Technical Assistance Consultant’s Report
Project Number: 51029-001 September 2019
People’s Republic of China: Hubei Xiangyang Integrated Sustainable Transportation and Logistics Planning and Strategic Study
Prepared by: David Lupton & Associates Ltd.
For the Asian Development Bank and Xiangyang Municipal Transport Bureau
This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents.
TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001)
Logistics Improvement Plan
September 2019
Prepared for: the Asian Development Bank and Xiangyang Municipal Transport Bureau
David Lupton & Associates Ltd.
TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001)
CURRENCY EQUIVALENT
(as of 10 January 2019)
Currency unit: USD
USD1=6.7894 CNY
1 CNY=USD 0.1473
WEIGHTS AND MEASURES
km2 – square kilometre
m3 cubic meter
mu: 15 mu=1 hectare
NOTES
(i) In this Report, “$” refers to US Dollars (ii) The fiscal year (FY) of the Government and its agencies ends on 31 December. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2018 ends on 31 December 2018. (iii) At the 17 January 2019 meeting between the client the XMTB, ADB and the consultant, the client requested that the title for the Project be changed to “Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study” in order to reflect the new Han River Economic Development Plan
Consultants Quality Assurance Protocol
Prepared By Robert L. Wallack, Senior Logistics Specialist, U.S.A with assistance from Dr. Tang Hui, National Consultant, PRC Auditor/Reviewer 1. . James P. Rizer Consultant Team Leader
Place Xiangyang Date 14 September 2019
Approved By David Lupton, Principal
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Abbreviations 2. 2PL Two Party Logistics 3. 3PL Third Party Logistics 4. BRI Belt Road Initiative 5. CFLP China Federation of Logistics and Purchasing 6. CRC China Railway Corporation 7. ILC Integrated Logistics Centers 8. IWT Inland Water Transportation 9. NDRC National Development and Reform Commission 10. PLAZA Plataforma Logistica de Zaragoza 11. PPD Public Private Dialogue 12. TL Transportation and Logistics 13. VAS Value Added Services
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Contents
Executive Summary ...... Error! Bookmark not defined. I. Introduction ...... 5 A. This Report ...... 5 B. Aims and Objectives ...... 5 C. Han River Development ...... 6 D. Organization of this Report ...... 7 II. Background ...... 9 A. Geography and Economy ...... 9 1. Hubei Province ...... 9 2. Xiangyang Prefecture City ...... 11 B. The Transport Network ...... 13 1. National Trends ...... 13 1. Freight in Xiangyang ...... 14 2. International Trade ...... 16 C. Transport Network Issues ...... 18 1. Roads ...... 18 2. Railways ...... 19 3. Waterways and Ports ...... 21 4. Aviation ...... 23 5. Summary ...... 23 III. Current Situation ...... 24 A. Overview ...... 24 1. Dimensions ...... 24 2. Consultations ...... 25 B. Stakeholder Needs ...... 25 1. Industry Plans, Problems and Solutions ...... 25 2. Customer Needs ...... 30 C. High Cost of Logistics in Xiangyang ...... 32 1. Inefficient equipment ...... 32 2. Inefficient Operations ...... 33 D. Other Issues ...... 33 1. Fragmented Industry...... 33 2. On time delivery ...... 33 3. Congestion and transport Issues...... 34
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4. Logistics Parks ...... 35 5. Case Studies ...... 36 E. Gap Analysisn and Assessment of Future Needs ...... 39 1. Lack of Coordination ...... 40 2. Multimodal ...... 41 F. International Comparisons ...... 42 1. Ulwang Inland Container Port ...... 42 2. Other International experience ...... 44 IV. Proposed Way Forward ...... 45 A. Optimal Layout of Logistics Facilities ...... 45 1. Logistics Parks ...... 45 B. Multimodal Hub Development ...... 49 1. National Policy Initiative ...... 49 2. Reducing Rail Costs and Improving Services ...... 49 C. Institutional Reforms ...... 52 1. The Need for Coordination ...... 52 2. Forming a PPD body ...... 54 3. PPD Examples ...... 54 4. Xiangyang Logistics Association Reform ...... 65 V. Implementation ...... 67 A. Implementation and Operational Plans ...... 67 1. Purpose ...... 67 2. Actions Required ...... 68 B. Prioritised Project List ...... 73
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I. INTRODUCTION
A. This Report
14. This report for TA-9547 PRC: Hubei Xiangyang Integrated Sustainable Transportation and Logistics Planning and Strategic Study - 01 (51029-001) has been prepared for the Asian Development Bank (ADB), by David Lupton & Associates Ltd, New Zealand (DLA). 15. The purpose of the Technical Assistance (TA) is to develop recommendations for the Xiangyang Municipality Transport Bureau (XMTB) with respect to the resources, systems and institutions needed to develop and manage the Xiangyang Municipal Government (XMG) transport network so that it serves the needs of the Prefecture. The process will draw upon existing planning documents and the experiences of the XMTB and other stakeholders in order to support the XMG’s preparation and implementation of strategic and sustainable transport and logistics plans. 16. The TA outcome will be the promotion of sustainable and integrated transport and logistics systems that can be implemented, monitored and revised as necessary in order to provide modern, green, efficient and livable areas within the Prefecture. Moreover, the XMG systems will be incorporated within the broader Hubei provincial and Chinese national policies, plans and networks. 17. The initiative is expected to address the needs and requirements of the XMTB with respect to planning, development, financing, data collection, management, and optimization of the transport and logistics networks. There will be three primary outputs: A comprehensive, integrated, sustainable transport plan completed; A logistics improvement plan completed; and, Multimodal integration and logistics capacity strengthened. 18. This is the report for the logistics component of the TA. It presents findings and recommendations on the development of a sustainable logistics improvement program. Separate reports address the other components of the TA B. Aims and Objectives
19. The terms of reference (TOR) for the TA imply that there is a need for the logistics plan to provide additional transport capacity within Xiangyang by supplementing road improvements with rail and waterway services for freight. There is an assumption that encouraging a switch from road transport will improve the transport system and environmental sustainability. Conserving resources is not the only objective. The objective is to also improve the quality of life in the Xiangyang prefecture. With this in mind, the policies and programs developed under the TA should maximize support for the inclusive economic development of the transport system, including infrastructure and environmental improvements. 20. The TOR requires the Consultant to identify key improvements for the Xiangyang logistics industry including recommendations on best practice logistics operating philosophies, technology and information systems and to develop a Xiangyang-wide optimal layout for logistics facilities based on best-practice.
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21. We interpret the idea of a “plan” to be more than a list of projects. Developing a plan involves setting objectives, determining strategies and developing policies that achieve the desired outcomes. The plan will set out concrete actions and investments for the first five years. Beyond that the plan will have an indicative program and decision criteria but for the later years it will be the policies and strategies that prevail, not the program that happened to look good in 2019. C. Han River Development
22. Since the TOR were issued for this TA, the National Development and Reform Commission (NDRC) issued the policy paper “Development Planning Han River Ecological Economic Belt” in November 2018. As a result, it has been proposed the title of this TA be changed to reflect the focus on comprehensive and integrated development outlined in the NDRC policy paper. The paper provides guidelines that emphasize the need to pursue developments that reduce pollution and strengthen the environment. The paper also articulates that all communities must benefit from development—that successful development means that both urban and rural residents have to share benefits. 23. A prominent basis for the paper is to foster inclusion, coordination and cooperation with the Yangtze River Economic Belt and the Silk Road Economic Belt initiatives that are national priorities. 24. Spatially, the Han River paper presents two zones for development: the Danjiangkou reservoir area and its upstream areas will place a priority on ecologically sound and “green” development; and “the middle-lower reaches of Han River actively carry out ecological restoration and construction, vigorously develop Eco-agriculture with high efficiency, advanced manufacturing and modern service industries, accelerate industrial and population agglomeration, strengthen linkage with Danjiangkou reservoir area and upstream areas, and enhance the overall development level of Han River basin.” 25. The paper presents four transport axes through Xiangyang, as channels for development: the Han River itself with Wuhan serving as a state-level central city and Xiangyang as a regional -level central city; the Wuhan-Xi’an high-speed railway; the Shanghai- Shaanxi Expressway; and the Erlianhot-Guangzhou Expressway. Each of the initiatives has unique advantages for economic development and should be pursued appropriately. Figure 1.2 highlights the axes and indicates the central role that Xiangyang will play in the Han River’s transformation.
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The axis of development along Wuha-Xi’an high-speed railway
The axis of development along Shanghai-Shaanxi Expressway
Shangluo
Hanzhong Nanyang Ankang Shiyan Dengzhou
Xiangyang r Shennongjia Forest Area
Suizhou Jingmeng Xiaogan The axis of development along Han Rive
Danjiangkreservoir area & upstream area The axis of development along Erlianhot-Guangzhou Expressway Tianmeng Middle-lower reaches of Han River Qianjiang Xiantao
Source: National Development and Reform Commission. “Development Planning Han River Ecological
Economic Belt.” Beijing. November 2018. D. Organization of this Report
26. Following this introductory chapter, chapter II provides background information on the Xiangyang logistics sector and the national transportation network. Chapter III discusses the current situation while chapter IV provides some analysis of the issues facing Xiangyang leading to a recommended way forward described in chapter V. The final chapter develops a time bound logistics plan 27. This report specifically identifies key guiding principles for transportation and improving the overall network. These include: Ships: strictly enforce discharge and pollution control, utilize energy-saving and energy efficient ships and retire older ones, and improve pollution response measures; Ports: speed up construction of Han River ports and improve navigation capacity through remedial actions and dredging; Railways and Highways: speed up construction and increase inter-Provincial connectivity; Aviation: accelerate expansion and upgrade of airports, increase flights and connections; Logistics: strengthen linkages between node cities including the leading role of Wuhan in the region, and “Vigorously develop cold chain logistics, actively develop public warehousing, intercity logistics, postal services, courier services, joint distribution and third-party logistics, and improve the allocation of urban logistics transfer & distribution stations and community distribution points;” and Free Trade Zones (FTZ): Xiangyang is specifically mentioned to construct the FTZ and to accelerate development of a “single window” for international trade. This would require significant upgrading of inland port / rail yards with bonded areas and bonded container transport to sea port.
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28. A detailed understanding of the current situation, stakeholder needs, and future demand for the Xiangyang logistics industry is included in Chapter II and III. An assessment of international best practice and lessons learned is given in section III.F., while gap analysis of infrastructure, systems, technology, and policies related to the Xiangyang logistics industry are given as section III.E 29. Plans to improve efficiency and reduce the cost of freight and logistics throughout Xiangyang are discussed in Chapter IV with a Xiangyang-wide optimal layout for logistics facilities that identifies opportunities for logistics clustering and multi-modal hub development based on industry needs as well as transport connectivity assessments is provided in section IV.A 30. Implementation and operational plans for integrated, multi-modal logistics systems, including policy recommendations are covered in Chapter V. The development of a prioritized project list and implementation plan specific to the needs and priorities of Xiangyang is the subject of Section V.B.
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II. BACKGROUND
A. Geography and Economy
1. Hubei Province
31. Hubei Province has a land area is 185,900 km2 and includes thirteen prefectures and four directly administered county-level entities. The population totalled 61.56 million in 2016, of which 48% were registered as females and 52% males. About 56% live in urban areas and 44% in rural areas. Wuhan, the provincial capital is a vibrant major inland port on the Yangtze river, and its greater urban area has a population exceeding 10 million. 32. Hubei province is dominated by the Yangtze River and its tributaries. The Jianghan Plain between the Yangtze and Han Rivers comprises the central and southern reaches of the province, with the peripheries more mountainous. The climate is relatively mild on the plain but there are times when temperatures are below freezing, while in summer, 40C is not unknown. 33. Important agricultural products include rice, wheat, cotton, fish and aquaculture, and tea. Major industries include automobiles, metallurgy, machinery, power generation, textiles, foodstuffs and high-tech products such as optical-electronics, telecommunications equipment biotechnology, pharmaceuticals and laser-based equipment.
Figure 1 Hubei Province and Administrative Divisions Source: chinadaily.com.cn 34. The 8th largest provincial (out of 31 contiguous provinces and municipalities) economy had a GDP of 3,547.8 billion CNY in 2017, with primary industry accounting for 352.9 billion
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CNY, secondary industry 1,544.2 billion CNY, and tertiary industry 1,650.7 billion CNY. GDP per capita was 60,199 CNY, which places it in the upper middle of China’s 31 administrative divisions as shown in Figure 2
Hubei Province Figure 2 GDP per Capita Source Hubei Provincial Bureau of Statistics. 2018
35. With its central location and key position on the Yangtze River, Hubei is a transport hub for road, water and rail. Total freight ton kilometres totalled 1651.3 billion in 2016. As shown in Figure 2.3, roads accounted for 74.3%, waterways 21.6% and rail 4.1%. 36. Passenger km totalled 1,058.1 billion with roads accounting for 83.4%, rail 15.0%, air 1.1% and waterways less than 0.1% (figures may not total 100% due to rounding). 37. While Hubei is a multimodal transport hub, the predominance of roads indicates that there is a definite preference for roads over other transport modes, primarily because of the overall efficiency of the road network—it tends to be faster and more reliable.
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Road Waterways Rail
Figure 3 Freight by Mode Source Hubei Provincial Bureau of Statistics. 2018
2. Xiangyang Prefecture City
38. Xiangyang (known as Xiangfan until 2 December 2010) is a prefecture-level city and consists of nine county-level divisions, including three districts, three county-level cities and three counties. The urban area of Xiangyang City is an incorporation of two once separate ancient cities, Fancheng and Xiangcheng District. 39. Its greater area covers 19,727 square kilometres and includes Baokang County, Gucheng County, Laohekou City, Nanzhang County, Yicheng City, and Zaoyang City; the built-up urban city center spans 190.3 square kilometres. As of 2017, greater Xiangyang has 5.65 million inhabitants, of which 1.45 million live in the city center; this number is forecast to grow to 1.7 million by 2020, and about 2.5 million by 2035. The Male:Female ratio is 1.05:1.00. In 2016, 39.95 million tourists visited the area, 12.5% more than in 2015. 40. A key issue is that a new city center is being developed about 18 km from the existing city center, and the overall urban area for the combined two city centers and various manufacturing and logistics areas will total 759 km2, or nearly 4 times larger than the currently designated area. Obviously, this raises considerable transport network issues. Government offices will begin shifting to the new city center in June-July 2019. 41. GDP totalled 369.4 billion CNY in 2016 and 61,189 CNY per capita. In 2010, primary industry accounted for 15.2%, secondary industry 51.9% and tertiary industry 32.9%. In 2016, primary industry accounted for 11.7%, secondary industry 55.4%, and tertiary 32.9%. This
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TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) represents increasing manufacturing and construction, a trend that is likely to continue well into the next decade. As just reported by the XMG Statistics Bureau, GDP increased 7.8% from 2017 to 2018. 42. Xiangyang possesses large water energy resources and mineral deposits including coal, iron, aluminum, gold, manganese, potassium nitrate and rock salt. Its reserves of rutile and ilmenite rank highly in China. Textile production is the mainstay industry followed by machinery manufacturing, chemical processing, electronics, and manufacturing of construction materials. Agricultural products include grain, cotton, vegetable oil crops, tobacco, tea and fruit. As the home of Dongfeng Motors (a leader in producing hybrid and E- -vehicles), Xiangyang is an automobile hub, producing Nissan and Infiniti brands for the domestic market. Electric vehicles are actively promoted but we are not aware of any direct subsidy. There are numbers of chemical fibre enterprises in the city. The city has invested in many industrial, technology and clean energy parks. 43. Increases in road passenger and freight traffic of 13% (5.4 billion passenger-km in 2017) and 9% (52.5 billion metric ton-km in 2016) per year respectively are placing significant strain on Xiangyang’s transport infrastructure and supporting systems, particularly the river crossings. The number of private vehicles grew at an average annual rate of 23% per year between 2013 and 2016. Road transport use in Xiangyang has been increasing at a much higher rate that population, which for the city itself was around 10% in 1990-2000 but fell to around 2% in 2000-2010. From 2013 to 2016, the number of private vehicles in Xiangyang grew by 87%, from 135,500 to 252,800 vehicles, averaging 23% per year (data on comparable years were not available). These increases are placing significant strain on Xiangyang’s transport infrastructure and supporting systems. Although there have been marked increases in road traffic in recent years, it is likely that these will slow in the not so distant future because population growth rates are slowing and many individuals have already purchased vehicles. 44. Urban transport accounts for more than 30% of the city’s total emissions because of its reliance on road transportation and the use of old technology, especially older diesel buses and older smaller trucks. Xiangyang’s 92 bus lines transport 550,000–600,000 passengers per day and cover the existing city center area, with the exception of Dongjin New Town. Although the public transport system has improved greatly in recent years, its availability in the outlying zones of the city is poor, and the vehicle fleets need to be modernized to reduce urban air pollution. The development of nonmotorized transport lanes, bus lanes, and urban rail systems is lagging that in other cities in the PRC. Moreover, the lack of grade-separated, signalized pedestrian facilities results in high pedestrian and vehicle interaction, interrupts the traffic flow on main roads, and endangers pedestrians. A new bus terminal owned by the Fanchan District will be opened in 2019 and will service and maintain buses running on electricity and areas west of the city. Many of the older buses have been converted to compressed natural gas (CNG). 45. Highway connectivity to the poorer southwest part of the city is particularly low, and the connection between downtown and the Xiangyang Liui Airport, 18 km northeast of the city, is inadequate. A new bus terminal is being opened at the end of 2019 that will improve transport options for the western areas. A new passenger terminal for 3 new high-speed rail lines is being constructed about 20 km in another direction. Although a light rail is being planned to connect the airport and the new high-speed rail terminal to the existing city center, A new city centre, which will also be the Government Centre for Xiangyang, is being developed
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TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) close to the new rail terminal. Connections to this centre are also needed urgently. With the new high-speed terminal set to open after the 2020 Spring Festival and some New City buildings already occupied, consideration needs to be given to alternative modes including bus rapid transit and express buses to connect the various demand centers in the near term. These may be replaced or augmented by light rail over the medium to long-term. 46. We will have more information on travel patterns once the mobile phone data are analysed. This will be presented in the Transport Plan. 47. According to the TOR water and air transport infrastructure is also inadequate to meet current and future demand. These capacity constraints have resulted in high transport costs, reducing the competitiveness of Xiangyang, while poor connectivity within the city has led to uneven economic development, particularly in the poor mountainous areas. Although the public transport system has improved greatly in recent years, usage is low (an estimated 20% of all passenger km) and there is only a low level of public transport available in the outlying zones of the prefecture. 48. Xiangyang is a railway junction for three main railway lines: Xiangyang-Chongqing, Hankou (Wuhan)-Danjiangkou, and Jiaozuo-Liuzhou (see Error! Reference source not found.). CR High speed trains operate on the Hankou - Danjiangkou route providing connections to Shenzhen-Beijing bullet trains at Wuhan. Three additional high-speed rail and a heavy haul dedicated coal line will transect the city by 2022. 2 other rail lines are being planned for later in the 2020-2030 decade. 49. Three National Highways including Route 207 pass through the city. The Han River and four other rivers are open to commercial navigation year-round and connect with the Yangtze River system. Xiangyang Airport has commercial airline service to major cities throughout China including Beijing, Shanghai, and Guangzhou. 50. The biggest challenge Xiangyang is facing is the heavy reliance on road-based transportation for both passengers and freight. This results in congestion, safety risks and air pollution. According to the XMTB, the transport modes split for freight is not rational, with 92% of tons by road, 1% by water and air, and only 7% by railway. It was reported that only one inland waterway port is currently operating in Xiangyang, however the infrastructure is fragmented and outdated and as such water transportation is underutilized. Redistribution of the modal split of freight transport has the potential to reduce logistics costs, fuel consumption, air emissions, congestion and road accidents B. The Transport Network
