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Published on August 29, 2007

With more connections between globalised trade and logistics, the country has been inevitably affected by international competition.

Speaking at a seminar entitled "Logistics: Offensive or Defensive in Response to Competition" held by Department of Exports Promotion (DEP) under the Logistics Clinic project, Chackrit Duangphastra, director of Logistics Service Provider Promotion, said that local logistics businesses may possibly be taken over by global logistics service providers with large amounts of capital, advanced technologies and networks.

As the trend of trade and investment has changed, Chackrit said there are demands for better, faster, cheaper logistics services; integration of stronger supply chain management; more outsourcing of merchants, and more competition of logistics service providers.

Under the context of Asean, Asean-Dialog, and bilateral free-trade pacts, Thailand's logistics services have been pushed to open more for other countries, including core freight, related freight and non-core freight logistics.

Chackrit said the private sector will have to improve its logistics service systems in response to a greater value of trade between Thailand and other countries and to meet quality standards following rules contained in FTAs.

Thammasat Business School associate professor Ruth Banomyong said that Thai logistics service providers, however, still have an opportunity to compete in the domestic market as they have an advantage over international firms with regards to regulatory documents.

Wice Freight Service (Thailand) managing director Araya Kongsoonthorn said yesterday, as a representative from the Thai International Freight Forwarders Association, that local freight forwarders have a competitive edge than global firms in the domestic market.

She said the reason is that Thai firms can offer more customised services than international firms.

"Not only will Thai freight forwarders upgrade themselves to third-party logistics service providers but also to the fourth-party logistics firms to avoid the impact from globalisation," said Araya.

She added that the Thai logistics firms might become only subcontractors of international firms if they do not improve themselves.

"To survive, Thai logistics firms should provide logistics services in packages or solution form to serve every need of the customers," she said.

She suggested they build their networks as transport operators on sea, land and in the air as well as provide insurance in a bid to manage costs and services efficiently.

Nopporn Thepsithar, senior vice president of Siam City Cement for Logistics and Exports, expressed his concern over the country's logistics industry, saying that local service providers might be taken over by international firms like in the retail business.

However, as a representative of the Federation of Thai Industries (FTI), he has tried to help Thai logistics firms to develop and upgrade their services through more integration.

"We cannot stand on logistics alone. In fact, the logistics development should rather be the third or fourth step for logistics service providers. Logistics should be developed into the stage of supply chain management," he said.

He added that with a well-managed supply chain, producers can choose any network suitable to their business. Again referring to the retail business, he said that traditional retail shops might stand alone with no network, but are not sustainable.

Promote Bhongs-tong, adviser to the Thai IT Industry Association, said that IT technology is a way of reducing costs and increasing the efficiency of logistics services management, resulting in competitive prices.

He said the firms can design for their desired choices but the IT package should be compatible to the networks of others. In addition, the package must be able to link with the Internet so that firms can connect to end-users outside.

Sasithorn Ongdee

 The Nation