THAI, Itochu join in distribution venture
Thai Airways International Plc and the Japanese trading firm Itochu will set up a joint venture to build a distribution centre at Suvarnabhumi International Airport to deliver parts and hi-tech products from Japan to manufacturers in Thailand.
With the joint venture, Thai Airways stands to expand its revenue from the cargo business, which generates 17 per cent of its annual revenue of Bt20 billion. Meanwhile, Itochu - which will shift its distribution centres from Singapore and Kuala Lumpur to Bangkok - will save operating costs due to the shorter distance between Tokyo and Bangkok. "Together we will operate the distribution business in Thailand by using the new airport as the centre," said Chanchai Singtoroj, Thai Airway's managing director of commercial cargo and mail. The joint venture has not been named yet, nor has the size of its registered capital been finalised. However, it is set to begin operating on the same day the new airport is scheduled to open, September 28. Chanchai said the joint venture will invest about Bt100 million in the distribution centre, of which about 30-35 per cent will be from the airline and the rest from Itochu. The distribution centre will be located in the Customs Free Zone, where Thai Airways' cargo complex will be located. It will occupy 5,000 square metres. Chanchai said the joint venture is the first stage in the airline's effort to expand into the distribution business to cash in on logistics development in Thailand, where turnover is expected to grow by 6.5 per cent annually. The company will gain more revenue from the centre by offering delivery and shipment. About 17 per cent, or Bt20 billion, of the national carrier's total revenue is from its cargo and mail department, and it hopes that the revenue from its cargo business will grow about 5 per cent annually after the new airport opens. Chanchai said the centre would handle mainly small objects, especially computer parts, electronic components and hi-tech parts. It will deliver the items to customers nationwide and overseas. While most would be distributed to Japanese manufacturing plants, the rest would be re-exported to Itochu's clients elsewhere. "Thailand has become a very important country as a distribution centre for Itochu because there are so many Japanese companies here," said Chanchai. "The centre will boost revenue for both parties," he added.
Suchat Sritama The Nation
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