1. National Trends
51. With the world’s second largest economy and second largest contiguous geographical area, China’s transport network has played a major role in its unparalleled economic growth and diversification, rural to urban migration by the population, and poverty reduction. Xiangyang is soon to become one of the next key hubs in China’s transformation. 52. As shown in Table 1, there are important national trends. While population growth has become quite gradual and in future years may even decline, the economy has experienced a prolonged period of strong growth. Rail tons and ton-km have shown a decline in recent years and rail has lost market shares to road transport. The high ton-km share but low tonnage
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TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) share for waterways is because the traffic figures include coastal and ocean shipping in addition to inland waterways and is not strictly comparable. Table 1 National Trends ） ） ） ） Total Freight TKM(billion) Rail TKM(billion) Rail Market Share TKM Highway TKM(billion) Highway Market Share TKM waterway Freight TKM(billion) Waterway Market Share TKM Total Freight Tons (Million Rail Tons (Million Rail Market Share Tons Highway Tons (Million Higway Market Share Tons Waterway Tons (Million Waterway Market Share Tons Year
1992 2,921.80 1,157.60 39.60% 375.50 12.85% 1,325.60 45.40% 10,458.99 1,576.27 15.10% 7,809.41 74.70% 924.9 8.80% 1993 3,064.70 1,209.10 39.50% 407.10 13.28% 1,386.10 45.20% 11,159.02 1,627.94 14.60% 8,402.56 75.30% 979.38 8.80% 1994 3,343.50 1,263.20 37.80% 448.60 13.42% 1,568.70 46.90% 11,803.96 1,632.16 13.80% 8,949.14 75.80% 1,070.91 9.10% 1995 3,590.90 1,305.00 36.30% 469.50 13.07% 1,755.20 48.90% 12,349.38 1,659.82 13.40% 9,403.87 76.10% 1,131.94 9.20% 1996 3,659.00 1,310.60 35.80% 501.10 13.69% 1,786.30 48.80% 12,984.21 1,710.24 13.20% 9,838.60 75.80% 1,274.30 9.80% 1997 3,838.50 1,327.00 34.60% 527.20 13.73% 1,923.50 50.10% 12,782.18 1,721.49 13.50% 9,765.36 76.40% 1,134.06 8.90% 1998 3,808.90 1,256.00 33.00% 548.30 14.40% 1,940.60 50.90% 12,674.27 1,643.09 13.00% 9,760.04 77.00% 1,095.55 8.60% 1999 4,056.80 1,291.00 31.80% 572.40 14.11% 2,126.30 52.40% 12,930.08 1,675.54 13.00% 9,904.44 76.60% 1,146.08 8.90% 2000 4,432.10 1,377.10 31.10% 612.90 13.83% 2,373.40 53.60% 13,586.82 1,785.81 13.10% 10,388.13 76.50% 1,223.91 9.00% 2001 4,771.00 1,469.40 30.80% 633.00 13.27% 2,598.90 54.50% 14,017.86 1,931.89 13.80% 10,563.12 75.40% 1,326.75 9.50% 2002 5,068.60 1,565.80 30.90% 678.30 13.38% 2,751.10 54.30% 14,834.47 2,049.56 13.80% 11,163.24 75.30% 1,418.32 9.60% 2003 5,385.90 1,724.70 32.00% 710.00 13.18% 2,871.60 53.30% 15,644.92 2,242.48 14.30% 11,599.57 74.10% 1,580.70 10.10% 2004 6,944.50 1,928.90 27.80% 784.10 11.29% 4,142.90 59.70% 17,064.12 2,490.17 14.60% 12,449.90 73.00% 1,873.94 11.00% 2005 8,025.80 2,072.60 25.80% 869.30 10.83% 4,967.20 61.90% 18,620.66 2,692.96 14.50% 13,417.78 72.10% 2,196.48 11.80% 2006 8,884.00 2,195.40 24.70% 975.40 10.98% 5,548.60 62.50% 20,370.60 2,882.24 14.10% 14,663.47 72.00% 2,487.03 12.20% 2007 10,141.90 2,379.90 23.50% 1,135.50 11.20% 6,428.50 63.40% 22,758.22 3,142.37 13.80% 16,394.32 72.00% 2,811.99 12.40% 2008 11,030.10 2,510.60 22.80% 3,286.80 29.80% 5,026.30 45.60% 25,874.13 3,303.54 12.80% 19,167.59 74.10% 2,945.10 11.40% 2009 12,213.30 2,523.90 20.70% 3,718.90 30.45% 5,755.70 47.10% 28,252.22 3,333.48 11.80% 21,278.34 75.30% 3,189.96 11.30% 2010 14,183.70 2,764.40 19.50% 4,338.90 30.59% 6,842.70 48.20% 32,418.07 3,642.71 11.20% 24,480.52 75.50% 3,789.49 11.70% 2011 15,932.40 2,946.60 18.50% 5,137.50 32.25% 7,542.40 47.30% 36,969.60 3,932.63 10.60% 28,202.00 76.30% 4,259.68 11.50% 2012 17,377.10 2,918.70 16.80% 5,953.50 34.26% 8,170.80 47.00% 40,994.00 3,904.38 9.50% 31,884.75 77.80% 4,587.05 11.20% 2013 16,801.40 2,917.40 17.40% 5,573.80 33.17% 7,943.60 47.30% 40,989.00 3,966.97 9.70% 30,766.48 75.10% 5,597.85 13.70% 2014 18,539.80 2,753.00 14.85% 6,101.70 32.91% 9,277.50 50.00% 43,810.89 3,813.34 8.70% 33,328.38 76.10% 5,982.83 13.70% 2015 17,835.60 2,375.54 13.32% 5,795.57 32.49% 9,177.35 51.46% 41,755.86 3,358.01 8.04% 31,005.19 74.25% 6,135.67 14.69% 2016 18,662.90 2,379.23 12.75% 6,108.01 32.73% 9,738.88 52.18% 43,867.63 3,331.86 7.60% 33,412.59 76.17% 6,382.28 14.55% 2017 19,737.30 2,696.22 13.66% 6,677.15 33.83% 9,861.12 49.96% 48,048.50 3,688.55 7.68% 36,868.58 76.73% 6,687.46 13.92% Aerage Annual 7.6% 3.3% -4.0% 11.7% 3.8% 8.0% 0.4% 6.0% 3.3% -2.6% 6.2% 0.1% 7.9% 1.8% Growth Rate (1992-2017) 2017Average Distance Traveled by 411 731 NA 181 NA 3,450 NA NA NA NA NA NA NA NA Ton (km) NA=Not Applicable. Note; waterways may include coastal shipping.. Source: China Statistical Press, China Statistical Yearbook 2018 and earlier years; National Bureau of Statistics of China, Beijing. 1. Freight in Xiangyang
53. Demand for freight services serving Xiangyang is growing rapidly. The growth of leading Xiangyang industries was in double digits from 2017-2019. The automotive industry produced 38.4 million vehicles an increase of 23.4 percent in which new energy vehicles accounted for 4 million, a 23.8 percent increase. The agriculture sector increased 12.2 percent, the equipment manufacturing industry double digit increase and pharmaceutical/chemical industry output value increased 8.1 percent. International trade also experienced increases of 24.2 percent exports and 12 percent imports. The trade demand from businesses is stressing the trucking industry as seen in Table 2/ Table 2 Total Freight Volume in Xiangyang City (2012-2017)
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Total freight Railway Waterway Air cargo Road freight (ten freight freight volume (ten Years volume thousand volume volume thousand (10,000 tons) tons) (10,000 tons) (10,000 tons) tons)
2012 14662.60 13003 867 792.5 0.10
2013 16965.72 15033 1011 921.5 0.22
2014 26962.76 24842 1049 1071.5 0.24
2015 27940.14 25632 1136 1171.9 0.24
2016 29,619.85 27150 1183 1286.6 0.25
2017 32887.27 30511 1409 966.98 0.29
Average annual 17.53% 18.60% 10.20% 4.06% 23.25% growth rate
(source: Xiangyang Transportation Bureau and the Hubei Materials Distribution Technology Research Institute)
54. Xiangyang’s geographic position is significant in relation to cities in the neighboring provinces for total road freight volumes. Of the ten cities from the surrounding provinces in Hubei, Henan and Shaanxi, Xiangyang ranks in the top three behind Wuhan and Nanyang, Henan, respectively in total volume of freight. 55. Xiangyang is a hub for rail transport because two railway lines cross the city: one north to south, Jiaolou from Henan to Guangxi; one east to west from Wuhan to Sichuan. In addition, there is a dedicated coal line from Inner Mongolia Autonomous Region to Jiangxi. There is potential for Xiangyang to connect its logistics parks by rail spurs to those rail lines and have multimodal functions with value added manufacturing and logistics services, gradually over the short to medium to long term: 2020-2025, 2025-2030 and 2030-2035. 56. Figure 4 shows Xiangyang’s overall transport network. The red and yellow lines indicate national expressways or highways and show north-south and east-west directions are served. These routes connect to similar expressways and highways in neighbouring areas. The green lines indicate Provincial highways. Collectively, the road network has a solid base and it is being expanded.
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Figure 4 Xiangyang Transport Network Source: Xiangyang Municipal Transport Bureau. November 2018.
2. International Trade
57. Foreign trade is a growing segment of the Xiangyang and neighboring cities’ economies. The logistics parks need to consider their plans and construction with timely access to all modes of transport. Many companies met in this field work expressed interest in expanding markets for both inbound and outbound shipments. However, companies (customers) have problems with rail and IWT for OTDs which causes higher costs. The following tables and maps show the importance of foreign trade for commodities and diverse markets. Capturing foreign markets are vital to Xiangyang becoming a transport hub. Table 3 Foreign Trade Data Table of Xiangyang City in Recent Years Year Total trade Exports Imports Change Change Change US$100M) ($ 100 M) ($ 100 M) total exports imports 2015 24.12 21.58 2.54 22.7% 24.1% 12.0%
2014 19.66 17.38 2.27 21.5% 21.2% 23.5%
2013 16.18 14.34 1.84 28.6% 34.6% -4.5%
2012 12.58 10.65 1.93 25.5% 39.1% -18.6%
2011 10.03 7.66 2.37 40.6% 38.2% 48.7%
2010 7.14 5.54 1.60 64.5% 68.2% 53.1%
(source: Xiangyang Transportation Bureau and the Hubei Materials Distribution Technology Research Institute)
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Table 4 Structure of Export Commodities in Xiangyang City in 2017 Commodity Export amount (10,000 US dollars) Proportion
Agricultural and Sideline 19232 10.12% products
Textile 10273 5.41%
Clothing 38479 20.25%
Light industry 42113 22.16%
Pharmaceutical and 11166 5.88% chemical industry Electromechanical products 53891 28.36%
Of which: automotive parts 9250 4.87%
Bearing 2998 1.58%
High-tech products 8595 4.52%
Total exports 190048 ——
(source: Xiangyang Transportation Bureau and the Hubei Materials Distribution Technology Research Institute)
Table 5 Exports of various regions of Xiangyang City in 2017 Export amount Area Proportion (10,000 US dollars) High-tech Zone 22583 11.88% Fancheng District 7178 3.78% Wucheng District 3222 1.70% Yinzhou District 48851 25.70% Laohekou 21623 11.38% Baokang County 7419 3.90% Gucheng County 14376 7.56% Nanxun County 17160 9.03% Yicheng 17326 9.12% Zaoyang City 12763 6.72%
Total city 190048 ——
(source: Xiangyang Transportation Bureau and the Hubei Materials Distribution Technology Research Institute)
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C. Transport Network Issues
58. The road and railway networks connecting Xiangyang internally as well to external regions are in the process of being significantly upgraded to where they will meet foreseeable demand and enable improved travel/transport times, costs, and the basis for medium to long- term economic evolution for a sustainable greener industrial sector, a more efficient agricultural (or primary) sector, and a growing and dynamic services (tertiary) sector. Inland waterways and associated ports and aviation are positioned and planned to assume increasing roles in the development of Xiangyang as a key transportation and a complementary commercial hub. Xiangyang is at the center of economic growth for the Han River belt, and it will become even more important in future years. 59. While the infrastructure in place and planned provide a solid basis for sustainable Han River development, there are issues that need to be strengthened for Xiangyang to facilitate the evolution of the Han River region. Specifically, capacities have to be enhanced with respect to data generation and analysis, forecasting, and most importantly integration of various modes. A better understanding of transport cost factors in Xiangyang and potentially competing regions is essential to realizing more competitive producers and economic growth. 60. Xiangyang has experienced very positive development results including economic growth in recent years. For these to continue and increase the efficiency of operations in the Prefecture, more attention has to be given to integrating not only transport modes to become more functionally multimodal, but also to integrating thinking—the ideas and concepts—that will provide the basis for a comprehensive multimodal hub. 61. This sounds good “on paper” but it is far more difficult to actually implement with positive results. Much more needs to be done on developing and/or utilizing information platforms. A higher priority needs to be given to collective dialogue and implementation. Globally, this is a weakness—private operators don’t want to share their market information, public sector agencies want to protect their “turf,” and special interest groups (e.g., environmentalists, preservationists, etc.) want to have an impactful role that is often at odds with the other participants. 1. Roads
62. The road network is expanding to accommodate increasing traffic and provide the necessary basis for growth and development. The national expressways provide the key link to the national road network. Provincial roads provide connections within Xiangyang and to neighbouring areas.
63. The length of the road network in Xiangyang totalled 30,215 in 2018 including county, town and rural roads. Of this, expressways comprised 599 km and national highways totalled 807.3 km. the expressways include: Fuzhou-Yinchuan (east-west) Expressway at 168 km; Erlian-Guangzhou (north-south) Expressway at 104 km; Gucheng-Zhu (east-west) Expressway at 64 km; East Ring Road of Xiangyang Expressway at 16 km; Baoyi Expressway at 74 km;
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Mazhu (east-west) Expressway in eastern Xiangyang at 59 km; and Mazhu Expressway in western Xiangyang at 114 km. 64. The national highways include: G241 Hubei (east-west) highway, passing through Tuguan, Shihua, Zijin, Guoduwan, Paifangwan, Houping, Baiguoshuping, Maliang and Dianya; G207 Xihai (east-west) highway, passing Wei Ji, Huang Ji, Huo Pai, Tuan Shan, San Qiao, Wang Shugang, Xiao He, Zhou Gang, Tao Yuan; G234 Xingyang (east-west) highway, passing Sizhuang, Taiping, Yuanzhuang, Ligang, Wudian, Tangdian, Qingtan; G316 Fulan (north-south) highway, passing Suiyangdian, Zaoyang, Qifang, Shuanggou, Laohekou Interchange, Gucheng Interchange, Shihua, Tuguanya; G346 Shangan (north-south) highway, passing Xinji, Banqiao, Nanying street office, Yicheng North Interchange, Wu'an, Nanzhan Chengguan, Changping, Huangpu, Paifangwan, Guoduwan Town, Siping, Langkou; G328 Qilao highway, passing Menglou, Lanmahe, Xianrendu; and G347 Nande highway, passing Shaziling, Tongmuji and Zengjiagang. 65. Provincial roads account for 2,037.3 km and there are 10 north-south roads, 9 east- west roads, and 9 interconnecting roads. There are five expressways under construction and two new expressway extensions are planned for the 2020-2025 period: one to the north into Hunan and one to the south to connect with the Chongqing-Shanghai expressway, a 32 km expressway as part of the South Ring Road for the existing city center; a 39 km expressway from Laohekou to Gucheng; a 37 km expressway from Baokang to Shennongjia; a 61 km expressway from Zaoyang to Qianjiang (the southern section); a 48 km Zaoyang-Qianjiang expressway (the northern section); and construction of a 17 km expressway from Xiangyang to Nanzhang will begin in the near future. 66. A fourth bridge over the Han River will be completed in 2020. The elevated East-West expressway across the centre of the city will be completed in 2022. In addition, a bypass of Xiangyang city for national highway for G207 is planned. This will reduce congestion in the city (62% of current traffic passes through Xiangyang). It will be 94 km in length, consist of 6 lanes of about two-thirds of its length, and including a new bridge over the Han River, will cost about 7 billion CNY, or $1 billion USD. Importantly, this will keep transiting heavy trucks out the city area.
2. Railways
67. The railways are set to play a much larger role in Xiangyang’s future primarily because of the three new high-speed passenger lines and the heavy haul coal line that will begin
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TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) operating over the next several years. The effect of these developments for the logistics sector will primarily be to free up capacity on existing lines. 68. There are three existing railways (Handan, Jiaoliu , Xiangyu ) with a total route length of 330 km in Xiangyang, a large marshalling yard (Xiangyang North Station) and more than 20 railway stations in Xiangyang Prefecture. Freight traffic volume through Xiangyang totalled 14 million tons in 2017, of which the arriving traffic reached 8.18 million tons while the out- going traffic was 5.82 million tons. 69. The Handan Railway (Wuhan to Danjiangkou Railway, east-west bound) has a total route length of 412 kilometres, of which about 182 kilometres are within Xiangyang. This line was put into operation in 1967. It is connected to the Beijing-Guangzhou and Wuhan-Jiujiang railways in the south and meets the Jiaozuo-Liuzhou and Xiangyang-Chongqing railways in Xiangyang. It is the main line connecting the central and northwestern parts of Hubei Province. 70. The Jiaoliu Railway (Jiaozuo to Liuzhou Railway, north-south bound) starts from Jiaozuo City, Henan Province, and ends in Liuzhou, Guangxi. It has a total route length of 1,645 kilometres. Jiaoliu Railway was built in 1970 and electrified in 2010 71. The Xiangyu Railway (Xiangyang to Chongqing Railway) starts from the east of Laohekou East Railway Station of Xiangyang and ends at Chongqing Railway Station including about 43 kilometres in Xiangyang. It was officially opened in 1979 and then was electrified with the double-track in November 2009. 72. Railway facilities include the Xiangyang North Marshalling Yard located in Mizhuang Town, near the Xiangyang High-tech Zone. The marshalling yard was expanded in 2012 and is now the 13th largest in China with a capacity of 6,000 wagons/day. Trains for five directions (Zhengzhou, Chongqing, Liuzhou, Luoyang, Danjiang) are assembled here. The Xiangyang Railway Station was built in 1958 and is now the main passenger and cargo station in the Xiangyang Railway Hub. 73. The Menghua Railway, a dedicated freight line from the west of Inner Mongolia to eastern China is under construction and will run north-south in Xiangyang. The line starts from Erdos in Inner Mongolia, passing through seven provinces including Shaanxi, Shanxi, Henan, Hubei, Hunan and Jiangxi, and ends in Ji'an City, Jiangxi Province. Its main line is 1,815 kilometres (330.6 kilometres in Hubei) with the technical standards of electrified, heavy haul (25-ton axle load) and double-track railway. In Xiangyang, it will pass through 6 counties (cities, districts) of Xiangyang, including Xiangzhou, Hi-tech zone, Fancheng, Xiangcheng, Nanzhang and Yicheng. A freight yard will be set up in Xiangzhou and a two kilometre connecting line between Denghu and Gaoying Station will be built. Denghu Station will serve as the end point for 10,000 ton trains where they will be broken into two 5,000 ton trains for dispersal over the network. 74. There are other key activities associated with railways in Xiangyang that have been approved for implementation under the 13th 5-Year Plan. These include: 1. Development of a railway logistics center (2,218 mu; capacity over 10 M tons/yr). It will be next to the existing railway vehicle manufacturer and adjacent to the marshalling yard. Construction hasn’t started yet. 2. There are plans to relocate the existing freight yard in the city center to an area between the marshalling yard and the new railway logistics park.
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3. A new spur line is planned for the new port (govt owned) now under construction about 30 km south of the city center. 4. A new spur line will be built for Dongfeng (following national policy the company will pay for it). 5. An information platform is planned. 75. A key issue from a transport planning perspective is that the current north-south Jiaoliu Railway dissects the city center and adds congestion and restricts growth. It has been proposed that the line be located either west or east of the city. This issue is discussed further in the Transport Plan. 76. Another suggestion would be to extend the spur line to Dongfeng Motors from the marshalling/freight yard/railway logistics park eastward past Dongfeng, the new logistics base park and the airport to the proposed river port if it is approved (it has been approved by the Provincial DRC but XMG Land Use Planning Bureau was opposing it on grounds that it will create congestion on the river and possibly pollute the Han River- this objection has now been withdrawn. This could serve as the main spur line to which could be attached additional spur lines serving other logistics centers and manufacturers in the area. This area has been designated for logistics centers and large manufacturers, thus establishing a rail network to service them would be a logical step. A number of the currently planned logistics centers have not included railway lines. 77. . Increasing the role of rail freight traffic remains problematic based on CRC’s performance over the years as it has not fully developed a customer-friendly basis to handle shipments especially handling containers. Instead CRC has focused on traditional bulk cargoes such as coal, fertilizers, iron and steel, grains, cement, ores, and bulk building materials. The national government’s policy to promote the use of rail and shift from road transport will undoubtedly have some effect but it will take time to develop customer confidence in switching from the reliable road trucking industry even if it is the most expensive transport mode. 3. Waterways and Ports
78. As noted in the background section, inland waterways and ports have not received the same attention with respect to investment that other modes have received. This is changing in Xiangyang as a new port is being developed about 30 km from the existing city center, and another port is being proposed to service the manufacturers and logistics centers in the northern part of the enlarged urban area. 79. Reportedly, at one time there were many small scattered ports or wharves in the city’s urban area. Currently only one, Shu Jia Port, is operating and it is an older coal port. It had a maximum capacity of 5 million tons per year. At its peak, it handled between 2-3 million tons of coal. Currently it handles about 0.5 million tons for the nearby power plant and provides storage space for the coal. Table 6 Inland Waterway Transport (IWT) Statistics Han-Yangtze River (2018
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Indicators Xiangyang (January- Hubei (January to PRC (2018) June) November)
Inland 195 kilometres navigable. Plan: 5,588 km Grades II-IV 6,300 km Navigation September-April: 1.1 Yangtze River meters water level only 500 tons vessels. May- 126,300 km August: 2-3 m. up to 1000 (PRC) tons
Volume (tons) 4,120,000 (up 11.05%) Vehicles: RO/RO 821,000 4.89 billion metric tons (626,600 cars, 94,400 trucks (up 14%)
Turnover 496.6 million (up 39.84%) 26.29 billion (up 1.2%) Not available volume (ton km)
Ship number 246 with total capacity of Not available Not available 78657 tons
Container 5,700 (2017 total foreign 1,773,800 (up 18%) 29,090,000 throughput trade) (up 6.2%) (TEUs)
(source: National and International Consultants) *Wuhan government plan to raise water level by 1.5 m. and has a subsidy policy.
