A Survey on Opportunities in Thailand’s e-Logistics andSupply Chain Market

Submitted to

New Energy and Industrial Technology Development
Organization

By
Thai-Nichi Institute of Technology

28 February 2020

A Survey on Opportunities in Thailand’s e-Logistics andSupply Chain Market
Submitted to

New Energy and Industrial Technology Development
Organization
By
Assoc. Prof. Dr. Bandhit

Rojarayanont

Assoc. Prof. Dr. Nuttapol

Limjeerajarus

Asst. Prof. Dr. Wipawadee

Wongsuwan

Asst. Prof. Dr. Jintawat

Chaichanawong

Dr. Siriaksorn

Jakborvornphan

Dr. Korakot

Hemsathapat

Thai-Nichi Institute of Technology (TNI)i

Acknowledgement

The researchers would like to thank for the financial support funded by the New Energy
and Industrial Technology Development Organization (NEDO) of Japan. The researchers
would like to express our gratitude to the director of NEDO Bangkok and all NEDO staffs fortheir supports in this study. The researchers would also like to thank the officials of government
authorities, members of public organizations and all companies for accepting our request for
an interview, and providing us the valuable information, which has contributed greatly to thisstudy.

ii

Executive Summary
Due to the on-going demand for consumer goods, the expanding number of internet
user base has made Thailand an ideal growth environment for digital technologies and ecommerce businesses. The performance of Thailand's logistics significantly improved in2018 because of the massive investment in transport infrastructure and relevant legal reforms.
According to the World Bank's Logistics Performance Index 2018, Thailand rose to the 2nd
place, overtaking Malaysia, and was seventh in Asia. The opportunities for the growth oflogistics business are far greater because the government has extensively implemented aconcrete strategy for national development in various basic infrastructure under the 12th
National Economic and Social Development Plan with the aim of reducing the country’s
logistics costs down to 12% of the country’s GDP by the year 2021.
To assure the achievement of logistics development targets, the office of the National
Economic and Social Development Board (NESDB) launched the 3rd Thailand’s Logistics
Development Strategic Plan (2017-2021) which is consistent with the current National
Economic and Social Development Plan and the 20-year national strategic plan. This plan is
focused on development of value-added supply chain systems, infrastructure and facilities, andlogistics support factors. Regarding the government supporting schemes, BOI provides
privileges to foreign investors to support further logistics and transport infrastructuredevelopment, investment in the Special Economic Zones and EEC (Packages of tax incentives,
general incentives, and assistance relating to smart visas and work permits). In addition, inorder to drive the research and development and adoption of innovation in logistics industry,
NSTDA, NIA and PMU C are funding agencies that provide financial support for research anddevelopment in e-logistics and supply chain. Thai government has committed to invest inlogistics, transport infrastructure development, human resource development and e-logistics’
research & development.
To improve efficiency, safety, reliability, and traceability of their operations, and to
reduce their operating costs and wastes, and thus enhancement of their competitiveness inThailand’ logistics market, the LSPs currently focus on route optimization while the WIs focus
on warehouse and inventory management system. For large companies, current government
policies do not have neither significant positive nor negative impacts on their e-logistics andsupply chain development plans. They are driven by customer’s demand and competition in
the market. On the contrary, local logistics SMEs are having difficulties in adapting themselves

iii
toward the e-logistics era, mainly due to the lack of investment fund and expertise support. The
government is asked to improve railway mode infrastructures as soon as possible. Otherwise,
logistics cost is hardly to reduce below 10% as that in developed countries such as the US andSingapore. The government must also initiate a human resource development plan forsupporting the e-logistics and supply chain technologies.
Logistics market in Thailand is rather large, approximately 2 Trillion Baht annually,
however, there is no dominant players. To further extend, logistics cost in Thailand is still high,roughly 14% of the country’s GDP, making a large gap for improvement and investment.
Political factor is the most influencing factors on the investment on logistic
development, followed by technological, economic, environmental and social factors,
respectively.
Current government policies and strategic plans have not yet been implemented. Someinterviewees strongly requested that the Thai government must geared up on the improvementof railway mode infrastructure; otherwise, logistics cost is hard to be reduced to < 10%. Also,
the development of human resource for e-logistics is a must now.
Besides investment on infrastructure, the government is being asked to evaluate andmodify obsolete laws and regulations and create the connection between B2B and G2B to work
closer with private investors.

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Table of Contents
Chapter Title

Page

Acknowledgementi

Executive Summaryii

Table of Contentsiv

List of Tables

vii

List of Figuresviii

Chapter 1 Introduction

1-1

1.1 Background1-1

1.1.1 Logistics in the 4.0 era

1-3

1.1.2 Modern technologies in logistics systems

1-3

1.1.3 Adaption of Thailand to the e-Logistics

1-7

1.1.4 Development of Thai logistics system to meet Thailand 4.0 1-9
policy1.1.5 Strategic Plan of Government Agencies related to e-Logistics 1-10
and Supply Chain
1.2 Research Objective and Scopes

1-11

1.3 Research Methodology

1-12

1.4 Report Outline

1-12

1.5 References

1-13

Chapter 2 Government Policies on Logistics and Supply Chain
2.1 Current Government Policies and Supporting Schemes in

2-1
2-1

Promoting Logistics
2.1.1 National Logistics Plan

2-1

2.1.2 National's Greenhouse Gas Reduction Plan for 2021 - 2030 2-4(Thailand's Nationally Determined Contribution Roadmap
on Mitigation 2021 - 2030: NDC Roadmap 2021 – 2030)
2.2 Government Supporting Schemes

2-8

2.2.1 Investment Promotion by the Thailand Board of Investment 2-8(BOI)
2.2.2 Research and Development Funding

2-19

v

Table of Contents (cont’d)
Chapter 2 Government Policies on Logistics and Supply Chain
2.3 Adaptation of Thailand Toward an e-Logistics

2-1
2-21

2.3.1 Thailand’s National Infrastructure Development Program

2-21

2.3.2 5G National Development in Thailand

2-24

2.3.3 Research & Development in e-Logistics

2-27

2.4 References
Chapter 3 Current Situations on e-Logistics and Supply Chain in the

2-28
3-1

Viewpoint of Logistics Companies and Organizations
3.1 Basic Information of Interviewees

3-1

3.2 Logistics Service Providers (LSPs)

3-2

3.3 Warehouse and Inventory (WI)

3-6

3.4 Public Authorities (PA)3-8

3.5 Successful Case Studies of e-Logistics Implementation

3-12

3.5.1 Daikin Industries (Thailand)

3-12

3.5.2 SCG Logistics

3-14

3.5.3 Café Amazon Warehouse

3-16

3.5.4 Energy Saving and Greenhouse Gas Emission Mitigation

3-19

3.6 References
Chapter 4 Potential and Obstacles of e-Logistics and Supply Chain
4.1 Potential and Market Opportunities

3-20
4-1
4-1

4.1.1 Potential

4-1

4.1.2 Market Opportunities

4-8

4.2 Current Obstacles

4-9

4.2.1 The Government Policies

4-9

4.2.2 Factors affect Transformation to Thailand Logistics

4-10

Development
4.3 Suggestion to Government Agencies

4-15

4.3.1 Suggestions for Development on value added of supply chain 4-16
system
4.3.2 Suggestions for Development on Infrastructure and facility

4-17

4.3.3 Suggestions for Development on support scheme for logistics 4-18

vi

Table of Contents (cont’d)
Chapter 4 Potential and Obstacles of e-Logistics and Supply Chain

4-1

4.3.4 Integration Among Government Agencies – State Enterprises 4-18
– Private Sectors
4.4 References

4-19

Chapter 5 Conclusion

5-1

Appendix A List of the Interviewees and Their Organizations

A-1

vii

List of Tables
Table Title
Table 2.1

Page
The 3rd Thailand’s Logistics Development Strategic Plan (2017- 2-2
2021)

Table 2.2

Flagship programs under the 3rd Thailand’s Logistics Development 2-3
Strategic Plan

Table 2.3

Project details related to logistics under the national's greenhouse 2-5
gas reduction plan for 2021 – 2030

Table 2.4

Tax and non-tax incentives provided by the BOI

2-8

Table 2.5

List of activity-based incentives

2-9

Table 2.6

List of companies which invested in logistics and supply chain 2-22
project under the investment promotion by the BOI

Table 2.7

List of companies that received research grant from NIA

2-28

Table 3.1

A summary of the currently implemented and the future e-logistics 3-4
and supply chain technologies for LSPs.

Table 3.2

A summary of the currently implemented and the future e-logistics 3-8
and supply chain technologies for WI managing companies.

viii

List of Figures
Figure Title

Page

Figure 1.1

Logistics cost (%) to GDP in 2016

1-1

Figure 1.2

Three roles in logistics business by functions

1-2

Figure 1.3

The use of AGV at Yangshan Port in Shanghai, China

1-4

Figure 1.4

The AGVs move customers’ orders around the Alibaba’s

1-6

warehouse
Figure 1.5

UPS driver sends the drone on its way to the customer

1-7

Figure 1.6

Ratio of Thailand Export Items in 2018

1-7

Figure 1.7

Shares of Thailand Export Partners

1-8

Figure 1.8

Five New S-Curve industries: Digital, Robotics and Automation,

1-11

Aviation and Logistics, Biofuels and Biochemicals and Medical
Hub
Figure 2.1

Expectation of the amount of greenhouse gas emission in

2-4

Thailand from 2005 – 2030 in various business sectors
Figure 2.2

Criteria for granting the activity-based incentives

2-11

Figure 2.3

Criteria for granting addition promotion incentives under the

2-13

merit-based incentives
Figure 2.4

Additional incentives for competitiveness enhancement

2-14

Figure 2.5

Criteria for granting addition promotion incentives under the

2-15

merit on competitive enhancement
Figure 2.6

Criteria for granting addition promotion incentives under the

2-15

merit on decentralization
Figure 2.7

Map of Investment Promotion Zones

2-16

Figure 2.8

Criteria for granting addition promotion incentives under the

2-17

merit on industrial area development
Figure 2.9

Investment incentive package for investment projects in the

2-19

Eastern Economic Corridor (2020-2021)
Figure 2.10

Development of 5G technology in Thailand

2-25

Figure 2.11

5G testbed at EECd

2-26

Figure 2.12

List of winning bidders of the 5G license auction in Thailand

2-26

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List of Figures (cont’d)Figure Title
Figure 3.1

Page
History of Thailand’s logistics cost and the shares of different

3-2

types of logistics cost in 2017
Figure 3.2

Transportation modes and their contributions in Thailand’s

3-3logistics system
Figure 3.3

Shares of Daikin air-conditioners distributed to different regions

3-12

Figure 3.4

Information flow in DIT’s factory and warehouse

3-13

Figure 3.5

SCG Logistics’s control center at Bang Sue District

3-15

Figure 3.6

Meeting with SCG Logistics’s Managing Director

3-15

Figure 3.7

Meeting with PTTOR’s Business Director for Café Amazon’s

3-18

Distribution Center
Figure 4.1

Thailand geography in ASEAN Member States

4-2

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Chapter 1
Introduction
1.1 BackgroundAs the world enters the digital age, today's technology development is rapidly changing due
to intense competition in research and development in science, technology and innovation. The
result is a revolution in the world of the logistics industry from the development of containertransportation about 50 years ago to finding new business models that will make transportation of
goods extremely convenient. In addition, the use of modern technology can respond to the needsof all types of customers and can manage resources worthwhile, including consideration ofbusiness operations that focus on sustainability and are environmentally friendly. Therefore, thechange in technology in this globalized world makes international trade easier to access modern
technology and innovation and inevitably affects every level of business.
Thailand is the ideal location for investors to spread their network throughout ASEAN andenjoy an enormous THB 90 trillion (USD 3 trillion) market. The reason for this is that Thailand isbeing recognized as the key regional logistics hub for multinational industries, ranging from theautomotive sectors, electrical and electronics, medical and food sectors. Moreover, the logistics
service providers are benefiting from the country’s prosperous automotive industry. This isbecause Thailand aims to become one of the topmost nations in the world automotive market byproducing more than 3,500,00 units of vehicles by 2020 [1].

Figure 1.1 Logistics cost (%) to GDP in 2016 [1]1-2
According to the Office of the National Economic and Social Development Board (NESDB),
the costs of logistics as a percentage of GDP in Thailand has dropped significantly, from 18% in2007 to about 14% currently [1]. Figure 1.1 represents the percentage of logistics costs to GDP ina year 2016. It seems that logistics market in Thailand is huge, but the cost of logistics is relatively
high as compared to the country’s GDP. However, there is a room for additional investment in
logistics business to implement the technology related to logistics business, particularly forinvestors who want to take advantage of growth opportunities in Third-Party Logistics.
According to the type of technology being implemented by various logistics companies , andthe shares in logistics cost (i.e. 54% for transportation cost, 34% for warehouse and inventory), weclassify roles of logistics businesses by three main functions (see Figure 1.2); namely, Logistics
Service Providers (LSPs) or also known as Third-Party Logistics (or 3PL), Warehouse andInventory and Public Authorities. List of the interviewees can be found in Appendix A.

Figure 1.2 Three roles in logistics business by the functions (Adapted from [2])In this report, we interviewed 8 logistics service companies, which account for 25% of allinterviewees. In addition, we interviewed all 5 warehouse and inventory operators, accounting for
16%. Furthermore, another 9 companies operate both logistics services and warehousemanagement, which account for 28 percent of the total interviewees. Aside from this, we had theopportunity to interview eight public authorities, accounting for 31% of the total interviewees.

1-3
1.1.1 Logistics in the 4.0 era
The concept of Logistics in the 4.0 era means the use of digital technology in various
activities of business logistics management. Logistics development in an era 4.0 will help shorten
the gap between logistics and supply chain activities. Manufacturers can meet the needs ofconsumers with the form of their business through the digital process, enabling them to create
value to consumers and compete with competitors in the world market. To transform the industry
into a smart transport, and smart logistics, it must have a clear goal and keep up with the world
trend. For example, the United States has a concept of transport drones to be fast. Customers, time,
costs and technology costs must be developed to be sustainable. At present, 80% of the investment
budget in Thailand has spent on an improvement of infrastructures, particularly railway and roadtransport. Our challenge is to create sustainability for the logistics and warehousing business [3].
The business world today is the era of structural change to the support e-Commerce / e-Trading
and towards sustainability, which has caused many changes in the international trade and logistics
market such as changing to Industry 4.0 / e-Logistics, including technology development for
logistics [4].
1.1.2 Modern technologies in logistics systems
The Logistics System Development Strategy Division recognises the importance of therapidly changing technology. This will benefit the adaptation of logistics operators as well asagencies related to the development of the country's logistics system to keep up with modern
technologies such as internet of things (IoT) technology, data analysis with Big Data Analytics,
and development to be friendly to the environment. Different types of technology for logistics
development are compiled as detailed belows.
1.1.2.1 Internet of Things (IoT) for logistics
The use of IoT in the logistics process is widely accepted as it can reduce overall costs,
increase security, accuracy and achieve high standards. The development of the IoT network in
the next phase will have a continuously decreasing cost of equipment, allowing logistic service
providers to have more opportunities to apply IoT to new business operations. However, the IoT
system in logistics is still limited by the need to develop the IoT standards in logistics [4]. Benefitsof IoT in logistics business are as follows:

1-41) Checking transportation and inventory correctly
It can be done by collecting information about product movements The system will be able
to report the delivery status to operators in the transportation route planning. Employee
management, including warehouse storage locations via Radio Frequency Identification(RFID) and Global Positioning System (GPS).
2) Increasing the transparency of the warehouse
It can be done by tagging information on each pallet (Pallet) and can send the current
condition and position, allowing for an analysis, planning, management, and productsupervision efficiently.
3) Intelligent transportation
It can increase the value of transportation by means of innovative smart trucks that cancollect information about routes planning and transporting times appropriately, which canincrease operational efficiency, and reduce costs.
1.1.2.2 Artificial Intelligence (AI) in Logistics
AI is a technology that will change the way logistics services businesses to meet customer
needs. In the future, AI will help entrepreneurs adjust their business operations proactively andcan anticipate changes to increase efficiency in shipping.

Figure 1.3 The use of AGV at Yangshan Port in Shanghai, China [4]Yangshan Port in Shanghai, China, is an example of using an automated port or an automatedshipping port. Figure 1.3 shows the use of AGV at Yangshan Port for container transportation toensure efficient product transportation [4].

1-5
1.1.2.3 Big Data Analytics in Logistics
Big Data will be the main center of information that will play a role in creating an overview
of the current situation for analysis in order to gain an in-depth information about various
operational trends. The advantage of using Big Data in logistics is choosing the right transportationroute. A selection of an appropriate transportation route has been analysed by correlating various
data such as weather conditions, traffic and other factors. The result of this is the most effective
real-time transportation management of goods to the destination, which allows logistics operators
to specify the exact delivery time, as well as efficiently loading products into transport vehicles.
Big data systems can help increase resource efficiency while also reducing unnecessary
costs in the supply chain. Big data can help increase the risk management of the supply chain, suchas the alert system during the transportation process due to unexpected events such as accidents,
the congestion of the destination to be sent to, such as the port of customs [5].
1.1.2.4 Automation and Robotics in Logistics
The development of automation and robots in the logistics process is more widely accepted
due to the rapid technological progress combined with the consent to pay at a high price in orderto improve service levels such as robots in the warehouse and autonomous vehicle. The growth of
the E-Commerce market causes logistics service providers to operate businesses faster and more
efficiently. It ranges from the processing of individual orders to the delivery of products tocustomers. Therefore, the use of automation and robots makes it faster and more flexible,
especially in the automated warehouse that needs accuracy.
The use of warehouse robot to manage warehouse activities such as pallet arrangement,loading and unloading of trucks, packaging and system control will help increase efficiency inresource management. The automotive industry is an industry that has the potential to deploy
automated warehouses in order to store auto parts and various equipment, including themanagement of picking up devices to assemble automobiles and transporting assembled cars tocustomers. An automotive industry will be the main industry that will bring more full robot
systems into the future [4].

