Wednesday, July 23, 2008

Airfreight firms facing tough test


Thailand's airfreight business faces its biggest challenge in 10 years because of high oil prices and political uncertainties, causing a slowdown in business transactions, industry executives said.

Air cargo shipments have dropped by 30% so far this year with a number of frequent customers turning to marine transport which costs three to four times less than air, said the Thai Airfreight Forwarders Association (Tafa).

Perishable goods, especially vegetables, fruits and flowers, account for as much as 60% of all air cargo shipments from and to Thailand.

Airfreight fees have risen this year by approximately 10% while airlines' fuel surcharges have doubled, Tafa chairman Kasem Jaliyawatwong said.

"Exporters of electronic goods to Asian destinations such as Singapore and Hong Kong have turned to marine shipments rather than air to lower their cost," said Mr Kasem. "On some of these routes, the fuel surcharge has become higher than the transport fees."

Statistics prepared by the Air Cargo Business Association (ACBA) showed 137,747 tonnes of cargoes were shipped by air out of Bangkok in the first quarter of this year, up slightly from 134,687 tonnes in the same period of 2007. Inbound volume rose to 82,086 tonnes from 74,527 tonnes.

Total outbound and inbound figures in 2007 were 534,319 and 307,490 tonnes, respectively, according to the ACBA.

"Costs keep moving up because of rising oil prices, making it difficult for businesses to estimate their actual costs and quote prices," Mr Kasem said. "At the same time, the political atmosphere has pressured business sentiment."

Tafa is hoping that shipment volumes will start picking up in the coming high season starting in October.

"But if not, it is possible that we could see the worst situation in our business for the past ten-year period," he said.

Mr Kasem also called on the government to put more effort into stabilising the baht at the current level of below 33 to the US dollar, or even weaker to 34 to help boost the exports.

"If political situation improves, businesses, especially the low-end wholesale market, would get a boost with more tourists coming to buy Thai products such as clothes," he said.

"Nowadays, tourists have turned to China or Vietnam to get cheap clothes."

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