B R I D G I N G T H E G A P : THAILAND AS THE NEXT MRO AND LOGISTICS HUB

CHART I: GLOBAL MRO SPENDING 2017, 2023 & 2028 FORECAST IN US$bns

CHART II: GLOBAL LOGISTICS MARKET REVENUE, 2017-2021 (US$bn)

CHART III: LOGISTICS REVENUE BY MODE OF TRANSPORT, 2022 FORECAST (US$bn)

In the era of globalization and international trading, coupled with ease of communication and travelling, Aviation and Logistics are becoming the cornerstone for global trade. The changing demographics and growing purchasing power stirred the growth of the industry, particularly in the Maintenance, Repair and Overhaul segment. The rise in

tourism created a domino effect for both the Aviation and MRO industries. This only proves that a growth in the tourism sector acts as a catalyst for the Aviation & Transportation sector, thus creating more demand for MRO services.

Global logistics market has been experiencing a steady growth and it is forecasted to continue the upward trend growing at a steady rate.

The logistics market is comprised of 4 segments based on the mode of transportation; Airway, Railway, Roadway and Waterways. As we look at the infrastructure side of things, the biggest share in Global Freight and Logistics is attributed to Roadways, particularly in the Europe and APAC region. This was due to the increasing trade activities

by the 2 regions.

GLOBAL TRADING PUSHING THE BOUNDARIES: AVIATION & LOGISTICS

B R I D G I N G T H E G A P : THAILAND AS THE NEXT MRO AND LOGISTICS HUB

ST Aerospace, Haeco, GE Aviation, AAR, SIA Engineering, AFI KLM E&M, Lufthansa Technic, Ameco Beijing, JAL Engineering, MTU

Key MROPlayers

Source: Oliver Wyman Global Fleet & MRO Market Forecasts

Source: Technavio

2017

862 905 957 1020 10941500

1000

500

02017 2018 2019 2020 2021

2023Ye a r

Ye a r

Rev

enue

,U

S$bn

2028

7792

115

1

CHART I: GLOBAL MRO SPENDING 2017, 2023 & 2028 FORECAST IN US$bns

CHART II: GLOBAL LOGISTICS MARKET REVENUE, 2017-2021 (US$bn)

CHART III: LOGISTICS REVENUE BY MODE OF TRANSPORT, 2022 FORECAST (US$bn)

GLOBAL TRADING PUSHING THE BOUNDARIES: AVIATION & LOGISTICS

DB Schenker, Deutsche Post DHL Group, Kuehne + Nagel, DSV, C.H. Robinson, Rhenus, Panalpina, United Parcel Service (UPS) Supply Chain Solutions, and Geodis

Key LogisticsPlayers

Source: Allied Market Research

ASIA: ENGINEERING ITS WAY UPIn 2017, APAC accounted for 30% share in the MRO sub sector. APAC will be one of the highest growing

regions in MRO subsector, due to forecasted increase in commercial aircraft and rising passenger demands. China accounts for largest market share in the region and the country’s share is expected to reach $10 bn by 2022. At the same time, by 2027, APAC is estimated to triple the amount of aircraft in-fleet, reaching almost

14,000 aircrafts. In the MRO subsector, engines will be the major driver of MRO demand with an annual growth rate of 6.9%.

At the same time, major airline carriers are focusing their efforts in the expansion of MRO capacities and OEM manufacturing facilities in Asia. Boeing and Airbus continue to expand their presence in Asian MRO market by

alliances and establishing local aftermarket facilities.

In 2016, Malaysia launched a plan to create KLIA Aeropolis, aviation hub

for air cargo, logistics, aerospace and aviation services

In April 2018, ST Aerospace and Vietnam Airlines have signed a MoU to set-up a MRO joint venture in Vietnam

The Aerospace Roadmap (2013-2022) of the Philippines aims to make the

country the MRO hub in Asia(manufacturing of OEM parts and

allied services such as MRO)

Airways

Waterways

Railways

Roadways

0 1000 2000 3000 4000 5000 6000 7000Revenue 2022F

21

CHART IV: APAC LOGISTICS MARKET REVENUE, 2016 - 2021 (US$bn)

CHART V: THAILAND MRO DEMAND, 2017, 2027 & 2037 FORECAST (US$bn)

Source: Allied Market Research

Source: The World Bank, Frost & Sullivan Analysis

The logistics sector is experiencing high growth due to an increasing demand in e-commerce and manufacturing boom in China associated with enormous investment in business parks and upgradation of modern logistics facilities. Moreover, shifts of manufacturing production towards SEA backed by infrastructure investments will

accelerate the regional growth in the logistics sector.

