Thailand Logistics and Warehousing Market Research Report to 2022: Ken Research


How Thailand logistics and Warehousing Market Evolved?

Logistics Service in Thailand comprises a range of activities that look over at the procurement as well as final delivery of raw material and finished products. These services include freight forwarding, warehousing and other value added services such as customs brokerage, inventory management, order fulfillment and product repair. According to the World Bank data available for 2014, there were ~ logistic operators in Thailand out of which majority are small scale operators. Majority of the local logistics companies in Thailand constitute trucking fleet operators which pickup products from one location and drop-off to another. Thailand is one of those six countries in Greater Mekong Sub-region which is trying to strengthen its transportation linkages among other member countries, which is expected to improve the cross-border transportation connectivity. Market size for logistics and warehousing has enhanced from THB ~ billion to THB ~ billion in 2017.

Traditionally, road transport was observed to be the primary mode of conveyance for Thailand’s exports and imports. The country is situated in the center of Southeast Asia and share border with Myanmar, Laos, Malaysia and Cambodia, thereby facilitating cross-border trade activities between countries. Presently, roadways are considered as the most preferred mode for transporting freight owing to the country’s vast road network. The logistics sector picked up the growth with a CAGR of % in the review period (2012-2017). Thailand is expected to generate long-term FDI flows into technology driven manufacturing segments such as electronics and automotives thereby creating pressure on existing logistics players to upgrade their capabilities in near future

Thailand Freight Forwarding Market and Segmentation

Freight forwarders specializing in arranging storage and shipping of merchandise on behalf of its shippers are called freight forwarders. They usually provide a full range of services such as tracking inland transportation, preparation of shipping and export documents, booking cargo space, negotiating freight charges, freight consolidation, cargo insurance, and filing of insurance claims.

By Normal and Express Delivery

The normal / standard delivery segment dominated Thailand freight forwarding market with a massive revenue share of ~%, whereas the remaining revenue share of ~% was captured by the express delivery segment in the year 2017. Normal delivery services are generally preferred where there is no urgent requirement for orders. Major companies operating into normal delivery include SCG Logistics, DB Schenker, Yusen Logistics, CEVA Logistics and others.

By International and Domestic Freight Forwarding

International freight forwarding accounted for majority of the revenues for overall Thailand freight forwarding market by capturing massive revenue share of ~% in the year 2017.

By Freight Movement Mode

The road freight segment dominated Thailand freight forwarding market by capturing revenue share of ~% in 2017 despite an overall decline in the market share of road freight in Thailand during the review period. The sea freight was the second largest mode that contributed to the overall freight forwarding market in Thailand. It accounted for ~% by revenue share. The air freight segment captured a relatively low revenue share of ~% in Thailand freight forwarding market in 2017. The remaining ~% revenue share was captured by other segments collectively in 2017.

Thailand Freight Forwarding Market Segmentation

By Flow Corridors

Asia flow corridor was observed to be the largest contributor in terms of revenue in Thailand freight forwarding market by capturing revenue share of ~% in the year 2017.China Japan and Malaysia feature in the top five list of major export destinations and import sources for Thailand thus contributing highly to the sea freight movement. The Thailand-Europe flow corridor followed Thailand-Asia with a revenue share of ~% in the year 2017. Other major flow corridor includes the NAFTA countries which are the emerging trade partners of Thailand.

By International and Domestic Companies

International companies operating in Thailand freight forwarding market dominated by capturing revenue share of ~%, thus evaluated at THB ~ billion in the year 2017. Targeted entities for international freight forwarding companies are the international MNCs as such they always seek to make alliances with international freight companies backed by extensive service network and brand image in the market.

Most of these companies follow asset light model in Thailand and do not own fleets. FDI investment applications exceeded the BOI’s targets in 2016, totaling THB ~ billion. The domestic companies operating in Thailand freight forwarding market captured the remaining ~% revenue share thus, evaluated at USD ~ billion in 2017.

Competitive Landscape in Thailand Freight Forwarding Market

The freight forwarding industry in Thailand was observed as highly fragmented with the presence of both domestic as well international freight forwarders in the country. According to the membership record of customs broker and Transport association of Thailand there are around ~ large scale international freight forwarders that provide all types of services including LCL, FCL and others whereas around ~, large scale operators exist which provide fewer services thus totaling ~large scale international freight forwarders in the country. On the basis of revenue, major freight forwarding companies providing air freight services include  – Kerry Logistics, DHL Express, CJ Express ,Thai Post, DHL Post, Nikos Logistics, FedEx, TNT and UPS.

Thailand Warehousing Market and Segmentation

Warehouses operating in Thailand are not just simply storage spaces, but instead host multiple value-adding processes, like just-in-time packaging, assembly, product customization and others. In the past, warehouse was known as a cost center but now organizations in Thailand use warehouse as a place to add value by doing many related jobs such as labeling and packaging. Due to lingering price disparity in the country, the modern way of handling warehousing or distribution centers is commonly targeted for premium products and the conventional way is frequently utilized and is used by the rate-conscious firms.

