Written by: Matthew Stimpson
TNT Logistics (Thailand) Ltd.
Logistically – Thailand as a
Transport Hub
T
hailand is located in the geo-
graphic heart of the ASEAN
region; a natural hub for the
ten member nations. Compared to Ma-
laysia and Singapore, Thailand is closer
to China, which potentially gives the
country a better opportunity to become
a gateway to the Chinese mainland. Well
positioned as a potential regional hub,
Thailand is currently strengthening its
infrastructure and facilities to provide
improved links between the countries
in the region for land, air and sea trans-
portation. The level of infrastructure
in South East Asia (SEA) for road, sea
and air transport is adequate, but devel-
opment is still required for integrated
transportation. Road is the preferred
mode of transport between SEA coun-
tries, in terms of its ease of use, but sea
continues to be the most used mode of
transport for intra-SEA trade, in terms
of overall volumes.
In this regard, Thailand’s Govern-
ment continues to support and facilitate
the establishment of the Thailand trans-
port infrastructure network, with the
new Suvarnabhumi Airport, the Laem
Chabang deep seaport and the Ladkra-
bang inland container terminal being
good examples.
Regional hub for a range of
industries
In recent years, there has been significant
discussion about Thailand being the fa-
voured regional hub for SEA or even the
whole of Asia for many industries, rang-
ing from: automotive, aviation, exhibi-
tions, electronics & IT, tourism, gems &
jewellery, rubber, medical, food, spa &
healthcare, furniture, leisure and even
financial services.
Thailand, often called the “Detroit
of Asia”, could surely claim the title of
automotive hub and all the “Detroit of
The American Chamber Of Commerce In Thailand F 29
Asia” talk has some basis in reality. Total
vehicle production has risen steadily over
the past decade to such an extent that
the automotive sector is now one of the
country’s top industries. Parts exports
have risen exponentially. Thailand’s an-
nual car production reached one million
units for the first time in November 2005
and in December last year an event was
held in Bangkok to celebrate this signifi-
cant milestone.
The Thai auto industry had planned
to reach this mark in 2006, but the target
was achieved earlier due to increased ex-
ports and growth in the production of
pickup trucks. The Government has also
set a target to produce 1.8 million units
by 2010. It is also striving to place Thai-
land on the list of the top ten car produc-
tion bases in the world and to maintain
Thailand’s status as the world’s largest
production base for pickup trucks.
The country has approximately 700
auto manufacturing facilities; for every-
thing from parts to complete vehicles.
Thailand’s auto production is the high-
est in SEA. Many world-class car manu-
facturers such as Isuzu, General Motors,
Toyota and BMW have chosen Thailand
as their Southeast Asian production base.
This is a positive indication that Thailand
will continue to develop as the automo-
tive hub in this part of the world.
With the recent opening of the
multi-billion-Baht Suvarnabhumi Air-
port, Thailand has the opportunity to
established itself as one of the key avia-
tion hubs in the region. It is one of the
most modern airports in the world,
providing services and capacity for a
significant increase in the number of
passengers and cargo in comparison to
 Thailand as a Regional Hub
the old Don Muang Airport. Initially
the new Suvarnabhumi Airport will be
capable of accommodating up to 45
million passengers a year, 76 flights an
hour and over three million tonnes of
cargo per year.
With a large domestic market, an
ideal location at the heart of ASEAN and
its ever-expanding economic growth,
Thailand is now also recognized as an
exhibition hub. In the period 2003-05,
there was a 32% increase in the number
of exhibitions and trade shows held in
Thailand with an estimated 385 events
and trade shows being staged in 2005
alone.
... an ideal location at the heart of ASEAN and its
ever-expanding economic growth, Thailand is
now also recognized as an exhibition hub.
In addition, Thailand is also now
recognised as a regional hub for ICT
(information communication and
technology). In 2005 Thailand over-
took Singapore to become the world’s
number one exporter of hard disk drives
(HDD). HDD production more than
doubled to 140 million units, repre-
senting 42% of the world market share.
HDDs are now Thailand’s number one
export, accounting for 14.2% of all ex-
ports, which makes Thailand the top
hard drive manufacturer in the region.
There are many other examples of
industries where Thailand has become
the regional hub. These include:
• Tourism – one of the key focuses
for Thailand, with more than 10
million tourists coming to Thai-
land each year, generating annual
revenues of more than Baht 380
billion;
• Gems and jewellery – the Govern-
ment also rightly promotes Thai-
land as a gemstone hub. From Janu-
ary through August of 2006, nearly
US$2 billion in gems and jewellery
were exported and it was the second
largest exporter of gems and jewel-
30 F Thai-American Business / September-October 2006
lery in the world, according to the
Thai Gem and Jewellery Traders As-
sociation;
• Rubber – currently, Thailand is
the world’s largest rubber export-
er, with exports standing at three
million tonnes a year, worth Baht
280 billion. The Government cited
Thailand’s vision to be an integrat-
ed “hub of rubber technology and
development” for the benefit of all.
Thailand wants to be not just an ex-
porter of rubber as a raw material,
but also a leading producer of fin-
ished rubber products that are truly
world class;
• Medical - because of Thailand’s great
potential and many advantages, the
Cabinet in June 2004 approved a
strategic plan for a project to devel-
op Thailand as the medical hub of
Asia. A target has been set to bring
in Baht 140 billion in health service
business by 2008. The Government
believes that the project will enable
Thailand to earn substantial income
from other related services also,
such as dental care, annual medical
check-ups, spa services, traditional
Thai massage, long-term health
care, food, medicine, cosmetics as
well as tourism; and
• Food and others sectors - Thailand
also has one of the most advanced
food processing industries in Asia,
and is the world’s largest exporter
of rice..
Taking all of these facts into consid-
eration, it is a reasonable assertion that
Thailand has become the regional hub
for a host of industries. Still many more
are in their early developmental stage,
with Thailand competing as the regional
hub with countries such as Singapore,
Malaysia and Vietnam.
Specific benefits for the
logistics industry in
Thailand
To support the country’s aim to be a re-
gional hub for a broad range of industry
sectors, it is paramount that Thailand
continues to promote the businesses
that increase cost efficiency, respon-
siveness, and reliability in distributing
products and services to local and over-
seas consumers. As such, there has been
significant focus in recent years by both
the public and private sectors to up-
grade the country’s logistics systems.
In 2002, Thailand’s logistics costs
were as high as 19% of GDP (gross do-
mestic product), compared to 8-11% in
developed countries, such as Japan, U.S.
or European countries. Even though re-
cent research shows a slight decrease to
16.8% of GDP in 2005, it is still a major
challenge for Thailand to improve effi-
ciency in its logistics industry.
At the highest level there is a need
to adopt improved and varied modes of
transportation, such as water transport,
rail transport, and multi-modal trans-
port, which will help add value to prod-
ucts and services and lead to increased
efficiency and reduced overall logistics
costs. This can be facilitated by both the
public and private sectors.
At the lower levels it is necessary
for individual companies to improve
the way they operate their supply
chains, by using best practice logistics
techniques and leading edge technol-
ogy. Here, the private sector has a huge
role to play. Firstly, manufacturing
and service companies must have the
will power and management buy-in to
comprehensively review their logistics
arrangements and when necessary un-
dertake major re-engineering of their
supply chains. This may often include
the hard decision to outsource logis-
tics services to a third party. Secondly,
the 3PLs (third party logistics compa-
nies) must offer the Thai market the
best practice processes and technology
that are readily available to companies
in Europe and North America, such as:
JIT (just in time) deliveries, lean ware-
housing, supply chain visibility tools,
 Automotive Case Study – Isuzu CKD Operation

