Thai agricultural products exported to China through road and rail transportation amount to approximately 100 billion baht annually.
Thai agricultural products were predominantly transported to China via land borders prior to the opening of Laos-China Railway.
There are still several challenges impeding the railway from becoming the primary route for transporting agricultural goods.
Thai products have gained significant popularity among Chinese consumers for many years. In particular, agricultural goods, including highly sought-after fruits like durian, longan, and mangosteen, hold a special place in the hearts of Chinese buyers. Currently, Thai agricultural products exported to China via both road and railway routes contribute to an annual trade value of approximately 100 billion baht.
Before the launch of the Laos-China railway, the majority of Thai agricultural products destined for China were transported across land borders, commonly known as “transit transportation.” Among these routes, R12 and R3 were the primary channels for exports. Notably, the R12 route accounted for 75 percent of the total value of agricultural products exported to China, equivalent to approximately 75 billion baht, while the R3 route constituted the remaining 25 percent.
The recent inauguration of the Laos-China railway, considered a flagship project of the Belt and Road Initiative (BRI) in Southeast Asia, has sparked curiosity about the potential benefits it holds for Thailand. Kawin Viriyapanich, Director of Thai Trade Center in Vientiane, discusses the opportunities and challenges for Thai products in China.
With improved efficiency, the transportation time via the railway has significantly reduced from 14 days to just three days. This time reduction, coupled with competitive costs, has resulted in an increasing number of exporters opting for railway transportation. Moreover, apart from agricultural goods, the railway has also become a viable means for exporting industrial goods, such as electrical transformers and printed circuit boards, to China.
While the railway shows promise as a transportation route, several factors hinder its complete substitution of the R12 and R3 routes. First, the primary market for fruit retail and wholesale in China is located at the Youyiguan checkpoint, serving as a central hub for fruit imports via land, water and rail. This strategic location facilitates efficient distribution throughout China, leading many exporters to prefer direct transportation to Youyiguan instead of the railway route to Kunming.
Additionally, exporters are considering the trade-off between price and transportation duration. “Some are willing to pay more for speed, some opt for cheaper costs. The factors are different for each company,” he says.
Rail transport is considered suitable for high-value goods, resulting in a significant volume of durian, a premium-priced fruit, being transported via the railway, while other fruits are transported using more cost-effective alternatives.
As the Director of the Thai Trade Center in Laos, responsible for facilitating trade activities between Thailand and China, Kawin emphasises the centre’s commitment to coordinate with transportation service providers. The aim is to ensure smooth operations and a promising future for Thai exports, particularly in relation to the growing use of the railway as a means of transporting goods.
Words by: Natanit Tanmanasiri
Photo courtesy of Thai Trade Center, Vientiane
