2012-09-04 09:00:16 - Recently published research from Business Monitor International, "Thailand Shipping Report Q3 2012", is now available at Fast Market Research
BMI View: Floods and World Economy Weigh on Forecasts
Although BMI thinks Thailand's post-2011 floods economic recovery is losing steam, we are still moderately optimistic on the outlook for the country's ports and shipping sector. We see GDP growth of 4.0% this year, followed by 4.4% in 2013, which will provide a degree of support for the industry. Admittedly, foreign trade growth will fall by half in 2012 compared to the preceding year (down from 11.6% to 5.3% in real terms). But on the plus side we see foreign trade growing at just above 5% per annum for the next few years.
As for industry-specific factors, some of the worst fears about the impact of last year's floods now seem to be
receding. One of these was that multinational companies active in the Thai manufacturing sector might conclude that damage to the supply chain was irreparable, and therefore relocate their activities to areas less exposed to flooding or other natural hazards. Some six months on, however, automobile exports from Thailand are recovering at a healthy pace.
Full Report Details at
Headline Industry Data
* Gross tonnage at Laem Chabang, the country's largest port, set to rise by 6.8% to 57.23mn tonnes in 2012 (faster than the forecast 4.0% GDP growth for this year).
* Box handling at the same port to rise 6.7% to 6.116mn twenty-foot equivalent units (TEUs).
* At the Port of Bangkok BMI projects that tonnage growth will reach 5.8% in 2012 (up from 2.4% in 2011) to 17.81mn tonnes, with container handling set to grow 5.4% to 1.376mn TEUs.
* We expect the real value of foreign trade to grow 5.25% in 2012, with imports up by 5.5% and exports marginally behind at 5.0%.
Key Industry Trends
Precious Shipping Losing Money But Still Buying Boats
Precious Shipping, the largest Thai dry bulk shipping company, posted a net loss of THB40.96mn (US$1.33mn) for the quarter, down from a net profit of THB108.63m in the same period of 2011. It said the move into the red was caused by rising running expenses and falling freight rates. Despite slipping into the red, Precious is continuing with its fleet expansion plans. In February, the company obtained a credit facility of US$100mn from the Export-Import Bank of Thailand for the acquisition of new or second-hand dry bulk vessels. We caution, however, that while these strategies are bringing orders at a difficult time for shipbuilders, owners that continue ordering run the risk of helping to prolong the ongoing rates depression caused by the current overcapacity in the sector.
Plans For New Port At Pak Bara
Officials have confirmed plans for building a new port at Pak Bara off southern Thailand. The port will offer initial capacity of 825,000 twenty-foot equivalent units (TEUs) a year, reaching nearly 2.5mn TEUs by 2032. The proposal is apparently being developed despite a degree of uncertainty over Thai involvement in the US$4bn development of the Dawei port in neighbouring Myanmar. Although Bangkok has suggested its support for Dawei is cooling, BMI believes this is part of a negotiating strategy to put pressure on Myanmar's government to overcome delays and deliver increased power supplies to the proposed site. Dawei still offers a regional gateway to Laos, Cambodia, Vietnam and southern China. It has the added benefit of reducing pressure on the Malacca Strait and could complement the further development of its own Laem Chabang port.
NYK And RCL Offer Joint Service
Japanese shipping company NYK Line and Thai shipping company Regional Container Lines (RCL) have announced that they have jointly launched a new Asian service, according to Transport Weekly. The Thailand-Vietnam-Canton service will utilize three vessels, two from RCL and one from NYK. Each vessel will have a capacity of 1,000TEU. The service will run every three weeks and call at Bangkok, Laem Chabang, Haiphong, Shenzhen-Shekou and Hong Kong.
Key Risks to Outlook
The main 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 the threat of an external blow to Thailand's economy could still tip the country into a recession.
A second risk appears to be diminishing. This is the ever-present danger of domestic political confrontation between 'Red Shirts' (the ruling Puea Thai Party (PTP) led by Prime Minister Yingluck Shinawatra and 'Yellow Shirts' (the largely urban opposition). Constitutional reform, considered by many to be a possible trigger for a new clash between the two sides, now has been set back to late 2012, and there are some signs it will be managed with an eye to minimising political risk.
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