80. The port under construction is next to a free trade zone/industrial park. Xiao He port is south of Shu Jia port, near a railway line for passengers and freight, 4 docks are under construction, and this could be expanded to 17 berths in the future. This port has significance for exporting to international markets through the Yangtze River to Shanghai. A spur railway line is planned to connect to the complex. The port will have an annual capacity of 10 million tons in its first phase and then reaches 20 million tons when fully developed. It is hoped that the proximity to the free trade zone will make it attractive to users. 81. Adjoining this new port will be a new industrial park that one of the largest operators in the Shenzhen port is considering to develop. A framework for the investment has been agreed upon, and formal contract is pending. 82. The key issues are the dams being built to increase and maintain channel depths and associated dredging to ensure that depths are maintained. There are other works along the river banks to combat erosion. 83. There is one dam about 2 km north of the existing coal port. A second dam at Nianphanshan about 104 km south of Xiangyang city center will be completed in 2021 but filling of the reservoir behind the dam will likely begin this year and continue into 2020. A similar schedule is planned for a third dam on the lower Han River. The dams will ensure that depths will be maintained in the 6-8 meter range. 84. The locks at the dams are capable of handling 2,000 ton vessels but in the beginning years (2020-2025), 1,000 ton vessels will be used and increased to 2,000 tons by 2030. RORO (roll-on/roll-off) vessels are planned to carry vehicles from Dongfeng Motors. In addition, there will be general and bulk cargo vessels that are also able to transport containers. Logistics Plan June 2020) Page 22
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85. Waterway tariff rates are competitive at 10-20 fen per ton km. Vessels will be able to travel the 400 km to Wuhan in one day and reach Shanghai in another 2-3 days. Inland waterways have proven to be more reliable than railways in that departure/arrival dates and times are set and cargo tracking is possible on a daily basis; whereas shipments via rail are dependent on train movements that do not provide cargo tracking. While travel times will be longer than road, if the delivery times can be assured, this, combined with the ability to track the consignment and the lower price should make the service attractive for part of the market. 86. The proposed Tang Bai Port south of the airport and designated to service the manufacturers (high technology zone for automobile manufacturing) and logistics operators in the northern part of the enlarged urban area has reportedly been approved by the Provincial government. Forty percent of Xiangyang domestic output is from this area. The key issue has been the reclassification of the land from agricultural use to a transportation area and this is expected to be resolved by the end of 2019. 87. The new ports are expected to provide a viable alternative to roads for freight based on tariffs and the ability to track cargoes 4. Aviation
88. Aviation has been experiencing a rapid increase in passengers and service. In 2012, there were about 0.2 million passengers which had increased to 1.4 million in 2018. The target is to reach 2 million per year and thus become a “main line” airport. Currently there are an average of 17 scheduled flights per day. The current airport consists of a new (2018) terminal, an approved runway 2400 meters in length, taxiways, a short runway for small planes, and associated facilities. The runway is being extended to 2600 meters and the plan is to connect service to 25 airports during 2019. A parallel 3200 meter runway is being planned for construction in 3-5 years. 89. Until recently, PBN, or plane-based navigation system was used. In bad weather or times with poor visibility, aircraft were unable to land or take off. The advanced navigational aids now installed will enable landings and take offs under more adverse conditions making air services more unreliable. 90. Current air freight volumes are small due to the type of planes that can use the airport. However the location of the airport close to the high tech zone and the expansion of the airport should see the further development of air freight.
5. Summary
91. Overall, the current transport infrastructure is in relatively good shape and the planned improvements will meet projected demands over the next decade. However, to meet the stated goals and targets, all parties have to be “on the same page,” with some common understanding of what needs to be done and why. The following subsections highlight the strengths and weaknesses of the infrastructure and operations for various modes. 92. Collectively current and planned initiatives for the transport and logistics networks are positive steps that Xiangyang is implementing. The XMTB has competent skilled staff that are more than capable of identifying and addressing the issues.
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III. CURRENT SITUATION
A. Overview
1. Dimensions
93. Xiangyang has one 5A class logistics enterprise1, 12 logistics enterprises 4A class, 10 logistics enterprises 3A class and 5 logistics enterprises 2A class. There are seven major logistics parks and around ten minor parks as well as operator’s own facilities. The parks are currently not rail served. The following figures depict some of the logistics parks (Figure 5) and business locations (Figure 6).
Figure 5 Location of main logistics parks
1 China Federation of Logistics and Purchasing classification. Logistics Plan June 2020) Page 24
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Figure 6 Location of Industrial and Commercial centres 94. Xiangyang is one of 42 national railway logistics node cities. The city has 17 railway freight stations, 26 railway freight yards, 17 warehouses and 55 local and railway special lines. There are 5 major freight stations in the urban area: Xiangyang, Xiangyang south, Xiangyang east, Wangshugang and Yujiahu for a total of 9.22 million tons of cargo in 2011. Freight volume of Xiangyang North station was 223 million tons2 in 2018 which increased in four consecutive years up to 29.6 percent over 2015.
2. Consultations
95. The Logistics Expert undertook a number of field surveys as well as comprehensive discussions with industry representatives to better understand the issues the industry faces and the infrastructure needs into the future. A field survey was undertaken of seventeen businesses selected to be representative of the range of company sizes and specialisations. Strategies to improving Xiangyang’s logistics sector were discussed with the Xiangyang Logistics Association and two government river port entities. 96. Several important themes emerged, including the high cost of logistics in Xiangyang, the importance of one time delivery (OTD) and the effect of traffic congestion, the potential for the use of rail and inland waterways and the need for consultative planning for logistics parks and other facilities. These issues are discussed in the following sections. B. Stakeholder Needs
1. Industry Plans, Problems and Solutions
97. Table 7 shows the plans, problems and solutions for leading firms in terms of plans and solutions for leadings logistics issues.
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Table 7 Stakeholder Issues Logistics Plans Main Problems Solutions Stakeholders Government 1.) Maritime Safety 1.By 2020, Class III, 1. Construction of 1. PPD body with Administration 1000 dwt electrical, etc. to working group to 2023 balance electrical, dam, 2.TEU subsidies: irrigation, dredging, 650Y/TEU 2. “Too much talk transport and no action plans” 3.Have demand for 2. detailed policies to IWT 3. No details of solve problems demand from 4. Navigation IT departments: 3. PPD body to eliminate system agriculture and “silo menstality” manufacturing 4. PPD body: 4. No Information Technology direction/information working group (WG) about water levels and ship capacities- no IT systems 2.) Transportation 1. Constructing 1. No demand study 1. Early selection of Construction Xiao He Port nor for Tang Bai Port operations Investment, Company company/PPD 2. 3 break/b, 1 bulk 2. No plan for terminals container terminal 2. Collaboration with business-PPD body Association 3.) Logistics 1. 1 Port & 4 Parks: 1. Disconnect 1. Institution reforms of Association N, E, W, S between: plan- city and association construct-users 2. “Road Markets” 2. Collaboration, to Parks 2. Logistics Parks coordination: PPD body not good for road 3. Modal shifts from markets 3. Government lead with road business: PPD body 3. Lack of collaboration among departments Businesses Logistics 4.) Dong Feng Railway 1. In two years, all 1. Overloaded trucks 1. PPD body for and have facilities to do versus containers. collaboration. Now in TEU business Multimodal plans in “silo mentality”: Make Feng Shun Logistics different new department: Co (FSL) 2. Modern logistics departments “Economic & standards Information Group” 2. Packaging, manufacturing, Logistics Plan June 2020) Page 26
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3. Container logistics companies 2. International warehouse and use different standards in PPD body information systems standards WG 3. No place to store, 3. Government led plan load/unload to fund, implement 5.) Guang Cai 1. “Road Markets” 1. No enforcement 1. PPD body with all Logistics Park to Parks mechanism or leader relevant departments. Best practices from 2. IT systems with 2.City and 5 districts Shandong and Jiangsu all 6 parks not in harmony. Information 2. Institutional reforms: 3. Form large 3PLs management center past did not work. Form closed logistics cluster from good practices. 3. Too many small Standard approval companies process for logistics parks 3. PPD and Association reforms with WGs 6.) Xiang Guan 1. More use of 1. Poor multimodal 1. PPD body to Logistics Co. (3PL) containers. Better rail policy. implement PRC policies. rail services. Containers high cost, Nissan/DCEC case not available, low studies use international volumes. No standards and 3PLs can standards for fill their requirements packaging, using value add equipment. Rail not services. Rail spur in near manufacturing FTZ. 2. IT platform in FTZ.
2. PPD body with IT 2. Customers with working group (WG) different systems for inventory and no visibility (on-line tracking) Manufacturing 7.) Cummings (DCEC) 1. In 3 years use 1. “long journey” is 1. Implement PRC containers cost to suppliers policies by PPD WG using old pallets to standard pallets. 2. International Low volumes 2. IWT/rail services sales 2. low level of competitive, no multimodal services damages 8.) Shuang Lin NTP 1. Rail for 40% & 1. Now rail is 10% 1. PPD body with WG for (bearings) containers with poor OTD PRC multimodal 2. Did IWT pilot 2. PPD with Wuhan IWT project systems
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3. Use of logistics 2. 7-8 days to 3. Need full service parks Shanghai vs. 20 multimodal companies hours-truck 3. Not used. Poor transfers road-rail 9.) Xin Xing Heavy 1. Need multimodal 1. No I.T. intermodal 1. PRC multimodal Industries (vehicle because will reduce platform. Road policies implemented by castings) logistics costs congestion, safety, PPD body pollution. Rail loses shipments 2. Government 2. Rail is slow. 2. IT working group in promised I.T. Paying each PPD body system five years customer $152/year ago to use their IT systems 10.) Hanjiang Heavy 1. Need large truck 1. No specialized 1. City and logistics Industries (project project cargo logistics companies association cargo rail bridges) companies and for collaboration DG
2. Smooth permit 2. County to county process for different permit 2. Harmonize permits oversize/overweight process by PPD body with trucks Administration Services Bureaus inputs 3. Use of riverports 3. Poor road-IWT-rail by steel suppliers 3. Better coordination, services for cargo. collaboration of with 1500 dwt Steel suppliers near vessels responsible bureaus to IWT ports from implement plans with 4. I.T. systems in Wuhan in Xiangyang funding needs Xiangyang no port access to reduce costs 4. I.T. working group in PPD body 4. I.T. platform in Xiangyang is not good 11.) Wanzhou Electric 1. Use of logistics 1. Logistics parks not 1. business and parks if organized, meeting their needs government professional collaboration and services, certified standardize construction with all VAS, good approval and operations prices of logistics parks
2. Specialized and large logistics 2. small logistics companies companies need to 2. PPD body with wait to reach certification program to volumes and impacts reduce or merge OTD to them. Wuhan logistics companies. suppliers have OTD Good I.T. systems from issues to them I.T. working group
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Agriculture 12.) Xin Fa Di Peanut 1. Phases of plans 1. May to August 1. Coordination and Trading for cold and normal need refrigeration. knowledge sharing: warehouses with Refrigerated container cloud-based system is less than systems and building warehouses networked to all of and lower energy costs PRC 2. Agriculture association has no 2. Use of agriculture power association 2. Institutional reforms for agriculture and all 3. Use of local associations for greater logistics companies 3. Not large enough impact in Xiangyang and IWT and use Xiamen companies to long 3. Improve local logistics distance & for rail to and multimodal IWT Shanghai for international markets 13.) Zhuyeshan 1. Expand logistics 1. Competitor parks 1. PPD body to better Agriculture Products park with cold are real estate and coordinate logistics Trading Center warehouses and not operations. Took parks, forecasting and trucker mobile apps tenants from them management without logistics companies needed. Expand on-line with Taodaji and other on-line e-commerce for all area cities 14.) Lifeng Grain and 1. Need trucks May 1. No trucks 1. OTD trucking with no Oil and June available May and damages. June. No use for logistics parks 15.) Yuanda Oil 1. Would use 1. Use Yichang river 1. Construct river ports Xiangyang IWT, if port truck on barge to in Xiangyang: PPD available Sichuan/Chongqing, if need faster— 2. International trucks markets 2. Data collection 2. Not calculating system. Logistics parks logistics costs well. with 3PLs to do value Low profit margins. add-services. Not using logistics parks Consumer Goods/Supermarkets 16.) Zhonghao 1. Build logistics 1. small logistics 1. Educate logistics International Trading center to serve the yard now with no officials, integrate large wholesale demand study logistics parks, form market with e- conducted and no large logistics commerce with companies, road
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dedicated truck road plan. No I.T. markets out of the city, road platform need business collaboration. Form PPD with working groups. Form government led shareholder company. 17.) Metro 1. Improve use of 1. Need OTD, door 1. PPD body to form local logistics to door services. leading 3PLs and companies Logistics companies implement intermodal too small, and not policies. 3PLs. Poor trucks without 1-2 tons and hydraulic lifts. No multimodal: rail, IWT, via Wuhan delays 18.) Walmart 1. Local pork needs 1. No large cold 1. Form specialized refrigeration chain local local 3PLs systems companies
2. A District commerce office 2. Need all government plans 8 specialized 2. Evening truck departments to think product markets for delivery rules to city together in planning and supermarkets stores. Better current not silo mentality. logistics park services. Just now planning logistics parks for supermarkets 19.) Hao Lin Ju 1. Build refrigerated 1. Expressway is 1. Good case study for Logistics Distribution warehouse next to blocked so use Xiangyang in all facets (Hubei only) current room longer highway with of logistics improvement temperature delays. Rail: plan: local logistics storage procedures, company used, I.T. transloading, systems, know the communications, customer mentality, damages. Logistics efficiencies, costs. parks not planned well to use.
2. Customer Needs
98. Table 8 shows the six main industries in Xiangyang that have the demand profile required for the consolidation and improvement of logistics parks to international standard practices.
Table 8 Analysis of Main Industry Logistics Needs in Xiangyang City
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2017 output Raw materials and Industry value (100 Raw materials and finished product Category million finished product flow logistics needs Yuan)
At present, its vehicle accessories are mainly Automotive/New 2400 imported from overseas, Car ro-ro, container, steel Energy and some are sold to other provinces.
Textile and garment: Raw materials are mainly imported from the central and western provinces and foreign countries. Products are sold to Guangzhou, Jiangsu, Zhejiang and other regions as well as Agricultural/Deep Textile and apparel: 1630.1 Europe, the United States Processing and Japan. Container Food and processed products: Xiangyang City is a large agricultural city, known as Jingchu Granary, and its food and processed products are sold throughout the country.
Equipment 705 Container, steel Manufacturing
At present, Xiangyang City has formed a chemical product pattern Pharmaceutical dominated by Containers, hazardous 508.22 and chemical phosphorus chemical chemicals industry, and its chemical products are mainly used for export trade.
New Energy and 171.1 container New materials
Electronic Containers ,hazardous 580 Information chemicals
(source: Xiangyang Transportation Bureau and the Hubei Materials Distribution Technology Research Institute)
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C. High Cost of Logistics in Xiangyang
99. Our research found no authorized statistics relating to logistics costs per unit kilometre at any level of government. However in 2018 total logistics costs in Xiangyang as a percent of GDP (14.34 percent) were lower than the national average (14.8 percent) and only slightly higher than Wuhan (13.96 percent). At the national level, the Ministry of Transport is seeking a notable increase in transport efficiency in the next three years. The country will accelerate the construction of a comprehensive transport network including expanding the electronic toll collection system and promoting multimodal transport3. 100. All companies consulted were aware of the perceived high costs of logistics in Xiangyang, which they attributed to inefficient fragmented infrastructures, lack of standardized equipment, information systems and planning. They agreed that logistics costs need to be managed for Xiangyang to become a regional and international transportation hub. 101. Despite perceived high costs, the companies claim that the regional economy and logistics industry are highly competitive. The issue of competitiveness was discussed with Guangcai Logistics Park officials in their difficulty in finding business in the face of the numerous overlapping and low value services in the logistics parks of Xiangyang.
1. Inefficient equipment
102. One reason for higher costs is inefficient and insufficient infrastructure and equipment- Inefficiencies arise from the lack of standards based on international norms for trailers, containers, pallets, IWT vessels and vehicle chassis; procedures for logistics parks and most importantly lack of uniform information systems. There are policy conflicts due to the absence of a public private coordinating body. A better functioning logistics association is needed to implement policies such as intermodal transport, overloaded trucks, lower truck insurance costs and incentives to merge uncompetitive, low service trucking firms to form leading 3PLs operators with adequate truck fleets. 103. Rail services operate with a mixture of non-standardized equipment including trailer on flat car (TOFC), container on flat car (COFC), well car (double stack containers). There are no container warehouses to take advantage of the benefits of moving cargo off the roads onto waterways and railways with either trailers or containers. 104. The companies across all sectors in the field survey from agriculture to manufacturing to consumer goods need to use containers, but the transition and cost efficiencies are not possible and will take time. The price of the container is higher than wagons and wagons hold more volume than containers at present. Railway container transportation is now only 10 percent market share in the PRC, and in the future will increase. As for fees of containers, the China Railway Corporation (CRC), although still state owned, requests a fee charge to the National Development and Reform Commission (NDRC), or state planning mechanism, as opposed to market oriented, for approvals. The fee structure is divided into a base price or on-rail fee to move cargo from origin to destination and an off-rail fee between the customer and the railway yard operations or handling fee. Different types of cargo have different rates for bulk, steel and containers. Moreover, rail is most economical over 500-700 kilometres with a price advantage over road transportation.
3 source: Xinhua| 2019-03-28 Logistics Plan June 2020) Page 32
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2. Inefficient Operations
105. Transportation costs become higher based on operations inefficiencies which point to logistics management costs. This includes eliminating empty back hauls through carrier and shipper collaboration and promoting the use of multimodal transport for long hauls. Cargo tracking and tracing, timeliness, logistics competence can be resolved by management systems and information technologies and certification programs.4 Following these cost reduction measures can help Xiangyang improve the quality of logistics services with more value additions than value subtractions, reduce costs and compete better on quality not lowest cost, low value 2PL to more 3PL companies and to large leading logistics service providers. This will also enable businesses of Xianyang to have global market discipline from cost control management so that DCEC and Yuanda and other manufacturing and agriculture companies can reach international markets and grow the Xiangyang’s economy. 106. Inevitably, manual handling of cargo will be slow by comparison with mechanized handling. For example, in the case of the manual unloading of rail boxcars, four laborers (three in the wagon and one on the truck) would take about 7 hours to unload bagged cargo from one wagon. By comparison, the unloading of 20 ft containers by forklift, takes about 40 minutes utilizing only one person to drive the forklift. If the capacity of a rail wagon is about three times that of a 20ft container, the manual handling time required is at least 3.5 times that of the mechanical handling time (2.3 hours vs.40 mins = 0.667 hours). Clearly, therefore, mechanical handling will speed up the turnaround time of cargo and containers in the dry port, thereby increasing throughputs, revenues and profitability. This is assuming 50t payload and 60 kg per bag with unloading time per bag of 0.5 minutes and 20 pallets per TEU with loading time per pallet of 2 minutes.5 D. Other Issues
1. Fragmented Industry
107. There are issues with the logistics industry in Xiangyang. For decades, it has been based on 2,000+ small companies, some with only a few small trucks. There are only about 100-150 companies with revenues over 5 million CNY per year. In other words, the industry is fragmented, lacking the capital and skill sets to utilize new technologies and practices, and is not meeting the needs of customers. The industry needs to adopt international standards and efficiencies to grow the logistics businesses and in turn Xiangyang’s economy. 108. There are now, stronger logistics stakeholders coming forward individually and collectively who will provide leadership into the future. The gap will not be easy to bridge, but it is being done as it has been done elsewhere—sometimes quickly and sometimes slowly.
