The government is looking at incentives such as tax privileges to encourage shipowners to set up a national merchant marine fleet.
Deputy Transport Minister Kuerkul Danchaivichit said the maritime promotion board headed by Deputy Prime Minister Suthep Thaugsuban would meet soon to alter regulations and offer tax privileges to encourage shipowners to register their ships in Thailand.
"We need to offer them incentives as we know that many parties are interested in flying the Thai flag," Mr Kuerkul said.
"The current rules and regulations will remain an obstacle if not revised. The national board will push for these changes and discuss ways to realise a Thai fleet that must be sustainable."
Authorities are studying how the shipping fleets of Singapore and some European countries were set up and what are their strengths and weaknesses.
Maritime Department director general Chalor Kotcharat said the possibility of setting up a national fleet did not depend just on the existence of vessels. It also needed the ability to feed the fleet with customers, which Thailand lacks.
Mr Chalor said the past decision to merge the Office of the Maritime Promotion Commission with the Maritime Department had cost Thailand hugely in terms of lost opportunities to develop its maritime business.
He said he was pushing for the restoration of the OMPC with the freedom to initiate new ideas to improve the country's maritime operations.
This would free up the Maritime Department for other duties.
Shipping companies are expected to perform better in the current quarter than in the first three months, thanks to soaring imports into China, with experts projecting the industry's key index will break the 3,000 level later this year.
The Baltic Dry Index (BDI), the most widely used measure of commodity-shipping rates, has shot up by 48% since beginning of this month from 1,786. The index went up for a 13th straight day to 2,644 on Tuesday, prompting analysts to upgrade earnings estimates of shipping firms for the rest of the year.
Asia Plus Securities increased its net profit estimates for Precious Shipping Plc (PSL) by 11.9% this year and 5.2% in 2010 when the BDI is expected to top 5,000. After the review, PSL's profit is forecast at 3.45 billion baht, a drop of 39% from 4.9 billion baht in 2008.
CIMB-GK Research said that as dry bulk prospects have improved, Thoresen Thai Agencies (TTA) is also expected to perform better in the second quarter. The country's largest dry bulk carrier posted a drop of 95% in net profit to below market estimates in the quarter to March.
PSL managing director Khalid Hashim explained the sharp rise of the BDI recently as driven by an "extremely high" volume of iron ore imports for China.
In the first four months of this year, the mainland imported more than 188 million tonnes of ore and, if annualised, would equal 566 million tonnes, up 27.4% from 444 million imported last year.
"This spike in demand over a very short period of time was coupled with increased scrapping and delays in deliveries of new ships," he said. "Congestion at iron ore loading and discharge ports has further exacerbated the shortage of Cape-size ships and pushed rates even higher."
Other reasons for the rise in the BDI are inventory restocking and trade finance conditions improving in the first quarter over the paltry levels in the last quarter of 2008, added Mr Hashim.
However, PSL still believes the BDI will remain low compared to levels during the last four to five years.
"As the demand for dry bulk shipping is derived from world gross domestic product, we expect the BDI to drift downward as world GDP figures are still slowing and new ship deliveries are still outpacing scrapping efforts," he acknowledged.
PSL expects earnings per day per ship to average $14,000 this year. In the first three months, the company's net profit slid to 843 million baht from 1 billion in the same period of 2008.
So far, PSL has sold 12 ships from the 44 in the fleet, nine of which were physically handed over to the new buyers. The other three ships are still trading and would be delivered in due course, he noted.
UOB Kay Hian expects TTA to further downsize its existing fleet to trim maintenance costs after selling two ships in the first quarter. Up to five additional old vessels might be retired later this year.
TTA profits plunged to 996 million baht in the first half of its 2009 fiscal year from 4.68 billion a year earlier.
Shares of PSL closed yesterday on the SET at 17.20 baht, down 50 satang, in trade worth 91 million baht. TTA shares fell 1.30 to 19.90 baht, in heavy turnover worth 1.3 billion baht.
Thoresen Thai Agencies (TTA), the country's top dry bulk carrier, has further downsized its fleet to trim costs even though shipping rates have continued to rise rapidly.
The Baltic Dry Index (BDI), the most widely used measure of commodity-shipping rates, climbed to about 3,500 points at the end of May, 90% up on the previous month, and is on course to top 4,000 by the end of June, analysts say.
TTA confirmed yesterday it sold a loss-making vessel, following the recently announced sales of two ageing ships in the first quarter. The company's fleet now comprises of 39 vessels.
