Logistics providers operating in Thailand and the companies they service are no strangers to supply chain risk, and the latest installment of martial law imposed nationwide on May 22 saw them again reaching for contingency plans.
A nighttime curfew from 11 p.m. to 5 a.m. was introduced after the Thailand’s military seized power, imprisoning political leaders and clamping down on traditional and social media.
The restrictions raised fears that the delivery of cargo and the nighttime operation of air freight terminals would be affected. However, DB Schenker sought clarification from the army and told the JOC that transporting goods would be allowed during the curfew hours provided authorization was first secured with the military. Sealed containers, however, might be inspected.
“The DB Schenker fleet and our subcontractors have secured this authorization,” DB Schenker spokesman Andrew Seah said.
Air cargo flowing through Bangkok’s Suvarnabhumi International Airport is particularly vulnerable to disruption from the political turmoil. In January, protesters only threatened to close the airport, but in 2008, anti-government riots shut down Suvarnabhumi for nine days, forcing logistics providers to find alternative ways to keep goods moving through their supply chains.
Fortunately, a steady rise in the number of visitors to Thailand during the past decade — tourist arrivals grew 20 percent year-over-year in 2013 — has created a wide network of international airports across the country, and many feature in the contingency plans employed by logistics operators.
Seah said business continuity plans could not be standalone, sequential or linear as the provision of logistics services required a network solution. “So the contingencies and alternatives should cover every available mode and transport option to keep the supply chain moving,” he said.
Alwyn Mendonca, managing director, Gulf Agency Company (Thailand), said based on previous experience, Bangkok’s old Don Muang International Airport, U-Tapao International in eastern Thailand and Chiang Mai International airport in the north were all possible alternatives should Suvarnabhumi be unavailable.
“Other airports in Thailand will be an option, but their viability depends on their capacity and the flexibility of each airline to suddenly shift service. Perishable cargo will be most affected by any national airport disruption,” he said.
For Mathias Madritsch, regional director for sales management, marketing and communications at French logistics provider SDV, it was simple: “We have done it before when the airport was closed before the last coup. We trucked cargo to the nearest open airport.”
Morten Damgaard, Agility CEO for Southeast Asia, said key verticals served and requiring air cargo included high-tech, retail, chemicals, automotive and perishables, and if Bangkok airport were closed, there were options to keep customers’ supplies coming in.
“This includes road freight service to Malaysia or Singapore and then air freight on to final destination, or to use combined sea-air freight via Singapore,” he told the JOC.
Kerry Logistics is also keeping its options open. “If ever the Bangkok airport is shut off, we can divert cargo to other nearby airports at Don Muang, Chiang Mai, Had Yai or Phuket,” a spokesman for the Hong Kong-based 3PL said.
Global logistics providers routinely build business contingency planning into their supply chains, but no matter how efficient or innovative those plans may be, the closure of Bangkok airport would cause massive disruption.
Suvarnabhumi International is the world’s 20th-busiest cargo airport, with a 2013 throughput of 1.23 million tons. In the first four months of this year alone, the airport handled more than 400,000 tons of cargo, and a significant amount of that was perishables and time-sensitive shipments.
By way of comparison, Singapore Changi Airport, Southeast Asia’s busiest hub, reported a throughput of 1.85 million tons in 2013.
The greatest impact on logistics companies so far seems to be traffic; the 11 p.m.-to-5 a.m. curfew has had the effect of worsening Bangkok’s legendary gridlock.
Desmond Chan, managing director of Menlo Worldwide South Asia, said some domestic deliveries to customer stores were being delayed and have had to be rescheduled.
Logistics companies appear to be taking the latest Thailand crisis in their stride, but if the dire warnings of an Asia-Pacific risk consultancy are correct, it will not be business as usual for much longer.
“Those businesses heavily reliant on air freight or on key distribution or just-in-time manufacturing should make contingency plans now in the event of disruption to air and road transportation,” Steve Vickers Associates said in a report.
“This situation will rapidly evolve over the coming two weeks. Previous assumptions that military coups will not affect foreign businesses or interests operating in Thailand may not apply to this situation.”