- 1 - office of the national economic and social development board thailand logistics master plan...

- 1 -Office of the National Economic and Social Development Board

Thailand Logistics Master Plan

Office of National Competitiveness Committee

Office of the National Economic and Social Development Board

Miss Wilaiporn Liwgasemsan

Deputy Secretary General

17 November 2004

“Trend of Logistics Development in Thailand and Japanese Cooperation”Organized by

JETRO and TNSC


AGENDA

• Competitiveness and Logistics • Importance and Role of Logistics• Global Logistics Development • Thailand’s Logistics Status• Objectives in Logistics Development • Logistics Development Policy in Thailand


AGENDA



Source: IMD World Competitiveness Yearbook 2004 (60 countries)

The World Competitiveness Ranking 2004

58t

h

52n

d

35t

h

29th 24t

h

23r

d

16t

h

6t

h

2n

d

Indonesia

China

Philippines

Thailand

Malaysia

Korea

SingaporeHong

Kong

Japan

1s

t

12nd

USA

Taiwan

Thailand’s competitiveness position still ranked lower than other economy in the region

Overall Performance

31st

34th

31st 30th

29th

2000

2001

2002

2003

2004

Economic Performance14t

h 17t

h 23r

d

14t

h

9th

2000

2001

2002

2003

2004

Government Efficiency

26t

h 27t

h

20t

h

18t

h 20t

h

2000

2001

2002

2003

2004

Business Efficiency

38t

h 39t

h

33r

d

28t

h

23r

d

2000

2001

2002

2003

2004

Infrastructure41s

t 46t

h

42n

d 49t

h 50t

h

2000

2001

2002

2003

2004

Source: IMD Competitiveness Report

Even though Thailand’s ranking improved from previous year, infrastructure area do poorly

Macro Foundation• Fiscal & Monetary

Policies• Trade & Investment

Policies• Foreign Policies

Macro Foundation• Fiscal & Monetary

Policies• Trade & Investment

Policies• Foreign Policies

Generic Factors • HR• S&T• Management• Infrastructure• Environment

Generic Factors • HR• S&T• Management• Infrastructure• Environment

Enabling Enabling FactorsFactors

Agriculture Agriculture SectorSector

Industry Industry SectorSector

Service Service SectorSector

Public and Private Sector ReformPublic and Private Sector ReformPublic and Private Sector ReformPublic and Private Sector Reform

Well-being

CompetitivenessCompetitiveness

“Thailand Logistics

Development”

Transportation Infrastructure

Business IT Infrastructure

Labor force development

“Thailand Logistics

Development”

Transportation Infrastructure

Business IT Infrastructure

Labor force development

Logistics development is an important factor that enable Thailand to improve its competitiveness and well-being

- 7 -สำ��นั�กง�นัคณะกรรมก�รพั�ฒนั�ก�รเศรษฐก�จและ สำ�งคมแห่�งช�ติ�

AGENDA



Definition for Logistics

“Logistics Management is that part of Supply Chain Management that plans, implements, and controls the efficient, effective forward and reverse flow and storage of goods, services, and related information between the point of origin and the point of consumption in order to meet customers' requirements.”—Council of Logistics Management


Logistics ComponentsEnd User

Information & Finance

Producer

Wholesale

r

Retailer

BuyerRaw Materi

al resour

ce Key Activities•Transportation•Inventory management•Order processing •Information management•Financial management

Logistics activitiesSupporting Activities•Warehouse management•Material handling•Purchasing•Packaging•Demand management


Better logistics management helps a country to gain comparative cost advantage and create value to its products and services 1% 5

%

Reduced Reduced costcost

Market share

Source: Trade and Logistics: An East Asian Perspective, RobinCarruther,JiendraN.Baj pai , Wor l d Bank, Davi d Hummel s, Pur due Uni ver s ity,2 0 0 4 , http://indeng.nuigalway.ie/intranet/upload/268,13,LOGISTICS IN THE FIRM MICRO/INFRAFIRM ENVIRONMENT

Reducing Reducing logistics cost logistics cost

by 1%, the by 1%, the market share market share will increase will increase aboutabout 5-8%5-8%“Comparative Cost

