Thai exporters urged to unite for lower shipping costs

Thai exporters have been urged to group together to increase their bargaining power with logistics providers and reduce shipping costs to each market by between five and 10 percent per cent, reported The Nation.

Initially, the model for grouping exporters will be applied in Latin American countries, starting with Brazil. Logistics costs from Thailand to this market are high, accounting for almost 20 per cent of product value because of the long distance and the relatively low number of exporters involved.

After visiting Brazil's largest port of Santos in Sao Paulo state, Deputy Commerce Minister Alongkorn Ponlaboot said the ministry would encourage exporters to adapt the new strategy as a way of reducing their logistics costs.

"If Thai exporters could group together, they would have more bargaining power to lower their logistics costs. Exporters in each industry, in particular small and medium-sized enterprises, should consolidate their shipments and conduct deals with freight providers at an annual rate, as this would be much cheaper than the normal rate." By doing so, marine transport costs could be cut by between five and 10 per cent, he said.

To promote cooperation among exporters in each business sector, the ministry will soon meet with the National Shippers Association and the Federation of Thai Industries to draw up strategies and systematically group exporting firms.

The cost of shipping to Latin America is US$2,400 per TEU, while shipments to North America are quoted at $2,100.

Alongkorn said that although Thailand would continue to be locked into a trade deficit with Brazil, two-way trade should increase by 30 per cent this year from $2.3 billion last year.

He added that once shipping costs were cut, Thai goods would have a better edge when competing with other countries and that Brazil-bound exports would therefore increase.

At the same time, the prices of goods imported from Brazil should also be lower. The costs of manufacturing industries such as feed meal would be much cheaper as a result, thus lowering food prices. Thailand imports large quantities of soya bean from Brazil for supply to the feedmeal industry.
(Source:www.cargonewsasia.com)