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Intermodal Logisticslogistics Unlockingunlocking Vvaluealue IntermodalIntermodal LogisticsLogistics UnlockingUnlocking VValuealue Asian Institute of Transport Development E-5, Qutab Hotel, Shaheed Jeet Singh Marg, New Delhi 110 016, India Tel: (91-11) 26856117 Telefax: (91-11) 26856113 Email: [email protected] ASIAN INSTITUTE OF TRANSPORT DEVELOPMENT Intermodal Logistics: Unlocking Value © Asian Institute of Transport Development, New Delhi First published 2007 All rights reserved Published by Asian Institute of Transport Development E-5, Qutab Hotel Shaheed Jeet Singh Marg New Delhi-110 016 INDIA Phones: +91-11-26856117, 26856113 Fax: +91-11-26856113 Email: [email protected], [email protected] Intermodal Logistics Unlocking Value ASIAN INSTITUTE OF TRANSPORT DEVELOPMENT CONTENTS Preface i Abbreviations iii Contextual Information vii Chapter 1: Globalisation and Logistics: The Container Revolution 1 Section I : Maritime Transport Logistics Chapter 2: Maritime Transport Networks and Container Shipping Development 27 Chapter 3: A New Ports Structure: Asia Moves Ahead 45 Section II: Land Transport Logistics Chapter 4: Land Transport Networks: Regional and Subregional 85 Chapter 5: Dry Ports: Sharing Benefits 153 Section III: Facilitation of Multimodal Transport Logistics Chapter 6: Institutional Framework: Cross-border Impediments 167 Section IV: The Way Ahead 193 Annexures 199 References 205 Preface For about 25 years now, national barriers to trade and investment have been dismantled at an unprecedented pace, leading to a degree of integration of product and financial markets that is reminiscent of the pre- twentieth century global economic arrangements. One of the consequences of this has been the spread of production facilities across national borders. Thus, what was started by US multinational firms in the 1960s in Europe has now become a global trend. The result is hugely enhanced volumes of international and regional trade as firms look to the cheapest sources of supply in an increasingly competitive world. Given its lower labour costs, its imperatives for catching up, its need to raise the levels of domestic prosperity and a host of other reasons, Asia has emerged as the world’s manufacturing centre and a significant absorber of capital. Forty-five of the world’s top 100 container ports are in Asia. More than half of world’s export containers are shipped from Asia and 65 per cent of world container traffic is attributed to Asian ports. Asia, in short, is where the world’s economic future lies. But the improved competitive climate that has been generated has also led the firms to look for maximum possible reduction in costs. And one of the major areas where such reduction has been achieved is the supply chain management. By making the cost of acquisition of goods as low as possible, a virtual cornucopia of value has been unlocked. Reducing costs by 1 per cent on $500 billion of trade means a saving of $5 billion. Much of this has been achieved by a new science that is called logistics. Integrated intermodal transport is a key element in logistics. It consists, at its core, of efficient supply management, in which transport management plays the central role. At present, logistics cost account for 10-20 per cent of GDP, depending on the state of infrastructure in different countries. The problem for the emerging countries is that whereas freight cost as a percentage of import value in developed countries averages 2.9 per cent, in developing countries it is around 6 per cent. Clearly, reductions in logistics costs represent huge savings. As the ii Intermodal Logistics: Unlocking Value management guru Peter Drucker has said, “The last frontier of management to conquer is logistics and supply chain management.” This volume focuses our attention on intermodal logistics. It covers, inter alia, the spectrum of change in worldwide transport sector across shipping, ports, roads and railways. It brings out the efficacy and benefits of modal integration, and the need to percolate its advantages to remote hinterlands and landlocked regions. It then suggests that a network of dry ports and freight nodes as well as concomitant facilitation measures and institutional frameworks would help in this regard. The monograph is the outcome of painstaking research of Raghu Dayal, Director (Logistics) in the Institute. In this task, he bring to bear his long years of rich experience in ministries of railways and commerce in India before moving over to the Container Corporation of India as its founder managing director. He has an abiding interest in the subject and dwells on it in various forums. This publication is indeed a continuum of his efforts of years. I am confident that the publication will contribute hugely to the understanding of a subject that has