Rail freight between China and Thailand offers potential for growth, driven by the increasing number of Chinese firms opening factories in Thailand, according to MAI-listed LEO Global Logistics.
"As more and more Chinese companies open a factory in Thailand, this will benefit our rail freight business," said Kettivit Sittisoontornwong, chief executive of LEO Global Logistics.
He said the company opened its rail freight business in the second quarter of this year.
The company found that the cargo volume between China and Thailand is mostly Thailand-bound cargo, in line with data showing that Thailand has a trade deficit with China.
However, Mr Kettivit did not reveal the proportion of rail freight being transported from China to Thailand.
China was Thailand's largest trade partner in 2023, with a total trade value of US$105 billion and a $36.6 billion surplus in Beijing's favour, according to the Commerce Ministry.
Mr Kettivit said that normally the cost of rail freight is higher than the cost of sea freight, but he believes Chinese firms are being encouraged to use trains as a mode of freight transportation by the authorities.
He said the Chinese government typically provides significant subsidies for the cost of rail freight to encourage the use of rail links.
"At present, we are shipping EV spare parts, ore, and electronic appliances such as TVs," said Mr Kettivit.
The company expects its rail cargo revenue to account for 10% of overall revenue this year, with the goal of reaching 15% next year, he said.
For non-freight business, Mr Kettivit said the company launched its third branch of storage services on Rama IV Road in Bangkok, with an investment budget of 75 million baht.
He said the project aims to target small and medium-sized enterprises, condominium residents, and e-commerce vendors in the area.
Moreover, the company is considering expanding its existing branch in Chinatown, where the majority of customers are European tourists.
The company plans to open two additional branches by 2025, which would be located in the Bangkok Metropolitan area, Mr Kettivit said.