The logistics industry's strong growth this year is expected to continue, supported by the government's massive investment in infrastructure projects, better export outlook and the ever-expanding tourism industry, according to analysts and industry officials.
The predicted substantial growth is expected to bring about rising competition in the sector and also encourage major players to merge in order to create companies with fully integrated logistics services, ranging from warehouse management to consumer delivery.
Kasikorn Research Centre (K-Research) forecasts that Thailand's logistics sector will grow 5.7% this year thanks to strong demand for inland logistics that grew in line with busier economic activities and economic growth.
This is higher growth compared with the 5.3% rise seen in 2015, according to K-Research.
"For 2016, we see growth in every logistics segment -- land, marine and air. This is because the sector grows in line with GDP growth, which normally leads to busier logistics activities," said an analyst at K-Research.
K-Research attributes the growth in logistics this year to rising GDP that supports land logistics.
The robust tourism industry has also lent support to air transport as intense competition among low-cost airlines attracted more flyers and brought in more visitors to Thailand.
Marine logistics grew minimally as weak export outlook weighed down sharp rises.
K-Research's analysts said the logistics sector will grow further over the next few years, due largely to the government's huge investment in infrastructure projects, which will lead to rising demand for land logistics to deliver construction materials and spur other logistics segments as well.
"Export outlook is also expected to be better, which means a better outlook for marine logistics as well. Moreover, the tourism sector is expected grow and lead to rising demand for air transport," she said.
The analyst's comment echoes that of SET-listed WHA Corporation Plc, Thailand's largest developer of customised logistics facilities, which sees a brighter outlook for its business this year and in 2017.
WHA's chief executive and vice-chairman Jareeporn Jarukornsakul said the logistics sector was largely supported by the integration of the Asean Economic Community as well as the government's policy to stimulate consumption, which will help raise demand for consumer goods deliveries.
"Next year the government's policy to invest in megaprojects as well as promotion of the Eastern Economic Corridor will lend support to the logistics sector," she said.
Analysts said the bullish outlook for logistics is expected to escalate competition in the sector and force players, not only logistics providers but also those in warehouse and other logistics-related businesses, to adjust themselves to provide better services for a bigger market share.
This will mean mergers and acquisitions among logistics-related companies to create companies with integrated services to capitalise on the rising logistics trend.
For example, JWD InfoLogistics Plc has teamed up with Siam Motors Group, owned by the Phornprapha family, to set up a joint venture to provide integrated logistics services for the automotive industry.
The new firm is aimed at catering largely to two Siam Motors plants, handling the transportation of auto parts to warehouses, management for parts warehouses and packaging for delivery to carmakers' production facilities.
The joint venture is expected to not only strengthen JWD's business but also mitigate the possibility of future risks after the company's difficult experience as a result of the country's fragile automotive sector over the past several years.