower than the estimated 6.8% growth in 2012).
* At the Port of Bangkok, BMI now projects that tonnage growth will reach 4.1% in 2013 (down from 8.0% in 2012) to 18.936mn tonnes.
* We now expect the real value of foreign trade to grow 5.4% in 2013, with imports up by 6.4% and exports lower at 4.4%.
* 2013 air freight tonnage growth forecast at 4.9% and to average 4.4% a year to 2017.
* 2013 rail freight tonnage throughput growth forecast at 6.3% and to average 5.9% a year to 2016.
Key Industry Trends
Economic Trends Bode Well For LogisticsLogistics giant DHL and air freight operator Emirates SkyCargo are the latest global players to announce that they are increasing their exposure to Thailand's freight transport and logistics sector. DHL has announced that it will spend US$63.83mn on developing its business in Thailand over the next two-and-a-half years. The company is also seeking to expand its operations in Thailand's automotives and retail sectors, too. BMI's analysis is that the growth in domestic consumption, imports, and specific export sectors such as automobiles, textiles, and pharmaceuticals will all create strong medium-term demand for logistics in the country.
Rising Oil Import Needs Boost Tanker DemandThailand's increasing demand for imported oil is opening up opportunities for tanker operators, a trend we expect to continue over the medium term. Thai Oil, which operates Thailand's largest oil refinery, has signed a deal with Japan's NYK for the shipment of crude oil from the Arabian Sea to Thailand. Under the contract NYK's very large crude carrier (VLCC) Tateyama will be contracted for at least three years to operate on shuttling oil on this route. The deal marks a further development in Thai Oil's relationship with NYK. In February 2011, the two companies established a joint venture which purchased the VLCC Tenyo and then chartered it to Thai Oil on a 10-year contract.
Further Signs Of Movement On Dawei, But Funding Remains After a meeting of Thai Prime Minister Yingluck Shinawatra and Myanmar Vice-President Nyan Tun in Bangkok, it was announced that a bilateral committee was being set up with ministerial-level membership, to discuss ways and means of moving plans forward for the Dawei deep-sea port. A consortium of banks led by Bangkok Bank and Siam Commercial Bank have arranged a THB10bn (US$325mn) bridging loan to keep the project running, and to tide it over until a proposed US$3.2bn loan from a Japanese bank can be disbursed. However, there is still a long way to go: the overall project, including the deep sea port, an industrial zone, a gas pipeline and other road and rail infrastructure, has been valued as requiring up to US$50bn worth of investment.
Key Risks To Outlook
We believe domestic political risk to our freight forecasts is rising a little. Opposition protests in November 2012 raised concerns that Thailand might slip back into the 'red shirt - yellow shirt' factional confrontations that were so disruptive in 2010. Thousands of protesters gathered in the Thai capital Bangkok on November 24 calling for Prime Minister Yingluck Shinawatra to step down and accusing the government of corruption under the direction of ousted former Prime Minister Thaksin Shinawatra. This is the first major demonstration against her administration and the ruling Puea Thai Party (PTP) since the party assumed power in 2011. However, the government survived a parliamentary no-confidence motion brought by the opposition parties at the end of the month, and the immediate crisis subsided. Yet we note that from an economic perspective, while the economy has shown resilience by shrugging off political concerns in recent years, we still see risks that another flare-up could ultimately hurt investor confidence at the margin.
A second downside risk to our Thailand ports and shipping forecast continues to come from the uncertain global economy. Thailand remains exposed to the possibility of a sharper-than-expected slowdown in China, an increasingly important trade partner. We believe that an external blow to Thailand's economy could still, in a worst-case-scenario, tip the country into a recession.
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