Breaking down barriers

Thailand is at the forefront of efforts to decrease trading costs in south-east Asia

Thailand is pursuing cross-border bonded trucking in a bid to remove one of the key barriers to integrated, multimodal logistics solutions in the region.

When the 21-member Asia Pacific Economic Co-operation (APEC) met in Singapore in November, one of the top items on the agenda was minimising the cost of conducting international trade. One target was to reduce the cost of importing or exporting a container by US$450 within six years.

Thailand is already one of Asia’s best performers, in terms of the cost of starting and running a business and conducting international trade, but government and business leaders are united in their determination to further improve processes and remove trade barriers. Progress in this area is expected to start to bear fruit this year.

In Thailand, a typical export shipment currently requires four documents, takes 14 days and costs $625. In the eastern Asia and Pacific region, an average of 6.7 documents are required for exporting, which takes 23 days and costs more than $900.

On the import side, on average, three documents are needed in Thailand and it typically takes 13 days at a cost of $795. On average, in the eastern Asia and Pacific region, typical import shipments require and average of 7.1 documents, take 24.3 days and cost $953.

Despite its high global ranking, one of the bugbears of many businesses in Thailand remains the cumbersome customs processes. Progressive administrators are making efforts to help speed the flow and reduce the cost of international shipments, well ahead of APEC targets.

Since the third quarter of last year, Thai Customs has been working in partnership with leading logistics providers to develop viable intra-Asia trucking networks to and from Bangkok. Central to this has been allowing logistics providers such as TNT and DHL to move cargo under bond across Thai borders.

"The government view is that they need to bring down the cost of logistics and simplify processes, " says Stewart Sinclair, MD of Bangkok Flight Services, one of two ground handlers at Bangkok’s Suvarnabhumi Airport.

TNT started trials of bonded trucking services across Thailand’s borders, working closely with Customs in the third quarter of last year. Besides offering shippers an alternative to either road or air, TNT sees the ability to avoid lengthy delays at Thai borders as providing alternatives for air uplift to Europe and the Middle East using Bangkok’s passenger and freighter links.

"At the end of 2009 we were seeing ever increasing volumes of cargo moving to Bangkok for shipment to Europe and other destinations during the Christmas peak, and our new bonded services proved popular, " says Alan Miu, MD of TNT Express Worldwide, Thailand.

"Under bond, it takes 2.5 days from Singapore to Bangkok. If the cargo is not under bond, the commodity has to be taxed and processed at the border.

"It’s a lot more expensive and the driver has to pay the duty at the border. The truck has to be opened up, paperwork compared and so on. It’s at least an extra half-day waiting at the border, if not longer."

Cargo for international uplift is delivered directly to the customs free zone at Bangkok’s Suvarnabhumi Airport. Cargo for destinations within Thailand goes to TNT’s road hub at Pathumthani, outside Bangkok.

Thomas Tieber, CEO of DHL Global Forwarding in southern Asia, says the company will in future use the airport’s under-used free zone as a bonded inland container depot. It will run fixed international trucking services to neighbouring countries using RFID tags to remove some of the uncertainty and paper from supply chain planning.

Initially, services due to start this month will focus on Singapore and Malaysia, but this could be rolled-out around the region, with Laos next on the radar.

"If we’re moving cargo between Thailand and Malaysia or Singapore, we’d usually have to do customs clearance at the border, " says Tieber. "Now we’ll be able to do it at the airport in Bangkok, which is a lot easier. We’ve had a lot of interest."

He believes the reduction of barriers to entry at borders and the use of cross-border RFID systems will speed the integration of the south-east Asia market and reduce the cost of international shipments. And it’s an alternative that’s faster than ocean and cheaper than air, he adds.

Regional hub Miu says airlift capacity out of some neighbouring countries is also lacking, creating a role for Suvarnabhumi as a regional hub.

"In Vietnam, southern China and Cambodia, the international carriers tend to use smaller [aircraft] than B777s or B747s, so trucking under bond into Bangkok is a good fit, in terms of capacity, as Bangkok has a lot of international destinations.

"We’re expecting this to really take off as 2010 progresses."

He adds: "The general market from Thailand is really coming up now. I can see more and more customers in the hi-tech, spare parts, healthcare sectors, replenishing inventories."

Miu says there was a big build-up of demand for airlift from China to Europe in the lead up to Christmas and some of this cargo came to Bangkok.

"At the end of the year we were seeing a lot of cargo moving from southern China into Bangkok for uplift to Europe.

"We’ve also had enquiries about trucking from Thailand to pick up ocean services at PSA’s terminals in Singapore, " he adds.