Advantage” in both manufacturing and

service

Creating “Value” in place & time

Marketing

Possession

Product form

Creating Value

through Place &

Time Managem

ent“Delivery Delivery of Goods of Goods to the to the clients at clients at the right the right place and place and timetime””

Added Added valuevalue


Fuel Usage 2004Fuel Usage 2004

• ~10% of ~10% of energy energy wasted wasted on on congesticongestion on

52%

Household

Industry

Better logistics help reducing energy

wasted on consumption

ที่��มา: การรถไฟแห่�งประเที่ศไที่ย, กระที่รวงพลั�งงาน การประชุ�มกลั��มผู้��ปฏิ บั�ติ งานด้�าน Global Warming , Kyoto Summit ป$ 1997

Co2 Emission Co2 Emission

Mode optimization could reduce Co2

Emission

5 Rail 10 Costal Transport

180 Small Truck

250 Air Transport

403 Personal Vehicle

g-C per 1 Ton/ 1 km.

Efficient logistics also help environment condition and save energy


AGENDA



Physical distribution

Internally integrated logistic

• From raw material procurement to client delivery

Externally integrated logistic

• Linking all partners in the supply chain

Global logistic management• Raw material procurement and distribution in global level

1970 20001980 1990Source : The World Bank and CMU

Thailand

Australia

Hong Kong

Singapore

EU USADeveloped countries are gearing towards Global Logistics Management

• Cargo delivery


Public sector in each country has different Degree of involvement in logistics development Logisti

cs Advancement

L H

Direction

Public Sector Role

•Central planning by EDB•Public-Private Cooperation

•Preferred logistics hub and Gateway to China

•Set up special organization

•Part of national competitive-ness strategy

•Support linkage among EU

•Strategic service industry •Trans

porta-tion liberalization

•Strong private sector

• Impost logistics standard

•Set up Logistics Council Source: NESDB


AGENDA



Thailand’s performance is relatively low compare to neighboring countries

Tier 1Tier 1

Tier 2Tier 2

Tier 3Tier 3

•Highly Developed & well maintained in infrastructure

•High business-friendliness

•High availability of skilled labor

•Highly political & currency exchange stability

•Developing & partially maintained in infrastructure

•Moderately business-friendliness

•Moderate availability of skilled labor

•Political & currency exchange stability

•Requirement in infrastructure development & maintenance

• Low business-friendliness

• Low availability of skilled labor

• Some risk of political & currency exchange

• Singapore• Hong Kong• USA• Taiwan • Malaysia

• France• Spain• UK• The Philippines• China

• Thailand• Korea• India• Indonesia

Defining the logistics tiers

example

Source: Emerald


EU

USA

Japan

Thai

~ 11%~ 10%~

7%

This is shown by Thailand relatively high logistics cost comparing to other countriesLogistics cost / GDP yr 2002Logistics cost / GDP yr 2002

Source: NESDB

?~19%


AGENDA



•Reducing logistics cost via economic of scale/speed

•Attracting Investment

•Gaining economic benefits from being trading and service center

From geographical advantage, Thailand has set the goal to become “Regional Logistics Hub”

Myanmar

13%

Myanmar

13%

CHIANG MAI

BANGKOK

USAEU

InternatioInternational nal Trade’s Trade’s GrowthGrowth (‘97-’02)(‘97-’02) 11%11%

Laos -7%Laos -7%

Cambodia14%

Cambodia14%

China 14%China 14%

Benefits of efficient logistics management


To achieve the stated goal, cost reduction and increasing customer satisfaction must be accomplished

Global Standar

d Logistic

s Manage

ment

Cost Efficienc

y

Reliability

Responsiveness

Target“ Reduce logistics cost to 10% of GDP in 5 years ”

Target“Improving customer

satisfaction from 50% to 80%”

Target“Reduce processing time >50% by cutting unnecessary functions and using IT”

Source: NESDB


“ Reduce logistics cost to 10% per GDP in 5 years”

•IT linkage to reduce non-value added cost

•Modal Shift

Cost efficiency is driven from better management and planning

Cost Reduction Target

2548 2553

19%

10%

Source: NESDB

Trans-

port

Inven- tory

Admin

PS : Logistics Cost Information 2003


Saving ~ 40 million baht per

day

Saving ~ 10 million baht per

day

Responsiveness can be acquired by using information technology and cutting process

Example

Waiting time for export license

ก�อนั

10 days

ห่ล�ง

4 days

Source : www.sepo.go.th , แผู้นงานด้�านการพ�ฒนาเคร'อข่�ายฐานข่�อม�ลัภาคร�ฐ

Waiting time for customs procedure

ก�อนั

5 days

ห่ล�ง

1 day

Single Window

Entry

One Day Clearance

Source : กระที่รวงการคลั�ง

Source : ที่�มว เคราะห่, สศชุ.


