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Viewing report
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Thailand Shipping Report Q4 2011
Business Monitor International, Oct 2011, Pages: 92
BMI View Growth in the Thai economy remains reasonably resilient despite a reduction in external demand and renewed concerns over a 'double-dip' recession in the US and Eurozone. For the moment, BMI is broadly maintaining its forecasts for GDP and ports throughput. As far as the local economy is concerned, the positives include a good investment performance and increased public spending from the newly-elected government. BMI now forecasts 2011 GDP growth of 3.6% (following the 7.8% expansion experienced in 2010).
Industry-specific factors are also in play. Although dry bulk rates remain weak, some local companies such as PSL are benefiting from fleet modernisation and the relative strength of intra-Asian trade routes. In our view, port and shipping activity looks set to expand faster than GDP in 2011.
Headline Industry Data
- Gross tonnage at Laem Chabang, the country's largest port, to rise by 8.1% to 55.64mn tonnes in 2011. Box handling at the same port to rise 8% to 5.6mn 20-foot equivalent units (TEUs).
- BMI projects 5.4% tonnage growth at Port of Bangkok to 17.49mn tonnes in 2011, with container handling set to grow 6.2% to 737,102mn TEUs.
- Real value of foreign trade set to grow 2.7% in 2011, with imports up by 2.8% and exports marginally behind at 2.7%.
Key Industry Trends Ports Could Benefit From New Move On Infrastructure Investment The new administration appears ready to build on its predecessor's efforts to encourage investment. Finance minister Thirachai Phuvanatnaranubala says he is working on tax incentives for infrastructure funds, something which could benefit the ports sector. There are also moves to investigate the possible creation of a sovereign wealth fund, with participation from the World Bank and ADB. K Line Launches Thai-India Container Service
Japan's 'K' Line has launched a Thailand-East India Express (TCX) service, with a rotation through Laem Chabang, Chennai, Visakhapatnam, Port Kelang, Singapore and Laem Chabang. We see this as part of shipping lines' increasing interest in the overlapping categories of emerging trade routes (ETRs) and intra-Asian trade, an area where there is dynamic trade growth and less shipping overcapacity than on the long-haul routes.
TTA Boosts Profits And Calms Frisky Shareholders Thoresen Thai Agencies (TTA) registered a net profit of THB324.45mn (US$10.86mn) during Q311, compared with THB138.11mn (US$4.62mn) in Q310. The improved performance came from better time charter rates on the dry bulk shipping fleet, according to the company. TTA also managed to head off a revolt by minority shareholders who wanted it to decrease its exposure to the volatile dry bulk sector and diversify into other areas, including liquid bulk and property development.
Key Risks To Outlook After the Puea Thai Party (PTP) election victory in July 2011, Thailand has a new government led by Prime Minister Yingluck Shinawatra, who is the sister of the controversial exiled former PM Thaksin Shinawatra. Although the political transition has been ordered and relatively market-friendly, the issue of Thaksin's return from exile remains an important downside political risk factor for our forecasts. We expect the PTP to press for constitutional reform and an amnesty that would allow Thaksin back into the country. The unknown at this stage is the likely reaction of the opposition Peoples' Alliance for Democracy (PAD). A return to mass protests and stoppages would, as in the recent past, have very negative effects on the transport system in general. It would also scare off investors and affect the shipping and ports sector.
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