2013-08-31 16:31:06 - Recently published research from Business Monitor International, "Thailand Shipping Report Q3 2013", is now available at Fast Market Research
Resilient But Wobbly Growth Pattern
The Thai economy grew very strongly in Q412, and then weakened abruptly in Q113. Year-on-year GDP growth in the last quarter of 2012 was a spectacular 18.9%, which then dipped to a below-consensus 5.3% in the first quarter of 2013. To some extent, this was to be expected. Given base effects (in Q411 the country was hit by devastating floods), the end-2012 growth number was always going to be somewhat offthe- scale. It was also boosted by one-off vehicle tax rebates and the government's costly programme of rice subsidies. In contrast, since the beginning this year, neighbouring countries have been easing down interest rates, making the Thai currency appear comparatively overvalued. With the exception of the
booming automobile sector, exports are encountering headwinds from sluggish world demand. We also believe that, in the second half of this year, mainland China's rebalancing process will lead to somewhat slower growth there, with a consequential downside impact on the region as a whole. The upshot is that, with some ups and downs across quarters, we expect GDP growth of 4.0% in 2013. This is down from the 6.4% achieved last year, and weaker than the Bloomberg consensus for 2013 which stands at 4.8%.
Full Report Details at
As for industry-specific factors, port and shipping growth will be broadly in line with the pace of GDP and foreign trade growth, although we have trimmed some of our forecasts relative to our last quarterly report. We note, however, that according to our forecasts in 2013 GDP will grow by 4.0%, while foreign trade will expand by a slightly higher 5.4%.
Headline Industry Data
* Gross tonnage at Laem Chabang, the country's largest port, set to rise by 5.0%, to 45.51mn tonnes in 2013 (faster than the forecast 4.0% GDP growth for the year).
* Box handling at the same port to rise 2.7%, to 6.086mn twenty-foot equivalent units (TEUs).
* At the Port of Bangkok, BMI projects that tonnage growth will slow to 4.1% in 2013, at 19.41mn tonnes, with container handling set to grow 6.5%, to 1.488mn TEUs.
* We expect the real value of foreign trade to grow 5.4% in 2013, up from 4.5% the year before. Imports will be up by 6.4%, ahead of exports that will grow by 4.4%.
Key Industry Trends
RCL Changes Partners On China & Vietnam Route: Thailand-based shipping company Regional Container Lines (RCL) has revealed that Hong Kong-based Orient Overseas Container Line (OOCL) will be replaced by Taiwan's Cheng Lie Navigation Company (CNC Line) as its partner in the RBC service. The RBC service offers connectivity between China, Thailand and Vietnam. The RBC port rotation is Shanghai and Ningbo, China; Laem Chabang, Thailand; Ho Chi Minh City, Vietnam; and Ningbo. CNC Line will contribute the vessel, Kuo Chang, with 1,120 twenty-foot equivalent units (TEUs). This vessel will replace OOCL's Victoria Trader. OOCL will continue to operate as a slot buyer on the RBC service after the change of partners.
RoRo Ships Set To Benefit From Thai Automobile Export Boom: Nippon Yusen Kaisha (NYK), the world's biggest operator of roll-on roll-off (RoRo) ships (carriers used to transport vehicles), which has Toyota as its biggest customer, is increasing its car carrier fleet in anticipation of a record 2013 in Thai vehicle exports. The firm, which has a total of 121 car carriers from its total ship fleet of 837, ordered four RoRo carriers in October 2012 and wants to increase its car carrier fleet to 130 by March 2017. Thailand's pro-business government and strong supplier presence have incentivised automakers to use the country as a production base and utilise the excellent port infrastructure to export surplus production to emerging markets, such as the Middle East.
Eco Ships With Big Propellers? Tell Another One, Says Precious Shipping Boss: Khalid Hashim, the chief executive of Thailand's Precious Shipping, dismissed talk of 'eco-ship designs' as no more than a marketing ploy by shipyards desperate to sell their products. Hashim was quoted saying 'Basically the ecoship concept is really just a marketing ploy by the almost dead shipyards to try and get a short lease on life.
In the dry bulk and tanker space there is no such thing as an eco-ship.' Hashim said a much larger propeller means the stern sits much lower in the water leaving the bulbous bow sticking out the water, and resulting in more drag and resistance than the energy economies achieved from the propeller.
Key Risks To Outlook
Concerns that Thailand may slip back into the violent 'red shirt-yellow shirt' factional confrontations that were so disruptive in 2010 remain in the background. That said , the administration of Prime Minister Yingluck Shinawatra has on the whole avoided major confrontations with the opposition, and has further improved the country's political risk profile by maintaining peaceful negotiations with some of the leaders of the insurgency in the south of the country, a process which has the backing of the neighbouring Malaysian authorities. Success in stemming the insurgency and re-establishing order in the south would have positive ramifications for Thailand's economy, in our view.
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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