1-6

Figure 1.4 The AGVs move customers’ orders around the Alibaba’s warehouse [5]Alibaba has brought robots to be used to transport goods inside the warehouse as shown in
Figure 1.4. The automated robots are designed to meet the needs of every warehouse that needs
to be transported from one location to another. In addition, intelligent robots can manage
Packaging and can lift products weighing up to 1,000 kg.
1.1.2.5 Autonomous Vehicles in Logistics
Autonomous Vehicles are advanced robot technology. Currently, this technology is mainly
used to increase the efficiency of storage, lifting, and sorting in the warehouse mainly in the formof Automated Guided Vehicle (AGV). The next development trend is the deployment ofautonomous vehicles to transport products. Self-Driving Truck is a logistical innovation that will
become a necessity for the transportation of goods and logistics providers in the future. Major
automotive industry giants, such as Scania Daimler, Volvo Tesla, and technology companies, areaccelerating the development of unmanned truck technology to reduce the rate of road accidents
caused by human error [4].
1.1.2.6 Drone in Logistics
The use of drones can be utilised in the transportation and logistics industry to increase theefficiency of the transportation of goods to be more convenient and faster. It will help with Last
Mile Delivery and can be used to quickly inspect warehouses, reduce shipping space limitations,and long-term transportation costs when compared to delivery by truck. The obvious benefits ofusing a drone are lower costs and faster shipping than road delivery as well as solving
transportation labor shortages.

1-7

Figure 1.5 UPS driver sends the drone on its way to the customer [6]The UPS has tested drone delivery by flying from the truck to the destination and returning
to the truck in approximately 30 minutes, which can carry a maximum weight of 4.5 kilograms at
a time (see Figure 1.5). The result is that it allows truck drivers to deliver multiple products andreach the recipient quickly, without having to reach a particular area of the remote area [4].
1.1.3 Adaption of Thailand to the e-Logistics
Thailand is an export oriented economy with exports accounting for around 18.9 percent of
the country’s GDP for 2018. As of September 4, 2019, Thailand exported $144 billion worth ofgoods during the first seven months of the year 2019 dropping by -0.4% compared to the same
period one year earlier [7].

Figure 1.6 Ratio of Thailand Export Items in 2018 [Adapted from [7]]

1-8
The pie chart in Figure 1.6 presents the percentage share of each export regarding theoverall exports from Thailand during the year 2018. The country mainly exports machinery
including computers (17.2 percent of total shipments), electrical machinery and equipment (14percent), vehicles (12.2 percent), rubber (6.2 percent), plastics (5.8 percent), gems and precious
metals (4.8 percent), mineral fuels including oil (4.2 percent). Agricultural goods, mainly meatand seafood preparations, account for 2.6 percent of total shipments. Organic chemicals andcereals contributed 2.5 percent and 2.3 percent of the country’s export items, respectively [6].
Major export partners are China (12 percent), Japan (10 percent), the United States (10 percent),
the European Union (9.5 percent) and the rest are exported to others countries include: Malaysia,
Australia and Singapore as shown in Figure 1.7 [8].

Figure 1.7 Shares of Thailand Export Partners (Adapted from [8])The Thai government is well aware of the importance of logistics, particularly forcompetitiveness in the current strengthened free flow of the global trade. This is because we havebeen aware of the government's policy to push Thailand into a "transportation hub in ASEAN
and Asia". Aside from cost and lead-time reduction, logistics is considered as a crucial factor foraccomplishing competitiveness.

1-9
In the meantime, Thailand is in an appropriate position:1) being a leader among Southeast Asia and Indochinese countries;2) having a high Japanese intensive investment;3) acting as the logistics hub in Southeast Asia;
4) having important manufacturing base in many areas; and5) being a centre of ASEAN Economic Community (AEC).
Although Thailand has continuously invested in infrastructure development, whether it isports, airports, roads and rail systems, but there is no linkage in each mode of transportation, lackof network systems and integrated logistics management systems, both collecting, distributing andtransporting cargo both within the region and between regions. Furthermore, the important thingthat will make Thailand becomes a logistics hub in the ASEAN and Asia region consists of manyfactors, especially the linkage of economic activities that are all systematically related to thelogistics system [3].
1.1.4 Development of Thai logistics system to meet Thailand 4.0 policy
Thailand has placed a great importance on the development of logistics systems, especiallythe development of Thailand to be a logistics centre. Therefore, Thailand must accelerate thedevelopment of logistics systems to be able to link both locally and internationally and to increase
competitiveness. For this reason, the government sector has set up a strategic plan for thedevelopment of logistics systems to be used as a model to develop the potential of the Thai logistics
system to keep abreast of the civilization and support the Thailand 4.0’s policy [6]. Apart from
that, the Ministry of Transportation has issued a rule that the transport vehicle must be equippedwith a GPS system, enabling the service to be expanded into a multi-model transponder, whichlink all transportations with the aim of reducing logistics costs.
The logistics system development strategy is consistent with the current National Economic
and Social Development Plan and the 20-year national strategic plan. There are many discussions
on the development of infrastructure in Thailand’s development and strategic plans, such as watertransport development, road transport, air transport or rail transportation for increasing the capacity
and safety of cargo by developing a dual rail system which is a project that has been continuously
discussed [6]. However, it appears that the operation is kept in its place, and there is no progress
to be seen. It was suggested that the development of the Thai logistics system in the future will not1-10
be much difference from what it is because the main modes of transportation still rely on the roadtransportation. Therefore, the public and private sectors should consider the technologies that
could help supporting the transportation and warehouse management.
1.1.5 Strategic Plan of Government Agencies related to e-Logistics and Supply Chain
In the midst of digital disruption where modern technology has replaced old technology andled to new business models, the government has planned to develop the country to Thailand 4.0
by defining 10 target industries (S-Curve) to the future economic driving industry. Also, Thailand
is currently implementing the 12th National Economic and Social Development Plan (2017 – 2021)[9]. This five-year plan is the short-term strategic plan in accordance with the 20-year strategicplan and reform (2017 – 2036) [10]. The transportation and logistics industries are industries which
complement Thailand’s geographically advantageous location, and that furthermore allow for the
support and expansion of other industries.
The government therefore needs to formulate policies and promote logistics development tosupport the growth of industries that use advanced technology in production. It can be done byfocusing on the development of modern technology such as the development of large data sources
or Big Data by collecting state information that will benefit the business development of logistics
service providers, promotion of research and development of technology and innovation inlogistics to replace imports. Thus, Thai logistics service providers must adjust the business model
to be up-to-date and be consistent with the changes in technology.
Logistics Industry is one of the new five future industries (New S-Curve) which is anindustry that Thailand has the potential in production and caused by the changes in global
manufacturing technology (see Figure 1.8). Thailand is an important transportation hub for
multinational companies that set up production bases and sales networks in Indochina with a welldeveloped infrastructure and a center in the Greater Mekong Subregion (GMS). It is expected that
Thailand’s logistics cost falls at the rate of approximately 12% per GDP by 2021 [11, 12].

1-11

Figure 1.8 Five New S-Curve industries: Digital, Robotics and Automation, Aviation andLogistics, Biofuels and Biochemicals and Medical Hub [11]1.2 Research Objective and Scopes
It is quite important to put a focus of this study on the logistics industry. This is because
logistics industry is the source for the international competitiveness of the shipper inmanufacturing industries in order to implement economic cooperation in distribution and logistics
industry for Thailand.
The objectives of this research are as follows.
1) To survey strengths and potential obstacles to the successful of e-logistics and automatedrobots’ implementation in logistics and supply chain industries in Thailand.
2) To comprehend the current situation and needs on logistics of existing Thailand andJapanese manufacturers, retailers, distributors, and their prospects for market
opportunities of the logistics industry in Thailand.
3) To study the development of logistics for supply-chain optimization and an integrated
logistics network, both locally and internationally in Thailand by which the movement ofgoods can be tracked.

1-12

1.3 Research Methodology
1) In-depth interviews will be carried out to collect the information on the current status
and trend of the logistics and supply chain in Thailand from 30 representatives;•

Local, Japanese, and International Logistics Service Providers (LSPs)
o Air Freight Forwarding (AFF)
o Ocean Freight Forwarding (OFF)o Domestic Truckage / Cross Border (DT/Cross)o Customs Brokerage (CB)o Removal (R)•Warehouse and Inventory (WI)•

Public Authorities (PA)e.g. The Thai Federation on Logistics, Thai Transportation and Logistics
Association, Thai International Freight Forwarders Association and Thai
National Shippers’ Council.

2) Summary of the current status, plans, strengths, obstacle potentials, needs and policies
trends on logistics, and the automated technologies used in logistics and supply chain
industries in Thailand will be presented, discussed and concluded.

1.4 Report Outline
In this report, the objective and scope of this study is defined in Chapter 1. Modern
technologies that are able to upgrade Thailand's traditional logistics management system tobecome the ASEAN logistics hub is also described in this chapter. Consequently, the current
government policies and supporting schemes in promoting logistics and supply chain are presented
in Chapter 2. Accordingly, the in-depth interviews of current situations on e-logistics and supply
chain in the viewpoint of logistics companies and organizations are summarized in Chapter 3.
Successful case studies of e-logistics implementation are gathered and given in this chapter.
Chapter 4 presents potentials and obstacles of e-logistics and supply chain and suggestions togovernment agencies. Finally, the key findings discussed in all previous chapters and overall
conclusions of the research are summarized in Chapter 5. The list of the interviewees is provided
in Appendix A

1-13

1.5 References[1] Available

at:https://www.mordorintelligence.com/industry-reports/thailand-freight-and-logistics-market (Accessed: 12 February 2020).
[2] MOL Logistics (Thailand) Company Profile (April 2019).
[3] Sorat, T. (2006). When Thailand wants to be a TRANSPORT LOGISTICS HUB: the logistics
center of the Indochina region. Bangkok: V-Surf Logistics.
[4] Chantarik, K. (2018) Future Logistics Thailand. Available at:
http://www.thansettakij.com/content/266866 (Accessed: 16 August 2019).
[5] Alibaba and Cainiao open China’s ‘largest’ robot-operated warehouse (2018) Available at:https://roboticsandautomationnews.com/2018/10/30/cainiao-opens-chinas-largest-robotoperated-warehouse/19571/ (Accessed: 18 September 2019).
[6] UPS & drones: Delivery company launches UAV from truck (2017) Available at:https://www.theregister.co.uk/2017/02/22/ups_drones_delivery_company_launches_uav_fro
m_truck/ (Accessed: 18 September 2019).
[7] Workman, D. (2019) Thailand’s Top 10 Exports. Available at:
http://www.worldstopexports.com/thailands-top-10-exports/ (Accessed: 18 September2019).
[8] Trading Economics (2019) Available at: https://tradingeconomics.com/thailand/exports(Accessed: 18 September 2019).
[9] The 12th National Economic and Social Development Plan (2017 – 2021). Available at:
http://www.nesdb.go.th/ewt_dl_link.php?nid=6422 (Accessed: 09 September 2019).
[10] The 20-year Strategic Plan and Reform (2017 – 2036). Available at:
http://www.nesdb.go.th/download/document/ร่ างยุทธศาสตร์ชาติ (Accessed: 09September 2019).
[11] Thailand Board of Investment, Promotion programs for aerospace industry in Thailand andfuture plans (Accessed: 18 September 2019).
[12] THAILAND’s Logistics Development Strategic Plan No. 3 (2017-2021) (2018) Available at:
http://www.tnscdirectory.com/thailands-logistics-development-strategic-plan-no-3-20172021/ (Accessed: 18 September 2019).
[13] Available at: https://www.eeco.or.th/en/industry/aviation-and-logistics-industry (Accessed:
18 September 2019).

2-1

Chapter 2
Government Policies on Logistics and Supply Chain
2.1 Current Government Policies and Supporting Schemes in Promoting
Logistics
2.1.1 National Logistics Plan
The Thai government has recognized that logistics system is a crucial element insupporting economic activities and national competitiveness. In addition, the government has
set a policy to push Thailand to be the "transportation hub in ASEAN and Asia". The
government has launched a series of national logistics development strategy since 2003 todevelop a logistics system and upgrade Thailand into the center of trade, services, andinvestment in ASEAN and Asia. The office of the National Economic and Social Development
Board (NESDB) has set up the 3rd Thailand’s Logistics Development Strategic Plan (20172021) which is consistent with the current National Economic and Social Development Plan
[1] and the 20-year national strategic plan [2]. This strategic plan is focused on reducing
problems and limitations, enhancing trade facilitation, and improving standards of logistics
processes and human resource management in logistics and supply chain [3]. The important
key points of the strategic plan are as follows:
Vision: “To enhance Thailand’s logistics system and its position as a center of trade,
services and investment in the ASEAN region as well as to increase its competitiveness”
Strategic planning:
1) Strengthen capability of the entrepreneur to take an advantage from the value addedof supply chain and encourage to implement technology and innovation in logistics
management.
2) Upgrade Thai trade facilitation efficiency to meet international standards.
3) Develop supporting factors such as improvement of standardization for personnel inthe logistics area and establishing a collaborative network with the private sector todevelop human resource management systems as well as logistics development
monitoring and evaluation systems.

2-2
Objectives: To build Thailand’s competitiveness in logistics, enhance trade facilitation,
increase Thai logistics service providers’ potential to conduct business domestically andinternationally and develop the capacity of the country’s logistics personnel.
Indicators:
1) Thailand ranks higher on the international logistics performance index (International
LPI) by 2020.
2) Thailand’s trade facilitation efficiency ranks higher by 2021 (Trading AcrossBorders).
3) Thailand’s logistics cost is at 12% per GDP by 2021.
4) Electronic import and export transactions increase by 100% by 2021.
Table 2.1 The 3rd Thailand’s Logistics Development Strategic Plan (2017-2021)
Strategic Issue

Strategy

1. Development of value-

1.1 Upgrade logistics and supply chain management for agriculture and industry

added supply chain

to meet international standards.

systems.

1.2 Connect trading to E-Commerce.
1.3 Develop the potential of Logistics Service Providers.

2. Development of

2.1 Develop transport and logistics network infrastructure along strategic routes

infrastructure andto connect the sub regions and trade gateways.

facilities.

2.2 Develop a National Single Window System. Establish a central
administrative agency to develop and monitor a central system to integrate dataand expand the network to link with the Port Communication System at Laem
Chabang Port, Bangkok Port, and Suvannabhumi Airport.
2.3 Develop the E-logistics process: Support the reduction of import-export
processing time.
2.4 Overcome international trade barriers.

3. Development of

3.1 Develop logistics professional standards.

logistics support

3.2 Develop logistics personnel to meet international standards, focusing on

factors.

both upstream and downstream vocational or technical training.
3.3 Research and develop logistics innovation and technology.
3.4 Evaluate/follow up on international trade agreements and develop a databaseto evaluate the results of the country’s logistics system development.

2-3
Under the 3rd Thailand’s Logistics Development Strategic Plan, there are flagshipprograms as shown in Table 2.2 that the government has pushed to improve national logistics
performance and to increase connectivity within sub-regional and ASEAN framework throughdomestic networks that connect economic corridors [4].
Table 2.2 Flagship programs under the 3rd Thailand’s Logistics Development Strategic Plan
Issue

ProgramRailway Infrastructure - Construction of double track in six main rails linking Bangkok
and main cities in the northeast and southern regions of Thailand
to stimulate growth of modal shift of cargo from road to rail
carriage.
Road Infrastructure- Development of 4-lane road networks linking Thailand’s key
economic corridors and border areas in the special economic
zones (SEZs) such as Chiang Rai, Tak, Mukdahan, Sa Kaew,
Trat, Songkla.
- Development of inland container depot / logistics park (freightvillage) in border provinces to support growing cross-border
trade and investment.

Port Infrastructure- Improvement of seaport on both Thai gulf and the Andaman Sea
to cater to growing international maritime trade

Aviation- Establishment of aviation industrial estates

Infrastructure- Expansion of runways, free zones, and cargo carry capacity at
Suvarnabhumi airport and Don Muang airport

Customs Clearance- Upgrading facilities at land customs border points,

System- Development of national single window system- Improvement of customs and trade regulations to accommodate
paperless trading and international trade facilitation commitment
to save time and costs for shippers and logistics service providers.

Human Resources- Enhancement of human skills in logistics industry.

Capacity Building- Arrangement of training and educational programs to provide
insight information on trade, logistics, innovation, regulations- Organizing trade exhibitions and logistics business matchingactivities to strengthen and widen supply chain networks.

2-4

2.1.2 National's Greenhouse Gas Reduction Plan for 2021 - 2030 (Thailand's Nationally
Determined Contribution Roadmap on Mitigation 2021 - 2030: NDC Roadmap 2021 –2030)
The government agencies are well prepared for the reduction of greenhouse gas
emissions. To further extend, the Cabinet has approved the National's Greenhouse Gas
Reduction Plan for 2021 - 2030 (Thailand's Nationally Determined Contribution Roadmap on
Mitigation 2021 – 2030: NDC Roadmap 2021 – 2030) for reducing greenhouse gases byapproximately 20 percent or equivalent to 111 million tons of carbon dioxide equivalent(MtCO2e) by the year 2030. The reason that the Cabinet has to accelerate the plan is because
greenhouse gases have increased from 273,408 thousand tons of carbon dioxide equivalent (ktCO2eq) in 2005 to 555,000 thousand tons of carbon dioxide equivalent or 555 million tons ofcarbon dioxide equivalent (MtCO2e) in the year 2030 or equivalent to an average rate ofincrease of 2.8 percent per year (shown in Figure 2.1) [5]. Examples of projects and plans
related to logistics and warehouse management under the National's Greenhouse Gas
Reduction Plan for 2021 - 2030 are shown in Table 2.3.

