Transport And Logistics - Forging Sub Regional Links
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Transcript of Transport And Logistics - Forging Sub Regional Links
Transport and Logistics:Forging Sub-Regional Links
Meeting of Governmental Experts from Landlocked and Transit Developing Countries
July 30 - Aug. 3, 2001
Uma SubramanianThe World Bank
•Globalization
•Decentralization of production, processing and
marketing
•Economic liberalization
•Deregulation of industries and markets
•Reduced role of the state and expanding role for the
private sector
Emerging Trends
Sub-region of Focus
Indian states
BiharW. Bengal
Uttar PradeshOrissa
N.E. Region
Countries
Bangladesh BhutanNepal
India (Eastand N.East)
150 125 100 75 50 25 0 25 50 75 10150 125 100 75 50 25 0 25 50 75 100 125 1500 125 150
U.PU.P
Population (millions)Population (millions)
JapanJapanBangladeshBangladesh
MexicoMexico
IranIranWest BengalWest Bengal
Chile & PeruChile & PeruOrissaOrissa
KenyaKenyaAssamAssam
IraqIraqManipurManipur
ZambiaZambiaArunachal PradeshArunachal Pradesh
BiharBihar
BrazilBrazil
PopulationComparative Statistics
Socio-economic IndicatorsGNPpercapita1998
% of pop <$1/day
% of pop <$2/day
Infantmortalityrate per1000 livebirths
LifeExpectancyat birth1997
Maleilliteracyrate1997
Femaleilliteracyrate 1997
Bangladesh 430 47 87.5 71 63 33 61
India 350 50.3 86.7 75 58 50 73
Nepal 210 -- -- 83 57 44 79
Bhutan 430 -- -- 63 61 -- --
China 750 22.2 57.8 32 70 9 25
Brazil 4570 23.6 43.5 34 67 16 16
Growth in FDI (1990 and 1997)
0.0
10,000.0
20,000.0
30,000.0
40,000.0
50,000.0
60,000.0
70,000.0
S.Asia East Asia &Pacific
Latin America Sub SaharanAfrica
Middle Eastand N.Africa
Europe andC.Asia
Foreign Direct Investment($ mill ions) 1990Foreign Direct Investment($ mill ions) 1997
0
10
20
30
40
50
60
World OECD DevelopingCountries
LatinAmerica
East Asia South Asia
Ratio of Total Trade to GDP
1975-19791990-1994
Exports within Regional Trade blocs (% of total exports)
0
10
20
30
40
50
60
70
80
1980 1985 1990 1994 1995 1996 1997
APECNAFTAEUMercosurSADCASEANSAARC
India : Trade with neighborsUS $million 1998 Export % Import %
Bangladesh 1038 1.9 65 0.2
Nepal 324 0.6 147 0.5
Bhutan 12 0.0 15 0.05
OtherCountries
52987 97.5 28958 99.2
Total 54341 100 29185 100Source: UN COMTRADE data
Bangladesh: Trade with neighborsUS $million 1998
Export % Import %
India 55 1.4 1179 16.1
Nepal 18 0.5 14 0.2
Bhutan -- 0.0 5 0.1
OtherCountries
3749 98.1 6115 83.6
Total 3822 100 7313 100Source: UN COMTRADE data
Nepal: Trade with neighborsUS $million 1998
Export % Import %
India 145 32.9 440 30.7
Bangladesh 10 2.3 6 0.4
Bhutan -- -- -- --
OtherCountries
288 64.9 988 68.9
Total 444 100 1434 100Source: UN COMTRADE data
Towards increased regional integration
• SAPTA followed by SAFTA• In terms of absolute value, intra-regional trade
is increasing. Between 1988-98:– India exports to Bangladesh increased 6 folds– Bangladeshi exports to India increased by 4 to 5
folds
Impediments to efficient transport and logistics in South Asia
• Physical infrastructure gaps or inefficiencies• Procedural inefficiencies --excessive and
complex documentation and customs procedures
• Constraints due to protocol (on choice of routes, border crossings, restrictions on movements etc.)