But analysts expect TTA to sell more ships despite the shipping industry's improving prospects. Kim Eng Securities (Thailand) anticipates two more vessels being sold by the end of the third quarter. TTA declined to confirm this.
The brokerage, however, has upgraded TTA's earning estimates for 2010 to 2.1 billion baht from 1.87 billion. A net profit of 1.36 billion baht is expected this year, a huge drop from 8.33 billion baht in 2008 when the BDI topped 11,000 points in mid-May.
"We have upgraded our short-term outlook [of TTA] based on the rising BDI in April and May, which pushed time charter rates in the second quarter," said Daowadee Teera-apisakkul, shipping analyst at Kim Eng.
The index finished at 3,494 points on May 31, up 90% from the previous month due to increasing Chinese demand for iron ore, while port congestion has tightened vessel supply, she said.
Meanwhile, Jutha Maritime Plc is upbeat about its financial results in the second quarter and the latter half of 2009, saying the BDI has bottomed out.
In addition to improving trade with China, Jutha's president Chanet Phenjati said a significant rise in the scrapping of dry bulk carriers has caused the BDI to jump. In the first four months of this year, 359 dry cargo carriers totalling 9.62 million dead weight tonnes (DWT) were scrapped, an increase of 1,644% from 551,900 tonnes in the same period of last year.
"The worst is over for us," he said. "We will perform better in the current quarter than the first quarter, thanks to the better-than-forecast rebounding of the BDI."
Mr Chanet said Jutha is on track to achieve the total revenue of 800 million baht this year, up 17% from 2008, even though only 173 million baht was made in the first three months. Its net profit sank to 6.5 million baht from 49.65 million in the same period of last year.
A new ship will be delivered to Jutha in September, bringing its total fleet to eight vessels, including five charters and three liners. Jutha was awarded a vessel management contract from a European carrier, generating an additional income of $300 per day.
But Jutha will fail to pay dividends for another year in 2009, saying it has to reserve cash for payment of the eighth ship. About 80% of the $19-million vessel is financed by bank loans with the rest owned as equity, Mr Chanet said.
Shares of Jutha closed yesterday on the Stock Exchange of Thailand at 4 baht, up 30 satang, in trade worth 382,000 baht. TTA shares finished at 24.30 baht, up 2.30 baht, in trade worth 1.79 billion baht.
The Transport Ministry expects to forward the Pakbara seaport construction project in Satun for the Cabinet's consideration on Tuesday, Deputy Transport Minister Kuakul Danchaiwijit said yesterday. Transport Minister Sophon Saram said the government might not be able to afford the investment of Bt11.47 billion and might have to invite private firms to invest in the project.
However, it is still to be decided whether the government will jointly invest in the project or allow private firms to take part on their own, he said.
The ministry has assigned the Marine Department to study the possibility of allowing private firms to invest in the construction project.
Kuakul said the Office of Natural Resources and Environmental Policy Planning had granted environmental-impact assessment approval to the project on June 16.
The port will accommodate ocean-going vessels of 50,000-70,000 dead-weight tonnes, opening a new gateway from northern and northeastern Asia to Europe, the Middle East and Africa.
It is expected to take five years to complete. Of the Bt11.47-billion cost, Bt8.63 billion will be for construction materials and equipment.
Meanwhile, the Cabinet has approved a budget of Bt1.55 billion for the construction of the Chiang Saen 2 port in Chiang Rai province.
Port and Marine Corp is expected to begin construction work this month and finish the project within 960 days.
The Port Authority of Thailand (PAT) expects shipments in tonnes volume to jump as two large Israel-based ships are due to arrive at Laem Chabang Port by August.
Sunida Sakulratana, acting PAT governor said yesterday that the two ships, which belong to Zim shipping line would arrive at the Laem Chabang Port by the end of July and early August respectively.
"They are considered as superships, equivalent to a seven-storey building. One is capable of carrying 8,000 containers, or TEUs (20-foot equivalent units), and the other can transport 10,000 TEUs".
She said the two vessels would tranship from Asia Pacific to Canada and the US, transiting Hong Kong and China.
Traffic at Bangkok Port and Laem Chabang Port recorded a drop in the first eight months this fiscal year (October 2008/September 2009) in line with the contraction of imports and exports, marking an average drop of more than 20 per cent. Consequently, shipping traffic at Bangkok Port and Laem Chabang for the full year are expected to be down.
She said in the first eight months (October 2008-May 2009), shipping traffic at Bangkok Port was down 13 per cent on year to 1,702 arrivals. Shipments by volume dropped 18 per cent to 14.93 million tonnes and container traffic dropped 16 per cent to 841,000 TEUs.