Reliability On-time delivery Reducing in Defect Rate

Customer satisfaction can also gain from on-time delivery and reducing defect rate

0

20

40

60

80

100 Big companies

SMEs

Room for

Improvement

On-time deliveryOn-time delivery

(%) 80

%

50%

Source: Supplychain Benchmarking, iCongnitive, NESDB


AGENDA



In order to develop proper logistics plan, NESDB has identified critical issues for logistics development

Objective: To be Regional Objective: To be Regional Logistics HubLogistics Hub

Data Base & IT

Human Resourc

e

Logistic Service Provider

Infra-structur

e

Law & Regulati

on

Cost Efficiency

Speed Up Flow

Security &

Reliability

Improve outdate

d law

Issue new law

Increase mode

efficiency

Create linkageBoost

gateway efficienc

y

Increase public-private linkageDevelop accessib

le softwareBuild databas

e system

Develop HR for

industry (pre/post school) Develop

public sector

HRBuild

Awareness

Create Knowledge Base

Create business environment for

LSP Give incentiv

e for Thailand

LSP


The important aspect in logistics development and its problems•Limitation based on the

size or weight of truck•Unclear customs procedure

•Absence of law / regulation on LSP business

•Insufficient law / regulation on IT business

Law & Regulations

• Inefficiency of linkage between mode e.g. ICD ,Truck Terminal

• Less focus in coastal transportation

• High cost of empty container movements

Infrastructure • Lack of logistics personnel

• Lack of logistics management vision

• Lack of logistics degree and trainer

• Lack of occupational standard

Human Resources in Logistics

•Lack of understanding on IT strategic benefits

•No standard on existing information

•Inefficiency of IT structure

•Lack of IT personnel

Data Base and IT•Insufficient fundamental operating knowledge

•Costly logistics software •Low accessibility to financial support

Logistics Service Provider


Hence, NESDB together with other organization has formulated Thailand logistics master plan covering important aspect in logistics


Data Base & IT

Human

Resource

Logistic

Service

Provider

Infra-struct

ure

Law & Regulation

Cost Efficiency

Speed Up Flow

Security &

Reliability

Ongoing project

•Development in gateway and its linkages (MOT)

•Develop “Single Window Entry” (MOICT)

•Road Map: Capacity building (MOC)

•Investment supporting (BOI)

•Issued MTO Law (MTO board)

• Improving outdated law• Issuing new law if needed

• Supporting Modal Shift• Increasing transportation efficiency

• Increase accessibility to IT• Standardization of data

• HRD in both quality and quantity • Public Awareness

• Creating decent Business environment

Policy

Direction


Future

immediat

e Plan

•Speed up on project for coastal freight transport development

•Develop dual track

•Increase efficiency of LCB port

•Develop courses

•Grant logistics scholarship

•Create occupational standard

•Accumulate logistics knowledge and expertise

•Issue law for service provider

•Create incentive system for LSP

•Accelerate the law on limitations of size & weight of truck

•Revise the Re-export Tax regulation

•Accelerate the e-transaction law

•Encourage the information link in private sector

•Setting the responsible unit

However, several plans still need to be implemented in the future


Data Base & IT

Human

Resource

Logistic

Service

Provider

Infra-struct

ure

Law & Regulation

Cost Efficiency

Speed Up Flow

Security &

Reliability

International Standard International Standard


For law and regulation aspect, There are some laws/regulations urgently needed to be amended

•Exempting re-export tax (no advanced import duty)

Key Issues Outcomes• Increasing the limitation on weight of 10-wheels truck from 21 tons to 26 tons