• Institutional inefficiencies
Physical infrastructure: Roads
• The primary mode for freight movement • Two lane highways, poorly maintained and congested in
many parts resulting in low speeds (200-400 kms/day)• Small private sector owned and operated trucking services• Competition and low turnover combine to enable low cost
operations (average operating cost $ 0.044 to 0.049 per ton/km)
• Load limits vary (8.5 tons per axle for Bangladesh versus 10 tons for the others)
• Bilateral protocol restrictions
Rail • Mix of broad and meter gauge in both Bangladesh and India; efforts to
integrate gauge and links across countries being undertaken • Public sector run organizations in both India and Bangladesh • Characterized by old rolling stock, overstaffing, poor maintenance despite
recent efforts to improve performance; in Bangladesh, track maintenance a particular problem in flood prone areas
• Declining market share of freight• With CONCOR, increase in container movement in India; • Limited movement of containers in Bangladesh between Dhaka-Chittagong
due to anomalies in charges, regulations and problems. Only 10-12% (<40,00TEU) of containers are moved by rail to Dhaka ICD)
• Protocol for exchange of wagons between Bangladesh and India
Table 10: Border Crossing Documentation
India toBangladesh
For India Customs – Customs Export Declaration, Bill of Lading, Invoice, PaclingList, Letter of Credit,For Bangladesh Customs – Import Permit, Bill of Lading, Packing List, Letter ofCredit, Consignment Insurance Cover, Certificate of Registration (VAT), ImporterPass Book , and for goods for EPZ (bonded warehouse licenses, Value bonded Form,Risk and Duty Bond
Nepal to India For Nepal customs – Customs Transit Declaration, Customs Export Declaration, DutyInsurance Certificate, Invoice, Packing List, Certificate of Origin , Certificates ofRegistration (income tax, VAT, company), Letter of Credit,For India Customs – Customs Transit document, duty Insurance, Invoice, PackingList, Letter of Credit, Certificate of Origin
Bangladesh toNepal
For Bangladesh Customs – export Registration Certificate, Invoice, Letter of Credit,Packing List, Certificate of Origin, Truck ReceiptFor Nepal Customs – Customs Import Declaration, Invoice, Packing List, Certificateof Origin , Import License, Letter of Credit, Health/ Quarantine Certificate andEquipment Interchange Receipt and Duty Insurance Coverage for Containers
BangladeshPorts
Exports – Export Bill of Entry, Invoice, Packing List, Export Permit, Undertaking byExport of Company and Outpass Statement Letterhead, Export Permit, Risk Bond
Indian Ports Imports - Customs Transit declaration, Bill of Lading, Invoice, Packing List,Certificate of Origin , Import License, Letter of Credit, Health/ Quarantine Certificateand Equipment Interchange Receipt and Duty Insurance Coverage for ContainersExports – Customs Transit Document
Source: Annex A
Approach • Comprehensive approach -- physical and nonphysical barriers in
transport and logistics
• Development of an analytic framework that would facilitate rational dialogue among public and private sector and among countries
• Inter-active or participatory approach to AAA; continual national, and regional consultations with stakeholders from various sectors in order to build ownership in the countries.
• Combining detailed case studies of commodity flows with transport-logistics systems in the region
• Knowledge sharing with global case-studies from other regional trade blocs such as Mercosur, NAFTA, SADC.
Two types of analyses• identifying the critical impediments along a logistics chain (physical
gaps and constraints, policies, procedures, commodity type and market conditions, helped determining where improvements in the short term can bring about significant returns in terms of efficiency improvements
• comparing among alternative routes (and modes), as a means toward the more cost-effective route. The comparative analysis not only provides information on the potential savings if these routes wereoperationalized, but also allows a dynamic analysis of how improvements in the components of both logistics chains would affect overall benefits and route selection.
Logistics Cost Model
Commodity flow cases studiedCommodity Mode on land Route / Type of commodity
Domestic CementGeneralfreight
Indian RailIndian Truck
Domestic/ low value bulkDomestic/ med value bulk
Regional CementAgr. produceLimestoneYarn
Ind-BGD barge/truckNep-BGD trucksBhutan/BGD trucksInd/BGD trucks
Regional/ low value bulkRegional/ Med valueLow value/bulkHigh value/ containerizable
International WoolTeaCarpetPolypropeleneGarments
Ind-Nep trucksIndian truckNep-Indian trucksIndian-trucksBGD trucks
High value/containerMed value/break bulkHigh value/containerMed value/ break bulkHigh value/containerizable
• The core set of strategic commodities and routes selected for this study, were chosen for two reasons: – they provide opportunities for landlocked areas
to reach markets; – they are critical commodities that link the sub-
region to the global market.