By Warehouse Space

Most of warehouse space is located in Samutprakarn province, with a total area of ~sqm or ~% of entire market. Samutprakarn still remain the most popular location for logistic service providers. This is mainly because this province is located not far from Bangkok, the capital city of Thailand, and the Suvarnabhumi Airport. Chonburi takes the second highest amount of warehouse area in Thailand contributing almost ~ sqm which equals about ~% of the overall warehousing market in Thailand mainly due to the lower rates for warehousing compared to the city of Bangkok and the convenient location of Chonburi. Ayyuthaya contributes the third highest share in terms of warehouse area available In Thailand with a share of about ~%.

By End User

The FMCG sector drives significant investment and value for Thailand warehousing market by capturing revenue share worth ~% in the year 2017. The fast moving consumer goods sector in Thailand has had a slow pace recently in terms of growth. The marginal growth it has had over the last 5 years has been caused mainly due to the increase

The second major sector contributing to the warehousing sector is automotive. The growth in the number of passenger vehicles has led to an increased demand for vehicle parts and service equipment leading to the automotive sector having a market size of THB ~ Billion. The electronics sector takes the next highest market share as the demand for high grade electrical and electronic equipment is constantly on the rise in developing countries. Remaining sectors varied from textiles to consumer durables to pharmaceuticals cumulatively contributing THB ~ Billion to the Warehousing industry in Thailand.

By Business Model

The industrial / retail freight segment dominated overall Thailand warehousing market with a massive revenue share of ~% in the year 2017. The rising retail sector in Thailand has elevated the requirement of warehouses in the country majorly due to increasing demand for storage of processed packaged foods and beverages, as modern food retailing businesses expanded their operations in order to meet the consumer requirements. The use of containers in export shipments makes the transport and goods handling easier and faster. Additionally, the containers are designed to facilitate the carriage of goods without intermediate reloading. The cold storage segment in Thailand warehousing market captured revenue share worth ~% in the year 2017 owing to the rise in products requiring cold storage. Major selling cold storage products in Thailand include the pharmaceutical products such as vaccines and injections which have a requirement of being stored in a temperature controlled environment. The agriculture and other segments collectively captured the remaining revenue share worth ~% in Thailand warehousing market.

The market encompasses a mix of unorganized and organized players. The companies in the country are competing with each other on the basis of the size and location of the warehouse. The location of the warehouse has to be appropriate to the needs of the customer which reduces extra cost of transportation and increases time efficiency. The other important factors which influence the choice of warehouse are technologies/automation used in the warehouses; value added services, GDP-certified temperature and humidity-controlled environment and others. Though there is high initial cost in terms of investment while adopting these technologies, players know that it will reap huge benefits in the long term in terms of competitive advantage over other players and efficiency in operations.

Thailand Express Logistics Market and Segmentation

By International and Domestic Express

The international express segment contributed Thailand express logistics market with a massive revenue share of ~% in the year 2017. International express delivery companies operating in Thailand were the first to start investing in modern technology in order to meet the increasing demand in the delivery of goods through E-commerce. On the other hand, domestic express services in Thailand express logistics market captured ~% revenue share in the year 2017 majorly owing to the growing internal demand in the country backed by rising e-commerce and express delivery services.

By B2B, B2C and C2C

The B2B segment followed with a revenue share of ~% in Thailand express logistics market in the year 2017. B2B includes the delivery of trade samples, contracts, and other time sensitive deliveries transported through a scheduled network with door-to-door track-and-trace of individual items /consignments. The B2C and C2C segments followed with revenue shares worth ~% and ~% respectively in 2017.

By Air and Ground Express

Aviation is one of the top priority sectors for development by the government of Thailand as it is critical to the country’s economic growth. Air express logistics services dominated Thailand express logistics market with a revenue share of ~% in the year 2017. On the other hand, ground express logistics in Thailand express logistics market captured the remaining revenue share worth ~% in the year 2017. Thus just as in the normal delivery segment, the air freight takes a back seat when it comes to the revenue share of the Thailand express logistics segment.

How Thailand E-Commerce Logistics Market is positioned?

Thailand E-commerce logistics market generated revenues worth THB ~billion in the year 2012 owing to the country’s increasing access to internet and smart phones coupled with the emerging trend of online shopping. The market is primarily dominated by third party logistics providers such as Kerry Logistics, DHL, CJ Logistics and SK Logistics followed by E-commerce merchants such as Lazada Thailand, Shopee, 11Street and JIB and others. There are also pure-play ecommerce logistics providers like Shippop, aCommerce Co, Giztix, SME Shipping Co. which provide on-demand delivery services for small ecommerce players who do not have their own shipping infrastructure. The gradual shift in the preference of customers from physical shopping (store based) to online shopping has exponentially increased the number of online orders.