The PAT acting governor said that for the whole of 2009, traffic at Bangkok Port is expected to be down 9 per cent, shipments by volume to be down 16 per cent, and container traffic down 14 per cent from last year.
Laem Chabang Port's shipping forecast for the whole year is expected to be down 9 per cent to 4,978 arrivals, cargo shipments to fall 17 per cent to 45.35 million tonnes, and TEUs to drop 15 per cent to 4.44 million. The traffic projection for the whole year is not much better than its eight-month figures.
Sunida that for this year, PAT expected to post Bt2.2 billion net profit, compared to Bt2.31 billion last year, on revenue of Bt9.2 billion, down from Bt9.9 billion last year. Out of total revenue, Bt7.8 billion will be from port activities and Bt1.4 billion from non-port operations.
To support the country's logistics development plan, Deputy Transport Minister Kuakul Danchaivijit said yesterday that the ministry is preparing additional eight projects regarding maritime transport development worth Bt4 billion to propose to the Cabinet. If approved, the projects will start from next year and be completed in 2012.
Maritime Department director-general Chalor Kotcharat said that the authority would continue the Bt1.3-billion multi-purpose port project at Klong Yai in Trat after receiving Cabinet approval on July 14. The port will support transport between Thailand and neighbouring countries such as Cambodia and the south of Vietnam, which now records annual border trade totalling Bt15 billion.
Arrival of mega-ships raises hope for Thai exports
BANGKOK, July 17 (Reuters) - The world's biggest ships are heading for Thailand for the first time, sent by an Israeli shipping firm and raising hopes of a rebound in Thai exports in the second half of the year, officials and exporters said on Friday.
A vessel with capacity of 8,000-10,000 twenty-foot equivalent units (TEUs) is due to reach Thailand's Laem Chabang port on July 23 to load goods ranging from rice to electronics and pick-up trucks, destined for the Americas, a senior official at the Port Authority of Thailand (PAT) told Reuters.
"Another mega-vessel will come on Aug. 6. It signals that more Thai produce will be shipped to clients in the second half of the year, reflecting better demand," said Nipon Petchtul, the PAT vessel operations controller.
He said it was an initiative of an Israeli-based shipping firm, Zim, to send such huge vessels to Thailand for the first time, anticipating a rise in demand.
Israeli shipping firm Zim, a unit of holding company Israel Corp , said on Monday it had received the first of 12 vessels it had ordered to meet an anticipated surge in demand as the global economy recovers.
A few more such vessels were expected to operate in Thailand, transporting Thai products to several destination in the Pacific region, Nipon said.
Thai exports, which fell a record 26.5 percent in May from a year earlier, were expected to recover slightly in the second half of 2009, with traders and officials expecting an average contraction of around 15 percent for the whole year.
Traders and exporters said they expected to receive more orders in the second half as buyers would have to order stocks to serve demand during the Christmas and New Year holidays. "For rice, I expect we could sell more as it seems like India will keep its ban on rice exports," said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.
Pornsil Patchrintanakul, deputy secretary-general of the Thai Chamber of Commerce, broadly agreed with that but was cautious about the overall export trend.
"I don't think food and farm exports will be too bad in the second half. However, I don't really expect a sharp rise in exports by the end of this year," he said.
PHUKET CITY: The public organization pushing to develop the Ao Phuket mega-project off Saphan Hin is conducting public hearings to gauge reaction to the possibility of designating all of Phuket as a special administrative zone for sustainable tourism.
Designated Areas for Sustainable Tourism Administration (Dasta), a public organization whose board answers directly to the Prime Minister’s Office, held the first in a series of public hearings with representatives from Muang, Thalang and Kathu districts at the Royal Phuket City Hotel on June 30.
The Dasta board was last in Phuket in May last year, when Samak Sundaravej’s government gave the agency the green light to develop a 100-billion-baht mega-project, including a convention center and marina, in Phuket Bay.
Subsequent public hearings at the time led to a request for more of Phuket to come under Dasta’s purview.
Through its consultant firm Phisut Technology Company, Dasta has organized a series of ten public hearings this month to include all of Phuket’s local administration organizations.
The first of these was held at the Phuket Merlin Hotel on Monday, when the Dasta administrative framework was presented to representatives from Phuket City and Wichit municipalities.
Most of those present were in favor of putting Phuket City and Wichit under Dasta administration.
Dr Prasit Koysiripong, president of the Old Phuket Town Foundation, said a Dasta listing would improve the lives of Phuket City residents and aid in preserving the historically significant areas of the old quarter.
