Kerry Logistics (Thailand) expects 15% revenue growth this year despite the export and economic slumps that are eroding logistics demand in international trading, driven mainly by its new free-zone warehouse service.

"We expect to see strong 15% revenue growth from 1.9 billion baht recorded last year. We aim to be the country's number-one integrated logistics provider in terms of services and margin," according to Alex Ng, general manager of Kerry Logistics (Thailand).

The Thai unit of the Hong Kong-based Kerry group runs logistics services and facilities including warehouses, air and sea freight, cross-border transport, domestic distribution, express delivery and a port. It has recently opened a new free-zone warehouse at its logistics centre in Laem Chabang.

A free zone is the part of a territory where any goods introduced are generally regarded as being outside the customs territory and are not subject to the usual customs control or permanent customs surveillance. Importers can therefore delay customs tax payments until their products are moved outside the zone.

Located eight kilometres from the deep-sea port, the free-zone warehouse has a total indoor and outdoor space of 10,280 square metres, with a pallet capacity of 2,796 sq m.

According to assistant general manager Sittiporn Techapamornkul, the free-zone facility should contribute significant revenue to the group. Thanks to a larger number of potential customers, it provides a higher margin than a general warehouse.

In addition, revenue from other units would also grow thanks to its strategy to provide integrated logistics services to its customers.

With more than 1,000 factories in 12 nearby industrial estates, Kerry expects its new free-zone warehouse service to be a major contributor to its growth revenue this year.

"Customers of free-zone warehouses are importers who want to delay paying import taxes until their goods are bought by clients such as car importers," he said.

Also, operators who use Thailand as a regional hub can keep the goods they have bought from regional countries here while waiting for additional goods to come. They can fully utilise container space to minimise their costs or ship them to another location later.

Kerry's current customers are mostly large companies in chemicals, automotive, fast-moving goods, fashion, apparel and electronic businesses.

"We are focusing only on the products subjected to high import tax rates because we charge about 30% higher than normal warehouse rates to cope with our costs in acquiring the free-zone warehouse operating licence," he said.

Transformed from Kerry's bonded warehouse that provides fewer benefits than a free-zone one, the new warehouse offers added value and has high potential to attract even more customers.

"The free-zone warehouse would differentiate our services from those of other operators and offers more diverse services to meet the different demands of customers," Mr Ng said.

"In a tough time like this, if we can save costs for customers such as the delay in import tax payments, our customers' cash flow will improve and clients will prefer us. Through this strategy, our business will likely grow."

As a testament to its popularity, the warehouse is currently 70% occupied although it has been operating for less than a month.

When the warehouse reaches its capacity, Kerry plans to turn the 10,440-sq-m general warehouse under the same roof into an expanded area for the free zone to accommodate growth.