Figure 2.1 Expectation of the amount of greenhouse gas emission in Thailand
from 2005 – 2030 in various business sectors [5]From Table 2.3, it can be seen that the infrastructure development plans to supportchanging modes of transportation in rail transport consists of 32 double-track railway
construction, construction of mass rapid transit and suburban trains for 20 routes, constructionof 14 new railway lines and high-speed railway construction with the Eastern Economic
Corridor (EEC) development. It can be seen that the development of infrastructure forchanging the mode of transportation (Shift / Maintain) can reduce greenhouse gas by a total of

2-55.42 MtCO2e. In addition, 7.721 MtCO2e of greenhouse gases is estimated to reduce bylogistics development projects under the national's greenhouse gas reduction plan for 2021 –2030 [6].
Table 2.3 Project details related to logistics under the national's greenhouse gas reduction planfor 2021 – 2030
Amount of
Project/Plan

Responsible

BudgetCO2

Department(Million Baht)

reduction(MtCO2e)

1. Development of infrastructure to

3,035,361.30

5.42

463,015.00

1.47

532,277.30

1.06

Transit

501,690.00

0.09

Authority of Thailand

1,538,379.00

2.79

80.00

0.19

60.00

0.19

20.00

-

634.000.611- Department of Land104.000.06

Transport

39.00

-

65.00

-

500.00

0.241

30.00

0.31

support changing modes oftransportation in rail transport systems
1.1 Construction of 32 double track railways
1.2 Construction of mass rapid transit andsuburban trains 20 routes
1.3 Construction of 14 new railway lines- StateRailwayofThailand- MassRapid

1.4 Construction of high-speed trains + EEC, 4routes
2. Promotion of freight management
systems to save energy (Logistics
Management)
2.1 Promotion of transportation management- Office of Transport andsystems for energy saving (LTM)

Traffic

Policy2.2 Research and development of energy

Planning

management transportation program- Energy(LTMA)

Planning Office

Policyandand

3. Promotion of freight management
systems to save energy (Logistic
Management)
3.1 Empty trip transportation management(Backhaul Management)
3.2 Development of Application and Platform- Office of Transport andfor Real Time Truck Transport

Traffic

Management

Planning

3.3 Promoting the use of Application for the
Backhaul Management
3.4 Establishing Distribution Center (DC)

Policyand- Department

of

Alternative

EnergyDevelopment
Efficiency

and

2-6
3.5 Establishment of an energy-saving driving
training center in 5 regions nationwide
4. Transportation

Management

System

50.00

0.12

50.00

0.12

377.00

-

52.00

-

130.00-130.00

-

65.00

-

286.00

-

65.00

-

26.00

-

195.00

-

-

-

-

-

(TMS)
4.1 Developing and supporting transportation
management systems- Department

of

Alternative

EnergyDevelopment

andEfficiency- Department of Land
Transport
5. Raising the standard of truck
transportation management (Q Mark)
5.1 Raising the standards of truck- Department of Landtransportation management to support

Transport

increasing energy efficiency and reducing- Office of Transport andgreenhouse gas emissions

Traffic

5.2 Encourage truck operators to improve the

PolicyandPlanning

quality of operations, according to thestandard of truck transportation
5.3 Establishing the marketing needs of truck
transportation standards
5.4 Monitoring and consulting with truck
transportation operators’ in implementing
truck transportation standards.
6. Increasing energy efficiency and CO2
reduction in Thailand's Cold Chain
Logistics system.
6.1 Study of guidelines for increasing energy- Office of Transport andefficiency and greenhouse gas emissions ofTraffic

Cold Chain Logistics.

Planning

6.2 Changing substances in the cooling system
in a Cold Chain Logistics truck to increase

Policyand- Department of Land
Transport

energy efficiency and reduce CO2.
6.3 A refrigerant replacement truck pilot
project in Cold Chain Logistics to increaseenergy efficiency and reduce CO2.
7. Logistics System Development
7.1 Sustainable Logistics Management (Green
Logistics) by the private sector- Office of Transport andTraffic
Planning

Policyand2-7
8. Development of infrastructure to176,146.90

1.38

981.500.7935

6,422.80

0.0812

2,162.90

0.0478591.700.001

155,834.00

0.4122

10,154.00

0.041

Total amount of CO2 reduction (MtCO2e)

7.721

support changing modes oftransportation in water transportation
systems
8.1 The 1st phase and 2nd phase of Single Rail - Port Authority ofTransfer Operator development at Laem

ThailandChabang Port
8.2 Construction of elevated dams in the Chao - Marine Department
Phraya and Nan rivers for
8.3 Sailing
8.4 Increasingtheefficiencyofthe - Marine Department

transportation system in the Pa Sak River
8.5 Development of ferry linking the upper - Marine Department
Thai gulf
8.6 The 3rd phase of Laem Chabang Port - Port Authority ofdevelopment

Thailand8.7 The 3rd phase of Map Ta Phut Port - Industrial Estatedevelopment

Authority of Thailand- Port Authority ofThailand2-8

2.2 Government Supporting Schemes
2.2.1 Investment Promotion by the Thailand Board of Investment (BOI)The Thailand Board of Investment (BOI) is a government agency under the Prime
Minister’s Office which was established to promote investment in Thailand and Thai overseas
investment by offering both tax-based and non-tax-based incentives since 1966. The BOI
prescribes the investment promotion policies under the Investment Promotion Act No. 2 B.E.
2534, No. 3 B.E. 2544, and No. 4 B.E. 2560. Tax and non-tax incentives offering by the BOI
are summarized in Table 2.4 [7].
Table 2.4 Tax and non-tax incentives provided by the BOI
Tax Incentives

Non-tax Incentives• Exemption/reduction of import duties on machinery• Permit for foreign nationals to enter the Kingdom(Section 28/29)• Reduction of import duties for raw or essential
materials (Section 30)• Exemption of import duties on materials imported
for R&D purposes (Section 30/1)• Exemption of corporate income tax on the net profit
and dividends derived from the promoted activity(Section 31 and 34)• A 50% reduction of the corporate income tax(Section 35(1))• Double deduction from the costs of transportation,
electricity and water supply (Section35(2))• Additional 25% deduction of the cost of installationor construction of facilities (Section35(3))• Exemption of import duty on raw or essential
materials imported for use in production for export(Section 36)

for

the

purposeofstudying

investment

opportunities. (Section 24)• Permit to bring into the Kingdom skilled workers
and experts to work in investment promoted
activities (Section 25 and 26)• Permit to own land (Section 27)• Permit to take out or remit money abroad in foreign
currency (Section 37)

2-9
According to the Announcement of the Board of Investment No.2/2557: Policies andCriteria for Investment Promotion announced on December 3, 2014, the BOI has set the criteria
for granting incentives by defining the incentives for investment into 2 types as follows [8]:1) Activity-based incentives
Activity-based incentives are classified based on importance of activities, which are
divided into 2 groups (see Table 2.5). In addition, the basic incentive shall grant for theinvestment in 4 core technologies in Section 8 (Technology and innovation development
includes targeted core technology development such as development of biotechnology,
nanotechnology, advanced materials technology and digital technology) and activities which
support the development of targeted technology in Section 8. The criteria for granting theactivity-based incentives for investment in each group of activities is shown in Figure 2.2.
Table 2.5 List of activity-based incentives
Group A: Activities that shall receive corporate income tax incentives, machinery and raw materials importduty incentives and other non-tax incentives.
Subgroup
A1

Eligible Activities
Knowledge-based

Incentives- 8-year corporate income tax exemption without being subject to aactivities focusing on

corporate income tax exemption cap.

R&D and design to- Exemption of import duty on machinery.

enhance the country’s- Exemption of import duty on raw or essential materials used incompetitiveness.

manufacturing export products for 1 year which can be extended
as deemed appropriate by the BOI.
- Other non-tax incentives.

A2

Infrastructure activities
for the country’s- 8-year corporate income tax exemption, accounting for 100% ofinvestment (excluding cost of land and working capital)

development, activities- Exemption of import duty on machinery

using advanced- Exemption of import duty on raw or essential

technology to create- Materials used in manufacturing export products for 1 year which

value- added, with no orvery few existing

can be extended as deemed it appropriate by the Board- Other non-tax incentives

investments in Thailand.
A3High technology- 5-year corporate income tax exemption, accounting for 100% ofactivities which areinvestment (excluding cost of land and working capital) unless

important to thespecified in the list of activities eligible for investment promotion

development of thethat the activity shall be granted corporate income tax exemption

country, with a few

without being subject to a corporate income tax exemption cap

investments- Exemption of import duty on machinery2-10
already existing in- Exemption of import duty on raw or essential materials used in

Thailand.

manufacturing export products for 1 year which can be extended as
deemed it appropriate by the BOI- Other non-tax incentives

A4

Activities with lower- 3-year corporate income tax exemption, accounting for 100% oftechnology than A1-A3

investment (excluding cost of land and working capital)

but which add value to- Exemption of import duty on machinery

domestic resources and- Exemption of import duty on raw or essential materials used instrengthen the supply

manufacturing export products for 1 year which can be extended

chain.

as deemed it appropriate by the BOI- Other non-tax incentives

Group B: Activities that shall receive only machinery and raw materials import duty incentives and other
non-tax incentives.
Subgroup
B1

B2

Eligible Activities

Incentives

Supporting industry that

- Exemption of import duty on machinery

does

high

- Exemption of import duty on raw or essential materials used intechnology but is still

manufacturing export products for 1 year which can be extended asimportant to the value

deemed it appropriate by the Board

chain.

- Other non-tax incentives

Supporting industry that

- Exemption of import duty on raw or essential materials used indoes

manufacturing export products for 1 year which can be extended as

not

not

use

use

high

technology but is still

deemed it appropriate by the Board

important to the value- Other non-tax incentives

chain.

Remarks:
Activities in Group B1 and Group B2 shall receive additional three-years corporate income tax
exemption on the revenue in case of:- Investment in automation or robotic system, the cap on corporate income tax exemption on therevenue of the project shall not exceed 50% of the investment capital (excluding cost of land andworking capital).
- Investments in automation systems, the corporate income tax exemption cap will be raised to100% of the investment, excluding land cost and working capital if the value of linkages to the Thai
automation industry reaches at least 30% of the total value of the automation system.

2-11

Figure 2.2 Criteria for granting the activity-based incentives [9]2) Merit-based incentives
The BOI also offers additional incentives based on the merits of each project (See Figure2.3) to stimulate more investment in activities that benefit the country or industry as follows:
Merit on competitive enhancement: Projects which invest in research and development
in technology and innovation, donations to Technology and Human Resources Development
Funds, educational institutes, specialized training centers, research institutes or governmental
agencies in the science and technology field in Thailand, IP acquisition/licensing fees forcommercializing technology developed in Thailand, Advanced technology training,development of local suppliers with at least 51% Thai shareholding in advanced technology
training and technical assistance and product & packaging design shall receive additional
corporate income tax exemption of up to 3 years, plus an additional tax exemption of up to
300%. Addition incentives and the criteria for granting promotion incentives under the meriton competitive enhancement is shown in Figure 2.4 and 2.5.

2-12
Merit on decentralization: Projects located in 20 provinces with lowest per capita
income: Kalasin, Chaiyaphum, Nakhon Phanom, Nan, Bueng Kan, Buri Ram, Phrae, Maha
Sarakham, Mukdahan, Mae Hong Son, Yasothon, Roi Et, Si Sa Ket, Sakhon Nakhon, Sa Kaew,
Sukhothai, Surin, Nong Bua Lamphu, Ubon Ratchatani and Amnatcharoen (excluding borderprovinces in Southern Thailand and Special Economic Development Zones which haveseparate special incentive packages) shall receive additional incentives. For example, Projects
with activities in Group A1 or A2 in these areas shall receive a 50% reduction in corporate
income tax for 5 years, additional corporate income tax exemption of up to 3 years, double
deduction for transportation, electricity and water costs for 10 years, and a deduction of 25%of the net investment cost of a project’s infrastructure installation or construction costs. The
criteria for granting promotion incentives under the merit on decentralization is shown in
Figure 2.6.
Merit on industrial area development: Projects located within an industrial estate or apromoted industrial zone (see map in Figure 2.7) shall be granted an additional year of
corporate income tax exemption. The criteria for granting promotion incentives under the meriton industrial area development is shown in Figure 2.8.

2-13

Figure 2.3 Criteria for granting addition promotion incentives under the merit-based
incentives [7]2-14

Figure 2.4 Additional incentives for competitiveness enhancement [7]2-15

Figure 2.5 Criteria for granting addition promotion incentives under the merit on competitiveenhancement [7].

Figure 2.6 Criteria for granting addition promotion incentives under the merit on
decentralization [7]2-16

Figure 2.7 Map of Investment Promotion Zones [7]2-17

Figure 2.8 Criteria for granting addition promotion incentives under the merit on industrial
area development. [7]Some examples of the incentives offered by the BOI for the investment in logistics
include [10]:1) Manufacture and/or repair of rolling stock, parts or equipment for rail systems:
BOI’s incentives under the general list of activities for investment promotion ranging
from group A1 to A3 (Applications must be submitted by Dec. 30, 2021 and projects meet the
BOI’s requirements and conditions).
2) Mass transit systems and transportation of bulk goods:
A2: Rail transport
B1: Pipeline transportation (except water pipeline)
A2: Maritime transportation services
A3: Air transportation services
3. Logistics service centers:
B1: Logistics service’s distribution centers (DC)A3: International distribution centers (IDC)
A3: Logistics Park

2-18
In addition, the BOI offers additional incentive packages for the investment in the
promoted areas such as the Special Economic Zones (SEZs) and the Eastern Economic
Corridor (EEC). Important additional incentives are as follows:
Incentive package of investment projects in the Special Economic Zones (SEZs)
The Special Economic Zones (SEZs) consist of 10 zones in Tak, Mukdahan, Sa Kaew,
Trat, Songkla, Chiang Rai, Nongkhai, Nakhon Panom, Kanjanaburi and Narathiwas (see map
in Figure 2.6). Logistics businesses in certain areas for SEZs may be granted 8-year exemptions
on corporate income tax and an additional 50% reduction in corporate income tax for 5 years.
Incentive package for investment projects in the Eastern Economic Corridor (EEC)
New investment incentive package for investment projects in the EEC (2020-2021)
which has started since January 2, 2020 is shown in Figure 2.9. Important additional privileges
are as follows:- Exemption of import duties on machinery and raw materials for production and
R&D.
- Permission to own land for BOI promoted projects.
- Rights to lease of land for 50 years.
- 17 % personal income tax rate.
- Able to use foreign currencies in the Promoted Zones.
- One-stop service center to facilitate foreign investors.
- Work permits being issued for periods of 5 years.
According to the announcement of the Board of Investment No.2/2563, announced on
Jan 15, 2020, applications must be submitted by the last working day of 2021. However,
Projects located in the four promoted zones for specific industries (EECi, EECd, EECa andEECmd) are eligible for the incentives without an application deadline [11].

2-19

Figure 2.9 Investment incentive package for investment projects in the Eastern Economic
Corridor (2020-2021) [11]2.2.2 Research and Development Funding
There are three public funding agencies that provide grant for the research anddevelopment on logistics and supply chain which are:
• The National Sciences and Technology Development Agency (NSTDA)• The National Innovation Agency (Public Organization) (NIA)• The Program Management Unit for Competitiveness (PMU C)

1. National Science and Technology Development Agency (NSTDA)
The National Science and Technology Development Agency (NSTDA) is a funding andresearch organization under the Ministry of Higher Education, Science, Research andInnovation (MHESI) which was established as an autonomous government agency since 1991.
NSTDA’s roles in the promotion of science include research and research funding, technology
transfer, human resources development and science & technology infrastructure. NSTDA
offers 4 programs to support the research and development on logistics and supply chain whichare:1) Technology and Innovation Implementation Programs
These programs include NSTDA Testing Labs, Technology Licensing Office (TLO),
Innovation and Technology Assistance Program (ITAP), and Research Gap Fund Program2-20(RGF). The objective of this program is to provide SMEs with an access to technical experts,
testing labs and university research projects, to incentivize businesses to perform R&D and toconnect enterprises to NSTDA research centers. ITAP program, under NSTDA, is an industrial
technology support program for SMEs to help them meet the challenges in introducing
technology-based products and processes by proving experts to identify technical solutions andconsultation and reimbursing the expert expenses of up to 50% of project cost with the
maximum of 400,000 Baht. Research Gap Fund (RGF) is a project that provides financial
support up to 75% of qualified expenses for SMEs to access university research projects tocreate new products or businesses.
2) Business and Entrepreneurial Acceleration Programs
NSTDA provides the support to promote entrepreneurship in technology businesses
through Business Incubation Center, NSTDA Investment Center and Startup Voucher. The
Startup Voucher is a scheme for assisting startups to expand their markets by providing avoucher up to 75% of qualified expenses at the maximum of 800,000 Baht per project.
3) Research and Development Investment Promotion Measures
The Thai Government has issued measures such as 300% tax exemption for R&D
expenses to encourage the private sector to perform R&D. NSTDA has been appointed as acertifying body for research, development and innovation projects submitted for tax privileges
by companies since 2002.
4) Human Resource Development Program
STEM Workforce is a program to support 10 S-curve industries targeted by thegovernment which include aviation & logistic industry. The program provides grants forgraduate students to work on the projects of university faculty members or researchers in publicorganizations who has a collaborative research project with industry partners in 10 targetedindustries [12].
National Innovation Agency (Public Organization) (NIA)
National Innovation Agency (Public Organization) (NIA) is a funding agency which wasestablished since 2003 to conduct activities that accelerate innovation in industry and business.
In fiscal year 2020, NIA offers two programs to support the innovation development on
logistics and supply chain which are:1) Open Innovation Program
The NIA provides “Innovation Coupon” for SMEs and startups (owned by Thai at least
51%) to develop commercial-scale prototype and industrial-scale prototype related to2-21transportation and logistics. NIA will support 75% of the total project budget (up to 1.5 million
Baht grant for 100% consultation, lab-testing and operational cost, 50% of material, equipment
and technology-licensing cost). The project that proposes for the support must be thecollaboration between SMEs and innovation service provider (ISP).
2) Mandatory Innovation Program: NIA provides financial support 75% of the total
project budget (up to 5 million Baht) for experienced medium and large entrepreneurs (owned
by Thai at least 51%) to develop commercial-scale prototype and industrial-scale prototype
related to the logistics innovation for agriculture solution.
In addition, NIA plans to launch other supporting programs, for example, Thematic
Innovation Program which NIA provides financial support 75% of the total project budget (upto 10 million baht) for 3-years experienced SMEs that invest in smart logistics innovation tosolving problems related to agricultural transportation and transportation in e-commerce
system. The NIA also provides financial support 75% of the total consultation cost (up to 1
million Baht grant for the consultation cost) under Managing Innovation Development(MIND) Credit Program [13].
Program Management Unit for Competitiveness (PMU C)
The Ministry of Higher Education, Science, Research and Innovation set up a new
funding agency to respond for the research grant related to smart logistics called “Program
Management Unit for Competitiveness (PMU C)” since 1 November 2019. PMU C will
provide the research grant for smart logistics technology that increase the competitiveness ofthe manufacturing and service sectors. In addition, the research grant proving by PMC C will
focus on supporting cooperative plans or joint ventures with end users, such as SMEs andindustry. PMU C announced a call for research proposal of the fiscal year 2020’s research grant
under theme of “Technology Localization for Future Transportation System (Future Mobility)”
since 26 February 2020 [14].