Thiti Sawisai, who heads the Phuket City Environment Protection Community, was less impressed.
Dasta’s stated objectives are laudable, but the agency seems to lack specific measures to meet these objectives, especially where environmental protection is concerned, he said.
“The project is unclear on how problems would actually be solved. Since Phuket is like a beloved daughter to us I really don’t agree with this project,” he said.
To this, city planner Somchai Poetiwongsajarn of Phisut Technology said specific measures would follow only after an area has been listed under Dasta and detailed studies conducted.
Two areas in Thailand are currently listed under Dasta: Koh Chang in Trat province and Chiang Mai Night Safari. Pattaya is also in the process of becoming listed.
“At first we wanted to list only the Ao Phuket project under Dasta, but now we are considering listing the entire island. It is up to the people to decide,” Mr Somchai said.
As the Dasta board reports to the Prime Minister’s Office, project reports and proposals are submitted for approval directly to Cabinet, thus bypassing normal bureaucratic procedures, he added.
Following the public hearings, Dasta could apply for a Phuket listing. Cabinet approval would take about three months, he said.
If granted, Dasta would then set up a local office and draw up a list of specific projects for implementation.
The office would be staffed in part by Phuket residents, who would be responsible for collecting the required information and liaising with local administrative bodies tasked with carrying out the work.
As for funding, income derived from Dasta projects would be remitted to local administrative bodies and not back to the central government, thus ensuring that local people benefit, he said.
Dasta executive board member Rajatin Syamananda, who has pushed for the Ao Phuket project since his time as Director General of the Interior Ministry’s Department of Town and Country Planning, also attended the hearing in Phuket City.
Mr Rajatin insists that any Dasta project, including Ao Phuket, will only move forward with solid public support. He is still keen on the Ao Phuket project, however.
The project would remove a layer of mud and tin mining dregs covering 10,000 rai of Phuket Bay and restore the bay’s natural sandy bed, he said.
Dasta listing would also help address the other pressing environmental issues facing Phuket City, such as solid waste management and wastewater treatment.
Problems in both of these areas are the result of poor city planning, he told the meeting.
One of the many computer-generated images of what shape the Ao Phuket could take. This one was presented by the Norwegian marine engineering firm LMG Marin last year.
The Maritime Promotion Board meets today to decide whether to upgrade the Maritime Promotion Bureau to a department so it can better deal with problems surrounding the setting up of a national commercial fleet.
The bureau now comes under the Harbour Department. The board is chaired by Deputy Prime Minister Suthep Thaugsuban.
Deputy Transport Minister Kuerkul Danchaivichit yesterday said upgrading the bureau to a department would give it more decision-making powers.
Mr Kuerkul said the department could begin operating by early 2011 if everything went smoothly.
The Office of the Public Sector Development Commission would determine staffing levels and funding needed for the new department should it be approved.
Under the reorganisation plan, the Harbour Department would be responsible for navigation services and developing infrastructure such as new ports.
Mr Kuerkul said the Maritime Promotion Board would discuss whether to scrap the troubled TMN Co, a company set up by the state-owned Thai Maritime Navigation Co, which holds a 30% stake, and 23 private shipping companies to operate a national commercial fleet.
The shareholders have all contributed funds to the project but further progress has been held up by alleged irregularities.
Mr Kuerkul said the Finance Ministry, a major shareholder in Thai Maritime Navigation, might be asked to take up the company's entire 30% in TMN to solve the company's problems.
The board would discuss the matter today.
Things became complicated after transport authorities under the Thaksin administration allegedly favoured certain private operators entering the joint venture in 2006.
PAT to organize welcoming ceremony for Zim Djibouti vessel
BANGKOK, 3 August 2009 (NNT) - The Port Authority of Thailand (PAT) is preparing to hold a welcoming ceremony for the Zim Djibouti, one of the world’s largest vessels.
Deputy Transport Minister Kuakul Danchaiwijit declared that the PAT would arrange a welcoming ceremony for the Zim Djibouti vessel on 7 August at C1 and C2 Terminals of Laem Chabang Port. The Zim Djibouti is a container ship constructed in South Korea with the capacity of 10,062 twenty-foot equivalent units (TEU) and will serve the Pacific Northwest Express (PNX) loop from East Asia to the North American West Coast. The vessel will cut the transportation duration, raise competitive potential, and support growth in trade between North America and Asia.
In addition, the arrival of the mega vessel in Thailand will be a sign of confidence among container ship entrepreneurs towards the Thai economic recovery, Laem Chabang Port, and the nation’s ability to become a sea transportation hub of the world in the future.
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