Limitation on the size

or weight of truck

• Saving transportation cost

Re-export regulation

•Reducing tax burden

•More favorable business environmentE-transaction law

•Approving the law related to the e-Transaction

•Reducing paper usage


MOT planned to improve Thailand infrastructure holistically

Source: Office of Transportation and Traffic Policy & Planning

Domestics

Regional

Global

• Modal Shift

• Hub and Spoke

• Gateway development•Linkage between modes

•Proper facilities for strategic products

Key Strategic

Issues• Dual track • Coastal port• Increasing ICD points• Linkage: rail and port

• Warehouse building• Develop sea port network

Approach

•Capacity building of sea ports and airports

•Specify strategic product

•Develop infrastructure

• Multimodal


Several logistics projects presented by NESDB are also approved by cabinet

Bangkok

• Dual Track Rail • Suwannaphum Airport • Lam Chabang 2nd Phase

• Chaing Mai Airport

• Phuket Airport

Total investment

of BHT

132,000 mil


Information network focuses on the linkage of all partners in supply chain

Big company

Service

Provider e.g. Brok

er

Supplier: Level 1

Supplier: Level 2

GDX

Ministries

Financial

Units

Transport

Units

1

2

Expected cost saving: at least 28,500 million baht per year


On database issue, although logistics cost is realized, other significant data and efficient data system is needed Acquired data:

- Logistic cost/ GDPOngoing Study:-Commodity Flow Survey-Logistics Benchmarking Study -Logistics agricultural product study

Center

Conditions: •Standard of data•No overlapping data

Information available among the Ministries

through satellite data approach

Example


Needed to develop

HR according to needs of private

sector

HR issue focuses on capacity building, both quantity and quality of logistics personnel

012345

2548 2549 2550 2551 2552จำ/านวนบั�คลัากรโลัจำ สติ กส, ความติ�องการแรงงานเพ �มข่�1น

No. of logistics

personnel53,237

12,449

18,17324,816

32,767

Skill & Knowledge

Transporting

Purchasing

Supply Chain

Management

Marketing

Material

Handling

Source: โครงก�รศ�กษ�เพั !อจ�ดทำ��ยุ%ทำธศ�สำติร'ก�รพั�ฒนั�บุ%คล�กรมนั%ษยุ'ฯ , TDRISource: โครงก�รศ�กษ�เพั !อจ�ดทำ��ยุ%ทำธศ�สำติร'ก�รพั�ฒนั�บุ%คล�กรมนั%ษยุ'ฯ , TDRI

Export

handling

140,000


ContexContext for t for Firm Firm

StrateStrategy and gy and RivalrRivalr

yy

ContexContext for t for Firm Firm

StrateStrategy and gy and RivalrRivalr

yy

RelateRelated and d and SuppoSupporting rting

IndustIndustriesries

RelateRelated and d and SuppoSupporting rting

IndustIndustriesries

FactorFactor(Input) (Input) ConditConditionsions

FactorFactor(Input) (Input) ConditConditionsions

- Customers view LSP yields low value proposition

- Customers are price conscious

- Large company gave high emphasis to logistics outsourcing

- No standard hence lead to price cutting war

- Market can be clearly separated in tiers

DemanDemand d

ConditConditionsions

DemanDemand d

ConditConditionsions

- Lack of Human Resource capability

- Insufficient basic infrastructure

- costly S&T- Lack of law and regulation stated duty and rights of LSP

- Directly effect to Oil Price fluctuation

LSP supporting plan will be formulated after identifying the key obstacle for LSP development

Preliminary


Target of reducing logistics cost by 9% within 5 year will be achieved by pursuing this roadmap


Data Base & IT

Human Resourc

e

Logistic Service Provider

Infra-structur

e

Law & Regulati

on

Cost Efficiency

Speed Up Flow

Security &

Reliability

Improve outdate

d law

Issue new law

Increase mode

efficiency

Create linkageBoost

gateway efficienc

y

Increase public-private linkageDevelop accessib

le softwareBuild databas

e system

Develop HR for

industry (pre/post school) Develop

public sector

HRBuild

Awareness

Create Knowledge Base

Create business environment for

LSP Give incentiv

e for Thailand

LSP

Success status M

in

Max

- 1 - office of the national economic and social development board thailand logistics master plan...

Documents

logistics logistics

trend of logistics development

logistics importance

thailand slide

wellbeing slide

infrastructure area

economic performance

tnsc slide