(Bloomberg) -- Thailand is turning to a less-traveled path to bypass supply-chain roadblocks and deliver perishables to China, its biggest customer in Asia.
Most agricultural and food products have traditionally been delivered to China from Thai farms and warehouses by trucks going through either Vietnam or Laos. Ships and airplanes are also used, but the Covid-19 pandemic has upended logistics worldwide, resulting in border delays, fewer flights and difficulty handling items that aren't suited for sea vessels.
One solution started this month, when Thailand began a two-mode system by trucking products to Vietnam, then moving the goods into containers on trains, which complete the deliveries to China. It may sound simple, but this is a first for Thai shipments, according to Narapat Kaeothong, vice minister for agriculture.
“Transporting by rail is now cheaper and faster than by trucks, so we have essentially reduced overall costs and delivery time,” Narapat said in an interview in Bangkok. “This could become a new system for our shipments. We can build on this idea and export more products at less cost.”
Currently, there's no direct train route that links Thailand and China, but the plan to connect the two countries via rail is in the works.
China is Thailand's No. 2 export market after the U.S., according to Commerce Ministry data. About 80% of farm products from Thailand have traditionally been transported by land to China. Tropical fruits such as durian, mangosteen and longan are among the key -- and most vulnerable -- items.
Thai exports to China increased 15.3% by value in May from the same month a year earlier, compared to a 22.5% drop in total exports. Thailand's trade- and tourism-reliant economy is facing its deepest contraction in more than two decades, with the central bank predicting gross domestic product to shrink by a record 8.1%.
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