Thailand, whose GDP is 50% driven by exports, has a 90% deficit in shipping tonnage putting the kingdom’s exporters and importers at a disadvantage. A new national shipping firm would also help optimise the return achieved by the government in its ongoing development of port infrastructure as part of the country’s national development strategy.
The Minister of Transport, this week, set up a task force to explore plans to establish a national shipping company to tackle a 90% deficit in shipping capability in a country that is so dependent on international trade and freight. The task force is to report within one year with an action plan to be considered by the cabinet.
This week, the Minister of Transport, Saksayam Chidchob, announced that he has ordered a review to be conducted into the establishment of a national shipping line to assist in the development of Thailand’s trade with the rest of the world and to make the country more efficient as an international transport hub for freight.
He explained that the new initiative would be pursued by both the Ministry of Transport and the Port Authority of Thailand.
A working group is to be established chaired by Mr Atirat Ratanaset who will gather the research and analysis into the project.
Action plan and report to be completed, ready to present to the cabinet for review within 12 months
This will include issues regarding the market and demand, operational plans as well as the proposed regulation and ownership framework for such a venture.
The goal is that within a year, an action plan will have been prepared which can then be reviewed by the cabinet.
The committee established to review the project will be called the National Shipping Line Preparation Committee and, at this time, it is envisaged that the new entity to be established will be called the National Shipping Line Limited.
Discussions to be held with the Royal Thai Navy on finding and training crews for the new shipping line
Officials have also been tasked with liaising with the Royal Thai Navy to prepare plans to train staff and crews for a maritime transport organisation.
This will also involve discussions with the Marine Department at the Ministry of Transport in association with the Office of Transport and Traffic Policy and Planning whose mission will be to prepare operational plans for the new venture.
Foreign ownership considered but the key goal will be to allow managerial flexibility of the enterprise
The minister has also explained the government will look closely at the ownership of the new shipping line which may involve it taking a preferential shareholding.
It may also consider opening up investment or ownership of the national shipping concern to foreign entities.
However, Mr Saksayam stressed that the plan’s priority will be to allow the new entity the greatest possible flexibility in managing and developing the new transport firm to achieve the best performance.
Kingdom currently has a 90% shipping deficit
Planners within the Ministry of Transport believe that the market exists for a viable entity and point to Thailand’s current 90% deficit in shipping activity linked with both inbound and outward trade from the kingdom.
A large proportion of the kingdom’s GDP is linked to international trade with 50% alone generated by the country’s growing export industry.
The absence of a substantial presence in the shipping market puts the economy at a competitive disadvantage.
Currently, Thailand is limited to smaller vessels with limited tonnage amounting to not more than 10% of the required capacity.
฿1.33 trillion a year market at stake if the shipping concern can be viably launched and developed
It is estimated that the financial loss to the kingdom because of this is ฿1.33 trillion per annum or the equivalent of over half the kingdom’s foreign tourism income for the record-breaking year in 2019.
Mr Saksayam explained that up to now, the kingdom has been prioritising infrastructural development of its deep sea ports at Bangkok and Laem Chabang in Chonburi as well as the Sriracha Harbour Deep Seaport in addition to regional facilities.
This new initiative will, if it gets the green light, help give the kingdom greater control over the transport of cargo to and from Thailand.
It may also assist in ensuring greater use and development of the country’s port infrastructure while offering both exporters and importers a more stable and advantageous trading environment.