2. On time delivery
109. The manufacturing, agriculture and consumer goods sectors all depend on uninterrupted movement of goods for just-in-time or on-time-deliveries (OTD) to meet their customers’ requirements and is one key theme.
4 “Transport Efficiency Through Logistics Development,” ADB, 2012, pages 17-18, 34. 5 “Planning, Development and Operation of Dry Ports of International Importance,” UNESCAP, Bangkok, 2015, p. 53. Logistics Plan June 2020) Page 33
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110. All of the business and government officials in the field survey stressed the importance of OTD. The OTD metric is carefully measured and managed by businesses in Xiangyang as it is in other countries because manufacturing needs deliveries for assembly line production to minimise material holding costs. Fruit, vegetables, dairy and meat need to be delivered promptly to avoid spoilage costs from lack of refrigeration and supermarkets need to keep shelves stocked for consumer demand. The customer is king and all decisions across infrastructure, operations and policies in logistics and transport planning need to focus on customer requirements and business profitability subject to market forces with the lowest cost for value and the best quality services. 111. As for reaching international markets, which is a plan for many surveyed, OTD costs by delays are measurable and need to be managed land side. “Our estimates imply that on average each additional day that a product is delayed prior to being shipped (for exports) reduces trade by at least 1 percent. A larger effect on time sensitive agriculture goods: a day’s delay reduces a countries relative exports of such products by 6 percent on average. For example, if Uganda reduced its factory-to-ship time from 58 days to 27 (the median for the sample), exports would be expected to increase 31 percent and Uganda would bring itself 2200 kilometres closer to its main trading partners…”6 112. International examples can quantify and instruct on how OTD delays can impact business costs and profitability to compete and the economy. Research from the United States Federal Highway Administration found shippers and carriers value transit time at $25 to $200 per hour and unexpected delays can increase that cost by 50 to 250 percent. Values of freight movement travel time reliability are at $60 per hour for mining, $176 per hour for agriculture products, and $223 per hour for certain types of manufactured products, representing factors of 2.5, 7.0 and 8.7 times their respective values of travel time.
3. Congestion and transport Issues
113. Business OTD requirements are made more difficult to meet by congested roads. Traffic delays add to logistics costs. At the time the consultations took place, the highway for trucks on the new bridge was not open. Many trucks choose the national roads because there are no fees or charges. Some national roads are only available for trucks at night so they have to use national highways. The Logistics Bureau and Logistics Association stated that here are few overloaded trucks, but anecdotal evidence suggests this may not be altogether true because some trucks choose the highway because there are hardly any overload checkpoints on the highways and there are a few on the national roads. We were told that drivers can deceive checkpoints with techniques and still be overloaded by two tons. 114. Moreover, freight system congestion impacts regional economies by: labor and operating costs-congestion means fewer deliveries per truck and need for additional drivers; inventory costs; capital costs-congestion requires additional vehicles to the fleet to meet customer OTDs; backhaul operations with hours of service restrictions for drivers; impaired cross-docking operations-congestion and lack of reliability makes it difficult to schedule docking crews for intermodal connections. Costs mount based on operator time, fuel and maintenance costs (trucks waiting in long lines on highways), accidents, and air quality.7
6 “Trading on Time,” Djankov, S., Freund, C., Pham, C, World Bank Paper 3909, May 2006, p. 4. 7 “The Impact of Freight Delay to Economic Productivity,” Tampa Bay Regional Goods Movement Study, Florida Department of Transportation, April 2014, pages 8, 10, 11. Logistics Plan June 2020) Page 34
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115. A second issue causing high costs, city congestion, safety and environmental problems is that of “road markets.” This problem was identified by the report from China Federation of Purchasing and Logistics (CFPL) several years ago, but the solution to move them to the logistics parks is still not implemented. “Road markets” are small logistics/truck companies set up in residential areas in the downtown Xiangyang area. These “road market businesses” are individuals with small, unsafe warehouses. This causes loss of business to Guang Cai logistics park. The “road markets” won’t move to the logistics parks because they claim that the facilities and services are not suitable for them. They lack a parking lot, repair area and that the warehouse space is too small. 116. A problem is that tractor-trucks can only use the highway at night. Containers are still not competitive to over-loaded trucks and costs are increasing because of the September 2016 policy (GB 1589 global standards of 170 to 150 cubic meters capacity for safety) to reduce overloaded trucks.
4. Logistics Parks
117. The concept of logistics parks8 is to function as an agglomeration of resources with multimodal transport connectivity (road, rail, IWT, air) with infrastructure and superstructure to facilitate logistics services and available human capital with information systems. They are an important interface between Xiangyang’s six pillar industries 9 and the transport and logistics infrastructures of roads, railways, IWT and airways. Logistics parks or integrated logistics centers (ILC) need to support the individual and differing shipping requirements of these six industries. The basic and value-added services offered by the logistics parks need a large networked 3PL on site of each logistics park in Xiangyang. This is currently missing 118. Xiangyang has many logistics parks reflecting the many stakeholders in their planning, construction and operation. There are local, provincial and local policies and regulations such as truck permits and oversize/overweight rules, real estate developers and their construction companies and there is an authority to manage and operate the ILC. Each ILC requires modern equipment to operate road, rail and IWT trailer and container services for intermodal operations with important information systems to balance supply and demand in a market- oriented economy. Tenants operate concessions to make a profit and provide revenue to the city from taxes and rent. These tenants are the 3PLs and transport operators. The most important stakeholder are the customers from Xiangyang industries each with specific shipping requirements for inbound raw materials to output finished products. 119. Currently, none of these stakeholders are coming together on a regular basis to plan, construct and operate with standard procedures. There are no demand studies to know the customers. As a result, there is much overlap of resources and most importantly, higher logistics costs which deters investments. There is no public-private dialogue vital to resolving the issues confronting Xiangyang Transport and Logistics offices.
8 There are many different names for logistics parks or centers across Asia, North America and Europe, but they all have essentially the same purpose, albeit with different emphasis. Some of these are: inland port, dry port, freight village, intermodal railroad terminal, intermodal terminal, load centre, logistics centre, logistics cluster, logistics node, logistics platform, maritime feeder inland port, trans-modal terminal, transport terminal, urban consolidation centre, urban distribution centre, warehouse 9 automobiles, agriculture, equipment manufacturing, electronics, new energy/new materials, and pharmaceuticals/chemicals Logistics Plan June 2020) Page 35
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120. The over investments in land use, logistics parks and a lack of knowledge of the dynamic logistics markets has caused further damage to Guang Cai and a third issue identified. In 2013, a logistics information center opened on 30,000 square meters with 400 shops and employed 1,000 people in the Guang Cai logistics park and considered the largest such operation in Hubei. In 2017, this center closed because truckers began using mobile truck applications. 121. New and more vibrant, larger and customer-friendly logistics parks are being built or planned that are outside the existing city center and in near- or semi-clusters to maximize spatial (land use) efficiencies, together with the necessary connections to various transport modes. These positive signs show that Xiangyang officials recognize the need to upgrade the industry and are making important policies, investments and reforms to ensure that these goals are realized both in the short as well as the long-term. 122. The issues are illustrated by the experience of some of the respondents. These are set out as a number of case studies on the next section.
5. Case Studies
123. In order to confront the logistics inefficiencies and higher costs across infrastructure, operations and policies, many Xiangyang companies are moving forward with their own plans to manage costs. The international supermarkets such as Metro and Walmart use their headquarters in different parts of China for logistics planning and Metro uses a reputable cold chain company from another province. These international supermarkets claim that one of the Xianyang districts is planning to build more “marketing sites” to receive and distribute specific cargo categories a) Zhonghao International Trading Center. 124. This dry goods wholesaler is the largest in the west and north of Hubei on a 700,000 square meters facility with 2000 shops on 5 floors for $1.060 million in annual sales. Products are sourced from all over China. The lack of a demand study is contributing to higher costs. Highway congestion on G55 to serve this facility is an added cost because of OTD requirements. Some of the major customers served are the large international big box supermarkets in Xiangyang and the region. Resolving the low- level logistics services could be an agenda item for aa PPD body in a logistics park working group since there is a plan to build another logistics facility to serve Zhonghao. b) Hao Lin Ju, Xinfadi and Zhuyeshan 125. The Hubei supermarket chain Hao Lin Ju Logistics Distribution Center and Xinfadi Trading, and Zhuyeshan Agriculture Products all have their own systems and facilities without much use of the Xiangyang logistics parks. Xinfadi claims the associations in Xiangyang have no power. They are building a national network of cold chain warehouses. They have modern logistics warehouses and product inventory and pricing information systems in operations and use a large Xiamen logistics company for their business of peanut trading and banking in relation to farmer harvests. Zhuyeshan is operating an on-line e-commerce order fulfillment and truck delivery system, Taodaji. Hao Lin Ju is using a local Xiangyang 3PL, Cheng Yang, but 80-90 percent of shipments are by road to serve 82 stores in Hubei. These companies claim that Xiangyang logistics parks are not planned well to serve their businesses-customers.
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Figure 7 Zhonghao Plans with Logistics Temporary Logistics Yard
Figure 8 Xinfadi Plans Zhuyeshan Taodaji Hao Lin Ju Warehouse
c) Dongfen Railway 126. At present, Dongfeng (DF) Railway has 80 percent of container transportation in Xiangyang and 20 years history with containers. The train station schedule is limited. After 5 p.m. there is no operations nor 11 a.m. to 2 p.m. However, they have capacity to receive containers from the United States West Coast. In 2018, DF Rail handled 1.5 million tons. They have ambitious plans by 2020 to become multimodal to markets in the Belt Road Initiative (BRI) with Germany and from Wuhan to Shanghai with a bonded area, data center. In the long-term, plans are for cold chain logistics with refrigerated containers (reefers) for food
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TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) companies and fruits. Now, trucks to rail are without containers, but only of trailers and DF Rail can do both.
Figure 9 DF Railway Containers DF Railway Plans DF Railway/FSL Logistics
d) Dongfeng Cummins Engine Co 127. Dongfeng Cummins Engine Co. (DCEC), a United States 50-50 joint venture since 1996, has modern multinational manufacturing logistics practices that stresses OTD as the “most important” to their successful logistics. They plan to use containers, but “it is a very long journey” because of the lack of standard pallets from suppliers which is a cost to the suppliers that suppliers cannot afford. As the old pallets wear out, then new standard pallets can be used in stuffing the standard TEU and forty equivalent unit (FEU) containers used in intermodal domestic road, rail, IWT and ocean transportation. Similarly, the Xiangyang logistics sector stressed the need to standardize chassis and container sizes which can only be accomplished by following international standards. Moreover, now DCEC does not have the volume for full container loads. DCEC made 177,000 units in 2018 and total logistics costs were $454,545 (3 million RMB) and uses budgets to control costs at 3 percent of invoice prices. They use quality management ISO TS16949 and outsource contracts to 3PL and vendor managed inventory (VMI) companies in Xiangyang and the region. DCEC cited costs of $.09 to $.10 per ton kilometre for road and $.03 for rail and would use IWT if competitive and caused no damages to cargo.
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128. DCEC has a modern Xiangyang 3PL, Xiang Guang Logistics Co. (XGL), that offers value added services (VAS). They are an excellent example of where Xiangyang logistics industry needs to transition from simple trucking and warehousing by two party logistics (2PL) to 3PL services based on customer requirements. For example, Nissan Motors with several plants in Xiangyang, uses international standards for packaging and XGL meets them with VAS which increases XGL profits. Most companies in Xiangyang do not use standards for packaging and pallets which increases costs and makes more costly to reach international markets. Similarly, DCEC would use the Xiangyang river ports, if there was infrastructure to support 1,000 DWT shipments all year for their production runs. e) Hanjiang Heavy Industry Co., Ltd 129. Hanjiang Heavy Industry Co., Ltd of China Railway 11th Bureau Group had a 2018 total transport cost of $1.363 million of which half was not overloaded. They manufacture bridge cranes for the construction of high-speed railways. These are oversize and overweight structures considered project cargo and require specialized logistics companies. Transport costs are $.06-7 cents per ton kilometre for regular transport and 9-10 cents per ton kilometre for overall transportation (including averaging in costs for over-sized/over- weight transport). All shipments are by truck without use of rail or IWT. However, costs can be reduced with Xiangyang IWT infrastructure in operations with 1,500 DWT vessels. “IWT would greatly reduce the freight cost of our steel because steel mills are near the docks.” Other problems cited were permits for forty-ton trucks issued by the Administration Services Center in Xiangyang government. Different jurisdictions have different permits which is time consuming and increases logistics cost from delays. Rail would be used as well if reliable. Another company, Xinxing Heavy Industry manufactures vehicle engine castings and uses trucks by 3PLs for 100 percent of shipments because of OTD to customers assembly lines. Rail is slow, loses shipments and has no information technology systems that the government promised five years ago. Now, each customer has their own information system platform that charges $150 (1000 RMB) for Xinxing to use. E. Gap Analysisn and Assessment of Future Needs
130. The view of the 17 businesses interviewed can be summarized by one company “If logistics parks in Xiangyang are organized, have professional services and are certified with all value-added services with good prices, then we would use them for packaging, labeling, etc.” This comment is from one of the 17 business officials in the field survey and summarizes
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TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) the business prospects of customers using the Xiangyang logistics parks. At present, the parks are overlapping without the critical rail-road-IWT interfaces except for the DF Railway in the FTZ and the Xiao He IWT under construction. All manufacturers, agriculture and consumer goods businesses would make use of the logistics parks if there is connectivity with rail and IWT with a network of roads to this critical infrastructure. The Tang Bai plans offer optimism for business use of logistics parks. 131. The absence of a few lead 3PLs in Xiangyang is a drawback to successful logistics parks. However, the recent merging of DF Rail with the Hubei Rail Investment Company is a positive development.
1. Lack of Coordination
132. A central complaint of almost all companies was that public and private entities need more collaboration, coordination, and cooperation in a joint effort by a single organization or committee. Institutional reforms are needed to address the lack of progress and high logistics costs which, if not rectified will continue to lead to inefficient allocation of resources, inefficient logistics, poor utilization of infrastructure and services, poor connectivity and high cost of logistics in Xiangyang. 133. Resolving these problems will take a coordinating and collaborating philosophy of one leading body comprised of all the various government departments. These are: logistics and transport bureaus, tax, land use, planning, police and in partnership with businesses and/or at least associations such as the Xiangyang Logistics Association. This collaborating will also be very important to multimodal planning and implementing PRC 2018 policies where all modes (road, rail, IWT, air) are still independent of each other in Xiangyang. This joint body of both business and government officials under one umbrella can take guidance to resolving the “road markets” problem from other provinces which unified all relevant government departments to end their “road markets” problem. 134. The Hubei-Xiangyang District Maritime Safety Administration (MSA) would like to have more action plans with schedules and suggests a subsidy policy to benefit the operators of Xiangyang IWT system. The subsidies could include $98 (650 RMB) per TEU to use containers where $46 (300 RMB) per TEU would go to management and transportation companies. They said this could be an agenda item for a Public Private Dialogue (PPD) body in an IWT Working Group and discussed in the Xiangyang Logistics Association as well. MSA were concerned that that their office has only limited power to organize meetings or conferences. 135. There are no quick and easy resolutions here: public sector agencies and the private sector businesses need to work together to upgrade efficiencies and “deliver the goods,” the public sector-private sector dialogue (PPD). There have been positive indications that this is happening and there are other signals that there are still trust and communication issues. It should be stressed that this period is the most difficult one in a transition phase that has been experienced around the world and it will not happen overnight but it will happen. The staff of the XYMTB are capable and dedicated to to improving the logistics industry and have taken major steps to ensure that this happens. But the dialogue needs to increase.
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2. Multimodal
136. One of the reasons for high logistics costs is believed to be the predominant use of road for goods transportation. Road transport is the dominant mode for the main sectors of the Xiangyang economy. The 2018-19 report by the Xiangyang Transportation Bureau and the Hubei Materials Distribution Technology Research Institute, “Xiangyang Builds a Production Service-Oriented National Logistics Hub,” indicates road transport increased from 88.68 percent to 92.77 percent between 2012 and 2017. Although rail volumes have been increasing, its share of all transport dropped from 5.9 percent to 5.4 percent and water transport also dropped from 4.28 percent to 2.94 percent since 2012. Containerization levels across all modes remains low. 137. The Xiangyang freight modal shares are lagging those of Wuhan and Yichang. Wuhan is 61.1 percent road, 12.19 percent rail and 26.71 percent IWT and Yichang is 78 percent road, 7.8 percent rail and 14.2 percent IWT. The Wuhan government issued two policy documents about subsidies to encourage intermodal transport for freight. The subsidies are based on the number of voyages and containers per voyage or the standard tonnage of cargo carried by ships. 138. Possible solutions for reducing logistics costs suggested included: increasing the cargo moved by railways by 30-40 percent based on the 2016 policy with more containerization; introducing the infrastructures and operations needed for 1,000 dead weight ton (DWT) vessels moving shipments on the inland waterways (IWT); and expanding and starting shipments to international markets. However, a lack of means to implement these plans is impeding progress for each of these companies and for Xiangyang’s economic development. Table 9. Transportation Structure of Xiangyang City (2012-2017) Road Freight Railway Freight Waterway Freight Volume Years Volume Volume Ratio Ratio
2012 88.68% 5.91% 5.40%
2013 88.61% 5.96% 5.43%
2014 92.13% 3.89% 3.97%
2015 91.74% 4.07% 4.19%
2016 91.66% 3.99% 4.34%
2017 92.77% 4.28% 2.94%
(source: Xiangyang Transportation Bureau and the Hubei Materials Distribution Technology Research Institute)
139. Container and trailer multimodal will need to conform to the international standards in order to achieve modal shifts as recommended in the target logistics continuous improvement plan shown in Chapter two of this report: 2020-2025, 2025-2030 and 2030-2035. At present, the road containerization rate is low, the level of railway and waterway container transportation is not high, resulting in slow development of multimodal transport. Container transportation is the main form of transportation for multimodal transport as stated in the recent Xiangyang Transport and Logistics report.
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140. While there are many positive signs indicating recognition of both the issues and the need to find workable solutions, there remain further issues that need to be resolved. One of the most critical is that China Railway Corporation (CRC has yet to become as “customer- friendly” as needed by 21st century global market businesses. CRC is the largest rail network in the world in terms of combined passengers and freight. It has deservedly earned many success stories and reasons to be respected and in fact admired. Unfortunately, it has been losing both money and freight market share and its evolution to handling of containers and global practices standards has been far less impressive. 141. There are reasons for this inefficiency including that CRC has placed a priority on moving tens of millions of people at low cost prices to benefit the broad social needs of the population. Another reason is that the railway construction standards require shorter and lower weight trains that are limited to 60 freight wagons unlike in the U.S.A. where freight trains are typically several hundred (and heavier) wagons in length, and the freight railways in the U.S.A. are owned and operated by private companies listed on major stock exchanges and make money. Of course, the quasi-government owned U.S.A. rail passenger performance operations are pitiful compared to the CRC’s passenger operations. 142. But the issue here is that on-time deliveries (OTD) and container transport tracking for CRC has not really become 21st century viable to date. CRC has been noted for losing track of wagons and shipments for days for years without resolving this issue. This has negatively impacted businesses both small and large that are or want to become global market participants. Thus, the national policy edicts to promote transport modal shifts. The recent national policies will have an impact but how soon that happens will largely be determined by how local agencies and other stakeholders respond. It is a local issue because it is dependent on the collaboration, cooperation and coordination amongst the various stakeholders to address the problem, find and implement reasonable solutions. 143. This is true for international cargo where Wuhan Customs uses paperwork and is not using electronic data interchange (EDI) or other platforms nor has visibility to shipments on- line to know about OTD which causes delays and increases logistics costs in Xiangyang. The 2018 PRC multimodal policy calls for the use of electronic versions of paperwork to streamline processes and lower costs. This will be important to Xiangyang to implement within a public and private dialogue mechanism. F. International Comparisons
1. Ulwang Inland Container Port
144. Korea has a good example of similar difficulties to integrate road and rail intermodal operations for inland ports and attain profitability. Uiwang Inland Container Depot (ICD) was established under a build-operate-transfer (BOT) contract in 1996. Land ownership is vested in The Korean Railway Network Authority, which is the public sector partner in the public private partnership (PPP). Shares in the partnership are: public, 25 percent; private, 75 percent. The private share in the partnership is held by 16 logistics companies. 145. The ICD is divided into 2 rail served terminals and approximately 6 container yards (CYs) and container freight stations (CFSs). One CY is operated by a government enterprise and the others by the private sector. It is the responsibility of the public partner to: (i) Provide and lease land to the private partners and (ii) Provide at its cost all rail and road accesses to the ICD
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146. It is the responsibility of the private partners to operate the ICD and provide at their cost all infrastructure and container/cargo handling equipment within the boundaries of the ICD, including: (i) Railway sidings for container loading/unloading (ii) Internal roads (iii) Paved container yards, for the handling and short-term storage of containers (iv) CFS and other warehouses (v) Rubber tired gantry cranes, reach stackers, heavy duty and light forklifts 147. Facilities and operations at Uiwang: (i) Area of ICD: 754,807 m2; CY area (2 terminals): 419,050 m2; warehousing area: 10,712 m2. (ii) Railway loading/unloading tracks: 11, 6,212 meters (iii) Handling equipment: Rubber tired gantry cranes, 3; reach stackers, 43; 35-ton forklifts, 7 (iv) Number of TEU ground-slots in CY: 10,214; average stacking height, 4.45 (3 full, 5 empty) (v) Annual handling capacity: 1.37 million TEU
Figure 10 . Uiwang ICD Layout
(vi) Trend in throughput and modal shares - Throughput growth (2010-2014): 2.8 percent per year - Road hauled volume (TEU): 4.3 percent per year - Rail hauled volume (TEU): 1.1 percent per year 148. On average, 12 trains per day carrying containers operate in each direction between Uiwan ICD and Busan seaport. Typically, each train is a block formation, comprising 30 container flat wagons, each carrying 2 TEUs (a total of 60 TEUs per train).