Case Studies presented -
• High value trade within the region• High value commodity exports to
international market • Medium value commodity movement
within the region
Case 1: Yarn Export India to Bangladesh
Consignment AttributesCommodity Yarn
Shipment Size 14.8 tonnes
Origin Calcutta, India
Destination Dhaka, Bangladesh
Landing Port Benapole, Bangladesh
Shipment Value $ 38,000
Mode of Transport Truck
Distance 360 kilometers
Cost HoursTransport and HandlingInland Transport $ 516 17Cargo Handling $ 525 24Crossborder ProceduresCargo Transfer $80 156Customs Inspec $97 73Trade Related LogisticsTime Cost ofTransport
$158
Other (Insurance,Documentation/Forwarding, L/Cprocessing
$817
Total $ 2193 270TransportLogistics Cost $ 2193Logistics Time 270 hours
Case 2: Carpet Exports Nepal to Germany
Consignment AttributesCommodity Carpet
Shipment Size 1 TEU
Origin Kathmandu, Nepal
Destination Germany
Landing Port Port Bremen
Shipment Value $ 90,000
Mode of Transport Truck and Ocean freight
Distance >1200 kilometers
Route AKathmandu Thru’ Calcutta
Route BKathmandu thru’ JNPT
Cost Hours Cost HoursTransport andHandlingInland Transport $ 480 117 $ 740 88Cargo Handling $ 260 74 $ 463 155Ocean Freight $ 1200 528 $ 750 336Cross BorderProceduresCargo Transfer 164 $80 37Customs Inspec 20 $97 7Trade LogisticsTime Cost of Transport $1252 $864Other (Insurance,Documentation/Forwarding, L/Cprocessing
$1485 $1485
Total $ 5343 $ 2193TransportLogistics Cost
$ 5343 $ 2193
Logistics Time 903 623
Case 3: General Freight Calcutta to Agartala
Consignment AttributesCommodity General Freight
Shipment Size 8 tonnes
Origin Calcutta, India
Destination Agartala, India
Border Crossings Petrapole - BenapoleAkhoura – Agartala
Shipment Value $ 24,000
Mode of Transport Truck
Distance >1600 kilometers
Route AAll India Road
Route BTransshipment thru’
Bangladesh
Route CTransit thru’Bangladesh
Cost Hours Cost Hours Cost HoursTransport and HandlingInland Transport $ 760 180 $ 263 41 $ 263 41Cargo Handling $ 278 18 $ 270 20 $ 270 20
Cross Border ProceduresCargo Transfer -- -- $ 106 35 $0 0Customs Inspec -- -- $125 152 $75 12Trade LogisticsTime Cost of Transport $ 73 $ 96 $96Other (Insurance,Documentation/Forwarding, L/Cprocessing
$ 396 $ 516 $516
Total $ 1507 $ 1,376 $ 1220Transport LogisticsCost
$1507 $1,376 $ 1220Logistics Time (hours) 198 248 73
Constraints highlighted by Private Sector User Groups
– Regulatory and physical restrictions to potentially cost-effective transit corridors
– Poor physical facilities and infrastructure at border points– Poor harmonization of documents and complementary time-
consuming procedures– Delays caused by current customs procedures, facilities and
communications– Regulatory and physical restrictions to operation of cost-effective
vehicles including container transport – Poor dialogue between public sector as facilitator and private sector
as user, as beneficiary of regulatory systems and as potential contributor to public investments and facilities
– Constraints due to bilateral protocols and agreements– Need for eliciting views from user groups before choice of transit
corridors in inter-country agreements
Constraints highlighted by Private Sector User Groups
– Regulatory and physical restrictions to potentially cost-effective transit corridors
– Poor physical facilities and infrastructure at border points– Poor harmonization of documents and complementary time-
consuming procedures– Delays caused by current customs procedures, facilities and
communications– Regulatory and physical restrictions to operation of cost-effective
vehicles including container transport – Poor dialogue between public sector as facilitator and private sector
as user, as beneficiary of regulatory systems and as potential contributor to public investments and facilities
– Constraints due to bilateral protocols and agreements– Need for eliciting views from user groups before choice of transit
corridors in inter-country agreements
Public - Private RolesPublic sector:
•Facilitate private sector capacity to contract, handle, and transport the country’s foreign trade
•Update and conduct bilateral negotiations to improve transit protocols and bilateral agreements
•Interact on a continual basis with private sector through trade associations
Private sector:•Keep government informed through trade associations of
constraints and realistic needs •
Summary Findings• Ports are critical in determining regional routes because of the high logistics
costs at the port. Elimination of delays in cargo handling and customs procedures will move cargo to more efficient ports.
