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Logistics- Trade & Transport
Facilitation
Kunming May 19th 2011
Paul Apthorp
The views expressed in this paper/presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not
guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use.Terminology used may not necessarily be consistent with ADB official terms.
8/6/2019 NSEC Symposium, 19-20 May, Kunming, PRC (II 03 Presentation by Paul Apthorp)
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NSEC – BKK- KMG
A Transport Corridor on Paper
Dalou ( CN) – Mong La Crossing not operating as a through route
No Operational route through Myanmar
No permanent Mekong crossing yet
Does not include the main route Boteng to Vientiane
Border Crossings
Lack of facilities
Manual cargo transshipment
No cranes for moving containers over
Long waiting times
Customs Clearance
Lack of Lao Customs Brokers…. And Banking service for payments
NSEC
Uncertain Transit Times
Long customs queues
Long lunch breaks
Mekong Ferry finishes at 5 pm …wait until tomorrow !
Transshipment
Lack of cranes for Transshipment of containers
Manual Transshipment means lack of security
Low security means high tech customers won’t use the route.
Trade Flow
Most Traffic to Vientiane
8/6/2019 NSEC Symposium, 19-20 May, Kunming, PRC (II 03 Presentation by Paul Apthorp)
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Impressive Border Gate
Mohan China
Waiting at Boteng Border = Costing Money
8/6/2019 NSEC Symposium, 19-20 May, Kunming, PRC (II 03 Presentation by Paul Apthorp)
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Customs Having Lunch – Everyone Waits
Transshipment at Boteng
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EWEC - Thailand- Laos - Vietnam
An Effective Transport Corridor
Certain Transit Times
Process run like clockwork
< One hour at each border
TNT sent 600 + Trucks along the EWEC in past year
Spending over US $ 500,000 in the local Lao economy
Spending $ 2 Million in the Vietnam economy
Spending $ 2 Million in the Thai Economy
Money spent employing
o Trucks Drivers
o Customs Clerkso Crane Drivers
o Customs offices
o Cafes
Logistics
Asset Utilisation drives Logistics cost
Idle equipment costs money
Facilities must be paid for
Freight Costs
Offset savings in Labour
Goes to the Cost of Goods Sold
Long transit Times
Reduces Comparative advantage of lower labour cost
Limits ability to respond to market needs
8/6/2019 NSEC Symposium, 19-20 May, Kunming, PRC (II 03 Presentation by Paul Apthorp)
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Time is more expensive than distance ( asset utilisation)
The easiest and quickest route is generally cheaper than a slower shorter route.
Transport takes the route of least resistance
Vehicles ( Trucks, Planes , Ships)
Cost money standing still
Freight rates are driven by market forces not distance
The Cost of Transport
Development of Infrastructure – last 5 years
8/6/2019 NSEC Symposium, 19-20 May, Kunming, PRC (II 03 Presentation by Paul Apthorp)
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Border Challenges today
Borders Open 12 hours x 7 Days
Multi Million Dollar Border Facilities developed, but …..
Customs Opening Hours are restricted:
5 Hours a day … 5 days a week (i.e. no 24/7)
With a 3 hours lunch break
Outcome of above is therefore restricting the flow of trade…!
Pingxiang Logistics Park
$$$$$ Investment
Customs open 5 hours a day
3 hours for lunch !
8/6/2019 NSEC Symposium, 19-20 May, Kunming, PRC (II 03 Presentation by Paul Apthorp)
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Time is more expensive than distance (asset utilisation) The easiest and quickest route is generally cheaper than a slower
shorter route. Transport takes the route of least resistance
Assets - Vehicles (Trucks, Planes , Ships)
Cost money standing still
Freight rates are driven by market forces not distance – (ease of trade)
The Hidden Cost of Transportation
examples “Did You Bring Any Help” ?
Costs – risk – damage – theft- safety !
8/6/2019 NSEC Symposium, 19-20 May, Kunming, PRC (II 03 Presentation by Paul Apthorp)
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Border handling Costs Money (swap bodies etc)
Every time you stop, offload or Transship it costs money Increases risks of damage / loss / pilferage etc – increases costs
Handling Facilities have to be paid for !
Cranes, Warehouses and Labour cost money
The costs are passed on to the Customers !