2.3 Adaptation of Thailand Toward an e-Logistics
2.3.1 Thailand’s National Infrastructure Development Program
The Thai government has committed US$ 25.2 billion to 36 projects for rail and roadupgrades, public transport improvement, airport expansion and seaport development
nationwide. On-going major development plans are• Development of U-Tapao airport.

2-22• Upgrading of Sattahip, Laem Chabang, and Map Ta Phut port.
• Construction of High-speed and double-track railways• Expansion of Bangkok’s public transport network.
In addition, to promote the EEC as a leading ASEAN economic zone which is expected
to drive additional infrastructure investment projects worth US $43 billion by 2021 [10].
Regarding to the investment promotion by the BOI, 56 projects which invested inlogistics and supply chain from 48 companies have been approved by 2019. List of promoted
companies by BOI are summarized in Table 2.6 [15].
Table 2.6 List of companies which invested in logistics and supply chain project under theinvestment promotion by the BOI.
Company Name
1. A N I Logistics Ltd.

Province (Office)Product

Phra Nakhon Sri Ayudaya- International Distribution Center(IDC)- Warehouse- Water Transportation

2. Aikai Logistics (Thailand) Co., Ltd.

Bangkok- International Distribution Center(IDC)

3. Alconix Logistics (Thailand) Ltd.

Bangkok- International Procurement Office(IPO)

4. Burapa Frozen and Logistics Co., Ltd.

Chiang Mai- Cold Storage Truck; Cold
Storage Room

5. Chaiyanan Bangplee Parkland Co.,

Bangkok- Logistic Park

Chon Buri- Container; Container Repair

Samut Prakan- Corrugated Tubes forLtd.
6. Cimc Logistic Service (Thailand) Co.,Ltd.
7. Delfingen Siam Co., Ltd.

Automotive; Textile Sleeve
Samut Prakan- Yarn Dyeing; Dyeing

9. Hi-Tech Kabin Logistics Corp., Ltd.

Bangkok- Industrial Estate

10. Honda Logistics Asia Co., Ltd.

Phra Nakhon Sri Ayudaya- Warehouse (Automotive);

8. Fair Textile and Logistics (Thailand)
Ltd.

Packaging Product Distribution
Center
11. Inet - Logistics Co., Ltd.

Khon Kaen- Software

12. International Logistics Park Co., Ltd.

Samut Prakan- International Distribution Center(IDC)

13. Katoen Natie (Thailand) Ltd.

Rayong- Logistics

2-23
14. KLM-Logistic Co., Ltd.

Nonthaburi- Wheel (Vehicle); Screw

15. Konoike Cool Logistics (Thailand)

Samut Prakan- Cold Storage

16. KTP Logistics Co., Ltd.

Surat Thani- Water Transportation

17. Logistics Alliance (Thailand) Co., Ltd.

Rayong- Warehouse

Co., Ltd.

- Distribution Center (Hemaraj
Eastern Indus. Estate:Rayong)- Distribution Center(Chonburi/Rayong)
18. Lucky Star Logistics Co., Ltd.

Samut Prakan- Cold Storage Truck

19. Melco Logistics (Thailand) Co., Ltd.

Bangkok- International Distribution Center(IDC)- Distribution Center

20. Nippon Express Nec Logistics

Bangkok(Thailand) Co., Ltd.

- International Procurement Office(IPO)

21. NP Marine Logistics Co., Ltd.

Bangkok- Water Transportation

22. Otax Electronics (Thailand) Co., Ltd.

Prachin Buri

- Electronic Equipment Parts;
Metal Parts for Electronic
Products; Plastic Parts forElectronic Products

23. OTT Logistics (Thailand) Co., Ltd.

Samut Prakan- Distribution Center

24. Pacific Logistics Pro Co., Ltd.

Samut Sakhon- Cold Storage Truck

25. Paisarnroj Logistics Co., Ltd.

Samut Sakhon- Cold Storage Truck

26. Parame Logistics Co., Ltd.

Chiang Mai- Cold Storage Trailer

27. Pitichai Logistics Co., Ltd.

Phra Nakhon Sri Ayudaya- Cold Storage

28. PTT Polymer Logistics Co., Ltd.

Bangkok- International Distribution Center(IDC)

29. SCG Logistics Co., Ltd.

Bangkok- Water Transportation

30. SCG Logistics Management Co., Ltd.

Bangkok- Loading/Unloading Facility(Cement Powder)- International Distribution Center(IDC)- Water Transportation- Loading/Unloading Facility

31. SCG Nichirei Logistics Co., Ltd.

Bangkok- Cold Storage; Cold Storage
Truck

32. Siam Eastern Logistics Terminal Co.,Samut Prakan- Logistic Park

Chaing Rai- Loading/Unloading Facility

Ltd.
33. Siam South China Logistics Co., Ltd.

2-24
34. SMC Logistics Co., Ltd.

Samut Sakhon- International Distribution Center(IDC)

35. SME Factory Co., Ltd.

Bangkok- Logistic Estate

36. SNS Logistics Co., Ltd.

Chon Buri- Distribution Center

37. SWS Logistics & Marketing

Bangkok- International Procurement Office(Thailand) Co., Ltd.
38. Thaveevong Logistics Co., Ltd.

(IPO)Songkhla- Cold Storage; Cold Storage
Truck

39. Ticon Logistics Park Co., Ltd.

Bangkok- Flatted Factory- Logistic Park

40. Toshiba Logistics (Thailand) Co., Ltd.

Pathum Thani- Warehouse- Stock Capacitors

41. Translogic Consulting and Service

Bangkok- Logistic System Software

Chon Buri- International Distribution Center

Co., Ltd.
42. TTK Logistics (Thailand) Co., Ltd.

(IDC)
43. TVS Logistics Siam Co., Ltd.

Bangkok- Trade and Investment Support
Office- International Distribution Center(IDC)

44. Vantac Amata Logistics (Thailand)

Chon Buri

Co., Ltd.
45. V-Serve Logistics Ltd.

- International Distribution Center(IDC)

Bangkok- International Distribution Center(IDC)

2.3.2 5G National Development in Thailand
5G technology is expected to support the e-logistics and supply chain, for example,
inter-vehicle data transfer and linking of vehicles and digital infrastructure to provide more
precise data for traffic control systems. Ministry of Digital Economy and Society and
Thailand's National Broadcasting and Telecommunications Commission (NBTC) is
responsible for the preparation and development of 5G technology in Thailand. Timeline of 5G
development in Thailand is shown in Figure 2.10. The Digital Economy and Society Ministry
is pushing for the adoption of 5G technology by 2020, especially in the Eastern Economic
Corridor (EEC). Figure 2.11 shows 5G testbed at EEC digital (EECd/Digital Park Thailand)for preparation of 5G technology to support industries in EEC [16].

2-25

Figure 2.10 Development of 5G technology in Thailand [16]

2-26

Figure 2.11 5G testbed at EECd [16]Figure 2.12 List of winning bidders of the 5G license auction in Thailand [18]NBTC held the 5G license auction for four spectrum ranges of 700 MHz, 1800 MHz,
2600 MHz and 26 GHz on Feb. 16, 2020. The five bidders were Advanced Info Services (AIS),
True Corp, Total Access Communication (DTAC), TOT and CAT Telecom. Figure 2.12
shows lists of winning bidders of each spectrum license [17]. AIS announced the strategic plan

2-27
of 5G after winning the auction to hold the most amount of 5G in all 3 spectrum ranges: 700
MHz, 2600 MHz, and 26 GHz. 2600 MHz and 26 MHz will be applied to support thetransformation of business and industry. The first phase of the AIS strategic plan of 5G isintended to expand 5G into the EEC area, which AIS already tested 5G in the EEC area suchas U-Tapao Airport, Laem Chabang Port, Amata Nakorn, etc. [18]2.3.3 Research & Development in e-Logistics
The example of success cases of Thailand’s research & development projects in eLogistics under the government supporting schemes are as follows:
NSTDA by the Technology Business Incubation Center (BIC) together with Panus
Assembly Co., Ltd., the operator in the transportation business sector, initiated the Panus
Thailand LogTech Award since 2017. The objectives of this award are to search and encourage
logistic startups in Thailand. After that, Panus Assembly Co., Ltd. established the PANUS
Logistics Innovation Fund which is a Corporate Venture Capital (CVC) fund that aims to
support Thai logistics technology (LogTech) startups. Currently, the PANUS Logistics
Innovation Fund has jointly invested with 2 startups that have Logistics Intelligence (LI)
capability:•

LogiSenses Co., Ltd., which operates hardware logistics intelligences for fleet
management using IoT-GPS boxes•

Crest Kernel Co., Ltd. which operates Software Logistics Intelligence for highperformance transportation management.

LogiSenses Co., Ltd., and Crest Kernel Co., Ltd. jointly launched “LogiSenses”, abusiness that developed a logistics management platform with intelligent technology (LI:
Logistics Intelligence). LogiSenses is the first car GPS services with Narrowband Internet ofThings (NB-IoT) technology in Thailand, which is supported by AIS. LogiSenses started trial
service for Ground Support Equipment (GSE) at Suvarnabhumi International Airport and will
expand to all major airports in Thailand and other types of transportation vehicles [19].
In addition, NSTDA supported technology startups in Thailand by granting 12
scholarships to develop AI innovation prototypes for industrial uses under the AI Innovation
JumpStart project. Some prototypes in this project are expected to be applied to e-logistics andsupply chain, for example, AI for storage/retrieval system of container (Bua Soft Development
Team), AI for drug warehouse (HOSPITAL-AI Team) and AI for automatic navigation drone

2-28(OZT Robotics team). These startups will be continuously supported by NSTDA throughBusiness Incubation Center and Technology Assistance Program (ITAP) [20].
The NIA has provided grants to 5 SMEs and startups in developing e-logistics &warehouse innovation. List of companies and technologies that received research grants from
NIA is summarized in Table 2.7. These developed innovations have been launched to themarket.
Table 2.7 List of companies that received research grants from NIA.
Company

Technology

1. Absolute Solution Co., Ltd.

Automotive Vehicle Logistic System

2. Eureka Design PCL.

Automated Storage/Retrieval System

3. Gen Serv Co., Ltd.

AGV System

4. FastShip Co., Ltd.

Automotive Vehicle Logistic System

5. E-Empowerment Co. Ltd.

Logistics & Supply Chain Management(MyCloudFulfillment)

2.4

References[1]

The 12th National Economic and Social Development Plan (2017 – 2021). Available at:
http://www.nesdb.go.th/ewt_dl_link.php?nid=6422 (Accessed: 09 September 2019).

[2]

The 20-year Strategic Plan and Reform (2017 – 2036). Available at:
http://www.nesdb.go.th/download/document/ร่ างยุทธศาสตร์ชาติ (Accessed: 09September2019).

[3]

THAILAND’s Logistics Development Strategic Plan No. 3 (2017-2021) (2018)
Available at: http://www.tnscdirectory.com/thailands-logistics-development-strategicplan-no-3-2017-2021/ (Accessed: 18 September 2019).

[4]

Office of Service Trade Promotion, Department of International Trade Promotion(2018), Thailand Determined to Become ASEAN’s Logistics Hub. Available at
http://www.tradelogistics.go.th/articles/critical-articles/thailand-determined-to-becomeasean’s-logistics-hub (Accessed: 8 February 2020).

[5]

Office of Natural Resources and Environmental Policy and Planning, Ministry of
Natural Resources and Environment, 2017

[6]

Thailand Greenhouse Gas Reduction Action Plan 2021-2030 Transport Sector, Officeof Transport and Traffic Policy and Planning

2-29
[7]

Thailand Board of Investment, A Guide to The Board of Investment 2019.

[8]

Announcement of the Board of Investment No. 2 /2557 Policies and Criteria for
Investment Promotion[9]

Thailand Board of Investment, Incentives Under the Investment Promotion Act.
Available at https://www.boi.go.th/index.php?page=incentive (Accessed: 8 February2020).

[10] Thailand Board of Investment, Thailand Investment Review Vol.29 (December 2019).
[11] Eastern Economic Corridor (EEC) Office, Business Opportunities: Aviation andLogistics. Available at https://eng.eeco.or.th/web-upload/fck/editorpic/files/Aviation%20and%20Logistics_2020.pdf (Accessed: 8 February 2020).
[12] National Science and Technology Development Agency, Industry Support. Available athttps://www.nstda.or.th/en/industry-support.html (Accessed: 15 February 2020).
[13] https://www.nia.or.th (Accessed: 15 February 2020).
[14] https://www.nxpo.or.th/C/ (Accessed: 15 February 2020).
[15] Thailand Board of Investment, BOI Promoted Company Database, Available athttps://www.boi.go.th/index.php?page=form_promoted_companies (Accessed: 20
February 2020).
[16] Ministry of Digital Economy and Society, 5G National Development in Thailand.
Available at
http://www.tct.or.th/images/article/member/2562/25621112/THAI_5G___Big_Bang_Fi
nal.pdf (Accessed: 8 February 2020).
[17] Komsan Tortermvasana (2020), 5G auction raises B100bn, Bangkok Post, 17 February
2020.
[18] Thailand Press Release, AIS launches the 5G strategic plan. Available athttps://www.thaipr.net/business/982015 (Accessed: 8 February 2020).
[19] https://www.prachachat.net/education/news-62605 (Accessed: 20 February 2020).
[20] https://www.nstda.or.th/th/news/12731-ai-innovation-jumpstart (Accessed: 20 February2020).

3-1

Chapter 3
Current Situations on e-Logistics and Supply Chain in theViewpoint of Logistics Companies and Organizations
In this chapter, basic information of the interviewees, which are categorized into threegroups based on their function in the logistics business, is presented. Then, the current
situations on their adaptation, perception and preparation toward the e-Logistics and supply
chain are summarized and elaborated as per their respective groups. Successful case studies of
the implemented e-Logistics and supply chain related technologies are thereafter highlighted,
including their impacts on energy saving and greenhouse gas mitigation. Finally, the summaryof the key content is given at the end of this chapter.

3.1 Basic Information of Interviewees
As mentioned in Figure 1.2 in Chapter 1, roles in logistics business can be categorized
by their functions into 7 roles, namely, air freight forwarding (AFF), ocean freight forwarding(OFF), domestic truckage and cross boarder (DT/CB), customs brokerage (CB), removal (R),warehouse and inventory (WI), and public authorities (PA). For the analysis in this study, theroles of key stakeholders are regrouped based on their shares in total logistics cost in Thailand
and their types of implemented technologies into 3 main groups; Logistics Service Providers(LSPs) or also known as Third-Party Logistics (or 3PL), which represents the former five roles,
Warehouse and Inventory (WI) and Public Authorities (PAs).
As observed in Figure 3.1, in 2017 the transportation cost shared the majority (54%) of
the total logistics in Thailand, which is represented by the LSPs group. The common e-logistics
technology implemented by this group is the route optimization. Another 37% of the totallogistics cost is contributed by the WI group, which focuses on warehouse and inventory
management systems. The PA group is defined for nonprofit organizations, which can be either
government or private organization. The PA helps promoting efficient logistic system andconveying feedback from logistics SMEs to the government.

3-2

Figure 3.1 History of Thailand’s logistics cost and the shares of different types of logistics
cost in 2017 [1]Of the 30 interviewees, 25% (8 interviewees) are from the LSPs group, 16% (5interviewees) are from the WI group, 28% (9 interviewees) operates as both LSPs and WI, and
31% (10 interviewees) are from the PA group. Detail of the interviewees, including theiraffiliations, positions, and roles is listed in Appendix A.

3.2 Logistics Service Providers (LSPs)
In Thailand, 81.1% of domestic cargo traffic in 2017 was conducted via the road modeof which the cost per distance (cost/km) was about 3 times and 2 times higher than that of thewater and rail modes, respectively (see Figure 3.2). This was one of the major factors thatmade the Thailand’s logistics cost expensive (c.a. 14% of the GDP), as compared to otherdeveloped countries (about 7%). According to LSPs interviewees, the Gross Profit Margin(GPM) of their business is relatively low (<5-8%), but the volume is huge and the growth iscontinuously consistent (5% on average). As a result, to increase their profit, LSPs are forced

3-3
to focus on the road-mode route optimization in order to increase transport efficiency, safety,
traceability and thus the cost reduction.