• Containerization of high value cargo at the earliest point in the logistics chain would reduce inefficiencies at the port
• Customs clearances are not the only factors that constrain cross border movements. Onerous procedures, inadequate preparation of document, multiple copies and signatures, limited number of gates receiving cargo, limitations on working hours etc. all add to inefficiencies
• High value goods in the region will continue to move mainly by truck. Constraints at border crossings would be reduced if cargo was allowed to move unrestricted across borders in bond.
• Intraregional shipments of perishables require tighter logistics by emphasizing reliability and delivery time, minimizing damages/ losses. Allow cargo to move in a single truck from origin to destination with minimum delays a borders.
Summary Findings (continued)• Extension and integration of the BG railway system in Bangladesh and India,
combined with efficiency improvements and capital investments in comaptible rolling stock, may help capture some of the medium value bulk cargo.
• IWT role in transporting low value bulk cargo could be enhanced if the low travel speeds could be compensated by improvements to facilitate night navigation, and improvements in port operations to reduce turnaround time.
•
Priorities for the Region should address -
• Alternative and more cost-effective routing from landlocked countries/ regions to international markets
• Increased capacity in the region to trade in higher value goods
• Easier movement of goods between eastern and N.E.India • Regional markets for exports from Bhutan and Nepal, a lot
which would be perishables• Increased trade between Bangladesh and neighboring
countries
Short term priorities
• Improve design/ provision of infrastructure (e.g. warehouses) at selected border crossings e.g. Benapole; Birgunj; Bhairawa; Phulbari;Akhoura) and market centers (e.g. Noapara; Siliguri)
• Use of freight operations information system for real time monitoring of cargo and wagons. Tracking system for transit cargo by road
• Extend movement of container traffic particularly for high valuecommodities (such as yarn). Concept for extending container movements within Bangladesh is important.
• Expand e-commerce opportunities more broadly for remote sector/ regions for small enterprises to reach markets
• Improve port performance through multiple measures (e.g. create greater competition among ports through flexible routings; dedicated terminals operated by private sector so that feeder vessels can operate to a fixed schedule; etc.)
Short term priorities (cont)
• Reduce/ eliminate need for transshipment • Simplification and equally importantly, harmonization of
documentation and procedures• Electronic communication among shippers and customs • Reform of regulations on carriage of goods by different modes (assign
clearer liabilities for tighter intermodal operations• Assignment of liability for goods carriage and harmonization across
borders
Long Term Needs• Investments in the road network along with increased maintenance• Strengthening and widening bridges (Bangladesh and N.E. India)• Information services (e.g.EDI); introduction of smart card system • Third party logistics providers
Recent Developments• Subregional Quadrangle under SAARC • Emergence of “champions” within the region -- private sector forum• Revision of the IWT protocol• India and Bangladesh have launched a direct bus service between Dhaka
and Calcutta• Transshipment for Indian cargo through Bangladesh is being debated • Rail integration (new border crossings open; Dhaka-Akhoura-Agartala)• Phulbari treaty • Pre-shipment Inspection introduced for selected imports in Bangladesh• Agreement to air flights between Dhaka and Gauhati (Private sector led)
• Bus link between Dhaka -Sylhet to Shillong/Gauhati
Potential/Proposals for Private SectorParticipation
• Direct (private sector operated) flights between Dhaka and Gauhati• Inland water transport vessels (sp. refinery products from Numaligarh) • Port terminals • Bonded warehouses/ ICD at strategic market centers and sea/ land ports• Cold storage warehouses/ trucks for perishables • Containers/ tractor trailers • Joint industrial ventures
– cement factories; gas cracker plants • Small enterprises - several possibilities
– horticulture, floriculture (orchids; medicinal herbs) – handicrafts– eco-tourism (cultural heritage)
• Third Party Logistics Provision
Institutions to Promote Private Sector Participation
• I-WIN [WBIDC, ICICI, All India PFI] • ILFS (India)• Infrastructure Investment Facilitation Center (GOB, WB,
DFID, CIDA)• Infrastructure Development Company Limited (GOB and
WB)