Old laws a brake on express delivery

Old laws a brake on express delivery

Kerry Express showcases the vehicles that power its express-delivery service at a trade fair in Bangkok in 2016. (Bangkok Post file photo)
Kerry Express showcases the vehicles that power its express-delivery service at a trade fair in Bangkok in 2016. (Bangkok Post file photo)

Want to eat delicious food from famous restaurants without having to brave the notorious Bangkok traffic? Want to buy the latest mobile phone gadgets without leaving the comfort of your home? You are not alone.

Millions of Thais also want to have food and goods delivered right to their doorsteps, which is why Bangkok's roads are now bustling with express delivery motorbikes and vehicles from various companies with eye-catching logos. Every one of these drivers, however, is working illegally. But they are not to blame. Blame it instead on the outdated law.

Thanks to ever-expanding e-commerce, the highly popular express delivery business is growing by leaps and bounds. Now worth a whopping 30 billion baht, the business has doubled in size in just two years. That rapid growth has attracted a multitude of investors, from domestic goods-transport firms to international express delivery companies.

Previously, express delivery services were operated exclusively by Thailand Post, a state enterprise. Kerry Express, a Thai-Hong Kong joint venture, broke the monopoly in 2006 with the entry of its distinctive bright orange logo. Kerry has now overtaken Thailand Post to claim the biggest market share in express parcel delivery.

More companies followed, boosting competitiveness in the express delivery business. The latest are Flash Express, a Thai-China joint venture sporting a bright yellow logo, and Indonesia's J&T Express with its red trademark.

These major express delivery firms have been joined by more than 570 other operators who have registered as goods-carriage businesses with the Ministry of Commerce's Department of Business Development. Many, like Nim Express, were conventional goods-transport firms that have expanded into express delivery. Others are new start-ups, such as the messenger service Skootar.

But as the express delivery business rapidly expands, the law that governs it is being left behind.

Under the Land Transport Act 1979, goods-carriage operators must register with the Department of Land Transport for licences. Operators must also register their vehicles to transport goods.

Here's the problem. Under this law, only trucks with six or more wheels qualify as goods-transport vehicles.

But the express delivery businesses use small cars, pickup trucks, or motorcycles to deliver small parcels with speed and flexibility. Speed is the main selling point, offering customers same-day or on-demand delivery.

Since the Land Transport Act does not permit small vehicles to transport goods, business operators sidestep the law by registering private pickups for goods carriage under the Vehicle Act 1979. But the problem does not end there.

Under the Vehicle Act, private pickups are confined to personal use and cannot be operated for delivery businesses, with violators facing a 2,000-baht fine. Meanwhile, breaking the Land Transport Act by using vehicles for unregistered purposes carries a one-year jail term, 20,000-baht fine, or both.

Motorcycles do not face the same limitation. They can be registered as private and public motorcycles under the Vehicle Act and then legally used for commercial transport of goods.

So far, no one has been arrested for using an unregistered vehicle to transport goods. But if state authorities choose to enforce the law, delivery operators who use pickup trucks will face severe penalties.

Change is necessary. This outdated law must be amended if the government wants the express delivery business to maintain its growth spurt.

First of all, the law must give room for more categories of vehicles to be used in the goods-carriage business. Currently, the Land Transport Act allows only nine types, all of them big trucks. Pickup trucks should be added to the list, so that operators no longer need to evade the law and be prey to routine police extortion.

In addition, the Department of Land Transport should undertake a feasibility study on loosening the definition of private vehicles. The new law should allow private vehicles to be used for commercial transportation to provide extra income for owners, thereby boosting the economy.

Allowing private vehicle owners to join the delivery business will help business operators cut the cost of creating their own transport networks.

In fact the business is already heading in this direction, with some express delivery operators inviting private vehicle owners to join their network.

Thailand and its business environment is undergoing dramatic change at the hands of disruptive technology, and the goods transport business is no exception.

If the law doesn't move with the times, it becomes a heavy chain that holds back the country, society and the economy.

Laws governing vehicles and land transport are now 40 years old. If the government wants the express delivery business to grow in parallel with rapidly expanding e-commerce, the outdated laws must be amended to keep up with the times. There is no other choice.


Urairat Jantarasiri is a researcher at the Thailand Development Research Institute (TDRI). Policy analyses from the TDRI appear in the Bangkok Post on alternate Wednesdays.


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