AIRPORT CLOSURES & THEIR AFTERMATH
Shippers could pass on higher insurance costs
VICHAYA PITSUWAN
Local businesses may face more expensive raw material imports as logistics costs for imported goods may increase to reflect higher business risks stemming from the airport seizures last week.
Tanit Sorat, the vice-chairman of the Federation of Thai Industries (FTI), expressed concern that the incident would have broad impacts.
Logistics charges are composed of a freight charge, a bunker charge (vessel fuel surcharges), a congestion charge and an insurance premium, which is likely to increase if the destination country is insecure or has high risk.
Mr Tanit noted that recent political strife had moved Thailand onto a list of the 20 most dangerous places in the world, as compiled by London's Daily Telegraph. The country was ranked seventh behind perennial trouble spots Iraq, Afghanistan, Chechnya, South Africa, Somalia and Sudan. The perception of outsiders, he said, was that Thailand was not safe.
Cargo airlines may see the airport seizures as a threat to business so they may face higher insurance premiums, increasing import costs for customers.
Mr Tanit fears that once cargo airlines list Thailand as a high-risk destination, additional costs will be imposed on inbound and outbound shipments. The electronic parts industry, which uses air cargo for 90% of its shipments, would be hardest hit.
Higher production costs will add more pressure on business operators already facing a demand slump.
The FTI plans to discuss the airport closures and their impact tomorrow, at a meeting to be attended by representatives from the gems and jewellery trade, electronics, perishable goods for export, Thai Airways, the Thai Airfreight Forwarders Association (Tafa) and Airports of Thailand (AoT).
The cargo logistics industry lost 600 million baht daily from the airport closures, based on normal trading activities with early estimates totalling more than five billion baht in damage, said Mr Tanit.
In addition, logistics operators faced extra costs, with demurrage charges for shipped items delayed.
Cargo service providers and export companies plan to discuss responsible solutions for the extra expenses.
"The airport closure led to an interruption in deliveries that was not caused by either the cargo [handler], the shippers or the receivers, so someone has to be responsible for this unnecessary cost," Mr Tanit said.
Another fear is that Thailand will lose its place as a logistics hub.
"The logistics industry officially employs about 1.2 million people, so it is essential that we retain this recognition and the government should also provide credit support to small logistics providers to prevent mass layoffs," he said.
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