They go to the Cost Of Goods Sold !! Affecting the competitiveness of goods, imports or inputs Impacts country export competiveness and business opportunity
The Certainties in Transportation
examples “Costly Border Transshipment”
Vast improvements BUT costly crane hire and still time delays etc…..
8/6/2019 NSEC Symposium, 19-20 May, Kunming, PRC (II 03 Presentation by Paul Apthorp)
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Trade Facilitation
“The simplification and harmonisation of International Trade procedures”(WTO)
.. “ Streamlining and simplifying International Trade Procedures in order toallow for easier flow of goods” (OECD)
“ Simplification and harmonisation of International Trade procedures toassist the movement of goods” (DFAT Aus)
Ease of use - Countries & Customs
Some Countries
Customs seen as Pro Export
Customs are “User friendly”…simplified export processes
Customs are trade facilitators First . Revenue collectors Second
Customs allow for easy movement of bonded cargo (between facilities)
Some Countries
Customs regulations differ by border and method of export
Strict adherence to Company Articles of Association (no common sense
leeway)
Lack consistency in interpretation of regulations (person to person;region to region)
Shippers forced to obtain export permits on the “gray” market
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Decision 197 / TB-BCTImporting Alcohol , Cosmetic & Mobile Phones
In order to protect the interests of consumers and health, against theimportation of fake goods, inferior quality and increase anti-commercialfraud. The Ministry of Industry and Commerce launching notice to allow theimport of alcohol, cosmetics, mobile phones through the 3 international ports:Hai Phong, Da Nang, Ho Chi Minh City as below:
1. Imported document In addition to the documents presented for customs clearance, importers
must provide more documents issued by authorized distributors, importers ofgenuine production, venture or agency contract manufacturing of genuinetrading goods. These documents are diplomatic representative agencies ofVietnam in foreign consular legalized under the provisions of law.
2. At import border Importer only allowed doing customer clearance at 3 international SEA ports:
HPH, DAD, SGN 3, 4, 5: Ministry of Industry and Trade requesting all ministries, departments
relating to support for launching this decision and improve checking,inspecting and dealing with misconduct. The decision will be effected on Jun1, 2011
What is Still Missing ?
A Competitive Cross Border Transport Sector Poor vehicle Standards
Overloading Breakdowns Poor driving standards
Smooth and efficient Border Processes
Easy Market Access for SME exports Less than container loads
Regional ICDs and Consolidation Points More numbers and also public options
Need to encourage investment in quality and simplification (protectscompliance) and Discourage poor standards
8/6/2019 NSEC Symposium, 19-20 May, Kunming, PRC (II 03 Presentation by Paul Apthorp)
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What is Still Missing ?
To encourage investment in betterequipment Improve asset utilization to
justify investment
Higher capacity with lessenvironmental damage More axles … less damage to
roads and bridges
Better vehicles burn less fuel Less emissions for “carbon
neutral’ ambition for corridors
Benefits of Improved Transport Standards
Better equipment / processesmeans:
Higher capacity per vehicle
Lower cost per kilo of freight
Lower cost per kilo means:
Lower costs for export
Lower costs for importers andlocal populations
Greater production options
Building a lower cost logisticssystem
To encourage regionalinvestment
8/6/2019 NSEC Symposium, 19-20 May, Kunming, PRC (II 03 Presentation by Paul Apthorp)
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London to Paris 1981 $ 900 One way
No channel tunnel …….. Ferry costs $ 300 one way. No open market Permits required Customs clearance .. With costs 12 meter Trailers ( 40 ft) 18 ton maximum pay load $ 0.05 per kilo
London Paris 2011 $ 900 One way ( $2300 with Inflation) Channel tunnel No permits Reduced customs procedures 13.6 Meter Trailers 24 ton maximum pay load
$ 0.0375 per kilo ($0.1275 with Inflation)
Updating Transport – Regulations and Moderisation
Thesis
“The reality of Multi Modal Transport in the GMS is that it serves the Import of Consumer Products from non GMS countries. Multi Modal transport is not serving the needs of SMEs in the GMS ”
New Roads and Bridges have done little to improve market access orparticipation in the Global Supply Chain for SMEs in the GMS hinterland.
The Non-Physical Barriers are still the dominant
Transport is move expensive than it needs to be.