Thailand may not see bright export prospects in the third and fourth quarters this year if high ocean freight rates and container shortages remain, says the Federation of Thai Industries (FTI).
Its warning came after the Thai National Shippers’ Council said earlier this month that the country’s exports could rise by 10%-15% in 2021, driven by an export boom in April, as the global economy recovers.
Freight rates continue to increase sharply due to limited shipping capacity to serve a growing demand for imports and exports, the federation said.
Supant Mongkolsuthree, chairman of the FTI, said manufacturers and exporters are worried higher freight rates will increase transportation costs, causing traders to delay shipping or buying goods.
This comes as Thailand is depending on exports to help shore up its economy.
“The export sector is a key engine to push the Thai economy forward during the Covid-19 outbreak,” Mr Supant said.
Usually, traders place new orders to buy products in the third quarter to prepare for sales in the last quarter, with a bustling shopping mood during year-end festivals, he said.
FTI admits it is hard for the government to solve the problem as it is a global issue but expects it should at least find some “indirect” measures to relieve the problem.
Freight rates had increased even before the Covid-19 pandemic because of limited space on container ships, causing owners to resort to some management options that added costs, Mr Supant said.
Pre-pandemic, ship sizes were decreased or fleets were made smaller, said Visit Limlurcha, chairman of FTI’s Food Processing Industry Club and vice-chairman of the Thai Chamber of Commerce.
The pandemic later aggravated the problem as lockdown measures caused problems in container management in many countries, resulting in container shortages, which is also blamed for increasing freight rates, according to FTI.
Mr Visit said ocean freight rates have increased on every route, especially the Asia-North Europe route which saw the price reach a record US$11,037 (348,800 baht) per forty-foot equivalent unit (FEU).
Last year, the freight rates stood at around $2,000 per FEU.
Thailand may not benefit from the “high season” of the export sector in the second half of this year as it is difficult for the country to increase export volume, said Mr Visit.