Thailand’s Cross-border Logistics

truck delivery to export goods

Given the fact that Thailand borders as many as four neighboring countries, namely Myanmar, Cambodia, Laos and Malaysia, border trade is not only an important source of increased revenue for the country but also boosts Thai products’ competitiveness in the international market. Thus, enthusiastic entrepreneurs should familiarize themselves with logistics-related information to ensure smooth cross-border trade and further aptly expand into the neighboring countries as regards the following areas:

1.Thailand – Myanmar Border Trade (Ranong – Ko Song)

The following seven provinces have high potential for Thailand – Myanmar border trade: Mae Hong Son (Ban Huai Phueng Customs Checkpoint), Chiang Rai (Mae Sai Customs Checkpoint), Chiang Mai (Chiang Dao Customs Checkpoint), Tak (Mae Sot Customs Checkpoint), Kanchanaburi (Sangkhla Buri Customs Checkpoint), Prachuap Khiri Khan (Ban Singkhon Customs Checkpoint) and Ranong (Ranong Customs Checkpoint).  The three other border provinces, namely Ratchaburi, Phetchaburi and Chumphon, however, have no Thailand – Myanmar border trade activities as the areas are made up of mostly uninhabited forests.

Major export items include diesel oil, alcoholic and non-alcoholic beverages, fabrics and threads while major import items are natural gas, oil crops and aquatic products, livestock comprising cattle, hogs, goats and sheep and timber products.  This article will focus on Ranong – Ko Song Checkpoint concerning seafood industry, the main sources of which are Myeik (formerly Mergui) City and Ko Song.  Transportation of marine products between the two sources takes 14-16 hours.  All fishing vessels are subjected to mandatory load-release inspections at Ko Song Checkpoint which take approximately 30-45 minutes.  This is followed by another five to six hours of sailing to Ranong where they are required to go through the Thai customs clearance formalities (in Ranong) before or after unloading their catch at the port.  When fishing boats moor at the dock, marine products are transported to the fish market via various venders/operators.  This is where the dock or raft passage tariff is collected.

After sorting, marine products are put up for auctions which begin from 7:00 to 8:30 am.  Afterwards, they are shipped, either via refrigerated trucks or trucks with ice buckets to keep them cold, to various provinces and Malaysia for consumption, processing and export to various overseas destinations. In the process, problems still persist as regards certain areas of logistics management, namely a decline in marine life in Thai waters, as Myanmar and Indonesia announced the termination of concession granted to Thai fishing vessels, thereby adversely affecting the supply of raw materials to Ranong’s fishery and seafood processing industries; inconvenient cargo transport by road that hinders freight links between Ranong and other parts of Thailand; sub-standard shipping services by water provided by the private sector that results in cost increase, among others.

2.Thailand – Cambodia Border Trade at Khlong Yai Border Checkpoint 

Cambodia is bordered by Thailand on multiple sides, i.e. in the North where Cambodia shares borders with three provinces of Thailand, namely Ubon Ratchathani, Si Sa Ket, Surin and Buri Ram; in the West with three provinces of Thailand, namely Sa Kaeo, Chanthaburi and Trat; in the South by the Gulf of Thailand, while Thailand – Cambodia border trade is conducted at the permanent border checkpoints and special-purpose border crossings in three provinces in the Northeast, namely Ubon Ratchathani, Si Sa Ket and Buri Ram, and three provinces in the East, namely Trat, Chanthaburi and Sa Kaeo.  Of all the above-mentioned border trade markets, Talat Rong Kluea situated at Ban Khlong Luek Permanent Border Checkpoint in Aranyaprathet District, Sa Kaeo Province, is the major market where the largest border trade value is registered. Nevertheless, the second most important border checkpoint is Khlong Yai Customs Checkpoint in Trat Province as this is where the largest export value of soft drinks (sweetened drinks and carbonated beverages) is registered on a continual basis.

The logistics model of said industries sets out from manufacturing plants scattered in various provinces, where goods are distributed via distribution centers directly to local distributors, retailers, and wholesalers in Trat Province who ship goods from various manufacturers to clients in Thailand as we;; as Cambodia.  Cross-border shipments to Cambodia are transported either by road (through Ban Hat Lak Permanent Checkpoint) or by water (mainly through the two private-owned piers, namely Sor Krittawan and Chalalai).  The destinations are Koh Kong, Phra Sihanouk and Kampot Provinces.  Transport to Koh Kong is mainly by road through Ban Hat Lak Permanent Checkpoint to Ban Jam Yium in the border area in Koh Kong where transshipment by Cambodian operators takes place for further distribution to various areas in Cambodia.  Delivery of goods to Phra Sihanouk and Kampot Provinces, on the other hand, is done mainly by water through private-owned piers in Trat Province, with destinations at Mongrithi Pier as well as other small-sized private-owned piers in Phra Sihanouk Province and Kampot Port.  From there, Cambodian operators take care of transshipment from said piers and port for goods to be further distributed to local retailers in various areas.