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149. Railway services to and from the IDC are understood to be losing money. One reason for this is the low share of rail in the haulage of containers to and from the ICD. This share currently stands at 44 percent and it was reported that rail would need to achieve a 70 percent share in order to breakeven financially on these services. Several options for the improvement of the ICD’s profitability are being assesses, including: 1.) Improve the economics of block train operations by signing a long-term rail haulage contracts with major shippers; 2.) Improve the profitability of inland logistics terminals by encouraging more domestic traffic. The recent experience of the JR Freight company in achieving the growth of high value domestic cargo through the operation of 12-foot domestic containers was cited as an example of what is possible in Korea.
2. Other International experience
150. International cluster examples can be instructive to Xiangyang as one methodology to their institutional reforms. Singapore’s Air Logistics Park next to Changi airport and Singapore’s large Pasir-Panjang seaport operated by PSA International are both logistics parks within the logistics cluster of Singapore. Xiangyang city includes the catchment area of Baokang, Gucheng, Laohekou, Nanzhang, Yichang, Zaoyang. Similarly, the Plataforma Logistica de Zaragoza (PLAZA) in Zaragoza, Spain is a logistics park and the logistics cluster in the State (province) of Aragon includes logistics parks in nearby Teruel, Huesca and Fraga as well as private logistics facilities in the region. Xiangyang leaders need to understand that the logistics cluster is just an organizational concept and what matters most is to customers or users and the managers of those businesses within the cluster as to “relative costs and performance levels of logistics in, near, or far from a notional cluster of logistics facilities and infrastructure.”10
10 Sheffi, p. 82 Logistics Plan June 2020) Page 44
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IV. PROPOSED WAY FORWARD
A. Optimal Layout of Logistics Facilities
1. Logistics Parks
151. The results of the logistics parks should be measurable and improve profits over time from lowering logistics costs. The services should be easily understood by the target customers. These services need to be offered by a well networked (domestic and international) 3PLs. The services are: Asset-based trucking, air, rail and inland water transport services Freight forwarding and other non-asset-based transportation services Dedicated and multi-tenant warehousing and distribution facilities Consolidation and deconsolidation facilities and container freight stations Light manufacturing and other industrial facilities Financial, insurance and managerial office space Container storage, repair and scrapping facilities Chassis pools Other support services 152. The value of logistics parks is when pricing is aligned with higher quality service levels from the agglomeration effect. The following is possible in Xiangyang: Economies of Scope- Balancing of freight flows; increasing cluster density results in more balanced freight flows and higher load factors Economies of Scale- larger freight volumes result in higher load factors, use of larger transport units, lower inventory carrying costs Economies of Density- agglomeration of freight-generating companies in physical proximity reduces cost of first- and last mile logistics Economies of Frequency- less-than-full load containers or trailers can be filled and shipped faster Economies of Co-location- sharing of physical assets and human resources11 153. Xiangyang can define and implement their logistics parks based on accepted practices. There are distinctions between logistics parks, clusters, and campuses. 154. Logistics parks are clearly defined by the ownership and geographic property boundaries. A logistics park is developed by an agency such as a real estate company, private companies, port authority, or a government agency. A cluster is an amorphous agglomeration of companies and facilities with logistics intensive operations with fuzzy borders and no central management. They may cover an extended region with more than one park
11 “Planning of Integrated Logistics Centers,” Meeuws, Rene, ADB/DLA, Xi’an, July 2019. Logistics Plan June 2020) Page 45
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and a range of other logistics related facilities12. For Xiangyang, the absence of a large, leading logistics company gives way to a logistics cluster environment. A logistics campus is a special type of logistics park with even more tightly coordinated operations, where land and the buildings are operated by a single entity, but this same entity does all the logistics and distribution activities in the park. An example is the logistics campus of United Parcel Service (UPS) in Kentucky.13. DF Railway’s plans could fit the logistics campus model. Their proposals over the time span of 2020-2025, 2025-2030 and 2030-2035 are described in Section V.A.
Figure 11 Schematic layout – multimodal facility
155. The logistics cluster could be an approach for Xiangyang to lower the barriers and lack of cooperation among the seven logistics parks. The cluster philosophy could avoid further logistics parks being built without demand studies which seems to be occurring based on meetings with the consumer goods sector in Xiangyang. “Thus, logistics clusters, as extended regions, often contain more than one park as well as a range of other logistics-related facilities. A cluster might have multiple logistics parks.” 156. The volumes of Xiangyang logistics business and those of customers in the area is not as large as international examples from the Unites States, China, Asia and Europe. However, the basic infrastructure layout and network of operations can be instructive. Modern logistics parks have certain infrastructure features. Rail and IWT are anchor infrastructures of which distribution centers and road connections for drayage of trailers or containers are essential.
12 Sheffi, p. 81 13 Sheffi, p. 81 Logistics Plan June 2020) Page 46
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At present, DF Railway fits this model. Also, the plans and construction of IWT river ports of Xiao He and Tang Bai.
Xiangyang International Lugang Logistics Park International Lugang Logistics Park Xiangyang East Agricultural Products Logistics Park Xiangyang North Logistics Park Sijiqing Agricultural Products Logistics Airport Logistics Center
Xiangyang West Modern Integrated Logistics Park
Dongjin City Distribution Center
Lingang Logistics Park Yujiahu Area
Figure 12 Urban Logistics Node Planning Layout
157. Distribution centers are an important part of the functions of logistics parks. In the U.S.A., the Alliance Texas development has a series of commercial parks anchored by the rail hub where distribution centers are operated by two types of shippers: 1.) beneficial freight owners (BFO)-manufacturers, distributors and retailers who are operating their own logistics facilities and; 2.) Logistics service providers who offer warehousing, distribution, transportation and many value-added services to their customers (BFO). The connectivity by roads is important to link all the warehouses and distribution centers (DCs) to both inbound and
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TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) outbound product flows. Markets can radiate in many directions by road and rail spurs with containers, trailer and chassis yards strategically located. 158. In Xianyang, plans can be made with the city and developers to build dedicated private roads in and out of the logistics parks to avoid congestion and damage to the roads. These “special roads” can be paved with materials to withstand heavy loads such as those used in airport runways. This plan will also comply with the overweight truck laws and could be consistent with the need to move more cargo onto standard containers. A standard TEU shipping container maximum weight is 24,000 kilograms (kg) (52,900 pounds) and FEU is 30,480 kg (67,200 pounds). Tractor trailer trucks in the U.S.A. are maximum legal weight of 80,000 pounds that includes tractor, chassis, and container shell which are net cargo weight of 30,000-44,000 pounds. 159. Dedicated roads will help OTD and costs associated with reducing the weight by sub- dividing truck shipments and by transloading at the port or rail yard. The option is to construct a network of dedicated roads with high weight limits to haul heavy containers or trailers from the rail/logistics parks to the distribution centers.14 As such, the Hubei automotive sector is an industrial cluster and could be a model to attract other industry clusters supported by the logistics cluster in an integrated Xiangyang logistics intermodal (rail-IWT) hub as these examples illustrate based on international standard practices. 160. Among the issues and working groups to construct in the PPD body, there is the China Rail Construction Company (CRCC), Luoyang, Hunan multimodal facility in Xiangyang to consider. Luoyang rail multimodal plans would be a prime issue to include in the PPD dialogue. The city location and the existing infrastructure warrant that both government and the Luoyang business convene to discuss how to integrate their plans into the overall Xiangyang logistics continuous improvement plan over the next 5, 10 and 15-20 years.
14 Sheffi, pages 148-151. Logistics Plan June 2020) Page 48
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Figure 13 CRCC Luoyang Planning B. Multimodal Hub Development
1. National Policy Initiative
161. Last year, the People’s Republic of China (PRC) State Council announced a policy to significantly increase the proportion of railway and waterway freight in its transportation structure from roads in the next three years. The goal by 2020 will be mainly implemented in the Yangtze River Delta region and the Beijing area and will involve better regulating highway freight transportation. 162. The national policy promoting modal shifts from road has raised awareness of the issue and it will impact Xiangyang’s development. Specifically, port operations and plans are being significantly upgraded both through port development and by constructing new dams and locks that will raise the water level and ensure deeper channels for heavier craft. These investment upgrades are significant and will be in place over the next two years, complemented by the addition of one of China’s leading port/logistics operators for the new port.
2. Reducing Rail Costs and Improving Services
163. The DF Railway described the railway transportation price advantage over road transportation. The cost from Wuhan to Xiangyang were quoted to be $606 (4000 RMB) by road and $258 (1700 RMB) by rail. So, there is a 45 percent savings for transport costs. The Wuhan Yangluo Port is the biggest multimodal operation in Hubei, yet market forces are still not possible as a subsidy per container is in effect to artificially control costs. Xiangyang is
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TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) dependent on Wuhan, also a producer in the automobile supply chain, since many shipments go through Wuhan. 164. Many companies such as Shuanglin NTP (bearings) would like to move more of their shipments using containers on rail with but the OTD of rail is poor so they can now only use rail for 10 percent of their shipments. Their annual logistics costs are 6 percent of finished goods total sales. They tried IWT in a pilot project to Shanghai, but they could not achieve the desired level of OTD. Shipments from Xiangyang to Wuhan to Shanghai were delayed and took 7-8 days, whereas by road takes 20-24 hours. 165. The conclusion is that although rail is potentially cheaper for longer line haul transport, it is not competitive because of poor service and reliability. If a better service was provided, it would be used. This is not helped by a general lack of interest by CRC. Since Xiangyang, Wuhan and Shanghai are all national railway logistics hub cities, the ideal solution would be to establish daily timetabled block container trains between Xiangyang and Wuhan and Shanghai. Transport companies and shippers would be able to reserve container slots in advance with guaranteed pickup and delivery times. The support of companies such as Shuanglin NTP as anchor customers should be sought. Other cities including Urumqi for international freight might justify a timetabled service. This would address the OTD issue and minimise the impact of the CRC’s lack of interest. XMTB might work with a bank to arrange finance for the purchase of containers to enable wider participation. While CRC would operate the trains, management of the service including container handling, marketing and the sale of container “slots” would be in the hands of a private company. 166. Another block train service that could be negotiated on a timetabled basis would be for auto carriers. Dongfeng says they plan on upping production to 1M hybrid/e-cars and they want to use both rail and water for delivering the vehicles. Dongfeng advised that that CRC would purchase more auto carriers and is in the process of doing so or Dongfeng might purchase some as well. In 2012, there were still only around 2,000 auto carrier wagons compared to about 32,000 in the USA. They have indicated that the proposed Tang Bai port could handle auto roll-on roll off vessels with a capacity of around 340-350 autos. 167. The overall project is considered high priority for Xiangyang and has three distinct components: about 800 million RMB for the 8.5 km rail line to the intermodal terminal and 5 km from there to the port plus yards at the terminal and port; 700 million RMB for the terminal; and 2-2.5 billion RMB for the port. Assistance for such a project could be sought from ADB.
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Lao Hekou Port Area Gu Cheng Port Area
Yu Jiahu Port Area Xiao He Port Area Yi Cheng Port Area Xiaohe Lingang Logistics Park
Figure 14 Xiangyang Port Logistics Node Layout Plan
Shanxi/Shaanxi Province Direction Anhui Province Direction Airport Logistics Center Guangxi Province Direction
Figure 15 Xiangyang Airport Logistics Node Planning and Layout Pla
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Connecting the second Eurasian Continental Bridge via the Lancang and Lancome Railways Connected to the third Eurasian Continental Bridge via the Yunnan- Chongqing- Kunming Railway River and Rail
Figure 16 Xiangyang International Logistics Channel Map C. Institutional Reforms
1. The Need for Coordination
168. The current state of Xiangyang logistics centers/parks points to institutionally driven inefficiencies as one source of higher logistics costs and thus a need for institutional reforms. Guang Cai logistics park explained that there are six other logistics parks in the five districts in Xiangyang: Sijiqing (agriculture), Yicheng, Tongjitang, Ruibang, Dongfeng He Yun in the Free Trade Zone (FTZ), and Chuan Hua (copy of Chengdu new district). There are too many plans that over-lap and the districts only seek to inflate their gross city product numbers to attract investors and have no knowledge of logistics. Moreover, there is a “silo” mentality of many different government departments not communicating with each other. The layout of logistics companies and facilities is dispersed in Xiangyang. The lack of collaboration, coordination and cooperation by city government and the 5 districts together with businesses is causing damage to the customers because there are no professional value-added services by certified 3PLs in the logistics parks. Moreover, poor planning by the government caused Guang Cai to lose out for business from Alibaba and JD.com. They did not have the square meters needed for them to establish their business in Guang Cai and the government did not perform adequate due diligence with demand studies. 169. The two main institutions identified for immediate reforms are the Municipal Modern Logistics Work Joint Conference Office of the Municipal Development and Reform Commission and the Xiangyang Logistics Association. These are two distinct institutions with different functions, but both necessary in Xiangyang continuous improvement in logistics planning. These reforms will work to assist Xiangyang moving from a command planned economy to market oriented with signals of demand and supply through information systems. A recent reform was to merge DF Rail with Hubei Railway Investment Company so that DF Rail can be a lead logistics company for all Xiangyang industries. This change can prove effective in establishing a PPD body as well as identifying the required strong leader or champion.
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170. Several business and government officials claimed that public-private institutions in the past did not work. There is probably a lack of understanding of how these institutions are established and what their functions are based on successful international examples. The next section of this report will provide more details. 171. A report by the China Federation of Logistics and Purchasing (CFLP) described the public-private institutions that Xiangyang has tried in order to grapple with the issues described in this report. The Municipal Development and Reform Commission set up the “Municipal Modern Logistics Work Joint Conference Office” for planning, policy coordination and comprehensive supervision of the cities’ logistics industry development. This organization described the division of responsibilities of all relevant government departments and how projects can be approved based on the master plan as well as funding mechanisms for projects. Another institution is defined as the “Municipal Logistics Authority” that recognizes logistics companies that pass national 3A level qualifications to lead to one main or large logistics company. A third body is defined as the Logistics Development Council which works with the logistics industry associations to build information management systems for the logistics industry including cost accounting and statistical reporting systems. 172. The report described the complexity of the problems. They are: the Xiangyang city government and five districts each with their own logistics bureaus in a silo mentality; the “road markets”; the higher-level PRC policies needing implementation at the local levels such as intermodal for road, rail and IWT with containers and information systems to lower logistics management costs 173. These problems would be best addressed by having a single body led by a strong government and business co-chairpersons. This approach is essential to confront the higher logistics costs brought on by overlapping and poorly planned logistics infrastructure and related low- level logistics services. 174. A restructured PPD body based on international practices could be informal or formal with a legal mandate including a mission statement or “articles of organization” defining its purpose. Participants could include upper and lower levels of logistics and transport with businesses or the Xiangyang Logistics Association, representing businesses, to collaborate and solve problems in a vertical and horizontal flow of communications. Sample sections from the American Trucking Associations is in the Appendix of this report. This sample document can guide the recommendations to the Xiangyang Transport and Logistics Bureaus in reforming the “Municipal Modern Logistics Work Joint Conference Office” and the Xiangyang Logistics Association. 175. The existing 7 logistics parks could be an important participant to the PPD body in forming a logistics cluster in Xiangyang. “Some cluster advantages include trust between cluster inhabitants, tacit knowledge exchange, a collaborative environment, the support of research and educational institutions and the availability of a supply base.”15
15 Logistics Clusters, Sheffi, Yossi, MIT Press, 2012, p. 44. Logistics Plan June 2020) Page 53
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2. Forming a PPD body
176. The cluster methodology for forming a PPD body can also transcend political and jurisdictional borders. “For example, Memphis city (Tennessee, U.S.A.) Logistics Council oversees a region of some 16 counties spanning three states in its planning efforts. This multicounty, multistate agglomeration defines the Memphis cluster in terms of critical infrastructure, the span of logistics companies, and the regional labor force that works in logistics. Thus, the boundaries of most clusters remain fuzzy.”16 177. The importance of a solid and functioning PPD body is critical. There is great need for Xiangyang inland water transport (IWT) to be functioning with access to all economic sectors based on consultations for this report. DCEC, Yuanda Oil, Shuanglin NTP indicated plans to seek or expand international markets and consumer goods companies rely on imports. Moreover, PRC 2018 multimodal policies have institutions such as the Yangtze River Economic Belt Shipping Alliance, the Yangtze River Port Logistics Alliance, and the National Standardization Management Committee. In addition, the current construction of the Xiao He port terminals and planning for the Tang Bai He lack demand studies. At present, construction is only for 3 breakbulk and 1 bulk terminal for agriculture and mining shipments and without infrastructure for containers. 178. Working groups are vital to a successful PPD body. A working group within the Xiangyang joint (government and business) PPD body could be dedicated to IWT. This working group and its technical committee could include agenda items of: information systems to balance inbound and outbound shipments to be profitable to port companies, shippers and trucking firms; demand studies to include provisions to handle containers and trailers; and how to coordinate the stakeholders of the Han-Yangtze river system involving dredging, locks, dams, electricity and construction schedules. 179. In Europe, the Marco Polo Program aims to ease road congestion and pollution by a modal shift of freight traffic to inland waterways or rail. The Program is run by the European Commission Directorate-General for Mobility and Transport (DG-MOVE) by issuing grants. Between 2003-2012, there were 200 projects and involved 50 percent of small and medium enterprises (SME). The important lesson here for Xiangyang is that project approvals are user-driven or bottom-up. The grants assist business operators to become profitable during the modal shift.17
3. PPD Examples
180. The Han river IWT system will need to prove the benefits of the system for moving freight cargo to the potential users. These users are customers from the sectors found in this report: logistics parks, logistics companies, manufacturers, agriculture (cold chain) and consumer goods (containers). The best methods to convey the benefits, promote and implement infrastructure projects and to attract investors is a PPD body. The Kentucky Association of River Ports (www.kentuckyriverports.com) conveys this information on a
16 Sheffi, p. 82 17 “Promoting Inland Waterway Transport in the People’s Republic of China,” ADB, 2016, pages 30-33. Logistics Plan June 2020) Page 54
TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) website and through organizing meetings with the business community. Kentucky waterways have over 1,090 navigable inland miles.. 181. Another example of the importance of PPD institutions for IWT is the American Watershed Initiative. This body is collaborative including public and private sector leaders from 31 states comprising the Mississippi River Watershed working together to find solutions for challenges facing the Mississippi River and the more than 250 rivers that eventually flow into it. This body has a Steering Committee with members from throughout the watershed and diversity of sectors: conservation, navigation, agriculture, flood control, risk reduction, industry, academia, basin association, local and state governments, and the U.S. Army Corps of Engineers. Leaders are selected from business and government and charter goals are established based on stakeholder inputs. Among these goals are: ecosystems, flood control, river transportation corridor for the nation, clean water, support for economies and recreational opportunities. A report card is compiled to provide decision makers with information to aid them in developing a collaborative approach to managing the watershed. Participants in meetings and workshops are: 27 percent organizations, 22 percent businesses, 22 percent federal agencies, 16 percent state and local organizations and 13 percent academia. (www.americaswatershed.org) Port Allen, Louisiana container barge terminal to New Orleans for export
182. The Yu Jia Hu port is seeking to repurpose its coal and power plant operations. A stable and long term IWT working group within a PPD body could assist greatly in the transformation with both public and private sector participants. An example of this joint effort to repurpose a river port is found on the Thames river in London, England. The Port of Tilbury will start consultations over a $128 million expansion program near the mouth of the River Thames. The port is obligated to consult with local communities and other stakeholders over the construction plans of the terminal that will handle roll-on, roll-off (ro-ro) bulk and container traffic for rising volumes of intra-European traffic. The port also plans to boost its logistics business to exploit growing demand for just-in-time deliveries from Amazon’s United Kingdom fulfilment center on the site. The port’s new terminal is being built on the site of a former power station.18
18 “Port of Tilbury Expansion Gathers Pace,” Journal of Commerce, Barnard, Bruce, July 15, 2017 Logistics Plan June 2020) Page 55
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183. Not all PPD bodies are formed and succeed without interruption and need revising their structure over time. The case of Norway is useful to Xiangyang. Oslo, Bergen, Stavanger and Trondheim cities are like all developing and developed cities around the world. These Norway cities had a missing focus on logistic activities due to lack of co-ordination among actors involved in urban logistics, and often insufficient dialogue between city authorities and private actors who operate in the cities. Representatives from the industries do not always understand the municipal planning processes and on which level of bureaucracy the plans are accomplished. To solve challenges related to urban logistics and collaboration among private and public actors is to develop structured Urban Logistic Plans. A part of such plans should be the involvement of all stakeholders in the processes of development. The stakeholders must also be involved in policy development and strategic planning processes. 184. In Oslo, Norway, the “Forum for Business Activities”, terminated and a new forum established. The reasons for the termination of “Forum for Business Activities” in Oslo are several. These are: the same people every time tended to give less variation to the discussions, members who do not attend on a regular basis, members from police and citizen groups were sometimes missing, politicians and senior management from industry are needed. Meetings tends to become a talking group and lack of disseminations. To be successful, the new forum avoids the challenges mentioned above and promotes collaboration between different actors like transporters, logistic service providers, police and various agencies representing public authorities and private companies and organizations. The new collaboration agency – Oslo Forum for Urban Freight Transport – was established on September 9, 2015.19 185. The importance of a public-private dialogue body is clear. It is recommended that Xiangyang transport and logistics bureaus start with the body established. The Municipal Development and Reform Commission set up the “Municipal Modern Logistics Work Joint Conference Office” for planning, policy coordination and comprehensive supervision function of cities logistics industry development. This organization could work with DF Rail’s recent merging with Hubei Railway Investment Company to form the one “Xiangyang PPD body.” There is a formal methodology on how to reform this institution. The first is a diagnostic review, then a design and implementation of the body, and finally, monitoring and evaluation. The following section describes the steps that Xiangyang can take to move forward with this important reform.