Figure 3.2 Transportation modes and their contributions in Thailand’s logistics system [1]The common e-logistics and supply chain technologies that have been implemented by
LSPs are•Rules based route optimization system by which desired criteria such as speed control,
safe parking area, and driving hour limit can be set as inputs in a software.

•Internet of things (IoT) and Global Positioning System (GPS) by which LSPs can track
their goods and trucks.

•

E-document: orders, receipts and customer’s feedbacks can be done and collect inelectronic formats. This includes delivery documents processed via the customs.

•

Electronic Seal (E-Seal) is a hardware used to track goods across borders, send data inreal time via GSM network. It is also used to ensure that the cargo would not be open
until it arrives its destination.

•

iTrust technology is used for trading the Electronic Air Waybill (e-AWB) to thedestination and checking the ownership of the product or document.
With these technologies, a control center can communicate with truck drivers, send

instructions and suggestions to the drivers, track down the delivery, and receive customer’s
feedbacks via a smart phone.
In the future, more advanced e-logistic and supply chain technologies are expected to be
implemented by LSPs. These incoming technologies include:3-4•

Machine Learning or Artificial intelligence (AI) system for better and more adaptive
route optimization.

•

Big data for risk management. The data itself can also be sold to other third party
companies. For example, the data of the coordinate at which accidents occur frequently
is valuable to insurance companies.

•

Robotic Process Automation (RPA), which is also known as “BOT”, can conduct filing,ordering and processing 2 times faster than a skillful human without errors. With RPA,
unnecessary cost caused by human errors can be avoided. According to an interviewee,
one RPA can replace 3 workers.

•

Block chain by which transaction data will be secured and the processing and tracking
time will be reduced immensely, especially at the customs.
The currently implemented and the future e-logistics and supply chain technologies for

LSP and their possible impact on transport energy saving and greenhouse gas mitigation,
considered based on their direct impacts, are summarized in Table 3.1.
Table 3.1 A summary of the currently implemented and the future e-logistics and supply chain
technologies for LSPs.
Technology

Transport GHG
EnergyRemarks

Mitigation

SavingRules-based

route

P

P

optimization system

Directly increase transport efficiency,
reduce fuel consumption and thus the GHG
emission

IoT and GPS

Track goods and trucks
P

Reduce the use of paper

P

Reduce the use of paper

P

P

Further improve transport efficiency

P

P

Avoid traffic or accidents

E-document
E-sealiTrustMachine learning orAI
Big data
RPA

Reduce processing time and human errors

Block chain

Increase data security

3-5
At present, most interviewees mentioned that the government policies are not, neither thedriving force nor support to their e-logistics technology implementation. The reasons for theire-logistics technology implementation have been mainly due to the need in efficiency
improvement and cost reduction so as to increase their competitiveness over other market
competitors. The interviewees expressed their concern that even though the government has a
specific national logistics development plan, i.e., Thailand’s 3rd Logistics Development
Strategic Plan (2017-2021) by NESDB, but the executional plans and policies to achieve thegoal are not clear and concrete. They also concerned that the government’s plan will not be
continuously executed.
Some interviewees believed that the EEC policy would have a limited impact on Thai
logistics business. The EEC would have an effect on E-commerce more, especially on the
SMEs who conduct B2C (business to consumer) business, but it would not affect much on B2B(business to business) conducting players. Nevertheless, other interviewees had a different
opinion on the effect of EEC policy. They believed the EEC policy and its related financial
incentives would result in a significant penetration of Chinese logistics companies into the Thai
logistics market. As a part of the Chinese economy expansion, not only Chinese E-commercebusiness would come to Thailand, but also its vendors and the LSPs of those vendors would
join the expansion in Thailand. The local SMEs are likely to be the most suffered stakeholders
in this circumstance.
All interviewees agreed that the government must invest in the development of railway
mode logistics. Otherwise logistics cost reduction cannot be reduced effectively. Typically, agovernment should first develop river docks (like in Vietnam) as the water-mode transportationis the least expensive mode, followed by the railway-mode development. However, in the caseof Thailand, the road-mode transportation is dominating and shares a very high contribution of
81% of the total domestic cargo traffic. Improving the railway-mode before the water-mode
will have an immediate significant impact on Thailand’s logistics cost reduction.
Some LSPs stated that they have not yet adopted or invested substantially in e-logistics
technologies. There were two major reasons; few competitors and lack of investment fund.
LSPs that have certain customers and suppliers have a few competitors and are needless tospend a large or immediate investment in e-logistics development. Although there is no
dominant player in overall Thai logistics business, there are still leading companies in different
logistics sectors. For a small LSP, difficulty in the development of route optimization software
can be a major barrier to the enhancement of the company’s competitiveness. This is mainly
due to the lack of investment fund and connection to the software developers.

3-6
Besides adopting e-logistic and supply chain technologies, LSPs should also consider toreform or diversify their roles in the logistics business. For example, if an LSP believes that
B2B business in Thailand becomes saturated, but B2C business is going to expand with a highgrowth, the LSP may consider to collaborate or joint venture with another LSP who is an expert
in the B2C business.

3.3 Warehouse and Inventory (WI)
Warehouse and inventory management is very important for the logistics system because
it has an impact on the supply chain. The obvious advantage of warehouse management is thatit creates value added to the customers’ services such as labeling, packaging, sorting. The
growth of warehouse operations is expected to continually increase, especially in the central
and eastern districts. The reason is due to the increase of manufacturing and industrial zonesof the country, the expansion of industrial and factories producing various products such asfrozen food factory, processed food and agricultural products, and consumer products.
As presented in Figure 3.1, the cost related to warehouse and inventory management
shared 37% of the total logistics cost in 2017. To reduce their management cost, most large
companies have already implemented at least a few automation and robotics systems into theirwarehouse. The common e-logistics and supply chain technologies that have been
implemented by WI managing companies are•Enterprise Resource Planning (ERP) is business process management software thatallows an organization to use a system of integrated applications to manage the businessand automate many back office functions related to technology, services and humanresources. ERP software typically integrates all facets of an operation — including
product planning, development, manufacturing, sales and marketing — in a single
database, application and user interface [2]. According to the interview, the most trusted
ERP by large WI managing companies is the German SAP ERP.

•

Automated guided vehicle (AGV). Probably the most commonly used technologies
among Thai WI managing companies at present. AGVs are used to deliver parts orgoods from station to station in a production line.

•

Automated Storage / Retrieval System (ASRS) by which goods or parts can
automatically be stored in or retrieved from warehouse racks using a robot arm.

•

Warehouse Management System (WMS) is a software and processes used to control
and manage warehouse operations from the time goods enter a warehouse until they

3-7move out. In other words, WMS facilitates warehouse operations from goods receipt,
inventory tracking, slot allocation, selection and packaging, and document preparation
and reporting to internal employees and customers. Advantages of automatedwarehouse management are as follow:
o Effective delivery planning that makes use of an efficient analysis and planningof storage and distribution of products in the warehouse.
o Workers can always work consistently and maintain work efficiency withoutcausing fatigue.
o The company can reduce many labors in handling goods.
Most large interviewed companies stated that they and their partners developed
and customized their own WMS to meet their specific demand.
•

Transportation management system (TMS) is a system aiming to communicate withother parties who deliver goods to/out of a warehouse. Cooperating with other systems
like WMS, an efficient TMS can result in reduction in inventory reserve cost, storage
area and waste of waiting.
In the future, the ultimate goal of WI development is to become a “fully automated” or“dark” warehouse in which workers are no longer required. However, the fully automatedwarehouse is not likely to be built within the next 5 – 10 years, according to the interviews.
This is because the technology itself is over their current needs. Some newly built warehouses
had been designed to meet the capacity growth for the next 10 years.
The currently implemented and the future e-logistics and supply chain technologies for
WI managing companies and their possible impact on transport energy saving and greenhousegas mitigation, considered based on their direct impacts, are summarized in Table 3.2.
Interviewees mentioned that cold chain warehouse renting business, especially for foods,
has rapid growth recently. Such business would be a perfect target to adopt the automation androbotics systems in their warehouse in which operating condition is below the freezing pointand contamination must be controlled. They also mentioned that labor-intensive WI managing
companies such as manufacturers in electronics business have not yet implemented automation
and robots much due to their nature of delicate manufacturing processes. Considering thecurrent economic situation, such WI companies need to be more careful on the technology
investment.

3-8
Similar to LSPs, the WI managing companies introduced automation and robotics system
mainly due to their need in competitiveness enhancement, not related to the government
policies and plans on logistics development.
Table 3.2 A summary of the currently implemented and the future e-logistics and supply chain
technologies for WI managing companies.
Technology

Transport GHG
EnergyRemarks

Mitigation

SavingP

ERP

P

Improve efficiency, minimize wastes

AGV

Mainly aim to reduce labor and errors

ASRS

Mainly aim to reduce labor

WMS

P

P

Improve efficiency, minimize wastes

TMS

P

P

Improve efficiency, minimize wastes

Dark warehouse

P

P

Most efficient, but not likely to be
implemented soon

3.4 Public Authorities (PA)Currently, the logistics and supply chain industries are faced with the change that iscaused by digital disruption such as the utilization of machines to replace humans ina warehouse or integrating drone technology with the cloud system for real-time data collection
and online processing.
The President of the Thai Federation on Logistics (Thailog), gave an emphasis on an
importance of the personnel development, particularly in the field of logistics in order tocreate opportunities so as to compete at international level. In this regard, Thai logistics
operators are able to increase their competencies with ASEAN countries by integrating relevant
professional standards to be used as a guideline for human resource development in theirorganization to truly meet the needs of customers. Aside from personnel development, Thailog
highlights the creation of value-added in food and beverage supply chain. It seems thatcurrent transportation can adapt technology in order to increase the value of food and beverage
products through processes of cooling, packaging and labeling.

3-9
The President emphasizes the importance of integrating cooperation between thethree related agencies, namely government, private and educational sectors. The private
sector determines the characteristics of the logistics personnel to be in line with the operations
and develop the skills of the personnel by operating the real work continuously. Likewise, theeducational sector should be responsible for producing graduates and updating the curriculum
to be in line with the needs of the logistics operators. Above all, the government must support
the private sector to be able to produce standardized products and differentiate products
consistently.
The research team had the opportunity to interview the Manager Director of 1Trade(Thailand) Co., Ltd, one of Thai International Freight Forwarders Association (TIFFA)'s
subsidiaries. The International Freight Forwarders Association (TIFFA) has been established
for over 30 years. There is a total of 231 members (99% of which are small-medium sized Thaicompanies), which comprises logistics service companies, Multimodal Transport Operator(MTO), Freight Forwarder, Shipping Line and Warehouses. These members provide logistic
services through 3 channels: land (trucks and trains) / waterways (ships) / air (airplanes) toexporters and importers.
The current situation of the Thai logistics business is increasingly impacted by online
purchases, making logistics service providers find the ways to cope with the growth of ecommerce. Nowadays, the big logistics companies have already speeded up the developmentof technology to help in the management. However, Thai logistics service providers are notyet ready to invest in various infrastructures toward the development of software orplatform. Thai logistic service companies only have computers, servers and software, but ifthey want to link information with airline companies such as Thai Airways, they are not able
to do so, causing opportunity loss. The Thai International Freight Forwarders Associationencourages its members to use technology in their management systems to enhancecompetitiveness and stimulate the adoption of digital systems to support the needs of business
partners. The association is also one of the first departments that implement the use of anelectronic document with customs clearance (e-Customs) and the airline's Electronic Air
Waybill (e-AWB) operations in order to reduce paper-based work and make data encryption
more secure.

3-10Current developments of TIFFA towards e-logistics:
1) Development of software and platform for the TIFFA members to use at areasonable price. However, research and development costs are required during
development and after development processes. Therefore, the organization needs
concrete support from the government.
2) Development of IoT systems, especially in cross-border operations to increase service
value. He said the logistics service providers must improve their knowledge in order tounderstand how to apply technologies to the business. TIFFA EDI Services uses
technology to increase the efficiency of cross-border transportation. In addition, TIFFAEDI Services has collaborated with foreign manufacturers to use the technology related
to Electronic Seal (E-Seal) systems to transport goods across borders. Electronic sealtechnology or e-Seal technology helps in tracking cargo. It also helps in tracking
container information for international shipping. This E-Seal system has a battery
compartment and a Sim Card in order to send data in real time via GSM network.
Members of the TIFFA can use the E-Seal system to increase service value for theircustomers.
3) The last promotion is the development of block chain systems to identify ownershipof products and the development of the e-AWB system.
In this regard, the association not only promotes the efficient use of digital systems, butalso co-founded the 1TRADE project, a large data center platform that connects all departments
related to both domestic and international logistics. TIFFA EDI Service Group is currently
working on the development of the Electronics Marine Insurance (EMI) system for cargo
insurance and it is expected to be done by the mid of the year 2020. The 1TRADE project
consists of 3 main components which are
1. Preparation of electronic documents
2. Intelligent Technology or IoT, which can be separated into 2 parts which are
2.1 GPS and Platform for tracking and analyzing the data
2.2 Bluetooth Low Energy (BLE) for trading
3. iTrust technology, which can be used for the trading the Electronic Air Waybill(e-AWB) to the destination and checking the ownership of the product or document.

3-11
Thai logistics operators must adapt themselves to upgrade towards e-Logistics. Though,there are still many limitations in order to upgrade the Thai logistics industry to e-Logistics
such as:1) Linking various information into the same database2) Unclear executive's perspective towards the adaptation of technology3) Shortage of manpower•

This results in higher expenses because the company has to hire outsourcecompanies to develop the system.

4) A slow adaptation to technology changes•

The government must accelerate the development of a logistics platform with theaim of helping Thai small and medium-sized logistics operators.

•

The government may provide opportunities for foreign companies to find key
partners in Thailand to develop a platform related to logistics.

5) Unfair competition•

The government should develop and monitor a fair competition mechanism forforeign investors who receive special privileges from BOI packages or EEC
campaign and domestic LSPs who try to develop their own technology.

6) Price dumping of some LSPs•

The government must strictly regulate the price dumping.

7) Establishment of trade remedies measures to protect the domestic LSPs who sufferfrom the unfair competition and the price dumping.
In conclusion, most of public authorities agree in the same direction that the personnel
development in the field of logistics is needed. Besides, the Thai logistics operators should
therefore adapt themselves and get ready to increase technological capabilities in all aspects inorder to compete with foreign companies. Also, corporate executives need to change theirmindsets and consider the importance of investing in technology to develop the logistics
industry and meet the needs of the new generation of customers who choose to buy products
through online channel (e-Commerce). In addition, the government may provide opportunities
for foreign companies to find key partners in Thailand to develop a platform related to logistics.
The urgent measures that the government must accelerate is the development of a logistics
platform with the aim of helping Thai small and medium-sized logistics operators.

3-12

3.5 Successful Case Studies of e-Logistics Implementation
3.5.1 Daikin Industries (Thailand)
Daikin Industries (Thailand), Ltd (DIT) is located in the AMATA CITY industrial estate,
Chonburi, Thailand. DIT had a revenue of 47,115 million Baht in 2017. DIT consists of bothwarehouses and manufacturing lines at which more than 3 million air-conditioners are
manufactured a year and distributed to both domestic and Asia and Oceania regions (see Figure
3.3).
DIT is reasonably considered as one of the best case studies that implement e-logistics
and supply chain as well as automation and robotics system in its plant very efficiently. The
technology adoption by DIT is so efficient that it has received the “Thailand Prime Minister
Awards” many times in the last decade, e.g., 2014 for logistics (SCM), 2016 for energy
management, and 2018 for the best industry. Some of e-logistics and supply chain implemented
in DIT plants and warehouse and their impacts are highlighted below

Figure 3.3 Shares of Daikin air-conditioners distributed to different regions [3]DIT introduces AGVs to transport air-conditioner parts from warehouses to the
production lines. Parts from suppliers are delivered into a warehouse at which workers who
receive instruction from warehouse management software (WMS) pick and drop required parts
into AGVs. AGVs then deliver the parts to production lines at which operators will assembly
the air-conditioners as instructed. The WMS will synchronize number of parts used anddeducted from the inventory. In this way, part delivery inside DIT factories become more
efficient and the labor force can be reduced.
In 2018, DIT invests in collaborative robots with built-in vision for leak inspection. With
this technology, all air-conditioners assembled in DIT factory are fully inspected for refrigerant3-13
leak as well as high voltage checking. This increases reliability of DIT’s product, production
efficiency, and reduce human errors and product claims.
DIT employs “milk-run” transportation. Together with transportation management
software (TMS) and the WMS, suppliers are suggested and guided to deliver parts under “justin-time” production condition, i.e., the delivery truck must not arrive at DIT’s warehouseearlier than 15 min before the appointment, and must leave the warehouse not later than 15 minafter a suggested dropping time. All communication between customer via sales company, DIT
factory and warehouse, and suppliers are linked together, as show in the information flows(Figure 3.4.). An ERP plays an important role in optimizing orders and process management.
DIT selects the German SAP-ERP. These e-logistics and supply chain technologies make
DIT’s production more efficient, increase production capacity, reduce wastes (Muda), anddecrease inventory space and costs. Suppliers also get benefits from DIT’s technologies; nowaste in waiting time, no traffic at the factory, which finally contribute to the energy saving
and GHG emission mitigation.

Figure 3.4 Information flow in DIT’s factory and warehouse [4]DIT also uses the environmental friendly E-documents with its suppliers, which
tremendously reduce paper uses, paper work, and space for document storage.

