Operators eye a happier new year

Investment is flowing into new services and facilities in anticipation of a sprightly 2010

Like other export-led economies in Asia, rising industrial production in the second quarter of 2009 boosted growth projections in Thailand, with the electronics industry leading the rebound.

In keeping with accelerating logistics demand and economic growth in the second half of the year in Thailand, Bangkok Flight Services (BFS) saw a 20% hike in volumes through its terminal at Suvarnabhumi Airport during October and recorded further growth in November and December.

"Telecoms and electronics exports and re-exports were all performing strongly, " says MD Stewart Sinclair.

"Capacity out of China was short so we were seeing a lot of cargo coming through Bangkok."

Thai Cargo, the freight arm of Thai Airways International, aims to take advantage of the late-2009 upturn by introducing two new freighters to its hub at Suvarnabhumi Airport.

Last year the company signed a blockspace agreement to use two new Boeing 777-200 long-range freighters operated by Southern Air Freighter.

Poonsak Chumchuay, cargo and mail sales department director, says the first of the new fuel-efficient aircraft, which each offer more than 100 tonnes of capacity, will enter service in late February with the second joining the fleet a month later.

However, although the new freighters will not arrive until this year, the deal with Southern Air included the provision of a B747-300 for the latter part of 2009. This allowed Thai Cargo to launch freighter operations in October, offering twiceweekly services between Bangkok, Dubai and Frankfurt, and additional ad hoc flights to Amsterdam and Hong Kong.

Chumchuay says the existing services will remain in place when the new aircraft are delivered, but the company will also examine new freighter markets.

"We haven’t finalised the schedule yet but we’re looking at Europe, the US and Australia, " he adds. "We will assess demand for various destinations and follow the demand."

The deal with Southern Air was timely, coinciding with the massive upsurge in demand across Asia for air freight uplift to Europe in the lead up to the Christmas peak season. Thai Airways’ freight load factor in the first nine months of 2009 fell to 49.1%, compared with 56.3% a year earlier, as the volume of cargo carried fell 19% to 378,340 tonnes.

However, with the load factor rising to 58.8% in September, Chumchuay predicts the final figures for the fourth quarter will show a load factor of 60-70%.

"It boomed from October, so we were lucky having the freighter capacity, " he says. "In November, demand was very high and December was strong as well.

"Rates improved a lot, but not to the levels of US$6/kg seen at Hong Kong for some ad hoc cargo.

"What will happen in 2010 is unclear; it could go back to pre-crisis levels."

Some 60% of the cargo shipped by Thai Cargo in the pre-Christmas rush originated in China, arriving by bellyhold transport at Bangkok for onward shipment to Europe. Thai-origin cargo constituted most of the remaining 40%.

Thai Cargo enhanced its services at its terminal in the Customs Freezone at Suvarnabhumi Airport with the opening of a new cold storage handling facility in August, designed to meet the needs of exporters handling temperature-sensitive perishable goods.

Chumchuay says the cool chain management system covers the complete process, from pre-cooling the container and shipment, ULD (unit load device) thermal lining and temperature monitoring, plus reports from the receiving dock and prior to flight departure.

"This facility came into full operation in December and is unique for exporters in Thailand, " he adds.

The 660,572sq metre free zone at Suvarnabhumi includes some 21 warehousing units of 700sq metres and common user warehousing. It enables clients to benefit from import and internal tax relief and duties, and export duty on re-exports.

In 2008, some 503,534 inbound tonnes passed through its gates and 710,351 tonnes for export, both marginally down on a year earlier. Figures for the first nine months of 2009 were 325,274 tonnes inbound and 465,739 tonnes outbound.

Uptake of facilities in the free zone has been slow, not least because of issues relating to ownership and tax rights. A spokesman says a new marketing model will be launched this year to help reduce operating costs in a bid to retain current clients and attract new ones.

Last year, GAC opened a 600sq metre facility in the free zone and a second 3,500sq metre facility, situated outside, but near, the airport to supplement its 16,500sq metres of warehousing facilities across the country.

Erez Agmoni, business development manager at GAC (Thailand), says this helped the company expand its business in Thailand by 50% in 2009, largely through growth in air freight movements and customer wins.

"There has been a change in perception of GAC in Thailand now we have the new facilities, and customers have seen that we can find better ways to do the same business, " he says. "So we’ve actually had more business since the crisis began.

"The first quarter saw a big drop in demand for logistics in Thailand, although GAC was gaining market share, so we weren’t affected so badly.

"When volumes started increasing in the fourth quarter, we were able to use our international agreements to secure slots for exports with a range of airlines for ourselves and other forwarders because we can offer the airlines regular volumes."

GAC Thailand has 12 branches and employs about 250 people. Agmoni says:

"We grew from eight last year and were integrating offices and facilities in 2009.