The strategic planning unit of the Ministry of Commerce has suggested all stakeholders to observe the assaults within the Red Sea and the Israel-Hamas battle to evaluate the potential impacts.
An escalation of the conflicts might adversely have an effect on the Thai economic system, each instantly and not directly, mentioned Poonpong Naiyanapakorn, director-general of the Trade Policy and Strategy Office (TPSO).
Since the Yemen-based Houthi rebels started attacking and seizing cargo vessels related to Israel navigating by means of the Bab-el-Mandeb Strait within the Red Sea on Nov 19 final yr to display resistance towards Israel’s actions in Gaza, the essential international commerce route has grow to be a choke level, he mentioned.
If assaults proceed within the strait, it might have an effect on varied provide chains and international crude oil transport, mentioned Mr. Poonpong.
The Red Sea, by way of the Suez Canal in Egypt, serves as a significant commerce route between Asia and Europe, protecting 12% of worldwide maritime commerce routes.
This elevated transport prices on varied different routes in addition to these passing by means of the Red Sea and the Suez Canal, inflicting Thai items destined for the Middle East, Europe, Northern Africa and elements of the jap US to grow to be costlier.
According to knowledge from the Thai National Shippers’ Council, as of the second week of 2024, freight charges considerably elevated from December 2023 on the Thailand-Jebel Ali (United Arab Emirates (UAE)), Thailand-Europe (important ports), Thailand -US west coast, and Thailand-US east coast routes.
On the Thailand-Europe route, freight charges elevated by 252% for 20-foot containers and 196% for 40-foot containers, reaching US$3,200 and $4,500, respectively.
Additionally, exporters are grappling with additional bills similar to transport system interruption charges, port congestion charges, extra service prices throughout peak intervals, and emergency charges.
In phrases of the affect on Thailand’s exports, a TPSO research discovered shipments to Europe predominantly use the Red Sea route, accounting for greater than 8% of whole Thai exports.
Key export merchandise similar to computer systems, air conditioners and elements, digital circuit boards, vehicles and auto elements, clothes, rubber merchandise, processed rooster, and wheat merchandise might face transportation challenges due to transport points.
In phrases of Thai exports to the Middle East, the route is essential for transport to Jordan and Israel, contributing about 10% of Thailand’s commerce with the area, famous the research.
However, 90% of Thai exports are transported by way of ports within the UAE, then distributed to different nations within the area. Therefore, the general affect on exports to the Middle East might not be considerably affected, mentioned the workplace.
According to Mr. Poonpong, the assorted conflicts within the Middle East have the potential to unfold to different areas and contain different nations instantly.
Although the battle zone has not expanded past Gaza, there have been intermittent clashes between Israel and varied armed teams in Lebanon and Syria.
This has raised considerations that the battle might escalate regionally, resulting in the closure of the strategic Strait of Hormuz, a crucial oil transport route accountable for 21% of each day oil shipments globally, equal to 21 million barrels.
He mentioned the affect of this strait closing can be vital for Thailand, because the nation depends closely on imported crude oil from the Middle East.
In 2023, half of Thailand’s power imports (crude oil, pure fuel and refined oil) got here from Middle Eastern nations, primarily the UAE, Saudi Arabia and Qatar.
Closure of the Strait of Hormuz would block off Thailand’s oil imports quickly, resulting in crude oil shortages and hovering oil costs, affecting industrial manufacturing and the transport sectors.
Such a pivot might probably lead to inflation and value of dwelling challenges, mentioned Mr. Poonpong.
In addition, the Strait of Hormuz performs an important position in Thailand’s exports to the Middle East. Most Thai items are shipped by means of the strait to succeed in the port of Jebel Ali within the UAE.