4. PPD Organisation
a) Background 186. PPD can build consensus, trust and understanding between the public and private sectors simply by bringing people together on a regular basis. PPD initiatives make special efforts to include small and medium enterprises. This can be done by strong business associations (Xiangyang Logistics Association and the Chamber of Commerce). Meetings are less likely to degenerate into talking shops when the agenda is strict and clear and communicated well in advance, and when there are concrete proposals on the agenda that require decisions. An experienced and resourceful organizer
19 “Private Public Collaboration on Logistics in Norwegian cities,” Eidhammer, O, Andersen, J, Johansen, OG, Institute of Transport Economics, Oslo, Norway, Elsevier B.V., 2016, pgs. 81, 85. Logistics Plan June 2020) Page 56
TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) can head off the risk of meetings getting diverted into tangents by managing expectations beforehand. b) Principles: 187. The PPD should be based on the following principles 1.) Mandate and Institutional Alignment: Legal mandates that are too detailed carry the risk of restricting flexibility and restraining initiatives from adapting to changing circumstances. Existing institutions should be capitalized on. 2.) Structure and Participation: Dialogue structures can be set up to carry out specific participatory processes in a series of working groups, for example to contribute to the elaboration of reform strategies for specific sectors, issues or regional areas. An organizational design operated under the umbrella of a secretariat is often useful to help ensure a coherent approach to public-private dialogue, including the shaping of an overarching policy framework. 3) Champions: It is difficult to sustain dialogue without champions from both the public and private sectors who invest in the process and drive it forward. Director Ke of DF Rail and the Xiangyang Vice Mayor or representatives from Transport/Logistics Bureaus are suggested. 4.) Facilitator: Important qualifications include negotiation skills, understanding of technical issues and an ability to converse easily with everyone from ministers to micro-entrepreneurs. 5.) Outputs: Structure and process outputs can include a formalized structure for private sector dialogue with government, periodic conferences and meetings, ongoing monitoring of public-private dialogue outputs and outcomes, and a media program to disseminate information. 6.) Outreach and Communications: This also necessitates attention to building the capacity of the private sector to participate in dialogue to achieve a concerted strategy to communicate reform issues through clear and targeted messages 7.) Monitoring and Evaluation: Definition of inputs, outputs, outcomes and impacts will be enhanced with designation of appropriate indicators with periodic review from stakeholders, which will rely on the collection of reliable data. Monitoring and evaluation techniques enable better overall planning and provide both internal and external motivation to promote more effective implementation. To this effect, PPDs should develop a baseline assessment to measure their effectiveness in order to enable the partnership to better measure how it is achieving its goals over time and delivering on its envisaged benefits. 8.) Development Partners: Capacity building and disseminating international best practice are two areas where development partners can play a role. They should coordinate among themselves to avoid duplicating their efforts and maximize the availability of funds when partnerships are found to be worth supporting. c) Diagnosing the Status and Potential for PPD: 188. The potential for PPD depends on the attitude and approach of key players Public sector: how strong is the capacity, political will to engage, and leadership? Private sector: how organized is the private sector, to what extent does it have leadership, do entrepreneurs (logistics parks, logistics companies) feel a basic sense of security in speaking out to government without fear of retribution? Logistics Plan June 2020) Page 57
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Champion: to what extent are there credible and respected individuals with the expertise, profile and ability to attract the attention of participants and media? Instruments: what is the quality and capacity of support personnel, logistical facilities, and seed funds? Stakeholder Investigation: To write a report including the perceptions of potential participants and stakeholders in PPD. These include the private sector, intermediary organizations, the public sector and civil society. d) Questions to Ask: Private Sector 1.) Have businesspeople attempted to get their concerns heard by the government? Have there been attempts to organize? With what degree of success? 2.) What is the general attitude of entrepreneurs towards government? Is it characterized by a feeling of trust or is there frustration? 3.) Does the private sector interact directly with the government or with government officials? At what levels does this interaction take place? (Ministerial, departmental, civil servants, mayors, low-level bureaucrats, etc). 4.) Do businesspeople typically belong to a representative membership organization? Do they feel they are well served by them? 5.) Are there dynamic individual business leaders who command widespread respect and could act as figureheads in the PPD process and champions for the private sector? Who are they? Associations/Intermediaries 6.) How effective are intermediary organizations at representing their members at national and local level? 7.) What kind of services do they offer to their members? (Training? Services on behalf of public authorities? Information on laws and regulations?) 8.) Are there institutional linkages between business membership organizations and government agencies or public bodies? Do they have recent accomplishments? Public Sector 9.) The attitude of the public sector can make or break public-private dialogue. Public sectors are rarely homogenous in their willingness or capacity to engage in dialogue. There will often be wide differences between different levels of authority, agencies, departments, and regions. The report needs to identify the pockets of capability and enthusiasm. What is the level of capacity of technical staff at each level of the public sector? 10.) Are there mandatory requirements for government bodies to engage with the private sector? Which ones, at what level, and at which stage in the process of enacting logistics planning in Xiangyang? 11.) Are there any individuals who can act as public sector champions for reform and who aren’t perceived as politically divisive figures? Who are they? 12.) What is the extent of decentralization of decision making? Logistics Plan June 2020) Page 58
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13.) To what extent do local layers of government have responsibility for implementing decisions taken at national level? and How effectively do layers of government work together? Civil Society 14.) Are there leading think tanks or academics that produce researched recommendations on private sector development? 15.) What are the media outlets that produce radio or TV programming or written content about the economy? What is their distribution, reach and limitations? 16.) The report should conduct interviews with representatives of the major development partners present in a country and compile a matrix mapping their perceptions of dialogue and potential for contributing. 17.) Are there performance gaps serve to indicate how a system of public-private interaction that should have been working did not work to its full performance, and why? What is happening with the Xiangyang Municipal Modern Logistics Work Joint Conference Office? e) Recommendations: 189. Stakeholders who favor the idea of PPD and have a high degree of influence can be assigned roles and responsibilities and coordinating their input. Where opposition to the idea of dialogue is found, special efforts can be made to co-opt the most influential opponents by informing them about the purposes of dialogue and consulting them about how the design of dialogue mechanisms can make the process more acceptable to them. Many public and private stakeholders in Xiangyang will need to be influenced of the benefits of the PPD body with examples from this report. 190. A PPD design should include a Draft mission statement that needs to be aligned with existing institutions to avoid the risk of duplicating efforts. A formal mandate is a signal that can establish credibility, make continuity more probable, and enable dialogue to be better integrated into an existing institutional framework. There is no reason why dialogue cannot become more firmly legally grounded as it evolves and establishes itself. Dialogue can start with an informal mission statement and later consider seeking a formal or legal mandate at a future date if it seems helpful. 191. The following is a sample mission statement for Xiangyang.
The objectives of the Xiangyang PPD areto:: 1. Represent the views of the logistics and private sector in Xiangyang, using the broadest possible participation of the logistics & private sector on a volunteer basis.
2. Help the Xiangyang government develop its logistics plans with private enterprises.
3. Engage in a regular, constructive dialogue with the Xiangyang government for constructive contributions to policies & regulations, operations and infrastructures plans that underpin the economic development. 4. Work on issues of detail through sector-specific, sub-groups: Working Groups/Technical Committees
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5. Identify areas of difficulty for the logistics and private sector, particularly in the implementation of laws and regulations, where donor support and funding may provide or help provide a solution. 192. Other issues that need to be covered in the design include: Roles of stakeholders, including principles for selection of participants and optimal participation of donors. Functions of a Secretariat – who should organize meetings, circulate information, organize external resources, etc. Proposals for organizing working groups: by issues, sectors, locality. Agenda of initial key issues, based on consultations, respecting both public and private perspectives, and proposed mechanisms for introducing new agenda items in the future. Operating guidelines for dialogue – how often will stakeholders meet, the process for reaching consensus, feedback mechanisms, degree of openness, relationship with government, etc. Nature of outputs – what kind of outputs the dialogue should aim to produce, e.g. policy recommendations, policy papers, project proposals and implementations. Support services that may be required, such as research on issues; Communications and outreach strategies, identifying target groups and suggesting methods. Organizations that would benefit from capacity-building to enhance dialogue. 193. Figure 17 depicts the proposed organizational structure to the Xiangyang PPD. This institution will have oversight by a Steering Committee made up by leaders from the Xiangyang and or Hubei Transport and Logistics bureaus and officials with planning authority in government, such as the Ministry of Transport and the Development and Reform Commission. Representatives will also come from the business community in Xiangyang and perhaps from Wuhan.
Steering Committee
Secretariat Directors and Staff Working Groups Working Groups
Logistic Logistics Standard Information Intermoda River l Ports s Parks Companie s Systems s
Technical Technical Technical Technical Technical Technical Committee: Committee: Committee: Committee: Committee: Committee: Modal Dredging Road Training Pallets, etc. Automation ShiftsM Markets Figure 17 PPD Organisation Structure (source: Consultant)
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194. The Secretariat is responsible for the day to day operations of the PPD body. The function of the Secretariat is to organize meetings, coordinate research efforts and, set agendas, rally members, manage communication and outreach strategies, and be a point of contact for others who want to join. An important feature of a Secretariat is to provide access to technical input so that issues forwarded to government for discussion have a solid legal and economic foundation. Working groups meet more frequently than the main PPD body. They typically have a chair who deals with other working groups and the Secretariat, by which they are coordinated and supervised. They feed policy and project recommendations into the main sessions. 195. The Secretariat can be one person from the government, such as from the Transport/Logistics Bureau and one person from the business, such as Director Ke, DF Rail. Wherever they are hosted, Secretariats can be funded by donors – and often need to be, at first. But the aim should be for them to be move towards being funded by participants, ideally by contributions from the private sector, to promote local ownership. The following table proposes a staffing and budget plan. Table 10 Staffing and Budget Plan for Xiangyang PPD Organization (Chinese Yuan Department Type of Staff Number Unit Cost Total Cost of Staff Salary/mo. Salary/yr.
Secretariat General Administrator- 1 10,000 120,000 Government
General Administrator- 1 10,000 120,000 Business
Administration Management 2 5000 120,000
Technical (legal & economic) 2 7000 168,000
Support 4 2500 120,000
Liaison & Coordination Facilitators: Working Groups 2 4500 108,000
Total: 756,000
(source: Consultant, Wallack) 196. Having two facilitators ensures continuity in the event one facilitator leaves the partnership. It also enables specialization, i.e. facilitators may decide to split the agenda to work more intensely with some working groups and less with others. The role of the facilitators is vital to the success of the PPD body. Dialogue processes need to be facilitated to ensure progress. Meetings need to be arranged, participants invited and persuaded of the value of attending, and momentum maintained through the inevitable difficulties and changes. The role of the facilitator is to keep track of all ongoing PPD activities and in particular in the technical working-groups. The facilitator or staff of the Secretariat can be appointed to chair technical sub-groups in some cases. In any event, the facilitator should be the driving force behind the elaboration of the PPD and its action plan. He or she is responsible for calling and organizing meetings and technical working-groups; mediating the meetings and discussions between the private and public sector representatives; recording the minutes of meetings; keeping the work focused on the goal of producing viable proposals for reform to be included
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TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) in the action plan; researching the issues; preparing written proposals for discussion; and formulating the various implementation activities. 197. Legal and economic expertise are crucial to the success of any PPD project, as proposals that get processed through the consultative mechanism need to be solidly documented and grounded in the existing legal framework as well as in good practice in terms of business environment improvement. Ideally, a lawyer and an economist would be on staff of the PPD, but the cost may warrant hiring consulting expertise when needed instead. If budget is available for one of the two staff positions only, the lawyer should be on staff and the economic technical expertise should be on hire, as the nature of issues forwarded through PPD mechanism is often regulatory in nature. 198. Operating costs will be strongly influenced by the settings in which the Secretariat evolves. If the Secretariat is hosted by an existing structure (governmental office, business association, donor’s office), operating costs may be lower. But starting from scratch, operating cost should include office rent, communication budget, computer equipment and connections, transport, etc. 199. Depending on the output of the Secretariat, the activity cost will vary. A Secretariat that outputs professionally edited and printed brochure after each major activity should plan for such extra cost and time. The number of planned meetings, conferences, workshops, luncheons, communication campaigns, etc. should be carefully considered, as each activity will bring upon its burden in term of logistics, human resources, external providers, consultants, and therefore cost. 200. The Secretariat role is crucial to the success of the PPD body. The purpose of a Secretariat is to facilitate dialogue. This involves organizing meetings – and working group – providing backup with research to ensure a sound evidence base for discussions, ensuring that input from the private sector reflects broad representation, and keeping track of implementation of agreements. Secretariats generally respond to a Steering Committee composed of key senior stakeholders. The following are key functions: Prepare and distribute an agenda of the meeting. The Secretariat’s task is to prepare a coherent agenda for the meeting and any documentation on the issues to be discussed. It is important that the agenda be distributed in advance, so that the participants have a reasonable time for planning and preparation. The Secretariat should also have a clear goal and focus for each meeting that it organizes so that its credibility is not undermined Select a neutral but knowledgeable person to chair the meeting. At the beginning of the meeting, the chairperson should explain the goal or purpose and adhere to it. This person should be able to ask precise questions and have the ability to pursue specific issues in search of causes and solutions to the problems. It is important for the chair to maintain a balanced view throughout the discussions so that the invited parties feel that they are being given an unbiased forum in which to air their views. Where the chair must step in and take sides, this should be done carefully to solicit at least the understanding, if not always the support, of the participants. The staff of the Secretariat should be able to fulfil the role of the neutral but knowledgeable moderator. Taking minutes of the meeting is the task of the Secretariat. The minutes need not always be detailed, verbatim documentation, but it is very important that there be at
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least a summary of the main points discussed, a record of the commitments made (and the timeframe within which they will be implemented), and any points of disagreement. The draft minutes should then be distributed to the participating parties for commentary. Once comments are received (and if a party does not send comments within the agreed timeframe, the Secretariat may decide that “silence implies consent”!), the comments should be incorporated to the extent possible in the final version of the summary of the minutes. A last step to ensure ownership by all sides participating would be the signatures of the parties who participated. The general suggestions for the selection of dialogue partners both from the public and private sectors apply when organizing smaller meetings as well. The Secretariat should not limit private sector participation only to those businesses or business associations that were selected as members of the Steering Committee. If a specific issue requires new representatives of the business community to be invited for discussions with the government, the Secretariat should be able to come up with suggestions. It is important to ensure that discussion in these meeting does not lose focus, so that the time is lost due to some parties insisting on a certain issue and forcing all parties to discuss such issue in detail. In other words, there should be a mechanism that can prevent eventual monopolizing of the discussion. This role can be played by the chair, who can redirect the discussion to the specific issue being discussed, and thus keep the meeting focused on the agenda and time allowed for each issue to be discusses. f) Monitoring and Evaluation 201. Dialogue is not an end in itself – it is a means to outputs. Choosing the right outputs to aim for can be critical to a dialogue’s chances of success. Outputs can take the shape of structure and process outputs, analytical outputs or recommendations. All should contribute to agreed private sector and public sector development outcomes. 202. Analytical outputs can include identification and analysis of business roadblocks, agreement on private sector development objectives, and private sector assessment of government service delivery. Are the logistics parks in Xiangyang serving the needs of the business community? Recommendations can address policy or legal reform issues, identification of development opportunities in priority regions, zones or sectors, or definition of action plans. How can the pallets, containers and other international standards be implemented in Xiangyang to benefit the companies for lowering logistics costs and in what time frame over how many years? What action plan to implement? Targets? Outputs should be measurable, time bound, visible, tangible and linked to indicators. 203. In Xiangyang, the above outlined proposed organizational structure in Figure 5 could use the working groups and the technical committees as the basis for monitoring and evaluating. The outputs or progress towards targets (see chapter 2) will be measured over time. For example, reducing and eliminating the “road markets” will take a policy initiative, then implemented over time to move these individual logistics operators from the city to the logistics parks. Indicators could be 70,000 to half that number over a period of years. Similarly, other
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TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) working groups could take on issues to be resolved that will show lower logistics costs as another indicator over time resulting from the PPD. 204. For medium-term and long-term solutions (which can be undertaken within six months and up to two-fifteen years) the preparation and adoption by the government of an action plan to address the problems identified is helpful. An action plan is a documentation of the discussions between the government and the business community and is a commitment by the government to the business community that implementation will be carried out. The action plan thus serves as a basis for business to monitor implementation of measures. It indicates priorities and allocates responsibilities including: 1) What problems need to be solved? 2) What reforms will be undertaken to solve them? 3) Who will be responsible for implementing the reforms? 4) When they should be completed? and 5) How they should be assessed?