3-14With the integration of these technologies and management, the DIT can efficiently
operate to meet the customer’s demand growth while maintain its number of employees andpostpone construction of new additional plants. In 2017, the DIT production capacity had
increased, resulting in the increase in revenue by 35.4% from 34,787 million Baht in 2016 to
47,115 million Baht [4]. Nevertheless, the number of permanent employees and thesubcontractors had been maintained at c.a. 2,500 each (5,000 employees in total); 4,500
employees in 2016, 5,000 employees in 2017, and 4,800 employees in 2018 approximately)[4]. During our plant visit at DIT in 2019, instead of constructing a new factory, the company
had doubled its production lines from the unused inventory reserve space that is acquired fromthe technology implementation and better warehouse management. According to the DITinterviewee, this result reduces inventory reserve cost by more than a hundred million Baht ayear, let alone the postponed investment and operating costs needed for the new factory.
3.5.2 SCG Logistics
The SCG Logistics, Co. Ltd., is a company under Siam Cement Group (SCG), Co. Ltd(Public) who is responsible logistics businesses of the group. The SCG logistics is one of thelargest logistics companies in Thailand with an annual revenue of about 20 billion Baht in 2018with an amazing growth of 30%, according to our interview (Figure 3.5). The SCG logistics
provides a variety of logistics services, including domestic truckage and cross boarder(DT/CB), customs brokerage (CB), removal (R), warehouse and inventory (WI), and cold chain
business. Thus, it basically functions as both LSPs and WI.
The SCG Logistics does not own a single truck, but it acts as a third party who provides
support systems and specialists to its subcontractors. Currently, there are about 8,500 – 10,000
trucks collaborating with the SCG Logistics. The distance that company has to cover is 7
million km/year, which is equal to 90,000 trips/month and 250,000 orders/month. 90% of its
business is the B2B mode of which 80% are for domestic transportation and 20% are foroverseas and across border transportations.
Generally, to increase a company’s net profit by reducing operating costs, it can be doneby either improving company’s efficiency or decreasing number of employment. As a SCG’s
policy, the SCG Logistics chooses to do the former. In order to increase the company’scompetitiveness, efficiency, safety and thus, to reduce cost, time, error, and waste, the SCG
Logistics has planned to invest 800 million Baht in the next 5 years (2019-2023) for the
implementation of e-logistics and supply chain technologies. As of 2019, 200 million Baht was
already invested in the hardware of the project.

3-15

Figure 3.5 Meeting with SCG Logistics’s Managing Director.

Figure 3.6 SCG Logistics’s control center at Bang Sue District.

3-16
In its LSP business, the SCG Logistics has established its transportation control center at
its headquarter in the Bang Sue District, Bangkok (Figure 3.6). With this control center, only
4 skilled operators or engineers are required to control and supervise all 10,000 trucks operating
throughout Thailand in real time. An in-house rule-based route optimization is used tosupervise truck drivers for the economically best route, warning of proper parking areas, andwarning of limited driving hours via driver’s smart phones and GPS systems. For safety’s sake,if drivers violate SCG Logistics’s rules or turn off their cell phone for whatever the reason,
they will be automatically warned by the system. If they continue to violate the rules, theirrespective subcontractors will be fined and received other penalties.
In the near future, with the development of 5G network, the SCG Logistics plans toemploy a face recognition system to detect drivers’ face and their eye-blinking rate, which
could imply whether the drivers are asleep or not. The goal is to avoid accidents and losses.
The SCG Logistics also introduces Robotic Process Automation (RPA), which is also
known as “BOT”. The “BOT” can conduct filing, ordering and processing 2 times faster thana skillful human without any human errors. With the RPA, unnecessary cost caused by humanerrors can be avoided.
For its warehouse business, the SCG Logistics has implemented technologies like AGV
of Siemens, ASRS of Daifuku (Thailand), WMS, supply chain management software of JDA
in its regional warehouses. In conclusion, the SCG Logistics is one of the most adaptive
companies to the e-logistics era who also possesses sufficient investment fund.
3.5.3 Café Amazon Warehouse
The Café Amazon group is a company under PTT OR, Co. Ltd. (Public), which is incharge in coffee and bakery business. The Café Amazon is the biggest coffee brand in Thailand
in terms of the number of branch and coffee bean roasting capacity. As of 2019, Café Amazon
has more than 2,800 branches in Thailand with rapid expansion of branches in manyneighboring countries such as Laos and Cambodia. To sustain such enormous number ofbranches, it has to roast 15,000 kg of coffee bean/day at its roasting center at Wang Noi, Phra
Nakhon Si Ayutthaya Province.
As the company grows, the Café Amazon Group has experienced the problems of limited
storage space which caused a delay in delivery and high shipping costs. Additionally,
management through several small warehouses, including subcontractor’s warehouse became
inefficient and costly. For these reasons, the Café Amazon Group has planned to develop its
new distribution center (DC), which is designed to be almost fully automated warehouse.

3-17
According to the director of for Amazon Plants and Distribution Center Management
Project, the new distribution center will be located at the company’s Wang Noi plant, right next
to the roasting plant. The new distribution center will be with an area of more than 25,000
square meters to store the products of Café Amazon such as coffee beans, coffee-making
equipment, glass, straw, and other products of the PTTOR’s retail businesses. It is designed toserve for the next 10 year demand with the current growth at 3-4% per year. The operation in
the distribution center will be 80% with automation and 20% with conventional labor force forvery small size retails. Polytech, Co. Ltd. is the system integrator (SI) of the distribution center
project, which is expected to be fully operated in the Q4/2020.
The new distribution center will have an automated storage and retrieval system(ASRS) that can run both horizontally and vertically for storing and distributing goods off the
shelves under the command of the Enterprise Resource Planning (ERP) and Warehouse
Management System (WMS) as required by the user. The Café Amazon Group also uses theGerman SAP-ERP. Consequently, it is possible to check the location of the product storage
with high accuracy and check the status of all products in a real time. It seems that the Café
Amazon Group has prepared to cope with business fluctuations in the new disruptive
technology era.
In addition to the above mentioned automation systems that the company has introduced,
there are also many types of automation and robotics systems that work together such as sortingbox products, automated palletizer, automated depalletizer, automated conveyor,
automated guided vehicle (AGV), and etc. There is also a transportation management system(TMS) that is involved in both the inbound process and outbound process. Originally, The Café
Amazon Group hired subcontractors for good transportation, but at present, the company has
performed transportation by itself. This makes it possible to rule out transportation
management by the company. In the past, the company would send products in separate boxes
to each zone, but in the future, the company will add the receiving points in the middle of theway between the origin point and the receiving destination. The TMS of the Café Amazon
Group is an in-house system developed by another brother company, PTT digital, Co. Ltd.
Radio Frequency Identification (RFID) helps employees know the exact inventory
location, increase the accuracy of product selection and distribution process, and prevent theftwhen moving products along the supply chain.
Artificial Intelligence (AI) Technology is used to specify the appropriate vehicle sizefor product delivery, calculate the most efficient route for transportation to reduce shipping

3-18
costs, record products in and out of the inventory in order to evaluate business performance,and handle large volumes of cargo in warehouses with limited spaces.
All of which are expected to make the logistics system in the new distribution center
more efficient, more accurate, faster, safer, and are worth the investment. 5% of the total cost(equivalent to more than 100 million Baht a year) is expected to be saved due to lesstransportation cost and less inventory management cost.
Similar to other large logistics company, the new distribution center plan of the Café
Amazon Group is driven by its own internal need of efficiency and competitivenessenhancement. Government’s policy or incentives have insignificant influence on thecompany’s technology investment plan. Surprisingly, the company has filed a request for
BOI’s financial incentives, but the BOI rejected its request for the reason that this policy will
not effective for a company that implements automated warehouses to serve its internalbusinesses.

Figure 3.7 Meeting with PTTOR’s Director for Amazon Plants and Distribution Center
Management Project
The director (Figure 3.7) also added that there is now more competition in design andinstallation service providers, which is known as system integration (SI). The main
characteristics of each device are applied together, known as an integrated system that meetsthe needs of each business at a more worthwhile investment. We can conclude that automated3-19
systems for warehouses are considered new technology for Thailand. It has a direct impact on
the SI, such as the shortage of skilled workers in this field. Therefore, it is very imperative thatthe government has a policy that clearly promotes the production of personnel in this field inorder to drive this 4.0 continuously and steadily.
3.5.4 Energy Saving and Greenhouse Gas Emission Mitigation
Energy saving was estimated based on an assumption that the number of trips for goods
transportation by trucks would be reduced due to better logistic management using e-logistic
technologies and marketplaces. Data of registered trucks of overall private logistics enterprises
was obtained from the Transport Statistics Sub-Division, Planning Division, Department ofLand Transport. The number of vehicles (trucks) registered in Thailand as of 31 January 2020
was 809,612 units. It was assumed that 70% of the trucks would be in use, therefore, thereference case of energy consumption and CO2 emission was from 566,728 trucks in 2020. If
the fuel (diesel) consumption per truck was 29,620 Liters per year, the daily average diesel
consumption was 81.15 Liters per day (for two round trips a day, approximately). Assuming
5% of the trucks using diesel would be cancelled due to “Truck sharing” among freight
forwarders in land transportation, about 28,336 trips of trucks per day could be reduced.
However, one of the interviewees expected 10% of the trucks could be reduced because of
better logistic management.
Annually, it was estimated that the trips would be reduced by 8,500,800 trips for 300
operating days per year. As the diesel usage of a truck was 41 Liters per a round trip, thereduction in diesel consumption would be approximately 345 million Liters per year in 2020
or 2.05% of the total diesel consumption by trucks. This energy saving was equivalent to 338
ktoe per year. At a diesel price of 25.68 Baht/Liter, the fuel cost saving would be 8,861 million
Baht per year.
In the environmental aspect, the Emission Factor (EF) of diesel (moving) is 3.2988 kg
CO2e per kg of diesel. Therefore, it was expected that the reduction of CO2 emission would be
0.947 million tons of CO2e per year. If the number of registered trucks increased by 2,000
trucks per year, it was forecasted that from 2021 – 2030, CO2 emission mitigation would be
10.60 million tons of CO2e for 10 years, higher than the expected Thailand’s target of
cumulative reduction of CO2 until 2030 at 7.721 million tons of CO2e.

3-20

3.6 References[1]

Office of the National Economic and Social Development Board (NESDB), 2017.

[2]

https://www.webopedia.com/TERM/E/ERP.html[3]

http://www.daikinthai.com/corporate-information/history[4]

Plant visit with The Federation of Thai Industries, Daikin Industries (Thailand), Ltd.,on March 13, 2019.

4-1

Chapter 4
Potential and Obstacles of e-Logistics and Supply Chain
In this chapter the potential and market opportunities of logistics in the supply chain are
discussed, especially the potential of e-Logistics. Then, the current support and obstacles of eLogistics regarding the government policies are reviewed. However, there are five factors
affecting transformation context on Thailand logistics development. Consequently, the elogistics aggregator and e-logistics marketplace might be crucial for logistic development.
Finally, the suggestions to both government agencies and Thai LSPs are discussed.

4.1 Potential and Market Opportunities
Nowadays, technology has developed exponentially so that impact of digital technology
is larger and faster. Technology is transforming virtually in every business sector; i.e. (1) All
the world information and media are online, (2) Mobile device helps people reach to one
another anywhere and anytime at much faster, (3) Cloud computing could put a supercomputer
into the pocket. Therefore, digital disruption becomes closer. The mindset to run businessshould be adapted to the internet century, making thing even more comfortable. Therefore, theconventional logistics is being transformed into e-logistics according to their potential andopportunities in logistics development.
4.1.1 Potential
Thailand’s geographically advantageous location among ASEAN Member States, asseen from Figure 4.1, allows for the expansion of logistics business. Thailand is the door to
Cambodia-Laos-Myanmar-Vietnam (CLMV) that creates 3 trillion Baht on the market value.
The economic integration among several countries; i.e. Free Trade Agreement (FTA) andCustoms Union, expands the trading and investment, manufacturing, and employment. It alsoenhances competition and reduces fixed cost. Thai government, therefore, needs to formulate
policies and promote logistics development in order to support the growth of industries that use
advanced technology in the production.
Owing to Belt and Road initiative, Thailand could change the country’s role from anexporter of agricultural products to create value-added on imported goods from neighboring
countries and export to the third countries.

4-2

Figure 4.1 Thailand geography among ASEAN Member States [1]Thailand has concrete strategy for national development from the government. The
National Development Plans of Thailand related to logistics is the NESDB’s Thailand Logistics
Development Strategic Plan #3 (2017 – 2021), aiming to develop on (1) Value-added of supply
chain system, (2) Basic infrastructures and facilities, and (3) Supporting scheme for logistics.
The logistic development enhances expansion of the country’s strategic goal to become
the “Logistics Hub” of the Greater Mekong Subregion. This would enable the linkage between
domestic and international activities while upgrading the country’s logistics system toward
world standards. Thailand expects foreign investors turning to invest in various areas
throughout the country. The other plans that boost the potential of logistics development are
Eastern Economic Corridor (EEC) and Special Economic Zone (SEZ).
The national logistics plans will support both of industrial and logistics sectors. The
government has accelerated the investments in basic infrastructures, the marine and roadtransport networks, the cross-country motorway projects, the double-track railway, and theinternational trading gateway.
In 2019, before the COVID-19 crisis, the development of the Thai economy is potentiallystable. This was a good sign for Thailand to become the regional logistics market that attracts
investors in the long run. The infrastructure of Thailand has been developed in various areas.
The development of the domestic’s infrastructure and logistics system enhance connecting toother regions in the country while expanding the opportunity to connect with the neighboring
countries.
Thailand has progressively development of industrial estate that require standardized
logistic systems. Most of the industrial estates are located in Eastern Thailand, about 50 from4-3

59 estates, while the EEC has been implemented 4 – 5 mega projects. The efficient logistics
management plays an important role in manufacturing division so that the application oftechnologies in logistics management is crucial.
For land and sea transportation, Laemchabang Port is the main gateway for the goods
import-export of EEC, where the “Smart Port Management System” as infrastructure for data
integration among involved parties has been developed. The transportation of the export andimport at Laemchabang Port is “Multi-modal” among air-sea-train operation. Smart Port
Management helps to increase the efficiency of intelligent transportation by linking the importexport multimodal transportation at Laemchabang Port. The container management would be
convenient so that increasing service quality as well as reducing logistic cost, traffic, andpollution. Unfortunately, the traffic congestion due to road construction outside theLaemchabang Port might cause obstacles to transportation into the port.
Although logistics cost in Thailand is rather high, instead, this means “large gap toimprove” or “worth to invest”. Currently, the development of logistics innovation andtechnology involve e-commerce and e-payment. The Business to Customer (B2C) logistics inThailand has geared up because of the expansion of e-commerce. Although, there is growth of
e-commerce business, but transportation-related businesses are gradually impacted by online
purchases. For better entire service, value-added on last-mile delivery is important.
The national logistic policy is opened for the experienced LSPs from overseas to support
the Thai’s manufacturers and customers. The open logistic market for an investment of oversea
logistics company induces both pros and cons to Thai logistic development. The positive
impacts are, for example, more alternatives, lower service cost with higher quality, access to
specific skills and expertise, and reducing risk in operation. The overseas/multinational LSPs
has professional management, however, they normally put a focus on supporting e-Commerce
whose companies have growth drastically. If the multinational LSPs decide to use outsourcesfrom the local LSP companies, it would be a positive influence on the overall Thai logistics
development as well.
Among an extreme competition, however, there is no obviously major market controller
in logistic business. Therefore, joint venturing and company merging could enhance more
opportunity for an investment in terms of technology support.
In addition, Thailand becomes “Aging Society”, so that the logistic business needadaptation to fulfil increasing elderly person’s requirement on online health service, medicine
order, medical equipment and service. There will be an increasing need for cold chain logistics
for medicine and medical equipment delivery to the patient and elderly person. The customer

4-4

needs not only delivery, but also additional services e.g., cleaning, appliances repairing,
technological support, and preliminary medication. Therefore, the logistics industry should
upgrade the unskilled labor to the re-skilled worker.
The businesses related to food processing or cold chain storage system can still growbecause domestic and foreign consumers have purchasing power. The cold chain for foodproducts also has the potential to grow. By chance, the cold chain warehouse requires theimplementation of automation and robotics system, because of low-temperature constraints,
and awareness on contamination. Thailand has encouraged the development of smart
warehouses by offering special privileges (tax exemption up to 8 years together with levying
0% import duties on machinery). Thus, the overall growth of cold chain is 4-5% annually, thatis high potential to develop logistics technology to support the value-added of food andbeverages.
In the viewpoint of environmental concern, green logistics would reduce fossil fuelconsumption for goods transporting and transferring in warehouse or container yard. The useof larger container/vessel for international transportation results in economy of scale,convenient and efficient goods transfer. The intermodal container, a large standardized
shipping container, is suitable for intermodal freight transport that can be used across different
modes of transport, ship-rail-truck, without unloading and reloading their cargo [2].
Considering potential or obstacles to e-logistics, two key players are discussed in the next
section called “e-Logistic Aggregator” and “e-Logistics Marketplace” in the disruption andtransportation era.
(1) e-Logistics Aggregator
E-logistics aggregator provides e-commerce shipping solutions that a group of agentsfrom this company is responsible for processing all the operational components such as storage
and transportation. Digital technology enhances new business models so that giant overseas
LSPs could raise their trades based on “Sales Digitization” while “Logistics Startup” plays animportant role as “e-Logistics Aggregator”. This is a win-win relationship between giant
overseas LSPs and E logistic aggregators that focus on “e-fulfilment” of last-mile delivery forthe retail e-commerce enterprises. The e-logistic aggregators have to collaborate together withthe giant logistic LSPs for efficient delivery.
Most of the land transportation enterprises have not yet been a partnership with thee-logistics aggregator that established from the B2C e-commerce. Since 2017, there are at least
four logistics aggregators for online merchants in Thailand: aCommerce Co, Shippop Co,

