Thailand’s exports to Europe and the Middle East, worth an estimated 1.31 trillion baht, are facing disruption due to militants attacking vessels along a major shipping route in the Red Sea, experts have warned.
Assoc Prof Aat Pisanwanich, a scholar on international economics, warned that the country’s export shipments via this route could be severely affected as many shipping firms were forced to use a longer route south of the African continent, leading to higher costs.
He noted that about 15% of world shipping traffic transits via the Suez Canal, the shortest shipping route between Europe and Asia. He estimated that about US$3 trillion of the total global trade of $25 trillion relies on this shipping route.
According to the academic, Thailand’s exports to 15 Middle Eastern countries totalled US$10.99 billion last year, accounting for 4% of all Thai exports. Thai exports to 27 European Union nations (excluding the United Kingdom) were worth $26.81 billion, representing 9.3% of all exports from the kingdom.
“In total, Thai exports to the two major markets were worth about 1.31 trillion baht,” Aat said. Thai exports to Europe and the Middle East include farm products, processed agricultural goods, car parts, electrical appliances, and rubber.
The academic warned that if the ongoing war between Israel and the Hamas militant group in the Gaza Strip expands to include other militant groups in the region, namely the Houthi rebels in Yemen and the Hezbollah militants in Lebanon, the global economy and trade could see a new crisis.
Shipping cost will increase due to the higher costs of fuel and insurance resulting from the armed conflicts. If ships can no longer pass through this route and have to do a detour south of Africa, the transportation costs could rise by at least 15% and the supply chain would be disrupted,” Aat said.
“Thai exporters should closely follow the developments and plan ahead to cope with it,” he added. Source: The nation
