Equity Analysis /

Thailand: Transportation & Logistics - Strategy for the shadow of war

  • Cost-push inflation follows rising crude price

  • Logistics (ex-express delivery) to benefit from the situation

  • No impact on inland; mixed effects on air transport

Bualuang Securities
14 March 2022

After considering the potential impact (both positive and negative) of the ongoing Russia-Ukraine war, such as cost-push inflation, rising oil prices, and a potential shift in preferred travel destin-ations, we expect logistics (except parcel delivery) to benefit. We don’t expect any effect on inland transport, while airlines are likely to be subject to both positive and negative effects.

Cost-push inflation follows rising crude price

The global economy is gradually recovering from the pandemic, boosting consumer willingness to spend and travel. But cost-push inflation tied to the crude price spike may raise the operating costs of some operators. OPEC+ agreed to only a limited output rise. Concerns over potential supply shortfalls from Russia tied to the Russia-Ukraine war have heated up the crude market (Russia is the second-biggest crude exporter). Rising crude prices will feed into higher cost-push inflation (likely to be exacerbated by other commodities rising in price). Lifting sanctions on crude exports from Iran and Venezuela would ease—but not offset—the effect of sharply lower Russian exports.