205. In the case of Xiangyang, action plans can be divided into 2020-2025, 2025-2030 and 2030-2035 aligning all modal transport master plans into one integrated plan with respect to the goal and action of multimodal container operations. The action plan is most successful when it is based on discrete activities that can be undertaken and completed, and whose impact can be monitored and evaluated. Outreach and Communications: 206. Consultations have shown that the Xiangyang public and private sectors have difficulty in focusing on their common goals in logistics planning which are to reduce costs and attract investments for economic development. The more successful PPDs tend to have effective communications strategies for making participants and the general public aware of the returns on the time and effort invested in dialogue. Xiangyang PPD body could consider a brand identity to improve outreach and communicate the goals of the logistics plans. A logo should eventually be associated with the PPD name. The logo could be made of the initials. A logo will be a very useful tool for communication purposes – media, reports, corporate identity, etc. 207. Competent use of the media promotes public-private dialogue and is, of itself, a function of this dialogue. This is because public and private institutions approach the media differently, and nine times out of ten private institutions communicate more effectively. They have to: their bottom line depends on good communications. A public institution explains. A private company sells. Private companies tend to sell more effectively than public institutions explain. Because of this, private sector expertise is at a premium in communicating PPD themes to the general public. 208. Each target audience will clearly perceive the costs to themselves of becoming involved in PPD – time, effort, and, in the case of public sector actors and other champions, a potential risk to credibility. It is important that communication materials make clear to each set of participants the potential benefits they can expect from involvement. Framework: 209. Monitoring and evaluation is closely related to planning. Monitoring is an ongoing activity that focuses on progress in terms of realization of activities and depletion of budget. Monitoring tracks mainly the use of inputs (activities) and outputs, but in some degree also tracks (intermediate) outcomes. In contrast, evaluation takes place at specific moments, and
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TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) permits an assessment of a program’s progress over a longer period of time. Evaluation tracks changes and focuses more on the outcome and impact level. This methodology could be applied to Xiangyang over the 2020-2035 time. 210. Output measurement shows the realization of activities. Outcome measurement shows in what degree direct objectives and anticipated results are realized. And impact assessment shows the degree in which the overall objective or goal of the program is realized. Monitoring and Evaluation is an important component of the Xiangyang PPD to show results stemming from the goals as established in the working groups and their technical committees. The M&E involves writing reports on a regular basis of weekly, monthly or quarterly under project management guidelines. Data collection and indicators can be useful to include in the reports to show how the goals are met and what needs to improve to reach the goals in the desired time frames: 2020-2025, 2025-2030 and 2030-2035. Not just M&E of the working groups, but also of the overall PPD structure and any changes recommended to improve the outputs. 211. It is advised that the Xiangyang PPD have a project management framework with a description of tasks and responsibilities for the internal stakeholders to conduct M&E on the PPD. A description of competencies and tasks for an external consultant to co-conduct the M&E, and a description of the reporting format, deliverables, time-path and available resources for the M&E process in a term of reference document. 212. The Xiangyang PPD mechanism involves dedication to be successful from both the public and private sectors. The input indicators for M&E are resources of time, money, staff and material all of which are a risk to the business stakeholders. They are taken away from their daily tasks, but there can be measurable benefits for improving the logistics environment in Xiangyang. Output indicators and impact indicators will result from the PPD efforts in terms of lower logistics costs, more revenues and attracting investors. All indicators that can be measured over time by the PPD body and its stakeholder participants in the form of reporting to the PPD stakeholders and the general public. The important result of the PPD body should be to break down the “silo mentality” that is holding back and constraining current logistics planning. 213. The “Xiangyang Municipal Modern Logistics Work Joint Conference Office” is the indicative PPD body. There is recent institutional reform of the business stakeholder in DF Rail, led by Director Ke merging with the Hubei Railway Investment Company. These entities could form the single PPD body in Xiangyang by doing diagnostics, design and implementing, monitoring and evaluation as outlined above. Director Ke has the attributes of a champion in the proposed organizational structure as the General Administrator- Business. If this methodology is followed, then performance gaps will indicate how a system of public-private interaction did not work and why in Xiangyang.20
5. Xiangyang Logistics Association Reform
214. The formal structure of this institution is instructive to Xiangyang. The American Trucking Association (ATA) is a national organization, but membership is by state/city trucking associations. Leadership is by a Board of Directors from membership. Committees or working groups are important to the functions, targets, and outputs of the body. These committees have procedures that include how to conduct meetings with agendas and minutes. Mission
20 “Public-Private Dialogue, The PPD Handbook, A Toolkit for Business Environment Reformers,” Herzberg, B, Wright, A., DFID, World Bank, OECD, 2006. Logistics Plan June 2020) Page 65
TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) statements are written and the focus of the committees is specific to intermodal and equipment standards policies. Respect is accorded businesses to avoid divulging competitive cost or service information in meetings and legally guided. Details are provided in the Appendix of this report.
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V. IMPLEMENTATION
A. Implementation and Operational Plans
1. Purpose
215. This section presents the Consultant’s suggestions for actions and projects that are needed to improve the transport and logistics industries within the context of an overall comprehensive multimodal based policy and plan. The section leans heavily on proposals prepared by DF Railways and MSA. These have already been discussed with the XMTB. 216. Discussions with XMTB staff as well as staff from other agencies and companies demonstrate that they know what they are doing, what they need, and that the basic infrastructure for the various modes is operating, under construction, or being planned. In other words, a sound basis for realizing the goals and targets of the Han River Ecological Economic Belt is being established to meet the current and future needs of the greater Xiangyang catchment area. 217. As a perspective, what is needed largely fall into 3 categories: B. Near to long-term actions that are on-going such as data collection and analysis, and for this particular item, some equipment would be required; C. Infrastructure investments that have already been identified and could be accelerated for development such as relocation of the existing railway freight yard in the existing city center; D. An on-going dialogue focused on improving transportation and logistics efficiencies including costs and consumer demands. 218. The challenge is to tie together what is operating, under construction, and planned into a package that becomes multimodal in fact and not separate agencies and separate modes going off in their own direction. Coordination and cooperation are essential for multimodal success, and these may not happen overnight or through set plans. Rather, some of the supply-chain success stories resulted from informal discussions between acquaintances. There is no single “right way” to develop multimodal operations but for it to become reality, many players have to work together so that all can benefit.
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2. Existing Plans 219. There are a number of plans and proposals for logistics development in Xiangyang. Examples include the Lingng indudstrial zone, plans developed by DF Railway including for the TangBai port and plans for the Yu Jia Hu port. The plans for the Lingang Industrial Zone encompassed three phases –the first phase was originally conceived as being 2017-2020, the second from2021-2025 and the third from 2026.
Figure 18 Xin Gang Xiao He Lin Gang New City Phased Development Plan a) 2017-2020 Industrial Development 220. Focusing on the development of agricultural and sideline processing industries with local advantages, focusing on creating special sections such as grain processing, oil processing, brewing processing, food processing, feed processing. Gathering popularity and forming a certain scale of processing and transportation. Field work finds that many of these businesses already exist in Xiangyang such as the peanut farming, processing, storing and distribution. b) 2021-2025 Goal-oriented 221. A short-term, medium-term and long-term action plan is needed to correct these imbalances. Field work observations and recent reports from the local government find that the river port planning and construction offer useful time phases that can be applied to align the road, rail, air, logistics parks and logistics company modernization plans. In this way, overlapping and redundant plans can be reduced. For each time period, targets can be set that when realized will result in lower logistics costs, gradually over the next 15 to 20 years. Xiao He,Tang Bai and Yu Jiao Hu port plans are instructive as follows. 222. Entering the rapid growth period, it has gradually become the hub port of the Han River Basin; with the development of Hong Kong Xingcheng and Lingang, it has gradually become a new economic growth point in Xiangyang City.
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223. Further expand the port transportation capacity and focus on the development of container freight and energy transportation, build professional terminals, and cultivate the automobile ro-ro transportation market. Strengthen the management level of port collection and distribution, vigorously develop modern logistics industry, build regional logistics distribution centers and energy bases, and improve the efficiency of warehousing transfer.
Figure 19 Functional Zone From top to bottom: Customs supervision area 564539.3 m³ Bulk area 913777.3 m³ Container area 553811.16 m³ Car rolling area 369113.23 m³ Tax filing area 728224.89 m³ c) 2026-2035 (2025-2030 and 2030-2035) Goal-oriented 224. Entering a mature and stable period, it will become a core port area of the Hanjiang River Basin, one of the shipping hubs of Hubei Province; an integrated port city and an important functional group of the Xiangyang Metropolitan Area. 225. In addition, it is recommended to establish pilot project tests for container movements intermodally from road to river and from rail to river as well as from truck to rail in cooperation Logistics Plan June 2020) Page 69
TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) with businesses such as DF Cummins Engine and Hanjiang Heavy Industry as well as from one business from agriculture and the other six pillar Xiangyang industries. The development of the river ports cannot progress apart from the other modes of road, rail and air and logistics parks and needs to be aligned and planned together. This is the essence of integrating. This is especially the case with the development of the North region of Xiangyang where the Tang Bai river port will integrate the road, rail, air and nearby logistics parks as shown below in
Figure 20 DF Railway plans \
(source: DF Rail Plans) 226. The Tang Bai port is the center of the industrial zone of Xiangyang less than 10 kilometres from the factory to the port. Problems encountered are the port only functioning as loading and unloading to the factories and low water capacity of 200 tons, only. The plan is to increase capacity to 1000 dead weight ton (DWT) vessels over the next few years and to 2,000 DWT by 2030. This will require storage and logistics services around the port area with plans for a certified and professional lead third party logistics (3PL) company. Perhaps this role and responsibility will be to DF Rail. 227. All river ports in the area will be operated and managed by the experienced and financially capable, Shenzhen Yantian Port Company. Construction of both Xiao He and Tang Bai will be by Xiangyang Investment Construction Company. Xiangyang Maritime Safety Administration will be responsible for the administration of the ports. The action plan over the 2020-2025 phase could suffer losses and become profitable over that phase or into the second and third phases.
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228. The 2025-2030 and 2030-2035 phase plans are for intermodal logistics operations for automobiles, roll on/roll off, containers: ports with highway, rail dedicated line invested by Yantian Port Company, then transferred to the Ministry of Railways, Xiangyang department. Tang Bai port will connect the dedicated railway with Deng Hu railway station in the North and the airport. There is an existing logistics park of a state- owned enterprise steel company which will be extended to the Tang Bai port. 229. Possible delays are from the dredging, approvals from governments for land use and bureaucratic inertia. Also, Dong Feng owns the area now and asks the city to transfer to Hubei. Tang Bai construction plans are to be in 2020-2025. Xiao He first phase is to be completed in 2020, but without container terminals constructed and without demand studies for either port plans. d) DF Railway Plans 230. The following plans are from DF Rail which recently had institutional reforms conducive to better public private dialogue (PPD). DF Rail is merging with Hubei Railway Investment Company because DF Rail is experienced rail company with a modern logistics company unit, FSL Logistics, and will serve not just DF Rail customers, but the entire Xiangyang logistics industry. DF Rail could be one of the needed leading 3PLs in Xiangyang. 231. Suggestions provided by Dong Feng Rail, Xiangyang: The 14th Five Year logistics planning of Xiangyang city, 2020-2025. It is suggested to comprehensively implement the multimodal transport scheme and fully analyze the scientific layout of the recent and long-term period of more than 20 years, 2025-2030, 2030-2035 to reduce the regional logistics cost. The special railway line of 8.5 kilometres (3 kilometres away from the airport and Xiangyang North export docking of Xiangyang expressway) can be planned and built in Gaying station of Dong Feng Rail. The line would go to a special marshalling yard, container depot, LNG processing plant, other manufacturing. From there it is 5 km to the proposed new Tang Bai port. These plans will realize the large-scale import and export logistics base of railway, highway, water and air multimodal transport in Xiangyang. The railway end is reserved to the West of the line for the development of large-scale enterprises and materials in the next ten years: 2020-2025 and 2025-2030 Dong Feng railway along with the national railway Jiaozuo-Liuzhou railway, Gao Ying station of Wuhan bureau Xiangyang North station will be established as the heavy industry high-tech industry development zone Xiangyang city gradually becomes the North industrial park, Shenzhen industrial park of Nissan and Hubei (Xiangyang) and the establishment of the Free Trade Zone (FTZ) e) Yu Jia Hu Port Plans 232. Additional river port planning involves the Yu Jia Hu port which is coal and bulk cargo dependent in the center of the city. Coal is not good for the city’s environment. Plans are to convert the area to a distribution center, but there is a long way to go: 2025-2035. This plan could take the example of Port of Tilbury, Thames river, London converting from an energy terminal to an Amazon distribution and fulfillment center. Details are in Chapter Three.
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Figure 21 Yu Jia Hu Port Plans to Convert from Coal/Bulk to Distribution Center: Rail Access 3. Actions Required 233. Xiangyang Municipal Transport and Logistics Bureaus goal of improving the logistics and transport planning in Xiangyang needs to center their efforts on meeting customers’ requirements from the logistics infrastructures and services within the districts. These include companies operating in the agriculture, manufacturing and consumer goods sectors of the Xiangyang economy. All projects should have the greatest impact on improving on time delivery (OTD) and low warehouse inventories for customers or users of the road, rail, river ports, information systems and logistics parks. The port companies, logistics parks, shippers and logistics companies all need to make a profit from the supply and demand of public goods. 234. The focus here is two-fold: first there are some facilities that need to be relocated or in the case of cold storage expanded to meet growing demand; and second, establishing mechanisms that both support and promote cost-effective multimodal solutions. These have been discussed in Section 5 and are highlighted here. Resume and Maintain Public Dialogue. As indicated in the General/Overall discussion, this was initiated last year by XMG. As noted above, this is an essential component to successful multimodal operations. It should be resumed and maintained. It could take many different forms such as luncheon speakers, seminars, working committees, etc. it would not have to meet every week but as needed and at least every 6 months to start would be a suggestion. IT Development and Integration. As indicated in the General/Overall discussion and as discussed regarding logistics information platforms, there are many different systems and the purpose here is not to suggest unifying all of them but rather to determine where links need and can be established. Multimodal operations are highly dependent on IT, and support for the development of or integration with existing systems should be supported. Relocate Private Logistics Center. This successful and relatively large operation must be found a new home that is sufficient in size to enable growth and to support multimodal connections. This is a priority because it is a thriving operation and
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should be supported. Relocation should be targeted as soon as possible in the 2020-2021 period. Upgrade Cold Storage. The current owner/operator is facing some financial issues but appears to be able to continue. A new agricultural cold storage facility is planned for east of the new city center in the 2020-2021 period. Investigate Block Container Service. Work with shippers/logistics companies to plan and negotiate the provision of timetabled block container train services between Xiangyang and key destinations. Investigate options for the provision of leased pallets and containers so that shippers can make use of the service. Multimodal Integration of Logistics Centers. This is an on-going activity to stress and link logistics centers with multimodal transport modes when cost- effective. When multimodal modes are not cost-effective, there should be assessments as to why they are not. B. Prioritised Project List
235. The river port offices, logistics and rail multimodal parks, manufacturing, agriculture and consumer goods sectors surveyed in this report along with the six pillar industries in Xiangyang municipal area all depend on uninterrupted movement of goods for on-time- deliveries (OTD) to meet their customers’ requirements. All the companies of these sectors have various plans. However, how to implement these plans is impeding progress for each of these companies and for Xiangyang’s economic development as one of the planned 46 national logistics hubs. A logistics continuous improvement plan over 2020-2025, 2025-2030 and 2030-2035 is recommended with a PPD body to guide the improvements. 236. A key recommendation of this Plan is the establishment of a PPD body as set out in section IV.C.4. Establishment of a PPD body could be a specific project and could be undertaken with ADB assistance. 237. The objective of the continuous improvement is to align all master plans of the national, provincial and municipal in Xiangyang starting with the 14th Five Year Plans of 2020-2025. All individual Xiangyang department plans for rail, road, river ports, air and logistics parks will need to be considered and planned together and holistically to be seamlessly integrated. This is especially needed for multimodal planning. The current planning is in a “silo mentality” with each of these various entities and businesses planning and implementing, individually and separately. 238. Targets can be set in each of the time frames with working groups within the PPD body. Some of these targets in working groups are: Modal shifts Logistics park consolidation Logistics company training and certification Standardization Information systems 239. The reform of the Xiangyang Municipal Modern Logistics Work Joint Conference Office will go far to continuously improving Xiangyang’s logistics planning. The methodology to follow Logistics Plan June 2020) Page 73
TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) is to conduct a diagnosis, design and implement the PPD body with a Steering Committee, Secretariat from both business and government champions and lastly monitor and evaluate the PPD body over time. International examples show that establishing and operating of this body require dedication and long- term benefits to lower costs and attract investments. As a result, Xiangyang will realize the overarching goal of becoming the transport and logistics hub for the region and international markets. 240. Development will take place over three phases: Stop and Reorganize Joint Planning Realize Profits
241. The PRC transition from a command centrally planned economy to a market-oriented with Chinese characteristics economy is an ongoing and difficult process. Market signals to balance supply and demand in product markets, transportation/logistics service markets and financial markets rely on information and data collected and analyzed in real-time which calls for modern information systems in Xiangyang. Road, rail, river and air freight transport modes are underdeveloped and underutilized for lack of infrastructures and lack of government and business overall awareness of the importance of logistics costs and services to Xiangyang’s economy. Highway radiation range is limited and can’t cover the main industrial and logistics parks. There is slow progress on the PRC railway marketization investments (rolling stock, containers, chassis, equipment) and supporting scheduling, information systems for reliable OTD. The IWT construction is moving slowly for dredging, facilities and services. The use of containers and multimodal practices are at the low end by comparison to Wuhan and Yichang. These factors are a major obstacle to the development of the hub economy and the service oriented national logistics hub. 242. Many companies and districts are taking their own initiatives in projects that should be better integrated with those of Xiangyang city which will improve the government’s capacity to plan and reduce redundant and outdated facilities and systems. The projects should be focused on the targets outlined in this report and supported by the information given by the 17 companies. These projects are: modal shifts, consolidation of logistics parks and logistics companies, information system platforms, refrigerated logistics, standardizing of equipment, and institutional reforms of both the Xiangyang Municipal Modern Logistics Work Joint Conference Office and the Xiangyang Logistics Association. The refining and sorting out of the projects can be as follows in order of importance: a) Institutional Reform: Follow the guidelines in Chapter IV.C for a functioning public private dialogue body for regular planning, construction and implementing of projects in Xiangyang. The Xiangyang Municipal Modern Logistics Work Joint Conference Office of Municipal Development and Reform Commission is a starting point. Also, reforming the Xiangyang Logistics Association with guidelines from the Appendix example. One of the main problems is the lack of coordination Logistics Plan June 2020) Page 74
TA-9547 PRC: Hubei Xiangyang Comprehensive Transportation and Logistics Planning and Strategic Study- 01 (51029-001) in land, water, port and among port industries as cited by the Xiangyang Port Tangbaihe Port Area Wupo Operations Engineering Feasibility Report of October 219 and also cited by the Xiangyang Maritime Safety Administration. b) Data Center: 243. One of the key issues for successful decision making in planning is to have accurate data on logistics costs and benefits and timely, real time data for visibility of all shipments is especially important for customers. A data center will house the computer servers to run the many software applications that will increase as logistics improvement planning targets are met over the next 15 years. Cloud computing, artificial intelligence, Internet of Things, RFID are among the technologies needed for a modern port logistics. All stakeholders will benefit from both business and government by a new data center. The Xiangyang Maritime Safety Administration cited the lack of river navigation information systems for direction of vessels “Shippers mentioned market constraints engaged in IWT logistics. IWT has limited networking capability, which mostly requires expensive and time-consuming pre- and on-carriage by truck. This intermodal approach requires a comprehensive logistics management system such as a ‘logistic information public-sharing platform’ that the central government arranges. This system is high-tech, highly professional, and requires a high standard of coordination between departments at different levels.”21
244. The Guang Cai logistics park lost their information center to advances in trucking companies using mobile applications. This logistics park information center is standing on 30,000 square feet from 2013 before closing in 2017 and lost 1,000 jobs. There could be electronic data interchange (EDI) connectivity from this site in Xiangyang to Wuhan logistics operations which is at present lacking and needed. 245. Repurposing this existing facility in the Guang Cai logistics park to become a data center would be useful with modern computer servers and networking eqiupment, big data, artificial intelligence, an application for river ports to balance inbound and outbound full cargo shipments to reach profitability for all stakeholders, river information (navigation) systems (RIS), blockchain, a Xiangyang website with databases about logistics costs, and a platform connecting all 6 logistics parks for the logistics and transport sector. 246. Consideration could be made to companies and users of the Xiangyang public infrastructures for paperless documents in logistics and event management applications with visibility of shipments for OTD without compromising confidential business-customer information. This central repository data center for all modes would reduce the overlapping roles and responsibilities among the numerous departments and improve planning to meet the targets described in this report. 247. Xinfadi peanut trading company, Hao Lin Ju Hubei supermarket chain, and international supermarket chains have their own information system platforms and could be collaborators in the design, construction, implementation and operation of the data center. Xinfadi has a modern cloud computing network for possible guidance and integration. Gathering input from all sectors and government departments (17 companies in this report) is advised, preferably in working groups described in Chapter III.
