nsec symposium, 19-20 may, kunming, prc (ii 03 presentation by paul apthorp)

8/6/2019 NSEC Symposium, 19-20 May, Kunming, PRC (II 03 Presentation by Paul Apthorp)

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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.



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



Impressive Border Gate

Mohan China

Waiting at Boteng Border = Costing Money



Customs Having Lunch – Everyone Waits

Transshipment at Boteng



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



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



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 !



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 !



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…..



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



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



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



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.



ARN…… Opening Up the Inland

Thank You !!!

The EWEC – The Road to Follow !

nsec symposium, 19-20 may, kunming, prc (ii 03 presentation by paul apthorp)

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