29 November 2023
In an ambitious move to redefine global trade routes, Thailand is promoting its Landbridge project, a $28 billion infrastructure initiative aimed at creating an alternative trade route through Southeast Asia. It could reduce travel time for ships by up to four days and cut costs by up to 15% – but might adversely affect Indonesia.
The project is designed to provide a new trade route between the Indian and Pacific oceans, bypassing the congested and piracy-prone Malacca Strait, one of the world’s most vital and congested sea corridors.
It involves the construction of an about 90-kilometer-long rail and road system that will connect the deep-sea port in Chumphon Province on the Gulf of Thailand to a new, deep-water port in Ranong province on the Andaman Sea.
The Straits of Malacca is one of the world’s most vital shipping waterways, it currently serves 100,000 vessels per year, with that number expected to increase to 400,000 in the next 30 years.
The Landbridge project has ignited responses from neighboring countries. Indonesia faces potential effects as vessels may shift routes, impacting maritime traffic in the Malacca Strait.
Malaysia, particularly its ports, is also at risk of disruptions. Analysts suggest this challenge could spur strategic upgrades in Malaysia’s port infrastructure and operational efficiency.
Singapore may likewise be affected. According to Straits Time, Singapore’s Acting Transport Minister has acknowledged potential time savings for vessels but cautions that higher costs may offset the benefits.
A thinktank in Malaysia has concluded there is a need to create a regional economic growth zone between southern Thailand, Malaysia, and Sumatra, Indonesia, to ensure mutual investments and benefits.
The Landbridge, if successful, could become a strategic geopolitical asset, attracting interest from both Eastern and Western investors. Most analysts reckon the bulk of the funding will come from China, the largest investor in Southeast Asian infrastructure projects. Meanwhile the German ambassador to Bangkok, has said that he would lobby German businesses to invest in the project.
The idea dates back to the 17th century, when the Ayutthaya kingdom was a prosperous entrepot and modernizers foresaw that a vast canal, dubbed the “Kra Canal,” would connect the eastern and western coasts and boost trade.
All stakeholders today are closely watching its potential impact on global trade routes.
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