21 “Promoting Inland Waterway Transport in the People’s Republic of China,” ADB, 2016, pg. 14 Logistics Plan June 2020) Page 75
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c) Xiangyang Railway Freight Yard: 248. This facility and the rail and road infrastructures could be converted to many different modern logistics functions. At present, there are operations for flatbed trucks, eight rail tracks, warehouse bays for rail and truck loading and unloading and rail cranes. Problems cited are moving freight in and out of the city, therefore lack of business. This facility could transform into an e-commerce center with sorting of packages on conveyors for urban deliveries. Another possibility is a data center or satellite of a data center in colocation. The need to use more containers and shift from trucks to rail and river barges could transform this facility to a container yard with a chassis pool as a demonstration effect. Mechanized loading and unloading is also possible to measure benefits and expand. In view of the difficulties of removing the road markets from the city, then this facility could assist in the transition away from road markets to be a consolidation center for inbound and outbound transportation to the areas six logistics parks. d) Yu Jia Hu: 249. Repurposing the port to a distribution center for Alibaba or e-commerce to include for agriculture e-commerce with refrigerated logistics. The example of Port of Tilbury, London for Amazon is instructive in this regard. 250. At present, there are two berths for coal by rail to barges of 500,000 tons. The channel needs dredging for 1000 deadweight ton (DWT), Class III vessels from the current 500 DWT, Class IV, vessels. The dredging and operations need to be maintained all year to reach reliable schedules and profitable ends. The new plan is for Shenzhen Yantian Port to operate for three years and reach 10 million tons. A demand study is needed for new bulk commodities of rock or aggregates. Currently, the Xianyang River Transportation Co. Ltd. operates this port. e) Standard Equipment: 251. The companies described in this report could reduce their economic and environmental costs and city congestion by modal shifts from truck to rail and from truck/rail to inland water transport and vice versa by using equipment based on international standards. These include standard shipping containers, chassis’, and pallets. The use of standard equipment will enable companies to enter and capture international markets as aspired by Shuang Lin NTP, DCEC and Yuanda Oil in this report. Moreover, DCEC cited their plan to use standard equipment and river ports and would take a “long time” to transition. 252. A pilot project to inform, train and deploy some standard equipment units coupled with logistics information systems with a demonstration effect can show the cost savings and benefits and lead to longer term assimilation. This could be arranged in one of the existing logistics parks in coordination with the businesses. f) Tangbai Port-DF Railway-Hubei Railway Investment Co- Shenzhen Yantian Port 253. The Tangbai River, a tributary of the Han River, is currently navigable mainly by cargo ships and ships traveling down the Han River. Most of them are below 500 (dead weight ton) Logistics Plan June 2020) Page 76
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DWT vessels. The lack of all year navigation of the river is a major constraint to modernization of Xianyang logistics, economic development and of realizing the support of the Xiangyang High-Tech Development Zones’ 3,000 companies with $45 billion of operating income and with companies from 20 countries. 254. At present, the navigation of vessels on the Tangbaihe is not competitive for business use. The Hanjiang channel upgrade project will enable 1000 DWT, Class III cargo vessels for the Tangbaihe Port to handle specialized markets with value added services, logistics parks, route development and increase multimodal functions for loading, unloading and storage with trucks and rail connections. Proper river information systems and technologies will be needed for navigation of vessels and for logistics functions. Navigational aids are for ship sway, wave, draught, water level. Logistics systems are for berth and yard efficiency from terminal operation software (TOS) used for scheduling and stowage areas for loading and unloading freight of all kinds. 255. A proposed project would: Upgrade the waterway corridor over four years from Class IV to Class III and II, $150-$200 million. Provide truck and rail connections Introduce extended gateway facility in Taibaihe to serve Wuhan-Shanghai markets. This will include cargo handling facility to serve mostly import/export container flows between major international shipping nodes (Shanghai, Wuhan) one-year project, $10 million Introduce user charges to fund waterway maintenance. Imposition of user charges on IWT vessel operators to cover the existing waterway maintenance financing gap. Ongoing project, estimated costs (MSA did not provide requested cost data) are based on US$0.3 per thousand ton-km. Promote engine and fleet modernization in IWT. Provision of public subsidies (with private sector matching) for engine improvement, one year, $20 million Showcase IWT as an enabler of efficient logistics. Promotion campaign on the use of inland water transport and demonstration projects to illustrate its attractiveness, over 10 years, $30 million.22 256. Subprojects would include data management systems and a data centre 257. The economic and environmental benefits of these project interventions are measurable over time in terms of transport cost savings, emission reduction, safety inputs. Also, there are IWT modal share gains by 2030 as outlined as targets in this Xiangyang Logistics Improvement Plan report. Investments in waterways can deliver attractive economic returns and depend on expected intensity of future traffic. 258. A more detailed analysis of the Tangbaihe port project is included as a separate document,.
22 “Estimates based on Facilitating Trade through Competitive Low-Carbon Transport, The Case for Vietnam’s Inland and Coastal Waterways,” Luis C. Blancas, M. Baher El-Hifnawi, World Bank, 2014, page 3, Table 0.1. Logistics Plan June 2020) Page 77
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Appendix I Problems Faced by Xiangyang Logistics Stakeholders
Xiangyang Logistics Plans Main Problems Solutions Stakeholders Government 1.) Maritime Safety Administration 1.By 2020, Class III, 1000 dwt 1. Construction of electrical, etc. to 2023 1. PPD body with working group to balance 2.TEU subsidies: 650Y/TEU 2. “Too much talk and no action plans” electrical, dam, irrigation, dredging, transport 3.Have demand for IWT 3. No details of demand from departments: 2. detailed policies to solve problems agriculture and manufacturing 3. PPD body to eliminate “silo mentality” 4. Navigation IT system 4. No direction/information about water 4. PPD body: Information Technology levels and ship capacities-no IT systems working group (WG) 2.) Transportation Construction 1. Constructing Xiao He Port 1. No demand study nor for Tang Bai Port 1. Early selection of operations company/PPD Investment, Company 2. 3 break/b, 1 bulk terminals 2. No plan for container terminal 2. Collaboration with business-PPD body Association 3.) Logistics Association 1. 1 Port & 4 Parks: N, E, W, S 1. Disconnect between: plan-construct-users 1. Institution reforms of city and association 2. “Road Markets” to Parks 2. Logistics Parks not good for road markets 2. Collaboration, coordination: PPD body 3. Modal shifts from road 3. Lack of collaboration among departments 3. Government lead with business: PPD body Businesses Logistics 4.) Dong Feng Railway and 1. In two years, all have 1. Overloaded trucks versus containers. 1. PPD body for collaboration. Now in “silo Feng Shun Logistics Co (FSL) facilities to do TEU business Multimodal plans in different departments mentality”: Make new department: 2. Modern logistics standards 2. Packaging, manufacturing, logistics “Economic & Information Group” suggested. companies use different standards 2. International standards in PPD body WG 3. Container warehouse and 3. No place to store, load/unload. Need 3. Government led plan to fund, implement information systems funds 5.) Guang Cai Logistics Park 1. “Road Markets” to Parks 1. No enforcement mechanism or leader 1. PPD body with all relevant departments. Best practices from Shandong and Jiangsu 2. IT systems with all 6 parks 2. City and 5 districts not in harmony. 2. Institutional reforms: past did not work. Information management center closed Form logistics cluster from good practices. Standard approval process for logistics parks 3. Form large 3PLs 3. Too many small companies 3. PPD and Association reforms with WGs 6.) Xiang Guan Logistics Co. (3PL) 1. More use of containers. 1. Poor multimodal rail policy. Containers 1. PPD body to implement PRC policies. Better rail services. high cost, not available, low volumes. No Nissan/DCEC case studies use international standards for packaging, equipment. Rail not standards and 3PLs can fill their requirements near manufacturing in FTZ. using value add services. Rail spur in FTZ.
2. IT platform 2. Customers with different systems for 2. PPD body with IT working group (WG) inventory and no visibility (on-line tracking) Manufacturing 7.) Cummings (DCEC) 1. In 3 years use containers 1. “long journey” is cost to suppliers using 1. Implement of PRC policies by PPD WG old pallets to standard pallets. Low volumes 2. International sales 2. low level of multimodal services 2. IWT/rail services competitive, no damages 8.) Shuang Lin NTP (bearings) 1. Rail for 40% & containers 1. Now rail is 10% with poor OTD 1. PPD body with WG for PRC multimodal 2. Did IWT pilot project 2. 7-8 days to Shanghai vs. 20 hours-truck 2. PPD with Wuhan IWT systems 3. Use of logistics parks 3. Not used. Poor transfers road-rail 3. Need full service multimodal companies 9.) Xin Xing Heavy Industries 1. Need multimodal because 1. No I.T. intermodal platform. Road 1. PRC multimodal policies implemented by (vehicle castings) will reduce logistics costs congestion, safety, pollution. Rail loses PPD body shipments 2. Government promised I.T. 2. Rail is slow. Paying each customer 2. IT working group in PPD body system five years ago $152/year to use their IT systems 10.) Hanjiang Heavy Industries 1. Need large truck project 1. No specialized logistics companies 1. City and logistics association collaboration (project cargo rail bridges) cargo companies and for DG 2. Smooth permit process for 2. County to county different permit process 2. Harmonize permits by PPD body with oversize/overweight trucks Administration Services Bureaus inputs 3. Use of riverports by steel 3. Poor road-IWT-rail services for cargo. 3. Better coordination, collaboration of suppliers with 1500 dwt Steel suppliers near IWT ports from Wuhan responsible bureaus to implement plans with vessels in Xiangyang no port access to reduce costs funding needs 4. I.T. systems in Xiangyang 4. I.T. platform in Xiangyang is not good 4. I.T. working group in PPD body 11.) Wanzhou Electric 1. Use of logistics parks if 1. Logistics parks not meeting their needs 1. business and government collaboration organized, professional and standardize construction approval and services, certified with all operations of logistics parks VAS, good prices 2. Specialized and large 2. small logistics companies need to wait to 2. PPD body with certification program to logistics companies reach volumes and impacts OTD to them. reduce or merge logistics companies. Good Wuhan suppliers have OTD issues to them I.T. systems from I.T. working group Agriculture 12.) Xin Fa Di Peanut Trading 1. Phases of plans for cold 1. May to August need refrigeration. 1. Coordination and knowledge sharing: and normal warehouses with Refrigerated container system is less than cloud-based systems and building warehouses and lower energy costs networked to all of PRC 2. Use of agriculture 2. Agriculture association has no power 2. Institutional reforms for agriculture and all association associations for greater impact in Xiangyang 3. Use of local logistics 3. Not large enough and use Xiamen 3. Improve local logistics and multimodal IWT companies and IWT companies to long distance & for rail to Shanghai for international markets
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13.) Zhuyeshan Agriculture 1. Expand logistics park with 1. Competitor parks are real estate and not 1. PPD body to better coordinate logistics Products Trading Center cold warehouses and trucker operations. Took tenants from them parks, forecasting and management mobile apps without logistics companies needed. Expand on-line with Taodaji and other on-line e-commerce for all area cities 14.) Lifeng Grain and Oil 1. Need trucks May and June 1. No trucks available May and June. No use 1. OTD trucking with no damages. for logistics parks 15.) Yuanda Oil 1. Would use Xiangyang IWT, 1. Use Yichang river port truck on barge to 1. Construct river ports in Xiangyang: PPD if available Sichuan/Chongqing, if need faster—trucks 2. International markets 2. Not calculating logistics costs well. Low 2. Data collection system. Logistics parks with profit margins. Not using logistics parks 3PLs to do value add-services. Consumer Goods/Supermarkets 16.) Zhonghao International 1. Build logistics center to 1. small logistics yard now with no demand 1. Educate logistics officials, integrate logistics Trading serve the large wholesale study conducted and no road plan. No I.T. parks, form large logistics companies, road market with e-commerce platform markets out of the city, need business with dedicated truck road collaboration. Form PPD with working groups. Form government led shareholder company. 17.) Metro 1. Improve use of local 1. Need OTD, door to door services. Logistics 1. PPD body to form leading 3PLs and logistics companies companies too small, and not 3PLs. Poor implement intermodal policies. trucks without 1-2 tons and hydraulic lifts. No multimodal: rail, IWT, via Wuhan delays 18.) Walmart 1. Local pork needs 1. No large cold chain local companies 1. Form specialized local 3PLs refrigeration systems 2. A District commerce office 2. Evening truck delivery rules to city stores. 2. Need all government departments to think plans 8 specialized product Better current logistics park services. Just together in planning and not silo mentality. markets for supermarkets now planning logistics parks for supermarkets 19.) Hao Lin Ju Logistics 1. Build refrigerated 1. Expressway is blocked so use longer 1. Good case study for Xiangyang in all facets Distribution (Hubei only) warehouse next to current highway with delays. Rail: procedures, of logistics improvement plan: local logistics room temperature storage transloading, communications, damages. company used, I.T. systems, know the Logistics parks not planned well to use. customer mentality, efficiencies, costs. Source: Robert L. Wallack, Sr. Logistics Specialist, U.S.A.
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APPENDIX II American Trucking Associations
American Trucking Associations is the largest national trade association for the trucking industry. Through a federation of 50 affiliated state (provinces such as Hubei, Xiangyang metropolitan area) trucking associations and industry-related councils, ATA is the voice of the industry America depends on most to move the nation’s freight.
The management of the overall policy and direction of ATA is vested in its Board of Directors. The Board is made up of the Chairman of the Board, First Vice Chairman, Second Vice Chairman, Vice Chairmen (2), Treasurer, Secretary, Past Chairmen of the Board, Vice Presidents at Large (no more than 60), Vice Presidents at Large Emeritus, affiliated State Vice Presidents (50), affiliated Conference Vice Presidents (6), an Allied representative, a Trucking Association Executives Council representative, and the chairmen of the ATA Litigation Center, American Transportation Research Institute, ATA Truck PAC,Carrier Policy Committees (11), Small Carrier Committee, Audit Committee, and Nominating Committee.
All members of the Board of Directors must be members of a state association affiliated with ATA and members in good standing of ATA, with the exception of Past Chairmen.
Leadership: General officers of ATA are elected by the Board of Directors at its annual meeting C. Policy committees:
1. Committee Structure
Communications and Image, Environment and Energy, Hazardous Materials, Highway, Independent Contractors, Labor and Regulatory, Safety, Small Carriers, Supply Chain Security, Tax, Technical Engineering.
2. Antitrust Guidelines For Meetings
To minimize the possibility of antitrust problems, the following guidelines should be followed at all meetings of ATA boards and committees and all ATA- sponsored conventions, trade shows, training seminars, best practices discussions, conferences, colloquiums, and task force and working group sessions.
3. Procedures for Meetings:
1. Meetings should be held only when there are proper items of substance to be discussed which justify a meeting. 2. In advance of every meeting, a notice of meeting, along with an agenda, should be sent to each member of the group. The agenda should be specific and such broad topics as “marketing practices” should be avoided. An ATA Law Department attorney must review all agendas before they are sent to meeting participants. 3. Participants at the meeting should adhere strictly to the agenda. In general, subjects not included on the agenda should not be considered at the meeting.
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4. If a member brings up a subject of doubtful legality for discussion at a meeting, he or she should be told immediately the subject is not a proper one for discussion. The ATA staff representative or any member present who is aware of the legal implications of a discussion of the subject should attempt to halt the discussion. If the subject of prices, costs, or other competitive practices are raised by others at the meeting, you must disassociate yourself unequivocally from the discussion. If necessary, you must leave or halt the meeting. 5. Minutes of all meetings should be kept by ATA. An ATA Law Department attorney should review draft meeting minutes before they are distributed to meeting participants. Minutes should summarize accurately the actions taken at meetings, if any. Minutes should not contain comments made by particular meeting participants because of the potential for incompleteness or inaccuracy in attempting to report precise remarks. 6. An ATA attorney or other staff member should attend all meetings 7. Members should not be coerced in any way into taking part in ATA activities. 8. It is essential that members cooperate with ATA counsel, particularly when counsel has ruled adversely about a particular activity or topic of discussion
4. Topics to Avoid at Meetings
The following topics are some of the main ones that should not be discussed at meetings attended by ATA members or staff, including meetings or other gatherings sponsored by organizations independent of ATA: 1. Current or future prices of competitors. 2. Matters related to prices, such as discounts, credit terms, profit levels, or volume of production or service. 3. Wage and salary rates, equipment prices, or other actual costs of individual companies, since these costs are an element of price. 4. Dividing up, allocating, or rationalizing markets, bids, geographic areas, types of business, or customers among competitors. 5. Refusals to deal with suppliers, customers, or other competitors.
5. Guidelines to be applied to any “best practices” discussion:
1. All industry practices discussed should involve an attempt to reduce costs or realize some other efficiency. Discussions should be limited to what is reasonably necessary to accomplish these legitimate goals. 2. As in other areas of ATA activity, price and other competitively sensitive terms of trade should not be discussed in the “best practices” context. Specific present or future competitive plans and strategies of individual companies should not be discussed. Nor should specific customer information or specific companies’ costs.
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3. In discussing “best practices,” no agreement should be reached to use a particular practice, to deal with suppliers or customers on particular terms, or to exclude a member or other competitor for using a different practice. 4. To the extent possible, technical personnel of member companies, rather than marketing personnel, should be used to conduct “best practices” discussions. 5. Prior to a “best practices” discussion, an agenda should be prepared and reviewed by counsel. Minutes should be kept of all meetings at which “best practices” are discussed. Should questions arise about the propriety of a “best practices” discussion, the discussion should be discontinued until counsel can be consulted. Small Carrier Committee
Mission Statement:
The Small Carriers Committee (SCC) is an advisory committee to the Board of Directors and the Executive Committee of American Trucking Associations, Inc. (ATA). The mission of the SCC is to focus ATA leadership and staff on the needs, attitudes, influence, and political strengths of the ATA small carrier constituency; to recognize the importance of small carriers to ATA and the trucking industry in general; and, to identify and advance issues, programs, and services that will assist small carriers
Committee Chair and Vice Chait
Chair : President & CEO
President Vice chair Trucking, Inc.
Supported by the technical experts on the Safety Management Council.
Membership Criteria
For purposes of the Small Carriers Committee, a motor carrier is judged to be "small" provided its annual gross revenues do not exceed the size standards for small carriers set by the U.S. Small Business Administration ($25.5 million as of October, 2012). Any small motor carrier, who is a full dues-paying member of ATA as well as a member in good standing with an ATA-affiliated State Trucking Association, may be considered for membership on the SCC. Any small carrier meeting the above membership criteria and size standard (qualified small carrier) is free to attend any official SCC meeting, but holds no voting rights.
The SCC will meet in conjunction with the ATA Board of Directors or on such occasion as the ATA Chairman of the Board determines. Each SCC shall have one vote. The SCC Chair shall determine whether any SCC meeting shall be open to other than qualified small carriers. ATA staff shall be welcome at all SCC meetings. ATA will provide staff and serve as liaison to the SCC and its Chair and be responsible for drafting the minutes of the SCC Committee meetings
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ATA POLICY MANUAL, “Policies of the American Trucking Associations, Inc.”
(96 pages – showing key points onle )
Chapter L. INDEPENDENT CONTRACTORS
Independent contractors, in the form of owner-operators, are an integral part of the American trucking industry. STATUS Individuals who own motor carrier equipment or operate it under a bona fide lease and drive that equipment often choose to contract that equipment to for-hire private motor carriers and operate independent businesses as independent contractors. Legislation and regulations should preserve the independent contractor relationship between motor carriers and those individuals who choose to operate as independent contractors, and maintain their complementary roles in the trucking industry. Government agencies should recognize that the terms and rates of compensation between motor carriers and independent contractors are matters of private contract. The continued availability of independent contractor status under state and federal law must remain a high priority concern for the trucking industry and those segments that utilize contractors.
Chapter I. INTERMODAL TRANSPORTATION
The transportation system in the United States is diverse. Transportation services are provided by a variety of modes including air, highway, rail, pipeline, inland and coastal water, with ownership under the private enterprise system. The preservation and expansion of this diversity offers the benefits of freedom of choice, service alternatives, competitive innovations and economic efficiency, while affording the synergies of modal cooperation, where applicable. A highly effective and integrated intermodal system does not require common ownership of transportation modes. Effective intermodal transportation yields economic efficiencies only when each of the transportation modes is self-supporting and does not rely on government subsidies or cross subsidization of any sort to underwrite operating costs. Government policy should provide all carriers participating in an intermodal movement a fair and equitable share of the transportation charges assessed for the movement, prompt and full payment of their lawful transportation, drayage, and accessorial charges, and participatory involvement in the management of transportation service offering INTERMODAL INFRASTUCTURE An integrated and productive intermodal infrastructure is dependent upon effective and timely interchange between modes INTERMODAL EQUIPMENT AND HIGHWAY SAFETY The trucking industry supports government policies promoting the efficient utilization of intermodal freight containers, chassis, and rail-compatible trailers. It should be the joint responsibility of owners, providers and users of equipment in intermodal service to assure that this equipment is in compliance with federal and state rules and regulations, prior to offering the equipment for transportation on U.S. highways. This responsibility should continue as the equipment and loads flow through the intermodal chain. Motor carriers should not be compelled or coerced into accepting equipment under interchange that is not in compliance with federal and state regulations.
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To encourage the safe movement of intermodal shipments, the following goals should be realized in the establishment and enforcement of domestic and international legal standards: a. External dimensions must be compatible with U.S. highway length regulations; b. Gross vehicle weight formulas and axle weight limits must be compatible with U.S. weight regulations; c. Codes and their applications must be compatible with general trucking (Source: www.trucking.org)
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