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Yusen Logistics Discusses the Thai Automotive Logistics Industry

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Yusen Logistics Discusses the Thai Automotive Logistics Industry
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The Thai industrial sector, especially the automotive industry, has developed significantly, with Thailand being the ninth-largest vehicle manufacturer in the world. As such, the Thai automotive logistics industry has also significantly developed. Yet in order for the Thai logistics industry to develop further in the future, further development in logistics infrastructure and the unification of customs procedure systems in the region are
Yusen Logistics was established in October 2010 with the integration of Yusen Air & Sea Service Group and the NYK Logistics Group. In Thailand, Yusen Logistics (Thailand) was established in 2011 and the company provides logistics services, mainly in four areas including ocean freight forwarding (OFF), contract logistics (CL), transportation and tracking as well as air cargo freight to manufacturers operating in the Thai industrial sector. Currently, around 70% of the company’s customers are those operating in the automotive industry. Also, Japanese manufacturers account for around 70% of company’s customers. Asia Pacific Plant Management was delighted to have an exclusive interview with Hiroshi Maniwa, president and CEO of Yusen Logistics (Thailand), where we discussed the Thai automotive logistics industry and his company’s business in the industry.

Hiroshi Maniwa (間庭 浩) President and CEO, Yusen Logistics (Thailand)

Hiroshi Maniwa (間庭 浩)
President and CEO,
Yusen Logistics (Thailand)

Thai Automotive Logistics Industry at Present

The automotive industry has significantly developed in Thailand. Maniwa told us that Japanese automakers as well as their suppliers have established a significant presence in the country, and the country has accommodated a mega Japanese automotive cluster. Maniwa went on to say that in recent years, with the increase in labor wages as well as political instability in China, an increasing number of Japanese automotive manufacturers are paying attention to Thailand as part of ‘China Plus One’ movement. Against this backdrop, the automotive logistics industry has also witnessed significant growth over the last decade.

However, there are also challenges for the Thai automotive logistics industry. One of them is logistics infrastructure. Thailand has achieved significant
economic development in recent years, and the country is in the top 10 in the world in terms of the amount of container import and export. However, according to Maniwa, the capacity of logistical infrastructure in Thailand is still low when compared to that of other Southeast Asian countries, including Singapore and Malaysia. In the automotive industry, Thailand currently exports around one million vehicles per year. However, Laem Chabang port, the key port for export and import in Thailand, is already at full capacity. Maniwa sees that Thailand’s vehicle export is expected to grow further to 1.7 to 1.8 million units per year and he stressed that future development and expansion of port infrastructure is necessary to meet the future export growth in the country.

Port congestion has also become more serious year after year. Yusen Logistics (Thailand) currently has a container yard in Laem Chabang port. However, Maniwa explained that in order for the company to pick up the containers from the yard and deliver them to customers, it takes around nine hours in total, which is very inefficient. In addition, Maniwa says the land price has also been increasing and it is getting very difficult for logistics service providers to secure their own warehouses. The increase in land price is directly reflected in the product and service prices for customers, and Maniwa stressed that one major challenge for logistics service providers-including Yusen-has been how to offer quality logistics services and
products at an attractive price.

The labor shortage has been another major challenge for the logistics industry. Maniwa told us that the labor population in Thailand is limited, and currently three to four million laborers in Thailand are from nearby countries including Cambodia, Laos and Myanmar. Especially, the shortage of blue-collar workers has been apparent, including among truck drivers and folk lift operators. Maniwa told us that Yusen Logistics (Thailand) currently
has 700 trucks and around 1,100 truck drivers and maintaining sufficient number of quality truck drivers has been a challenge for the company.

The Way Forward

The Thai economy, including the automotive industry, is currently stagnant due to various factors. However, Maniwa expects it to recover during the second half of fiscal year 2016, and Thailand will continue to achieve stable growth with annual GDP growth of around 5% from then. For the automotive industry, the Board of Investment of Thailand (BOI) announced the investment promotion scheme for the Eco Car Phase II, which aims to increase the yearly eco car production to 100,000 units within the next five years. Maniwa further said that on average, people in Thailand switch to a new vehicle in a five-year period. As the country witnessed significant automotive sales in 2012 due to First-Car Buyer Program, Maniwa expects a significant automotive demand in the country to come again in 2017. He believes that these two factors will contribute to the rebound and further growth of the Thai automotive industry from the second half of fiscal year 2016 and the automotive logistics industry in the country will consequently resume its growth thereafter.

However, there will also be challenges in order for the Thai logistics industry to develop further in the future. One major challenge, according to Maniwa, includes cross border customs processes. Maniwa explained that in principle, zero tariff for cross border trade after the establishment of Asean Economic Community (AEC) is supposed to lead to shorter lead-time for cargo shipment. For example, cargo shipped from Bangkok is supposed to arrive in Phnom Penh in two days. Yet, due to complicated and lengthy customs process in Cambodia, it takes around one week for the cargo to arrive in Phnom Penh. Therefore, Maniwa stressed that unification of customs processes among Asean countries will be the key to the successful implementation of AEC as well as further development of the Thai logistics industry.


Five Year Business Plan

In 2014, Yusen Logistics (Thailand) established a five-year business plan that is to increase revenue from its current seven billion baht to 10 billion baht by fiscal year 2018. Maniwa told us that in order to achieve the plan, the company, based on the trust established among Japanese manufacturers operating in Thailand, aims to increase Japanese customers. According to Maniwa, the company also aims to increase local customers. He also said that the company, as a new business, currently also focuses on nationwide logistics delivery as well as e-commerce delivery. In addition, the company also plans to offer consulting services in relation to trading, based on their knowledge and experience accumulated over its business operation in Thailand.

“Yusen Logistics (Thailand), differentiating itself from competitors by providing quality products and services with added value, would like to enhance its presence and trust among manufactures operating in Thailand and grow business further in the country,” Maniwa expressed.


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