Thailand Shipping Report Q2 2012 Published : June 2012
No. of Pages : 132
Price: US$1175
Floods And World Economy Weigh on Forecasts Our outlook for the Thai economy - and the shipping and ports sector - remains for only moderate growth this year, against the background of a subdued recovery following the disruption caused by the floods of late 2011, some persisting political risk factors, and a generally troubled world economy. We are holding our main forecasts in place, although we believe downside risks have increased. The damage and disruption caused by the flooding was greater than expected, and GDP fell by 9% year-on-year (y-o-y) in Q411. However, we still hold to our prediction that the Thai economy will grow by 4% in GDP terms this year. We have trimmed our forecast for foreign trade, and now expect it to grow by 5.25% in real terms. The lower rate reflects the impact on Thailand of lower growth in mainland China, and of an overall contraction in the eurozone economy. As for industry-specific factors, we now expect supply chain problems to last longer than had at first had been imagined, disrupting automobile and electronic component industry exports for much of the first half of this year. This highlights downside risks to exports and associated demand for shipping. On the plus side, there will be some additional spending on reconstruction and recovery. Headline Industry Data Gross tonnage at Laem Chabang, the country's largest port, set to rise by 6.8% to 57.23mn tonnes in 2012 (faster than the forecast 4.0% GDP growth for this year). Box handling at the same port to rise 6.7% to 6.116mn twenty-foot equivalent units (TEUs). At the Port of Bangkok BMI projects tonnage growth will reach 5.8% in 2012 (up from 2.4% in 2011) to 17.81mn tonnes, with container handling set to grow 5.4% to 1.376mn TEUs. We have trimmed our trade forecast. We now expect the real value of foreign trade to grow 5.25% in 2012, with imports up by 5.5% and exports marginally behind at 5.0%. Key Industry Trends PTT Ponders Strait Of Hormuz Risk PTT, Thailand's state-owned oil company, has reacted to the latest spike in US-Iran tensions by considering diversifying its crude oil import sources. An executive noted that around 70% of Thailand's crude oil imports pass through the Strait of Hormuz, which could potentially be closed in a WashingtonTehran stand-off. PTT said it had purchased 2mn barrels of Castilla crude from Colombia, due to be shipped aboard a very large crude carrier (VLCC) during March. BMI notes that to the extent that PTT succeeds in diversifying its crude oil imports, there will be a corresponding shift in tanker freight demand. Shippers Rowing Against The Current On Box Rates? Container freight rates to and from the main Thai ports could go up in April 2012, as a number of shippers seek to improve their returns. At the beginning of March, Hong-Kong based shipping line OOCL (Orient Overseas Container Line) said it would raise rates on cargo moving to Australia from South East Asia by US$200 per twenty-foot equivalent container. Separately, Swiss container line MSC (Mediterranean Shipping Company) said it would be raising rates by US$400 per twenty-foot equivalent container on Asia-Europe routes. The hikes came amid continuing concern that excess capacity and competition have driven box rates down to uneconomic levels. Hard Times At RCL Thailand-based shipping company Regional Container Lines (RCL) registered a net loss of THB780mn (US$25.8mn) in 2011, compared with a net profit of THB465mn (US$15.3mn) a year earlier. The loss was attributed to persistent overcapacity, which has capped freight rates, as well as an increase in bunker expenses. The company reported revenue of THB15.24bn (US$504.09mn) in the same period, compared