Updated November 11, 2016
Kra Canal and improving logistics inside Thailand
Concerning how the Kra Canal can improve the logistics and decrease the logistics costs in Thailand, I would suggest the following points:
1. The biggest direct benefit of the Kra canal for the INTERNAL logistics of Thailand will be for the South of the country, where the transport infrastructure is completely inadequate.
2. Thailand has no domestic shipping network. The Kra canal and the construction of deep ports and industrial parks on both ends of the canal will change the situation completely. Shipping is the cheapest way to move bulk goods and containers between the South of Thailand and the other areas on the Gulf of Thailand.
3. Thailand is the largest exporter of rubber in the world, and most of the rubber comes from the South of Thailand. Today most of the rubber exports go to China. But the logistical cost for rubber exports is very high, because of lack of good infrastructure in the South.
4.The South does not have any large modern harbor -- Songkhla harbor has very low capacity -- so the rubber going to China is transported by truck all the way to the Laem Shabang port, and partly by train to ports in Malaysia and Singapore, which is a huge expense.
5. With the development of the Kra Canal, the South of Thailand will get new ports, so rubber and other products produced in the South will have a much quicker and less expensive path to the export markets, both to the East and to the West.
6. The Kra canal will also solve another limitation of the Songkhla, which is the disbalance between numbers of containers leaving and returning. With the Kra Canal there will be huge container traffic in both directions, so it will be easy to get containers and shipping capacity for transporting rubber and other products.
7. In the future India will become a big market for Thai rubber and other products from the South of Thailand, in addition to China. The Kra Canal and its ports will give easy access for exporting in both directions.
8. At present the South has very little industry to process its products, so the value-added is small. Most processing industries are in the Bangkok area, which means a big transport cost,
Because of the large traffic that will go through the Kra Canal, it will be advantageous to build processing facilities around the ends of the canal. This means a much shorter transport route from agricultural production areas in the South to be processed and exported with higher value-added. Also this will avoid the costly congestion in the Bangkok area.
9. Generally speaking the Kra Canal will be the key to developing the South of Thailand, giving it much greater economic weight and giving it much more direct access to world markets at low logistical cost.
10. By providing a much shorter sea route from Laem Shabang to the Indian Ocean, the Kra Canal will greatly reduce the logistical cost of exports from the Bangkok area (and the surrounding provinces) to India, Europe and other Western destinations.