4-5

Giztix and SME Shipping Co, providing one-stop delivery for online merchants [3]. Shippop,
a local logistics aggregator startup, mentioned that domestic e-logistics market in 2019 wasjump 15% in value from 31 billion baht in 2018.
The major players in the B2C logistics are the Thailand Post and the giant overseas
LSP. However, most of the Thai LSPs still in B2B logistics market. However, one interviewee
from the Thai National Shippers' Council (TNSC) forecasts that the market share of Thailand
Post will reduce to lower than 50% in the coming few years.
Nowadays, circulation trend of e-logistics aggregator is predicted to increase by theamount of 70% - 84% annually following the growth of B2C. It is forecasted that e-logistic
aggregators sales will increases to 3,500 Million Baht in 2020 due to the potential of this new
business model in market penetration. The B2B market in Thailand tends to grow exponentiallyby 10% - 12% annually during the year 2020 – 2027.
Manufacturers has changed their behavior to further accept digital technology forbusiness. The growth of online shopping is driving demand for logistics services with many
players and price structures [3]. Door-to-door transportation in Thailand tends to grow as
people purchase things via an online channel. Therefore, online logistics service would havebright future that the logistic aggregator could recently expand their service into the B2B
market.
In the future, the logistics aggregators in B2B market will bring their multinational LSP
partners into B2B as well. Consequently, these multinational LSP could access to client baseof Thai minor manufacturers to serve last-mile delivery to their customer, and fulfil the needsof online merchants. This would definitely affect the local LSP.
(2) e-Logistics Marketplace
Thai Logistics has so many enterprises among high competitions, especially landtransportation. Thai freight forwarder enterprises are facing difficulty to compete withmultinational LSP in B2B goods distribution business. Multinational LSPs normally focus on
approaching large manufacturer themselves while using logistics aggregator to gather minor
manufacturers.
Thailand has expensive transportation costs compared to many countries. The e-Logistics
Marketplace creates large opportunities for Thai LSPs among high competition in the digitalera, and act as linkage between products owners and LSPs. They can negotiate transportation
cost and conditions via an online platform. The e-Logistic marketplace gathers all orders for

4-6transportation services throughout the country. Consequently, it is possible for market
mechanism using “Truck Sharing” efficiently.
Based on an interview with the director of logistics section from Yan Wal Yun, thecompany could reduce transportation and opportunity cost due to backhaul (i.e., a sharing oftruck with their suppliers) in two cases; (1) Truck sharing to reduce backhaul of goods delivery
with 1-2 suppliers by carrying raw material back (saving 200,000 Baht/year), (2) Truck sharing
to reduce backhaul of 4-5 raw material suppliers from Nakornsawan and Nakornratchasima
with their product delivery (300,000 Baht/year). This demonstrates that the information
sharing and strengthen network among manufacturers and their suppliers help reducing
logistics cost significantly.
The major problem of Thai LSPs in competitiveness with multinational LSPs is lack ofonline service throughout the country. Thai LSPs could approach customer only in local andnearby areas, lead to inefficient transportation operation and high cost. The cause of low
efficiency is partial trucks freight or empty truck in return trip. The small enterprises encounterhigher logistic cost because of long distance freight forwarding that is inefficient resource
management.
If the local freight forwarders in each area create a network for data sharing on thetransportation order, all enterprises in the network would have many benefits from a reductionof transportation cost by 5% - 15%. However, networking among freight forwarders has been
conducted a long time ago, the delivery efficiency has been enhanced just a certain degree.
However, it is difficult to distribute benefit to the network members with appropriated andjustified cost estimation, especially if the network leader is the freight forwarder or truck ownerhimself.
All these problems can be managed well by using an online platform to create freight
forwarder and truck owners network. One example is the success case of “e-Logistics
Marketplace” in US. The Uber Freight has been developed to be a network leader by gathering
freight orders throughout the country. AI and Big Data were the key mechanism for “Dynamic
Pricing Model”. The suitable freight price was calculated real-time, therefore, E Logistic
Marketplace can reduce delivery cost and provide benefit to all network alliances. This would
be an important mechanism enabling small freight forwarder to be competitiveness impartiallywith large LSP.
The business model of e-Logistics Marketplace has high potential which would enable
benefits to all network alliances. Currently, Thailand has 1-2 startups using e-Logistics
Marketplace pattern. The Kasikorn bank research center [4] has expected that the e-Logistics

4-7

Marketplace in Thailand will dramatically expand within next 5 years, following the growth ofB2B e-Commerce. Therefore, a part of manufacturers tends to change their behavior. They aregoing to perceive digital technology for goods delivery to merchants.
The overseas LSPs have advantages on international freight because of collaborated
distribution centers that enable large truck transporting between distribution centers andconsequently small truck/pick up delivery from distribution center to destination. The
e-Logistics Marketplace will provide local LSPs to have higher efficiency than multinational
LSPs in case of provincial freights; e.g. agricultural product, fishery product, and goods
distribution from wholesalers to retailers.
In the future, when the e-Logistics Marketplace successes in the market, circulation andmanagement efficiency will increase. Thai freight forwarder or LSP will be able to maintaintheir client base in B2B logistic market. The reason is that Thai LSPs have strength over giant
overseas logistics companies in agile operation and lower overhead expenses and hidden cost.
If the provincial freight of e-Logistics Marketplace has better efficiency, the overseas
logistics companies would rather subcontract to the minor freight forwarder within the platformto perform their provincial freight. The transportation from distribution center to destination
has less economies of scale and require lot of experiences. It is not worthwhile for overseas
LSPs to perform overall operation themselves.
Although, e-Logistics marketplace would create much benefit to Thai LSPs significantly,
some SMEs would get the best from e-Logistics marketplace. Thai LSPs who are notpartnership with the e-Logistics marketplace will lose the competitiveness. The importantfactor that affects the partnership of Thai freight forwarder with the foreign companies is skill
and ability on digital technology for business; e.g. an implementation of GPS to their Trucks
possibly for real-time monitoring of goods by the network. Therefore, it is recommended thatthe minor freight forwarders should accept digital technology to be a part of their business andalways look for channel to be partnership with any e-Logistics Marketplace.
Thai LSP business who has growth among intense competition must adjust and employ
technology for management. To be the winner of battlefield in Digital Disruption era, they are
not only being technology user but also investing in digital technology. However, Thai LSP is
usually facing difficulties to develop toward leader or global LSP as stated by TNSC
administrative manager.

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4.1.2 Market Opportunities
Considering market opportunities of logistics business. The comments from interviewees
and the announcement by the Director of the Commercial Affair Product of GIS led to five
trends of transportation and logistics work in 2020 as the followings [5]:(1) Digital logistics: Logistic administration by digital data. Data is an importantvariable to win over the competitors. Therefore, transformation to the digital operation isinevitable because digital is affecting the day-to-day administration in the business. Due to thevisualized whole supply chain, the information in digital system enhances better and faster
decision-making. Similarly, it would enable the control of fast change nowadays.
(2) Real-time supply chain visibility: Business owner has to learn about real-time data,
e.g. location and amount of goods, transported time. IoT sensors must be used to follow
transportation, i.e., routes, delivery locations, and special conditions, to fulfil customer
requirements with the controllable cost of business as soon as possible. The data
communication in business would help enhancing the decision-making and forecasting theorder and supply chain management for the best efficiency.
(3) Consolidation of goods: Goods will be gathered from various companies intransportation by land-sea-air for cost-saving. This enhances logistic operation to be much
more stable and sustainable. Market and freight size in transportation has drastically changed
since everything can be purchased online. Amount of goods to be delivered has growth
dramatically, therefore, the size of goods loading should be reduced to facilitate fast delivery.
(4) Artificial and Augmented Intelligence (AI): AI will replace a repeating task ofhuman that could be operated by the system to acquire better and quantitative order. Thoughsome tasks definitely require human skill, therefore, a new trend is emerged called “Augmented
Intelligence” integrating human and AI to work together. The human intelligence is imitated,while human intellectual capacity is extended and embedded into the software, e.g., enlarged
memory of order, perception, forecasting, problem-solving, decision-making, to understandhuman requirements and increasing data connections capability. For example, logistics
planning needs to input human created data, i.e., action plan, the responsibility of customer
service section, flexibility in operation that required human experiences, feeling, and common
sense. These human data are further combined with AI’s data analysis and evaluation. AI will

4-9

predict and try to understand what will happen in the future and help to analyze results fromthe decision that has been made based on the learning of historical data. The predicted resultsfrom a decision in various directions improves preparation for solutions of those circumstances.
(5) Data Standardization and Predictive Analytics Platform: Platform technology
for risk assessment and single data management is a tool for logistics big data gathering in thedigital world. The logistic business should understand the operation of solution platform andapply for 1) improving transportation management efficiency, 2) upgrading performance oftruck freights, and 3) reducing fuel consumption. These activities were already done by the
Pharkphoom Logistics Limited Partnership (PPL), as mentioned by the Managing Director.
Information forecasted by platform would indicate patterns of risk and opportunity based ondata in the system. It should be flexible for additional input conditions; e.g., accidents, fuelconsumption, truck maintenance, expenses, transportation routes, optimal parking locations,etc. To enhance better performance, the representative from LTFT (Land Transportation
Federation of Thailand) suggested that the Ministry of Commerce should provide an open
platform that composes of a few number of functions for automatic truck tracking andcommunication with truck driver.
The logistic development towards e-Logistics has not only provided the potential andopportunities but also facing the obstacles. The current obstacles are discussed in the next
section.

4.2 Current Obstacles
Thailand is geographically located in the center of ASEAN. Among ASEAN countries,
there is an intense competition with neighboring countries and possibly degraded economic
system of neighboring countries. According to the implementation of government policy,
inefficient strategic plan and discontinuous operation might cause obstacles to the developmentof logistics toward e-logistics.
4.2.1 The Government Policies
The government policies are either the driving force or obstacles to e-logistics technology
implementation. Referred to evaluation of the Strategic plan (2017 – 2021), after half-plan, theresults were not successfully achieved as discussed in the followings [6];4-10(1) The KPI (Key Performance Index) do not cover all strategic aspects. Somegovernment agencies do not collect data that result in a lack of supportive database.
(2) Some government agencies have not paid attention to logistics development. They
have

inadequate

understood,

communication,

deployment,

information

dissemination within the agency themselves.
(3) The determination of the role, duty, responsibility is not obviously announced led tooverlapping roles.
(4) There are different standards, rules, disciplines, laws that bring about delay process
and operation, and also cause problems in data communication.
(5) The government agencies and state enterprises have inconsistency targets that resultin discontinuous of logistics development.
(6) There are no supporting policies to synchronize “Shift mode” and “Multimodal”
transportation as well as obsolete regulations on infrastructure development thatcause delay of implementation period.
(7) Budget allocation for logistics development is only part that contributes to inefficientdevelopment and discontinuous project operation.
The transformation of existing logistics industry to modern logistic based on activities ofgovernment agencies, state enterprises and private sectors are affected by several factors
discussed in the next section.
4.2.2 Factors affect Transformation to Thailand Logistics Development
Transformation context on Thailand logistics development includes 5 factors: Politicalfactors (P), Economic factors (E), Social factors (S), Technological factors (T) and
Environmental factors (En). Politics and International economic (P) highly affect followed byeffect from technological, economic, environmental and social [6].
4.2.2.1 Political factors (P)Uncertainty of politics and International economic (P) highly affect Thailand’s Logistic
development due to fluctuated trading and investment that slowdown the domestic economics.
For example, the US-China Trade War affects Thailand in terms of slowdown economic, andconsequently reducing export-import with US. The US counter measures lead to relocation of
suppliers/vendors to the country not affected by US-China Trade war. This negative impact
leads to a reduction of foreign order, production capacity, manpower due to Lay off, and4-11

certainly freight and related activities. Moreover, the suspend benefits under the Generalized
System of Preferences (GSP) for Thailand of US has shocked among local exporters, as they
are staggered from the domestic economic downturn and baht appreciation [7].
Another example, the effect from British Exit (Brexit) brought about short-term impact
on import/export of Thai products. However, fluctuation of UK ponds and Thai Baht resulted
in higher export price and reducing demand for Thai product.
Although Thailand has a national logistic plan but lack of harmonized, obvious andcontinuity action plan. Most of the government agencies work simultaneously without
collaboration. Laws, regulations and procedures related to logistics are out of date and needtransformation immediately to be consistent and up-to-date. In addition, there were suspicious
top officials in the Government having ties with big business corporations, and government
policies deemed favorable to such businesses [8].
The outdated laws and enforcement related to logistics lead to disadvantage on
competitiveness of the country in the commercial sector and decrease potential to be ASEAN“logistic hub”. In addition, domestic laws related to commercial cannot protect Thai business,e.g., retail laws, tax collection laws, stock trading, the regulation to prevent nominee ontransactions who avoid restrictions, etc.
4.2.2.2 Economic factors (E)The multinational economics has decelerated because of not only trade war but also
COVID-19. Year 2020 is already being defined by the outbreak of the coronavirus. COVID19 has already killed 3,831 (as of 9-Mar-2020) and infected at least 110,337 globally [9].
Although, the investment from China is huge, such as Alibaba. However, during past 2-3
months, China economy has been braked and affected by 42%, due to the spread of COVID19.
The economic factor influences the demand on international trades and logistics.
Moreover, the weakness on operation of Special Economic Zone (SEZ) affects thetransportation and logistics activities. Considering an investment situation in the 10 SEZ, theinvestor has worried about an availability of utility and accessible suppliers, especially SEZ
nearby border that might face weakness in operation. Although, the 10-year measure (e.g.,reinstated corporate income tax of 10% down from 20%), has been offered for investment
projects located in the 10 SEZs, not much interested investors are required to register with the
Finance Ministry (due December 31, 2020).

4-12

Since the Logistics Industry is one of the new five future industries or New S-Curve,
the industry has potential in production and effected by the changes in global manufacturing
technology (Figure 1.8) [10]. Due to supportive policy on new S-curve industries, the Thai
industries tend to change from labor-intensive logistics to technological-based management.
Thai logistics can go even further because of the new s-curve. Also, there are trends ofalliance/partnership on transportation and logistics industry.
Multinational logistics company normally have higher service efficiency andfrequencies, and larger transportation network that affects the structure of delivery market. The
multinational companies are ready to enter the market in Thailand because they have threecomponents; Investments, Platform and Technology, as stated by the Senior Vice President of
JWD. The Thai logistics company could survive, by finding a key partner from a multinational
company, having both technology and platform.
The investment of overseas company leads to disadvantages to Thai company because of
their Non-Asset Based LSP operation that would prefer subcontractors. This would be anegative effect on Thai LSPs having unsustainable development. Some interviewees
mentioned that Thai LSPs who are not well adjusting themselves, would not able to be theirpartner. They could just be subcontractors.
During the industrial revolution, the average life span of SME is reduced from 75 years
to 7 years, that shorten period for adjusting to follow digital trends. Though more than half ofThai logistic companies have noticed on digital disruption, they still have no clear idea on
strategic plan for their self-adjustment.
Thai small LSPs normally have computers, servers and software that cannot link withairline companies that lead to opportunity loss. Investment on digital technology for logistic
management need high cost that is unaffordable. Thai logistics service providers are not yet
ready to invest in technologies and tools. Some companies familiar with MS Excel, and never
employed the ERP-SAP. Also, they are not yet ready to invest in various infrastructures due toinsufficient investment capacity. The demand and supply of products and raw materials
fluctuated. Therefore, Thai LSPs must adjust themselves to these situations by investment indigital technology for real-time monitoring. However, the mindset of the top executive’s
members is very important for decision making.
Thai logistics SMEs who lack ability to be a principle logistics service provider, and lackof fund to invest, would play the role of subcontractors without negotiation power. Moreover,
it is expected that payment and salary would be normally low because of an unfavorable
employment contract.

4-13

In the viewpoint of the digital era, a novel application is available for easily moneytransfer. One interviewee stated that the medium players such as TIFFA as freight forwarderwould be disturbed by Blockchain, one of the disruptive technologies launched in 2009.
Blockchain is the “Internet of Value” creating digital scarcity. It is considered the 2nd generationof internet following the 1st generation TCP/IP. In brief, Blockchain is a decentralized databasethat is very difficult to modify. The digitized value could be sent to the downstream receiver
without a copy left in the computer of the sender. The Blockchain is a free market, enabling
the technology company to understand customer behavior. In addition, the waterway shipping
would prefer “Blockchain” for collecting and organizing their transportation economically andprecisely.
4.2.2.3 Social factors (S)Technology that replace human worker leads to lay off and consequently induces social
problems. The large logistic companies might have no policy on lay off and have to delay
employing automation and industrial robot. The state enterprises and large companies usually
have a powerful labor union. They cannot easily lay off worker and replaced them bytechnology. On the other hand, the manufacturers are facing challenges in the development of
automated robots to assist in the provision of automotive logistics services.
The aging society would reduce manpower in work-force age gradually. The workers
from neighboring countries are normally needed for non-skilled jobs. Fortunately, the logistic
industry might change their strategy to employ a potential experienced or elderly person.
There is economic expansion of major and minor cities according to trading andinvestment development. The urbanization always requires a city transportation system andlogistics. In Fact, the development of infrastructure would affect traffic congestion andtransportation management, results in unexpected higher logistics cost.
The logistic industry is lack of skilled and proficiency manpower, especially employees
who are suitable to business sector and possibly apply their knowledge to operate appropriately.
In order to offer better solutions to the customers, the logistics employees must understandservice capabilities, and have adequate soft skills to deliver an effective communication skill
with their colleagues. Therefore, logistics personnel training must be developed to build
knowledge and skills for their operation personal to meet logistic business requirements. Thai
education develops people to be software writer only. Therefore, Thailand is currently lack ofskilled labors who have both vision and imagination. The improvement of curriculum related
to logistics in higher education is also necessary.