Social commerce in Thailand is driven by social networks in Thailand like Facebook, Instagram and LINE. This is a business model unique to Thailand and hence merchants here set up ‘shops’ on the social network sites and they post videos or images of their product along with specifications. Average ecommerce order size in Thailand is pegged at THB ~ to THB ~. Share of logistics cost in the ecommerce order is estimated at ~% of the average order size. Non-cash payment technologies coupled with increasing trend of cross-border sales have created a positive impact the Thailand’s E-commerce industry.

The revenue generation increased to THB ~billion in 2017, thus displaying massive growth with CAGR of ~% in the review period 2012-2017

Thailand E-Commerce Logistics Market Segmentation

By Channel

3PL companies in Thailand E-commerce logistics market have dominated E-commerce logistics market with the share of ~% in terms of number of orders received during 2017. Some of the major 3PL companies include Kerry Logistics, DHL, CJ Logistics and others which provide end to end services i.e. from securing inventory in a warehouse to transporting goods from one place to another. E-commerce merchants via their in-house logistics team captured the remaining market share of ~% in terms of number of orders in the year 2017. Major Major E-commerce companies in Thailand include Lazada Thailand, Shopee, 11Street and JIB which have their own well established distribution channel in the country.

By Speed of Delivery

The 1 day delivery, commonly known as express delivery segment was observed to be chosen as the most preferred shipping choice for Thailand’s digital buyers owing to the rise in availability for free shipping among many e-retailers in the country and e-logistics service providers.

Thailand, average ecommerce order size is found to be around ~ USD; thereby companies here go the extra-mile for fast delivery. Growing expectations of consumers towards fast shipping from e-retailers has led to rise of same-day delivery option in Thailand. The segment captured a market share of ~%, thus evaluated at ~ million orders in Thailand E-commerce logistics market in the year 2017.  The 2 day delivery segment also known as the standard delivery segment, followed with a market share of ~% in terms of number of orders, thus evaluated at THB ~ million in Thailand E-commerce logistics market in 2017.

By Payment Method

The Cash on Delivery (COD) segment established itself as market leader in Thailand E-commerce logistics market with a massive revenue share of ~% in the year 2017. COD remains the dominant means of payment method accepted by merchants in the country owing to low consumer confidence in online payments and limited card penetration.  Thai consumers appreciate the simplicity and value of COD, which comes without additional charges. Other payment modes such as bank transfers, payment cards, e-wallets and scratch cards collectively captured the remaining share ~% in Thailand E-commerce logistics market in 2017.

By Area of Delivery

The intra-city segment within Thailand E-commerce logistics market established itself as market leader with a massive market share of ~% in terms of number of orders, thus evaluated at ~ million orders in the year 2017. The reason for the capture of the E-commerce logistics market has been the growing number of investments in the intra-city logistics sector and launch of logistics firms like Ninja Van, Lalamove, Skootar, Alpha, SCG Express and Others.

The intercity segment within Thailand E-commerce logistics market accounts for USD ~ million worth of deliveries and account for the rest ~% of the market.

Comparative Landscape in Thailand E-Commerce Logistics Market

The E-commerce logistics market in Thailand was observed to highly concentrate with the presence of major players such as Kerry Logistics, DHL, CJ Express, SK Logistics, Shippop, aCommerce, FedEx, TNT and Others in the year 2017. These logistics companies in Thailand compete on the basis of shipping points, coverage area, delivery boys, prices, payment collection methods and associations with E-commerce merchants.

The e-commerce logistics companies either have their own fleet of shippers or have employees act as shippers or outsource the delivery aspect to a third party. Since the E-commerce business environment has become more dynamic and competitive, the companies tend to demand better logistics services which are flexible and cost effective in nature. The e-commerce logistics companies either have their own fleet of shippers or have employees act as shippers or outsource the delivery aspect to a third party.

Thailand logistic and Warehousing Market Future Outlook and Projections

Thailand logistics market is currently at its growth stage and is expected to transform in the coming five years with an anticipated single- digit CAGR growth during the period 2018-2022 in terms of value. Freight will continue to dominate the market owing to extensive road network and development of mass transit rapid railway network which will support numerous numbers of industries in the coming years. Growing E-commerce industry has given opportunities to logistics players to expand their business across the nation and it will further enhance the demand of logistics in coming years.

The expansion of the rail network does not mean that the road haulage sector is no longer needed. On the contrary, there will be even more demand for road haulage because of the growth of both the population and the connectivity of businesses within the region. “Thailand will continue to develop itself into an industrial nation, and we’re seeing more production plants popping up in provinces further away from Bangkok.

The Action Plan on Transport in 2016 under the Office of Transport and Traffic Policy Planning (OTP) will cover three motorway projects, five dual track rail system projects (meter gauge), five dual track rail system development projects (standard gauge), expansion of mass rapid transit networks, and an expansion of capacity for air and maritime transport both at Suvarnabhumi Airport and Lam Chabang Port

The general-purpose warehousing sector will see stable conditions over the next three years. Although demand for warehouse space is likely to grow on increasing investment in industry and expansion in the domestic commercial and service sectors, especially for businesses involved in e-commerce, in some regions, ongoing investment in new warehouse space may feed an over-supply to the market with the result that it may be difficult for operators to raise rental rates

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