Thailand Freight and Logistics Market - Growth, Trends, Covid-19 Impact, and Forecast(2022 - 2027)

Thailand Freight and Logistics Market - Growth, Trends, Covid-19 Impact, and Forecast(2022 - 2027)

The Thai freight and logistics market was valued at USD 61.87 billion in 2020, and it is expected to reach around USD 100 billion by 2026, registering a growth rate of 6% during 2021-2026.

Thailand, the second-largest economy in ASEAN after Indonesia, is an upper-middle-income country with an open economy. During 2019 and 2020, the country had been significantly affected by the COVID-19 pandemic and the related lockdown, leading to low consumption levels and disruptions in supply chains. Small-size and low-tech firms have suffered due to reduced orders and a shortage of inputs, including raw materials, owing to the disruption of the supply chain.

Express services are likely to become more significant in the near future as Thailand's economy becomes increasingly integrated owing to rapid growth in international trade services. Growth in the e-commerce industry may drive the express delivery market, owing to the rising demand for this service in the B2C business segment.

Land transport is a major domestic freight mode of transport in Thailand. As estimated, more than 80% of the total domestic transport is carried out by road freight. The major existing truck transport operators are small and lack the latest technologies. Moreover, most of these trucks run empty (on return trips), and if this is correctly developed, truck transport has abundant room for growth in the future.

With the evolution of the Asian Economic Community (AEC), Thailand's position as a transportation hub for the Greater Mekong Sub-region (GMS) has been strengthened. This initiative has increased the country's opportunities for cross-border trades and import-export shipments. The most dominant mode of transportation is road transportation. Fierce competition is expected to occur, as professional multinational logistics companies owned by foreigners are expected to use their competitive advantages to gain significant market shares and compete with local logistics providers. To withstand the competition, domestic logistics firms have to identify the risks pertaining to their services among the neighboring countries and find avenues to manage the risks.

Key Market TrendsGrowing E-commerce Propels the Demand for Logistics Services

As incomes in the ASEAN countries steadily rise, the demand for consumer goods is created, with an evolved e-commerce ecosystem and increased spending of people in those countries. The second-largest economy of ASEAN, Thailand, has one of the region’s highest number of internet users. There are around 57 million internet users in the country who are well-versed in the use of digital technologies, mobile, and e-commerce. The expanding internet user base has made Thailand an ideal growth environment for e-commerce businesses.

The continued expansion of the e-commerce business has created a demand for logistics space and has brought significant changes in Thailand's supply chain and logistics operations. Many courier companies have launched their cost-effective and high-quality logistics services in the country and brought domestic end-to-end delivery to the market. Many other companies have established central warehouses and smaller drop-off and pickup points across the nation to sustain the rise in demand. For small and medium enterprises (SME), this means greater convenience and quick delivery to their consumers at a much lesser cost. Central Group, Aden, DHL Express Thailand, Kerry Express, Lazada, Pomelo, and Shopee are major e-commerce and logistics companies in the country. Additionally, the air freight handled at Thai airports is significantly increasing, owing to the ongoing demand created by e-commerce.

In Thailand, strong growth in downloads of apps of traditional retailers, such as the Charoen Pokphand Group Co. Ltd. and The Central Group's Big C hypermarkets and Tops supermarkets, suggests that the services may now be growing in familiarity beyond the Bangkok metropolitan area, where they have largely focused on until the pandemic, increasing the scope for expansion of the freight and logistics service in the country.

Thailand’s Emerging Automotive Industry Provides Opportunities for Logistics

Thailand offers excellent investment potential as a leading automotive production base in the ASEAN region, a fast-developing region for the automotive manufacturing industry. Over 50 years, the country has developed from an assembler of auto parts and components into a top automotive manufacturing and export hub. With shipments bound for around 100 countries, Thailand is the 13th-largest automotive parts exporter and the sixth-largest commercial vehicle manufacturer in the world, as well as the largest in the ASEAN region.

The country has virtually all of the world’s leading automakers, assemblers, and component manufacturers. Automotive logistics has rapidly become one of the most important sectors in Thailand, and it is still continuing to grow to this day. Recognizing the importance, ANJI-NYK logistics (Thailand), a leading automotive logistics provider, offers automobile manufacturers in Thailand end-to-end automotive logistics, focusing on the delivery of finished vehicles and automotive spare parts.

Auto exports performed badly in 2019, with unit export sales falling by 7.6% to 1.1 million vehicles and export value by 6.3% to THB 1.8 billion. This was largely a result of the global economy recording its slowest growth in a decade (only +2.9%) and the impact of the COVID-19 pandemic and the US-China trade war on the Thai export markets. However, this also presented an opportunity for Thai players to ramp up exports of certain types of vehicles and result in overall growth in the long term.

Competitive Landscape

The logistics market landscape of Thailand is fragmented in nature, with a mix of global and local players. According to industry sources, DHL holds a significant position in the Thai logistics market, with a foothold in air and sea freight and their expertise in 3PL services. Other global players, such as CEVA, DB Schenker, Nippon Express, Expeditors, Yusen, and FedEx, have a significant presence in the market in specific segments. Additionally, Japanese logistics companies are planning to expand their services in the market due to the rising trade and industrial activities. Global players dominate the Thai manufacturing industry, and these global players prefer global counterparts for their logistics operations. For instance, Japanese and Korean manufacturers in Thailand bring their domestic logistics partners or prefer to tie-up with service providers of the same origin.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

Companies Mentioned

Unithai Group
MON Logistics Group Co. Ltd
Kiattana Transport Public Company Limited
JWD InfoLogistics Public Company Limited
Sub Sri Thai Public Co. Ltd
Scg Logistics Management Company Limited
WICE Logistics
Yamato Transport
Kerry Logistics Network Limited
CEVA Logistics
DSV Panalpina
Deutsche Bahn AG
FedEx Corporation
Yusen Logistics Co. Ltd
Expeditors International
Nippon Express Co. Ltd
Kintetsu World Express Inc.
YCH Thailand
Deutsche Post DHL Group
CJ Logistics*

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