The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.

Since our last quarterly report, prospects for Thailands ports and shipping sector have taken a knock, with the country suffering the worst flooding in half a century and Bangkoks urban area particularly affected.

Estimates of the costs of flood damage range at 3% of GDP or higher. Manufacturing and export industries were disrupted in the last quarter of 2011, and some of this will spill over into early 2012. While BMI believes infrastructure reconstruction efforts and government spending in the first half of 2012 will stimulate activity, against this we note that the global economy remains discouraging. A combination of factors, including the potential for a break-up of the eurozone, the risk of an imploding property bubble in China, and a sputtering economic recovery in the US, present significant downside risks to Thailands economy. BMI now estimates 2011 GDP growth of 1.5% (down from our earlier forecast of 3.6%). For 2012 we are holding our prediction at 4% growth, although we note downside risks to this number. Over the medium term (the five years to 2016) we expect the Thai economy to perform moderately well, with average annual GDP growth of 4.2%.

As for industry-specific factors, our immediate focus is on the impact of the heavy flooding in the country. BMI believes that apart from short-term disruption to the Port of Bangkok, supply chain problems are reducing the flow of manufactured exports, particularly in areas such as the automobile and electronic component industries. This highlights downside risks to exports and associated demand for shipping.

Headline Industry Data

- Gross tonnage at Laem Chabang, the countrys largest port, set to rise by 6.8% to 57.23mn tonnes in 2012 (faster than the estimated 4.1% growth of 2011).

- Box handling at the same port to rise 6.7% to 5.82mn twenty-foot equivalent units (TEUs).

- At 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 747,839 TEUs.

- Real value of foreign trade set to grow 6.5% in 2012, with imports up by 7.0% and exports marginally behind at 6.0%.

Key Industry Trends

Floods Affect Thailands Major Ports

The massive floods in late 2011 affected Thailands key ports in different ways. The flooded areas were primarily around the capital city of Bangkok and the central and northern regions of the country, and did not directly impact upon the maritime facility of Laem Chabang, the countrys primary port in terms of both total tonnage and box throughput. The port of Bangkok was disrupted, however, and the facility stopped accepting import containers. The automotives industry was particularly affected. Japanese car companies with a strong presence in Thailand, already suffering following the March 2011 tsunami in Japan, had now been struck with a second natural disaster.

China Gets Agreement On Joint Mekong Patrols

China has secured approval for joint security patrols with Thailand, Laos, and Myanmar along the Mekong River, following an incident in October 2011 when 13 Chinese sailors were killed in an attack on two cargo vessels along the Thai section of the river. Regional rivalries are a sensitive issue in the lawless Golden Triangle region of the Mekong.

APL Launches New Singapore-Thailand Service

Singapore-based APL launched a new shuttle service between the Port of Singapore and Thailands Laem Chabang Port in December 2011. The new service will compensate for the removal of the Laem Chabang Port from APLs PS-1 service. It is the second weekly Singapore-Laem Chabang connection, after the companys Laem Chabang-West Asia Express (LWX) service. The LWX service covers the ports of Singapore, Laem Chabang, Mumbai, Nhava Sheva, Karachi and Colombo.

Key Risks To Outlook

Although domestic political risk remains a factor to watch, BMI sees the main risk to our Thailand port and shipping projections lying on the downside, and originating in the uncertain global economy. As mentioned, as we go into 2012 there is a question mark of one kind or another set against each of the three main drivers of the world economy. In Europe it is the sovereign debt crisis and the travails of the eurozone. In China it is the possibility that an economic slowdown will be worsened by a property price bubble crash. And in the US we fear that the recovery could lose steam. The threat of an external blow to Thailands economy could easily tip the country into a recession, and we warn that this is not a remote possibility given that the global economy looks set to deteriorate over the coming quarters.