not received enough attention and will thereby encourage governments in the region to take such necessary steps as are needed to improve the logistics in their own countries. In fact, this publication is in response to a need keenly expressed by a conclave of the BIMSTEC-Mekong-Ganga Cooperation countries. This, I believe, will help their economies achieve meaningful savings in costs which, in turn, will enable them to compete more effectively in the global markets. K. L. Thapar Abbreviations ACP - Accredited Clients’ Programme ADB - Asian Development Bank AGV - Automated Guided Vehicle AH - Asian Highways AITD - Asian Institute of Transport Development ALTID - Asian Land Transport Infrastructure Development (Project) AMBDC - ASEAN Mekong Basin Development Cooperation APEC - Asia-Pacific Economic Cooperation ARX - ASEAN Rail Express ASA - American Standards Association ASEAN - Association of Southeast Asian Nations BG - Broad Gauge BIMSTEC - Bangladesh-Myanmar-Sri Lanka-Thailand Economic Cooperation BR - Bangladesh Railways CAGR - Compound Annual Growth Rate CAR - Central Asian Republics CES - Container Freight Stations CHA - Customs House Agents CIS - Commonwealth of Independent States CONCOR - Container Corporation of India Ltd. CTD - Combined Transport Document DGFT - Directorate General of Foreign Trade DPW - Dubai Ports World ECO - Economic Cooperation Organisation ECT - Europe Container Terminal EDI - Electronic Data Interchange EDIFACT - Electronic Data Interchange For Administration, Commerce & Transport ERTW - Equatorial Round the World ESCAP - Economic and Social Commission for Asia and the Pacific FDI - Foreign Direct Investment FEDAI - Foreign Exchange Dealers Association of India FMC - Federal Maritime Commission, USA Intermodal Logistics: Unlocking Value iv OBL - Ocean Bill of Lading GDP - Gross Domestic Product GMS - Greater Mekong Subregion GTPL - Global Transport Partner Label HRD - Human Resource Development ICC - International Chamber of Commerce ICC - Inter Commerce Commission, USA ICD - Inland Container Depot ICEGATE - Indian Customs and Exercise Gateway ICF - Intercontainer-Interfrigo ICRIER - Indian Council for Research on International Economic Relations ICP - Integrated Check Post ICTT - International Container Transhipment Terminal (Vallarpadam) IGM - Import General Manifest IMC - Inter Ministerial Committee IPA - Indian Ports Association IR - Indian Railways IRU - International Union of Railways ISL - Institute of Shipping Economics and Logistics (Bremen) ISO - Indian Standards Organisation IT - Information Technology JNP - Jawaharlal Nehru Port KITA - Korea International Trade Association KMI - Korea Maritime Institute KTMB - Keretapi Tanah Melayu Berhad Lao PDR - Lao People’s Democratic Republic LC - Letter of Credit LCL - Less than Container Load MG - Metre Gauge MGC - Mekong-Ganga Cooperation MLB - Main landbridge MPPM - Maritime Policy Planning Model MSE - Mediterranean Shipping Company MT - Multimodal Transport MTGA - Multimodal Transport of Goods Act MTO - Multimodal Transport Operator v Abbreviations NMDP - National Maritime Development Programme NSICT - Nhava Sheva International Container Terminal NVO-MTO - Non-Vessel Operating Multimodal Transport Operator OECD - Organisation for Economic Cooperation and Development PPP - Public Private Partnership PSU - Public Sector Undertaking RFID - Radio Frequency Identification Device RITES - Rail India Technical and Economic Services Ltd. RMG - Rail-Mounted Gantry RMS - Risk Management System RORO - Roll-on Roll-off SAARC - South-Asian Association for Regional Cooperation SKRL - Singapore Kunming Rail Line SPA - Singapore Port Authority SRT - State Railway of Thailand SSCP - Sethusamudram Ship Canal Project TAMP - Tariff Authority for Major Ports TAR - Trans-Asian Railway TCR - Trans-Continental Railway TEU - Twenty-foot Equivalent Unit TIR - Transports Internationalaux Routiers (UN Road Transport Protocol) TKR - Trans-Korean Railway TOFC - Trailor on Flat Car TSR - Trans-Siberian Railway TT Club - Through Transport Club ULD - Unit Load Device UNCITRAL - United Nations Commission on International Trade Law UNCTAD - United Nations Conference on Trade & Development UNECAFE - United Nations Economic and Social Commission for Asia and the Far East UNESCAP - United Nations Economic and Social Commission for Asia and the Pacific USEC - United States East Coast USWC - United States West Coast VO-MTO - Vessel Operating Multimodal Transport Operator YOY - Year-on-Year Contextual Information Economy World Economy GDP (estimated: 2005) US$ 43.92 trillion GDP (PPP) (estimated: 2005) US$ 59.38 trillion GDP per capita US$ 5,755 GDP per capita (PPP) US$ 9,300 Annual growth of GDP per capita (PPP) 1950-2003: 2.1%, trailing ten years: 4.0% Source: Compiled by AITD World Economic
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