   In the process, several logistics management problems still persist, namely trade and transport regulations as yet non-conducive to border trade, as Thai wholesalers’ trucks are not permitted to enter and deliver goods in Cambodia.  Thus, the trucks have to await transshipment of cargo in or near Ban Cham Yiam in Cambodia, approximately five km from the Thailand – Cambodia border.  This is due to Cambodia’s sub-standard trade regulations pertaining to inspections and cross-border fee collections, transport rules and regulations and underdeveloped basic logistics infrastructure, be it rail transport system, a lack of transshipment and storage points for cargo shipped both by land and by water or a lack of standardized parking for trucks, all resulting in an increase in operating cost for cross-border traders and hence their inability to fully boost their competitiveness.

3.Thailand – Laos Border Trade at Chong Mek Border Crossing, Ubon Ratchathani

Chong Mek is a border crossing between Thailand and Laos.  Situated approximately 90 km from Ubon Ratchathain, it is the only land-based crossing in the Northeast open to travellers from Thailand to Lao PDR (Pakse), whereas other such crossings are across the Mekong River.  In the Thailand – Laos border areas, Chong Mek Border Crossing generates the third largest import – export value.  Main imports into Thailand consist of agricultural products, including cassava, purple-fleshed sweet potato, cabbage, dark brown tamarind flesh, castor seed, peanut (both shelled and in the pod), among others, depending on the harvest season of each type of products.

    The logistics model of said industries sets out from crop growers in Champasak Province, Laos. Middlemen collect produces/agricultural goods from these crop growers for Thailand – Laos joint trade ventures.  Thai entrepreneurs buy from the middlemen at the local near-border farm market in Laos  and ship the goods to Thailand through various channels including through logistics service providers to wholesalers or exporters who are dealers in foreign trade for further processing before distribution to retailers and end consumers.  Problems that hinder border trade at the border crossing involve the fostering of cordial relations among trade partners; logistics management encompassing loading and unloading, screening and packaging for transport, as well as ineffective value-adding caused by, for instance, unsuitable packaging that causes delay in loading and unloading and damage to goods being transported. Enhancement of the logistics-based system should result in reduced operating cost while significantly boosting profit margins.

4.Thailand – Malaysia Border Trade (Sadao Checkpoint)

The Thailand – Malaysia border consists of both a land boundary across the Malay Peninsula and maritime boundaries in the Straits of Malacca and the Gulf of Thailand/South China Sea.  Malaysia is located to the south of Thailand where the Thailand – Malaysia boundary extends for approx. 647 km with Golok River forming an approximately 95-km stretch of the land border.  Thailand – Malaysia border trade value has put Malaysia as Thailand’s Number 1 trade partner in ASEAN.  Major exports from Thailand include petroleum products, automobiles, computer parts and accessories, chemical products and rubber products. There are eight permanent border checkpoints in four southern provinces, namely Narathiwat, Yala, Songkhla and Satun. This article focuses on Sadao Border Checkpoint, Sadao District, Songkhla Province (Ban Dannok/Sadao/Songkhla) with emphasis on the rubber industry as it produces products with the consistently highest export value.

   The logistics model of said industries sets out from rubber farmers who sell rubber latex to dealers/middlemen or directly to processing plants.  Latex is then processed into either finished or semi-finished products not meant for use by end consumers but rather for further passing on to downstream plants for the manufacturing and distribution of finished products, partially for domestic consumption while the remaining can be exported to other trading partners overseas for further manufacturing and distribution to consumers.  The problem inherent in the rubber industry lies in the bargaining power that resides with of middlemen as well as Malaysian traders, causing farmers’ income to decrease after a deduction of operating cost and commission/brokerage fees imposed by middlemen. 

Obstacles to the Thailand – Malaysia border trade lie in the unrest situation in the three southernmost border provinces deterring cargo trucks from entering the areas and, hence, cargo must be unloaded in Hat Yai District, Songkhla Province, instead; delay in the clearance of goods at Sadao Border Checkpoint due to limited space and congestion. In addition, cross-border export of goods, particularly vegetables and fruits, from Malaysia to Singapore is only possible via Sadao Border Checkpoint in compliance with terms stipulated in the Memorandum of Understanding governing the transport of perishable goods from Malaysia to Singapore.  This obstacle makes it impossible for cross-border exporters in other locations to conduct their business.  Besides, in the area of loading and unloading, Thai trucks are at a disadvantage compared with those of Malaysia as the former are required to change hauling units as well as register as bi-nationality vehicle.  There is also a problem due to a lack of trading facilities such as roads linking Thailand with Malaysia at Wang Prachan Checkpoint in Satun Province and at Tammalang Pier, a small-sized pier unequipped to accommodate cargo containers, which results in low border trade volume.

Compiled by BLOG.SCGLogistics

References: ThailandConnectivity by the Information Center for Thailand’s Border Trade with Neighboring Countries, Department of Foreign Trade, Office of the Board of Investment and Department of Trade Negotiation

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