Thailand is one of the largest markets for one tonne pickup
trucks and is the world’s largest production base for these
vehicles. As a consequence, Isuzu Motors has chosen Thailand as
a global hub for the production of its one tonne pickup model;
58% of its Thai production is for domestic consumption and 42%
is for export (17% CBUs & 25% KD). Export countries include:
Malaysia, the Philippines, South Africa, Tunisia, Egypt, Kenya,
Columbia, Ecuador and Chile.
For the export operation Isuzu operates a CKD (complete
knock down) operation, whereby car kits are consolidated and
packed into containers ready for shipping overseas for the cars
to be assembled in the destination countries. This
operation commenced in Thailand in 2003 and Isuzu
chose to outsource the management and operation to
TNT Logistics (Thailand) Ltd.
The decision by Isuzu to base this activity in
Thailand and to outsource to a 3PL company was
taken only after considerable consideration by senior
management. Thailand was selected for a multitude
of reasons, including: accessibility to a broad supplier
base, availability of an excellent workforce, Government
support, etc.

added value solutions (sub-assembly,
kitting, call centres, etc), LLP (lead lo-
gistics provider) and 4PL (fourth party
logistics). This will require consider-
able investment by the 3PLs in technol-
ogy, people, training, equipment and
property.
Summary
The decision making criteria is complex
and varies from industry to industry and
company to company, but increasingly
multinational companies from a variety
of sectors are choosing to use Thailand
as their SEA, Asian or even global hub.
There is also solid evidence that the key
decision drivers for multinational or-
ganizations in choosing the location of
their regional hubs are directly related to
the prevailing economic, social, political,
and geographic conditions of the select-
ed countries.
In this respect Thailand is an excel-
lent option with its relatively favourable
Government regulations and support,
geographic location, solid infrastructure,
and access to all levels of skilled work-
force. These combine to enable Thailand
to proclaim its status as Asia’s regional
hub. With continued Government sup-
port and economic stability, Thailand
can further secure this position in the
region over the coming decade.
Matthew Stimpson is Business
Development Director for TNT Logistics
(Thailand) Ltd. He may be reached at:
matthew.stimpson@tnt.com

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