A few of the National Logistics Master Plans in Asia include:

Thailand is strategically located in Asia, where a lot of tourists have been coming in and out of the country. As a result, inbound and outbound flights have increased, thus creating a domino effect that has led to a strong demand

for MRO services.

The MRO market in Thailand is expected to grow at a CAGR of 5.7% for the forecast period 2017 to 2037. The sector is expected to lead job creation for the country in the next 20 years.

Thailand logistics revenues are forecasted to reach US$ 96.5 bn by 2019. In line with the growing demand, government initiated some projects in the logistics subsector.

Singapore’s Logistics Industry Transformation Map (ITM) was

launched in 2016 to reinforce the country’s position as the leading logistics hub in the global arena

Logistics Industry Transformation Map (ITM)

National Logistics Master Plan (2017–2022)

National Logistics and Trade Facilitation Masterplan (2016-2020)

Singapore Philippines Malaysia

Launched in the first quarter of 2017, it is envisioned to increase the country’s competitiveness through the development of the transport

and logistics sector

Malaysia’s National Logistics and Trade Facilitation Masterplan (2016-2020) outlines strategy to improve the logistics sector to boost trade

and enhance the country’s economy

THAILAND’S TAKE-OFF

302 321 342 366 396 430

2016 2017 2018 2019 2020 2021Ye a r

9741612

2946

2017 2027 2037Ye a r

3

CHART IV: APAC LOGISTICS MARKET REVENUE, 2016 - 2021 (US$bn)

THAILAND AVIATION MANUFACTURING SUPPLY CHAIN: OEM: DESIGN, ASSEMBLY, INTEGRATION (AND SERVICE) OF AN AIRCRAFT

CHART V: THAILAND MRO DEMAND, 2017, 2027 & 2037 FORECAST (US$bn)

National Logistics and Trade Facilitation Masterplan (2016-2020)

Malaysia

1

2

3

Ti e r

Gear, screw, bolt, structure

cable, and electrical wire

Aviation part, apparatus,

electronic, propeller

Engine, navigation system,

electrical power, fuel system

MRO center and Cross-border Logistics

Center at Nakorn Phanom by 2020

Logistics Center in regional cities is under

construction

The ‘Sustainable Freight Transport and Logistics in the

Mekong Region’ established by EU and Deutsche Gesellschaft fuer International Zusammenarbeit (GIZ)

(June 2016)

Thailand Post plans to spend THB 10 bn to

establish two fully automated

sorting centre by 2022

Some of the Logistics Companies in Thailand: Thai Cargo, S.C. Shipping Inter Service Co. Ltd., Kerry Express, JWD InfoLogistics Co. Ltd., SCG Logistics Management Co. Ltd., Thailand Post Co. Ltd., Impex Trading Co. Ltd., Precious Shipping Public Co. Ltd., Siam Shipping, ThaiSomdej Logistics Bangkok Parcel Service

MRO Companies in Thailand: Truimph Aviation Servies-Asia , Chromalloy Thailand, Scandinavian Aircraft Maintenance (SAMTHAI) Rolls-RoyceManufacturing companies in Thailand: Ducommun Technologies (DTI), Driessen Aircraft Interior Systems, Cobra International Co., Ltd., Leistritz, Goodyear Thailand, AVIA Satcom Co., Ltd., Michelin Siam Group

3 4

Thailand has evolved to become the land of manufacturing hubs, due to the low labor costs and its strategic location. Additionally, the country is considered to be one of the largest food exporters in Asia that solidifies the international trade and foreign investments in the country. In line with this, Thailand is on the upswing to become the leading Logistics hub in Asia. The government is further

encouraging growth of the logistics operations by integrating e-logistics across the borders of the Greater Mekong Sub-region and establishing a one stop Export Service Center to reduce time to export consultations and documentation.

On the other hand, the Aviation, specifically MRO space is becoming a fundamental sector for Thailand. Tourism played a vital role and due to

the rising tourist arrivals in the country, the demand for Aviation services has increased at a rapid pace. Another important factor is the education system in the country. There is a growing supply of

aviation professionals (e.g.: Engineers, Pilots, etc.), which solidifies the MRO status of the country.

The Thailand Logistics is mainly triggered by several external forces: Domestic & International Market, Energy Prices and Economic conditions. Also, businesses and SMEs rely heavily on the Logistics Service Providers in

terms of the transportation and storage of their products and services.