4-14

According to the interview with 1Trade Managing Director, the TIFFA has collaborated
with various logistics companies to establish a school that focuses on specialized teaching in
logistics and warehouse management. They provided International Transportation andBusiness School (ITBS) that has offered many courses on transportation management forinterested parties. TIFFA also received educational funding from the Department of Skill
Development under the human resource development project.
4.2.2.4 Technological factors (T)The logistics business is currently highly competitive, especially the competition in the
B2C market because there are numerous multinational companies. During the past 5 years,
most of logistics enterprises have rather a low margin at around 8% - 15%. Thai LSPs havebeen facing high competition due to expansion of investment from the large andoversea/multinational LSPs. The multinational LSPs have changed from the exporter forindustrial manufacturers to the domestic goods distributors, which much effect most of Thai
LSPs in Business to Business (B2B) market. Those oversea LSPs has integrated digitaltechnology with their logistics technology in “Operations digitalization” for better efficiency;
i.e. (1) Automatic system in their distribution centers, (2) Realtime monitoring for delivery
status, (3) Estimation for appropriate storage capacity, (4) Route optimization. All of thesetechnologies make the overseas LSP higher advantages, with increasing margin capacity 5 –6%. Definitely, the Thai land transportation enterprises in B2B market are facing serious
competition.
Thai SMEs in logistics industry is normally labor-intensive and lack of skilled worker
and a skilled specialist to implement advanced technologies as well as an automation system.
Moreover, Thailand is facing a shortage of skilled workers who can perform various tasks, i.e.
System Integrator (SI). SMEs might have difficulties to seek for the right SI or softwaredeveloper. The automotive industry also lacks of specialist in the field of logistics services.
In addition, the delicate tasks e.g. electronics assembly are labor-intensive that
impossible for industrial robot or not worth for investment. Therefore, the government agencies
should create the stage or platform for matching between Thai LSPs and those technologists
and SI.
The existing wholesale and retail might not survive due to the expansion of e-Commerceand digital trading. E-commerce demands the manufacturing of various products with small
volume. Package and conveyor, function to maintain and arrange goods within limited space
efficiently for entire delivery to destination safely, increases logistic cost. The LSPs must adapt

4-15

their transportation and storage from large volume using pallet to small packaging/parceling.
Thai LSPs should considerably provide up-to-date conveyor and packaging size.
The public sector usually regulates and drive policy for better efficiency and cost
reduction. The e-Government services have been increasingly implemented technology to be
deployed in public service by online and paperless communication. Therefore, Thai LSPs haveto adjust their services toward these current activities.
According to cold chain logistics, the development of warehouse and temperaturecontrolled transportation is necessary. Food and beverage producer always pay attention towarehouse construction, purchasing of truck/trailer, investment on IT, and stable refrigeration
system. Therefore, they usually look for an expertise in the field of logistic management for
better workflow and lower logistic cost. This would be an opportunity for the qualified LSPs
in cold chain logistics, on the contrary, it would be a threat for the rest.
4.2.2.5 Environmental factors (En)The trends on green logistics involve size reduction on a vessel for e-Commerce andfor easier distribution. The material for packaging tends to environmental friendly to suit 3R(Reduce, Reuse, Recycle). Therefore, warehouse activities are transformed to electricity or
hybrid, including technology and innovations for better accuracy and efficiency. To fulfil
customer requirement, the manpower reduction and further lay-off workers is inevitable.
The discussion on potential, opportunities, and obstacles above reviews advantages anddisadvantages of development from conventional logistics toward e-Logistics, and leads to thesuggestion to the Government Agencies in the following section.

4.3 Suggestion to Government Agencies
The interviewees from various Thai LSPs have mentioned that there are a number ofpolicies from the government related to logistics development or enhancement, but each ofwhich were not been implemented successfully. There are 4 categories of suggestions frommost of the interviewees that consistent to the evaluation from Burapa University, i.e.,suggestions for development on (1) Value added of supply chain system, (2) Infrastructure andfacility, (3) Support scheme for logistics, and (4) Integration Among Government Agencies –State Enterprises – Private Sectors [6].

4-16

4.3.1 Suggestions for Development on value added of supply chain system
The development of logistic industries and logistic trading system would help enhancing
the development of Thai LSPs. They should easily be adapted and responsive to the up-to-date
dynamic transformation and the development of cyber security with a confidence on an eCommerce. The “LSPs Network” should be reinforced by supportive “Business Matching”
between domestic LSPs and motivate overseas LSPs as partnership. The networking between
manufacturers and the local LSPs should be supported as well.
The competitiveness of Thai LSPs could be upgraded sustainably by improving laws andregulations related to logistics or harmonization of laws if possible. The out-of-date laws andregulations related to Thailand logistics should be revised; e.g., Carriage of Goods by Sea Act
B.E. 2534 (A.D. 1991), Land Transport Act B.E. 2522 (A.D. 1979), International Air Carriage
Act B.E. 2558 (A.D.2015), and The Multimodal Transport Act B.E. 2548 (A.D.2005), etc.
Ministry of Transportation has played an important role in logistics development plan.
The support from their “Government Administrators” for goods delivery is crucial; i.e. Marine
Department (MD), Department of Land Transport, Department of Airports, Department ofHighways, Department of Rural Roads, and recent Department of Rail Transport (establishedsince April 2019). The interviewees mentioned that the government officers should strengthen
their knowledge and have an understanding of laws enforcement, seriously and strictly. The
knowledge must be transferred between public and private sector efficiently.
Not only the government administrators but also the state enterprises under the Ministryof Transportation are playing important roles; e.g., State Railway of Thailand (SRT) that theState Railway Workers Union has much negotiation power, Port Authority of Thailand (PAT),
Mass Rapid Transit Authority of Thailand (MRTA), Expressway Authority of Thailand(EXAT), the Airports of Thailand Public Company Limited (AOT), and Airport Rail Link Co.,
Ltd. There are complaints from several interviewees on the mindset of SRT that much delay
the e-document processing, which sometimes all processes required almost 3 weeks.
The interviewees also suggested revisions of trade restrictions policies to the Government
due to complicated and time-consuming customs procedures that are too stringent. The
reduction of trade restriction would enable the operation of transportation efficiently.
Moreover, the government should enhance and support regulation/custom formality tofacilitate trading and to improve “National Single Window (NSW)” network connectivity ofB2B (Business to Business) and G2B (Government to Business) because B2G (Business toGovernment) and G2G (Government to Government) have been already connected.

4-17

Government should accelerate the development of facilities tools, equipment andpersonal. The purchasing process improvement enhances easier and faster service, upgrading
speed of document processing using technology, and development of data management by
information technology.
Once the infrastructure is ready for transportation, commercial facilities such as the data
linking system between government agencies and businesses must be ready. The distribution
networks must speed up as well as domestic and international distribution centers to enhance
its efficiency in terms of service costs.
In addition, to be up-to-date with the current situation, improving “Tax system” would
enable international trading, and enhance international trading negotiation in the issues on
reducing or eliminating NTB (Non-Tax Barriers) with important business-partner countries e.g.
BIMSTEC (Bengal Initiative Multi-Sectoral Technical and Economic Cooperation) and GMS(Greater Mekong Subregion).
4.3.2. Suggestions for Development on Infrastructure and facility
Interviewees from both public authorities and private companies have highly
recommended that Thailand must accelerate the development of transportation, including road,marine, rail, and air services. The rail transportation is a key part of domestic transportation.
Investment on railway mode logistics would reduce logistics cost effectively. The railtransportation must be successfully developed to be a back bone of Thai logistics. Theinterviewee from PTT Logistics mentioned that petroleum products delivery by one train canreplace 25 trucks, and estimated to reduce logistics cost to only 1/15 depending on operation.
Therefore, PTT has conducted the feasibility study on the “Track and Trace” platform for the
locomotive.
The existing infrastructure must be utilized intensively and efficiently, especially railway
system. The government has to focus on the development of monorail systems into double
tracks, although some manufacturing sectors are not influenced by such double tracks.
The “Shift Mode” can reduce road transport and connection to the other modes oftransportation, rely on modes of transportation with lower costs, such as railways or waterways.
The development of new and efficient airplane route would support expansion of air freight aswell.
Considering Special Economic Zones (SEZ), Thailand still has a center of prosperity inmany areas such as Nong Khai, Udon Thani. Therefore, it has an opportunity for thedevelopment of strategic trade routes and new economic towns for manufacturers and Logistics

4-18

Service Providers. However, the supporting scheme must be provided to convince the investors
into the SEZ; i.e. availability of utility and accessibility to suppliers. The new economic towns
are being therefore speed up for manufacturers and LSPs.
The development of logistics facilities (i.e., in-land port, frozen warehouse in Southern
Economic Corridor (SEC), and distribution center in major provinces) should be enhanced.
The state agency on cross border trading and logistic must be formulated to gather knowledge,
preparing manual for trading enhancement on regulation and procedure.
4.3.3. Suggestions for Development on support scheme for logistics
Valuable manpower is the key driving factor in the development of logistics industry.
The logistics personnel training must be developed to gain knowledge. The skills improvement
is also needed. The personal in both manufacturing and business sectors must be enhanced andsupported to strengthen their “Manpower” performance to meet international standard. They
can re-skilled their knowledge with appropriate curriculum development to produce efficientpersonal qualitatively than quantitatively.
The next supporting scheme is focused on the consistency in the Government policies.
The regulations and laws have to be more flexible as mentioned by several interviewees. The
government sector should push on policy and support logistic operation appropriately. The
government should support research and development (R&D) on logistic innovations, andenhance development of logistic and supply chain personal. The R&D helps to develop that
“Dynamic Logistic Database”. The academic R&D activities on innovations and technology isrequired to support logistics in both manufacturing and agricultural sectors.
The government agencies themselves must continuously enhance and support data
gathering and information dissemination, leading to standardized data management system.
4.3.4. Integration Among Government Agencies – State Enterprises – Private Sectors
There should be developing mechanism to reinforce investment plan of government
agencies and state enterprises into similar direction properly, e.g. Mechanism of “Action plan”
or “Budget allocation plan”, especially an investment on infrastructure involving operation ofstate enterprises. Not only the government policy needs to be implemented but also an actualand accurate data should be shared to other state enterprises and private sectors.
Linkage between representatives from government agencies to state enterprises and to
private sectors must be carried out continuously and regularly by means of; coordination, data

4-19

connection and sharing, data analysis, public hearing stage, and continuous follow up andsupport.

4.4 References[1] Ministry of Foreign Affairs of the Kingdom of Thailand (2018), Mapping South-South
Cooperation in ASEAN. http://www.mfa.go.th/asean/contents/files/asean-media-center20181008-152916-481302.pdf [Accessed 27 February 2020].
[2] Lewandowski, Krzysztof (2016). "Growth in the Size of Unit Loads and Shipping
Containers from Antique to WWI". Packaging Technology and Science. 29 (8–9): 451–
478. doi:10.1002/pts.2231. ISSN 1099-1522.
[3] Bangkok Post, 2020. Logistics aggregators tap Thailand's e-shopping boom,
https://www.bangkokpost.com/tech/1178709/logistics-aggregators-tap-thailands-eshopping-boom [Accessed 9 March 2020].
[4] Kasikorn Research Center, E Logistic Marketplace: opportunities for Thai Freight
Forwarder Enterprise among competition in digital era.
https://kasikornresearch.com/th/analysis/k-econ/business/Pages/y3051.aspx [Accessed 26
February 2020].
[5] Brand Buffet, 2020, 5 Trends and Transportation Business Technology and Logistics in
2020, https://www.brandbuffet.in.th/2020/02/5-trends-of-transportation-and-logistics/[Accessed 25 February 2020].
[6] Burapha University, Evaluation on Thailand strategic plan for logistics development
edition 3 (B.E. 2560 – 2564), half-plan period.
[7] Bangkok Post, 2019, Loss of GSP privileges insignificant.
https://www.bangkokpost.com/business/1781849/loss-of-gsp-privileges-insignificant[Accessed 9 March 2020].
[8] The Straits Times, 2020, Thai govt survives vote of no confidence,https://www.straitstimes.com/asia/se-asia/thai-govt-survives-vote-of-no-confidence[Accessed 9 March 2020].
[9] Workometer, 2020. COVID-19 CORONAVIRUS OUTBREAK,
https://www.worldometers.info/coronavirus/ [Accessed 9 March 2020].
[10] Thailand Board of Investment, Promotion programs for aerospace industry in Thailand
and future plans [Accessed: 18 September 2019].

Chapter 5
Conclusion
Logistics companies in Thailand have advantages in many ways compared toneighboring countries, owning to the Kingdom’s central geographical position. The continued
growth of e-commerce business has made demand for logistics space and has createdsignificant changes in the supply chain and logistics operations in Thailand. Many Businessto-Customer (B2C) logistics companies have launched their cost-effective and high-quality
logistics services in the country and brought domestic end-to-end delivery to the market.
Apart from that, many companies have established central warehouses, along with smaller
drop off and pickup points across the nation, in order to sustain the rise in e-commerce’s
demand, creating a greater convenience and a quicker process to deliver to their consumers,
at much lesser cost. The logistics market in Thailand consists of global and local players,
with a significant number of global plyers in the market. Local Thai logistics companies are
dominated by global players. Each of these global players would prefer to use their domestic
logistics service providers. To withstand the competition with international players, domestic
logistics companies have to find the global key partner so as to manage the risks.
Thailand’s Logistics Development Strategy (2017-2021) is focused on development ofvalue-added supply chain systems, infrastructure and facilities, and logistics support factors.
BOI provides privileges to foreign investors to support further logistics and transport
infrastructure development, investment in the Special Economic Zones and EEC (Packagesof tax incentives, general incentives, and assistance relating to smart visas and work permits).
NSTDA, NIA and PMU C are funding agencies that provide financial support for researchand development in e-logistics and supply chain. Thai government has committed to invest
in logistics, transport infrastructure development, human resource development and elogistics’ research & development.
To improve efficiency, safety, reliability, and traceability of their operations, and to
reduce their operating costs and wastes, and thus enhancement of their competitiveness inThailand’ logistics market, the LSPs currently focus on route optimization while the WIs focus
on warehouse and inventory management system. For large companies, current government
policies do not have neither significant positive nor negative impacts on their e-logistics andsupply chain development plans. They are driven by customer’s demand and competition in
the market. On the contrary, local logistics SMEs are having difficulties in adapting themselves

5-2
toward the e-logistics era, mainly due to the lack of investment fund and expertise support. The
government is asked to improve railway mode infrastructures as soon as possible. Otherwise,
logistics cost is hardly to reduce below 10% as that in developed countries such as the US andSingapore. The government must also initiate a human resource development plan forsupporting the e-logistics and supply chain technologies.
Logistics market in Thailand is rather large, approximately 2 Trillion Baht annually,
however, there is no dominant players. To further extend, logistics cost in Thailand is still high,roughly 14% of the country’s GDP, making a large gap for improvement and investment.
Political factor is the most influencing factors on the investment on logistic development,
followed by technological, economic, environmental and social factors, respectively.
Current government policies and strategic plans have not yet been implemented. Someinterviewees strongly requested that the Thai government must geared up on the improvementof railway mode infrastructure; otherwise, logistics cost is hard to be reduced to < 10%. Also,
the development of human resource for e-logistics is a must now.
Besides investment on infrastructure, the government is being asked to evaluate andmodify obsolete laws and regulations and create the connection between B2B and G2B to work
closer with private investors.

A-1

Appendix A
List of the Interviewees and Their Organizations
Note that some information of interviewees is omitted as per their requests.
No.

Organization

PositionRole

1

Skyfrog, Co. Ltd.

Managing Director

DT/Cross2

SCG Nichirei Logistics Co., Ltd.

Executive Member

DT/Cross3

Sammmitr PTG Pro Truck Solution

Sale Representative

DT/CrossCenter Co., Ltd.
4

B.S. Transport Partnership Limited

President

DT/Cross

5

Pharkphoom Logistics Limited

MD

DT/Cross

Senior Engineer

DT/Cross (NSP)

Vice President

DT/Cross, AFF,

Partnership (PPL)
6

Advanced Info Service Co. Ltd(Public)

7

ANJI-NYK

OFF
8

Eagles Air & Sea (Thailand) Co., Ltd.

Manager

DT/Cross, AFF,
OFF, CB, WI

9CJ Logistics (Thailand) Co., Ltd.

Managing Director

DT/Cross, AFF,
OFF, CB, WI

10SCG Logistics

Managing Director

DT/Cross, CB, WI

11

Ruk Siam Social Enterprise Co., Ltd.

Partner

DT/Cross, R

12

MOL

Assistant General

DT/Cross, R, AFF,

ManagerOFF, CB, WI

Senior Vice President

DT/Cross, R, AFF,

13

JWD Co. Ltd (Public)

OFF, CB, WI
14

PTT OR, Co. Ltd (Public)

Assistant Manager of

DT/Cross, R, AFF,

Logistics Management OFF, CB, WI
15

Yan Wal Yun Co., Ltd.

Managing Director

DT/Cross, R, AFF,
OFF, CB, WI

16

PTT OR, Co. Ltd (Public)

Business Director(Cafe Amazon)

DT/Cross, WI

A-2
17

Diakin (Thailand) Co., Ltd.

Plant Manager

DT/Cross, WI

18

Thai International Freight Forwarders

Managing Director

PA

Association (TIFFA)
19

National Innovation Agency (NIA)

Innovation DeveloperPA

20

Thai Federation on Logistics

PresidentPA

21

Thai Transportation and Logistics

President

PA

Executive Director

PA

Director, Import

PA

Association
22

Thai National Shippers' Council(TNSC)

23

Department of Foreign Trade

Administration andOrigin Certification
Division
24

Thailand Greenhouse Gas

Manager, ApprovalManagement Organization (Publicand Monitoring OfficePA

Organization)
25

Land Transportation Federation ofCommittee

PA

AdvisoryPA

Thailand Science Research and

Deputy Mission

PA

Innovation (TSRI)

Director

28

TAS Logistics Co., Ltd

Sale Manager

WI

29

Menam Mechanika Co., Ltd.

Sale Manager

WI30

PolytechPresident

WI

31

DELTA Electronics (Thailand) Co.

Regional Business

WI

Ltd (Public)

Director

Bangkok Metropolis Motor Co., Ltd.

ManagerThailand (LTFT)
26

Senate Committee on Commerce andIndustry

27

32

WI