Sustainability in Thailand's Logistics market: Opportunities and Challenges

Situated in the center of Southeast Asia, Thailand has become one of the most important strategic locations for the logistics industry in the region. Supply chain activities have been increasing due to the volume of manufacturing in Thailand. 

According to Logistics Asia, an international media company covering logistics-related news, the logistics market size in Thailand is expected to reach around 100 billion USD by 2026, with an annual growth rate of 6%.[1] To accommodate this growth and push Thailand to become an essential trade gateway in the region, the government is planning how to advance its infrastructure through the construction of double-track railways, airports, and storage development.[2]

According to ISO, the logistics and transport sector contributes just over a third of global carbon dioxide (CO2) emissions.[3] Consequently, the government and freight forwarders are adjusting their strategies to integrate sustainability into their mission. The Thai government has set a goal to reduce greenhouse gas emissions from the transport sector by 31% by 2030, achieve carbon neutrality by 2050, and reach net-zero emissions by 2065.[4] To achieve these goals, they have announced several policies to reduce traffic-related air pollution. The government is now subsidizing the production costs of electric vehicles (EVs) and deducting its excise tax for locally produced vehicles.[5] 

With these policies in mind, the government has set a goal to achieve a 30% share of renewable energy by the year 2036.[6] However, policies alone can achieve little without active participation, and this is where the private sector plays a crucial role. By channeling increased investments into sustainability initiatives and innovative developments, companies can not only reduce their carbon footprint but also align themselves with the government's targets.

The path to sustainability presents challenges, including limited public awareness and the substantial costs associated with incorporating sustainability into everyday operations. Nevertheless, by garnering support from all key stakeholders, Thailand can make significant strides toward realizing its sustainability objectives and advancing toward a more sustainable future.- Written by Rhenus Logistics

Business Hub in Thailand Introduction:

The Netherlands-Thai Chamber of Commerce (NTCC) is a prominent membership organization based in Thailand that fosters business expansion for Dutch, Thai, and international enterprises. We support our members through our extensive networks, events, information sharing, business matching, and synergies among its members.

Since 2018 the NTCC is one of the first worldwide accredited official NL Business Hub Thailand.

The NTCC acts as a central hub of information between members, the private sector, the government, and relevant industry. We can support Dutch companies in kick-starting your business in Thailand by directing you to the right sources for market information, economic outlooks, and potential partners. If you are looking to set up a company in Thailand, the NTCC can connect you with reliable local partners such as advisory firms, banks, lawyers, and potential partners to help you get started. Being part of the NTCC community provides direct links to the industry. Additionally, We offer active sector community that connect you with peer companies within your respective industries, and many more.

Rhenus Introduction: 

With over 100 years of experience in cargo transportation and freight forwarding, the Rhenus Group is one of the leading logistics specialists with business operations around the globe and annual turnover amounting to EUR 8.6 billion. 39,000 employees work at 1,120 business sites and develop innovative solutions along the complete supply chain. Rhenus Group has earned the EcoVadis Gold Rating for environmental, social, and ethical practices in accordance with international standards. Rhenus is also a member of United Nations Global Compact, committing to four Sustainable Development Goals (SDGs).

To discuss how the company is implementing its holistic sustainability strategy in Thailand and across Asia, we took the opportunity to talk to Mr. Tim Burger, Managing Director of Rhenus Thailand, who has been with the company for five years. As a Dutch national with broad global experience within the logistics industry, ranging from contract logistics, sales to warehousing management positions. In Thailand, he has assisted in the development of the company's air, ocean and warehousing services, road network, and recruitment procedures, and due to his multinational expertise, he has also helped build a customer base beyond Thailand. 

1. Mr. Burger, with your experience working in the logistics industry in the Netherlands as well as in several APAC countries, have you noticed any noticeable change in customer demand for sustainability services in the logistics industry over the last few years?

Over the last decade customers have been more aware of the impact of logistics operations on the environment, from carbon emissions, waste management to social impact. As a result, our customers demand a more comprehensive approach to sustainability throughout the entire supply chain, expecting providers to embed sustainability at every stage of the logistics process. At the same time, they expect logistics providers to provide accurate emission data about their operations to ensure credibility. All these aspects are more frequently incorporated in their procurement considerations.

2. How do you see the logistics industry, specifically airlines, ocean carriers and freight forwarding companies such as Rhenus working to adapt to these shifts in customer demand?

Both markets are integrating sustainability into their operations to remain competitive in the current business environment. For Air Freight, the airline market renews their fleet with more fuel-efficient aircrafts and increases the usage of SAF (Sustainable Aviation Fuel) to tackle their emissions. Ocean Freight carriers are actively workingthrough initiatives such as improving energy efficiency and promoting alternative fuels. For Rhenus Group, we set the target to be carbon neutral by 2045. We continually explore innovative solutions and invest in technologies to further reduce the environmental impact of our operations. For example, we are offering RHEGREEN, an air freight emission insight tool, which was developed in the Netherlands before we offered it at a global level. Apart from that, we have developed emission dashboards to track the emissions of each level of our operations and are partnering with carriers to offer immediate carbon reduction measures, whether it is transport optimization, where we offer customers the possibility to compare between time, cost, and emissions of different mode of transportation or the use of alternative fuels like biofuels and SAFs. Besides the air and ocean initiatives, Rhenus is also investing into sustainable warehousing projects. In Tilburg, Rhenus is operating one the most sustainable distribution centers globally with more than 13,000 rooftop solar panels which is part of the initiative to make this warehouse BREEAM certified.

3. What is your thought on the growth potential of sustainability in Thailand and what would be needed to drive it?

Over the last few years, I have noticed both professionally and personally that there is an expansion of awareness, changes in customer demand, and the private sector’s investment in sustainability projects. Private sector companies like Rhenus integrate sustainability into their businesses, whether by using technologies or developing innovative products. Policies and regulations from the government play an important role in broadening sustainability’s growth - for example, promoting free trade and making policies more friendly for investors attracts significantly more investment from the private sector and reinforces the development of sustainability projects. At the same time, every single one of us can contribute to a more sustainable Thailand. One area is to train and educate people to increase awareness among the population and make an accumulated impact on decarbonization.

Source: NTCC.

[1] The trends in the Thailand Logistics Market: What You Need to Know (2021) on Logistics Asia. Available at https://logistics.asia/the-trends-in-the-thailand-logistics-market-what-you-need-to-know/ (accessed 17 September 2023)

[2] National Economic and Social Development Council, แผนปฏิบัติการด้านการพัฒนาระบบโลจิสติกส์ของประเทศไทย พ.ศ. 2566 – 2570 [Thailand's logistics system development transformation plan 2023 – 2027]. Available at https://www.nesdc.go.th/ewt_dl_link.php?nid=13627 (accessed 18 September 2023)

[3] Rick Gould, A net zero logistics sector, 20 January 2023. ISO. Available at https://www.iso.org/contents/news/2023/01/a-net-zero-logistics-sector.html (accessed 19 September 2023)

[4] UNDP, Available at https://climatepromise.undp.org/what-we-do/where-we-work/thailand (accessed 19 September 2023)

[5] Krisda Utamote (2023) Interview by ASEAN sustainable energy week, 11 August 2023. Youtube. Available at https://www.youtube.com/watch?v=4e1zURfGqW4 (accessed 17 August 2023).

[6] Yuthana Praiwan, (2018) State targets 30% renewable power by 2030, 20 July 2018. Bangkok Post. Available at https://www.bangkokpost.com/business/1506658/state-targets-30-renewable-power-by-2030