Tue. Jun 18th, 2024

Thailand Plans for National Shipping Line to Support Economic Growth

The government of Thailand confirmed that it plans to move forward with efforts to re-establish a national shipping company to help grow the struggling country’s economy. The effort is also seen as a novel response to the current global shortage of cargo ship capacity, which Thai officials cited as contributing to higher costs and hindering trade.

Transport Minister Saksayam Chidchob has been a strong supporter of the plan citing the strong benefits both in the near term and longer to help his country’s economic growth. In June, he announced that the Port Authority of Thailand was conducting a feasibility study into what is being called the Thai National Shipping Line. Thailand previously had a national shipping company that was disbanded in 2011 after years of financial losses.

According to comments by the minister, the new plan calls for Thailand to enter into a partnership with an unnamed private company that will own 51 percent of the new entity. The plan is to charter ships and initially start service in June 2022 with domestic routes. The first routes will operate on the Gulf of Thailand transporting goods between Bangkok and industrial centers on the eastern coast and southeast. The minister said they also planned to add regional and international routes, and he said it would provide employment for graduates of the country’s Merchant Marine Training Center.

Currently, they estimate that Thai shipping operations transport less than 10 percent of the country’s goods.

The COVID pandemic and global travel restrictions have taken a toll on the Thai economy, which normally benefits from a strong tourist trade. Thailand has been building its export trades but the minister said they are highly dependent on foreign companies for freight services. “With COVID, the minister told Bloomberg, “we’re facing container shortages, so a lot of our goods can’t be shipped and some of our products will perish.”

Longer-term the government is also seeking to develop Thailand in the global logistics trade. They announced plans for a southern land bridge route which they are presenting as an alternative to transiting the busy Malacca Strait. The government plans to build ports that would be linked by 50-mile road and rail infrastructure. The minister said the route, which is due to open in 2027, would be the shortest shipping route in the region.

The launch of the shipping company is also designed to support another key government initiative known as the Eastern Economic Corridor. The plan calls for the redevelopment of a portion of the eastern coast focusing on 12 industries, including car, electronics, technology, biofuels, and tourism. Infrastructure improvements are planned in the eastern region with projects including airport renovations and a high-speed rail line due to be completed in 2023. Investments for the Laem Chabang seaport include expansion and automation with an initial capacity of 4 million TEU annually with plans to expand to 18 million TEU.

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