THAILAND’S POTENTIAL TO SKYROCKET

GOVERNMENT INITIATIVES

THAILAND LOGISTICS LANDSCAPE:

• BoI Thailand offers corporate tax exemption for MRO and Aviation repair sector ○ 3-8 years with exemption of import duty

• Thailand’s Special Investment Promotion Year (2016) ○ The Aviation and Logistics sectors have been given special tax and non-tax incentives

• 10-15 year CIT exemption• Personal income tax exemption for qualified expertise• Special grants, and financial support for qualified projects through a $0.28 million (THB 10 bn) Competitive Enhancement Fund

• The planned government investment of $56.65 bn (over THB 2 tn) in infrastructure, which covers the East-West Corridor and the Chinese-Laos-Thai rail link

○ Logistics service providers are starting to expand in these areas

• Ministry of Transport’s Infrastructure Development Plan (2015-2022) approved an investment of at least THB 1.8 trillion (USD 51 bn) for 20 mega-projects in logistics and transportation

○ The project covers: roads, rail, air transport and ports throughout the country)

Source: National Economics and Social Development Board (NESDB)

DOMESTIC CONDITION

ENERGY PRICE SURGE

Business Firms/SMEs

Agriculture

Transportation

Domestic Market Regional Market International Market

Service

Non-asset

Manufacturer

Warehouse ICT & Consulting

Trader

Logistics Service Providers

TRENDS OF INTERNATIONAL

TRADEECONOMIC

INTEGRATION

INCENTIVES

GOVERNMENT PROJECT

INVESTMENTS

5

The MICE industry in Thailand can capitalize on the existing and strong production and manufacturing capabilities in Thailand, in order to foster the growth in the MICE sector. In the current setting, Aviation companies are exploring opportunities to enhance their services through heightened MRO services. Apart from that, the growing tourism in

the country suggests a bigger business opportunity for aviation companies to invest in the country for MRO services. The country’s enhanced foreign trade gives a big nudge to expand the logistics centre, as this sector also

is seen as to have high potential.

Now is the right time for Thailand to propel its innovation forward, especially because of the growing economy and development within the country. Thus, more international attention will be placed on the country, which could

positively impact the MICE industry through a surge in conferences, meetings, exhibitions among others.

As a way to strategically grow the MICE industry, stakeholders can consider leveraging on promoting Thailand in terms of production capabilities, manpower, location and technological capabilities to help boost interest among

organizations and raising awareness related to events. Few recommendations include:

KEY TAKEAWAYS FOR MICE STAKEHOLDERS IN THAILAND

OPPORTUNITIES FOR MICE STAKEHOLDERS IN THAILANDTHAILAND LOGISTICS LANDSCAPE:

Key Recommendations Logistics management and warehousing

○ Supply chain and Logistics events ○ Warehousing conferences ○ Fleet management symposiums

1. Technological advancement ○ Automation and cloud technology in Logistics

and warehousing ○ Big data management for warehousing ○ Block chain technology for Supply chain

logistics ○ Innovative Aircraft/MRO solutions ○ Innovations in Supply chain such as predictive

analytics, RFID, software, among others ○ Warehouse innovation conference:

automation, drones/robotics, AI, among others

Key Recommendations 1. MICE stakeholders can facilitate

meetings to promote the Logistics & Aviation services and capabilities of the country to potential investors who would like to establish a hub in Asia

2. MICE stakeholders can hold forums to ensure that trends, opportunities and challenges are identified

Key Recommendations 1. Exhibitions to present latest innovations,

new services and technology in postal servicesa. Unmanned cargo solutions for logisticsb. Digital Transformation in Logisticsc. Disruptive Innovations in Supply Chain

and Logisticsd. Intelligent Logistics

CONVENTIONS MEETINGS EXHIBITIONS

5 6

February 2019

TerrapinnSuntec, Singapore

Aviation Festival Asia

Air Cargo China

4th China Air Logistics Development Conference and Exhibition 2019

Commercial Aviation Services Asia-Pacific

MRO Southeast Asia

The 6th Shanghai International MRO Exhibition

Aircargo ChinaShanghai, China

June 2019

March 2019

GICC GroupGuangzhou City, China

Aviation Week NetworkSingapore

November 2019

March 2019

Aviation Week NetworkKuala Lumpur, Malaysia

MROExpoHongqiao, Shanghai

November 2019

UPCOMING AVIATION AND LOGISTICS MICE EVENTS IN ASIA

© 2018 Thailand Convention & Exhibition Bureau. All rights reserved.