Suvarnabhumi Airport will be upgraded to meet world-class standards. While the oil crisis has affected the entire transportation sector, demand for air cargo services remains high for perishable goods, electronics/ electrical parts and express mail.  Despite this, air cargo services still need accurate planning to ensure on-time delivery, higher efficiency and competitive pricing.  Airline companies, on the other hand, may be forced to merge, as has already been the case with US airlines.     

Thailand’s inbound air cargo amounted to 308,000 tons in 2007, outbound cargo was 534,000 tons, transit inbound was at 205,000 tons, and transit outbound was 203,000 tons. 

Due to its geographical advantage, Suvarnabhumi Airport has the potential to become a regional hub, assuming it has an efficient cargo handling system, competitive pricing, service efficiency and customer convenience. 

The Free Zone Warehouse Management System (FZWMS) is now hooked up online with the Customs Department, and a Free Zone Operator said the on-going re re-organization of the ACCS will enable links with other operational departments. 

The private sector agrees that the government’s plan to set up a national air cargo line is a good concept, but various details and the management structure require careful consideration.

Meanwhile, Emirates will increase Sky Cargo space for its Bangkok-Dubai route by 30 tons per week, while Orient Thai has set up Orient Thai Air Cargo. Asia’s demand for air cargo services exceeds the 6.1% annual growth rate for worldwide air cargo volume estimated by Boeing Co.
     
Indirect routes could be key
Voratat Tantimongkolsuk, Deputy Director-Operations, CTI Logistics Co., Ltd., has claimed that air cargo demand has not dropped despite product quality requirements.  Voratat added that service efficiency can be improved through advance planning, appropriate management techniques, and other measures to enhance cost effectiveness. 

By shifting to indirect routes, customers could cut costs by 15-20%, particularly in the case of non-perishable goods that do not require immediate delivery.  Customers using this method can still ensure on-time delivery within 4-5 days and lock in lower freight costs. 

“Accelerating or slowing down delivery will not apply to seasonal goods or peak season delivery when cargo space is scarce and expensive.  Such cases demand a new business model rather than inventory reduction.  Due to the energy crisis, just-in-time delivery could increase costs even more than maintaining inventory at a suitable level, but product quality and speed to market will remain a major constraint,” said Voratat.

Demand for air cargo services in Thailand is rising steadily by 10% per year compared to a 6-7% global trend.  However, demand has slowed down somewhat due to weak purchasing power. Airline mergers and acquisitions could cut costs as has been the case with Northwest-Continental Airlines and Delta-United Airlines.
     
Essential for an Air Cargo Hub
The following conditions need to be met to attract more users, generate a substantial volume of transit cargo, and draw potential customers from neighboring countries that are within 2-3 hours’ flying time. 

1. Total freight costs (including transshipment) must be competitive with the cost of transporting goods directly from the customer’s port to their final destination: 
2. Services must be high quality, accurate, convenient and reliable;
3. Speed to market must be considered;
4. Sufficient cargo space is important; 
5. The transportation network must cover various end destinations;
6. There must be cooperation between Customs Department, TAT, various airlines and their warehouses, air-freight forwarders.

In addition to upgrading the capability of local Freight Forwarders, the public sector must listen to private sector viewpoints regarding government policy, regulations and restrictions, and the urgency of developing overseas networks.  CTI Logistics’ success derives from the supportive role of overseas branches in the US, Japan, China and elsewhere.
     
Cargo Free Zone
Vorathat feels the proposed separation of the Cargo Free Zone from the general cargo area, or the elimination of the Cargo Free Zone, is not a problem.  The business model, users’ benefits and TAT service fees will determine the users’ decision to use the free zone. Despite superior facilities and security measures, Suvarnabhumi Airport charges must be reasonable. 

The Airport Authority and customs procedures need to match world-class standards.  Procedures for moving cargo movements from airline warehouses to agents’ warehouses could be simplified and speeded up if the authorities accept Freight Forwarders’ Delivery Order.

Netbay to make things smoother 
As well as providing a gateway for online data exchange and installing the Free Zone Warehouse Management System (FZWMS) linking Cargo Free Zone to Customs Department, Netbay will expand the database system to allow for a comprehensive online e-Logistics management and e-Payment.

Pichit Viwatrujirapong, Managing Director of Netbay Co., Ltd., noted that the company had previously provided gateway services to the Customs Department.  Linking up the system by applying ebXML software enabled Thai Airways, WFS-PG Cargo and other companies which lease warehouses in the Cargo Free Zone to connect to e-Customs. Consequently, these companies can use FZWMS to manage their warehouses conveniently, quickly, accurately, and more cheaply compared to the manual system.  Online data can also be used to explore new business opportunities.

Easy e-commerce
Recognizing the growing importance of e-commerce for Thai producers/ importer/exporters who need to compete with multi-national companies with superior financial resources, know-how and wider customer base, Netbay will expand the database system to include (1) an e-Logistics system that will provide gateway services for transmitting/receiving online data pertaining to various Trade Documents, and (2) an e-Payment system.

Emirates expands cargo routes 
Apart from increasing cargo space for the Thai-Dubai route, Emirates will open five new cargo routes from Dubai to Kwang-jo (China), Callicut (India), LA, San Francisco, Durban (S. Africa). 

Sky Cargo services include temperature-controlled containers, Door-to-Door delivery, a 24/7 Sky Chain system for monitoring cargo status, advance booking of container space and route planning.  Last year Sky Cargo transported 1.3million tons of cargo, up 10.9% from the previous year. Exports from Thailand include electronic/computer parts, automotive parts, fresh fruits and vegetables and garments.  Imports are automotive parts, electronic parts, raw materials, textiles. 

Aniruth Songsatya, Emirates Airlines Cargo Manager (Thailand and Indochina), said Thailand’s air cargo business has grown steadily in line with a 4-5% growth target, notwithstanding the baht’s appreciation and the energy crisis.  Suvarnabhumi Airport is on a par with neighboring international airports, but various ancillary features must be fully operational in the near future, namely, the Cargo Free Zone and airport services regulations. 

Citing Dubai as a highly efficient airline hub for the Middle East, Europe and Africa, Suvarnabhumi Airport could become a similar hub for Indo-China and Southeast Asia if it can improve its management efficiency.

TAFA backs Thai Cargo Airline
Kasem Jaliyawatwong, Chairman of the Thai Airfreight Forwarders Association (TAFA), said the proposal to set up a national cargo company as a subsidiary of Thai Airways would provide more transportation options - subject to cost effectiveness, sufficient two-way cargo volume and cargo capacity (B747-400 planes are needed to transport agro products to Europe), and government support.  The new airline would cater to general cargo, high-value items, Transit Cargo from neighboring countries, and express delivery.  Passenger planes could allocate more space for perishable agro products.  To ensure cost-effectiveness, Thai Airways could handle 70% of two-way cargo space, leaving 30% for other business allies.