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Maritime and Road Transport in the Americas the TIR System As an Example of a Best Practice

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Maritime and Road Transport in the Americas the TIR System As an Example of a Best Practice Economic and competitiveness gains from the adoption of best practices in intermodal maritime and road transport in the Americas The TIR system as an example of a best practice Kareen El Beyrouty Andrew Tessler A report prepared by for Contents Executive Summary.................................................................................. 2 1 Introduction ..................................................................................... 5 2 Maritime and road transport systems in international transport ............................................................................. 7 2.1 Growth in shipping and road transport ....................................................... 7 2.1.1 Maritime Transport ............................................................................. 7 2.1.2 Roads ............................................................................................... 10 2.2 Key maritime developments ..................................................................... 15 2.3 Key road transport developments ............................................................ 18 3 Maritime and road transport systems and intermodal transport ....................................................................... 24 3.1 Intermodal transport ................................................................................. 24 3.1.1 Intermodal linkages .......................................................................... 24 3.2 Potential for improvements in trade facilitation ........................................................................................................... 26 3.3 Potential for improvement in customs procedures – the example of TIR ...................................................................... 32 3.3.1 The TIR system ................................................................................ 32 3.3.2 Quantification of potential for trade facilitation in LAC – TIR example ........................................................ 34 4 Adoption of TIR system ................................................................ 38 4.1 Potential challenges to TIR implementation for LAC countries ..................................................................... 38 5 References ..................................................................................... 43 0 Maritime and Road Transport in the Americas October 2014 Disclaimer and copyright Unless otherwise indicated, the materials published herein (the “Published Materials"), including opinions expressed therein, are the responsibility of the individual authors/compilers and not those of the Organization of American States (“OAS”), the General Secretariat of the OAS (“GS/OAS”), and the OAS Member States. As the holder of copyright in the Published Materials, the GS/OAS hereby grants to users (“Licensees”) a non-exclusive, limited license to download the Published Materials for non-commercial use and distribution. This license is subject to the condition that Licensees give full copyright credit to the GS/OAS and include the following: “Reproduced with permission of the General Secretariat of the Organization of American States.” 1 Maritime and Road Transport in the Americas October 2014 Executive Summary Both road and maritime transport modes have grown substantially in recent years, a likely product of globalization and the rapid development of emerging markets. Over 80 percent of goods marketed worldwide are transported by sea.1 More than 99 percent of trade by weight (except for bulks) is carried via ocean cargo, with a nine-fold surge in tonnages traded since 1960.2 Furthermore, developing countries are making up an ever larger share of the seaborne trade, responsible for 60 percent of world goods loaded and 58 percent unloaded.3 The world’s road network comprises over 40 million paved lane km. In the period 2000-2009, the global road network length increased by approximately 12 million lane-km with China and India accounting for more than 50 percent of paved lane-km additions during that time. Paved roadway length in Latin America also recorded substantial growth over that time. Within South America specifically, trucks account for some 35 percent of intra-regional trade by volume (with maritime transport some 61 percent) and 42 percent of trade by value (maritime 46 percent). Latin American and Caribbean (LAC) countries accounted for some 15.3 million trucks and vans in 2006 – roughly 8 percent of the global fleet total of 196.5 million in that year. Some key maritime developments in recent years include containerization, the increasing capacity of ports and shipping vessels, and improvements in port logistics. Containerized trade, one of the most profitable activities for ports, has been the fastest growing segment of the shipping market, making up more than 16 percent of the global shipping trade by volume in 2012 and more than 50 percent of the trade by value.4 Container traffic in Latin America has more than doubled in the past ten years, from 17 million twenty-foot equivalent units (TEUs) in 2000 to 40 million TEUs in 2010, with an average annual growth rate of 10 percent.5 A second key maritime development, related to the increase in containerization, is the expansion in capacity of ports and shipping vessels to take advantage of the economies of scale offered by larger vessels and to keep up with the increasingly larger volumes of goods traded. The average size of container ships has grown 80 percent since 2005.6 A third key maritime issue is port logistics, which includes tracking goods and relieving port congestion. The 1Sida, K. (2009) Trade Facilitation and Maritime Transport: The Development Agenda. National Board of Trade, and Swedish Maritime Administration 2 Hummels, D. (2006) Global Trends in Trade and Transportation: Benefiting from Globalization: Transport sector contribution and policy challenges. Berlin: 17th International Symposium on Transport Economics and Policy. 3 United Nations Conference on Trade and Development (UNCTAD) (2013) ‘Review of Maritime Transport’ 4 ibid 5 Sarriera, M. (2013) Benchmarking Container Port Technical Efficiency in Latin America and the Caribbean. IDB Working Paper Series No. IDB-WP-474. 6 UNCTAD (2013) ‘Review of Maritime Transport’ 2 Maritime and Road Transport in the Americas October 2014 savings associated with monitoring the movement of goods are estimated at 4 percent.7 A study on East Asian ports found that the net benefits from a reduction in congestion are greater than the net benefits of expanding ports in the region.8 Furthermore, the study found that cutting port congestion by 10 percent could lower transport costs in East Asia by up to 3 percent, or the equivalent of a 0.3 to 0.5 percent tariff cut.9 Traditionally road freight has suffered from limited abilities to achieve the economies of scale enjoyed by rail transport, as governments have imposed size constraints and also due to technical limits. The productivity of road transport has improved, however, with the introduction of larger articulated trucks. The use of such longer vehicles allows for exploitation of economies of scale. Higher capacity vehicles can improve fuel efficiency and reduce pollution, once limits on wheelbases, axle loads, spacing and weight are relaxed. For example, a government trial in New Zealand during 2008-09 found that 50 tonne vehicles could allow for 10-20 percent increases in productivity, a fall in trip numbers by 16 percent and a fall in fuel use by 20 percent.10 In order to move cargo large distances to its destination, much of the world’s freight uses multiple forms of transport. This intermodal freight is often seen in the form of shipping containers, which can be transferred between different forms of transport, including road, rail and seaborne trade. Coordination between these different modes of transport is an important part of improving global haulage networks. However, inland bottlenecks in the rail and road transport systems impede port cargo flows. Trade costs encompass distance-related transport costs, port efficiency, and regulatory burdens, and other factors. In addition to financial costs, trade costs also encompass the cost of time it takes to move goods. Both factors affect the competitiveness of trading and high trade costs can impose barriers to trade. Not only do they lower volumes traded, but they can prevent other products from being traded. For example, Dennis and Shepherd (2007) show that a 10 percent reduction in internal trade costs increases the number of products exported by 2.5 percent.11 For the majority of countries, however, logistics costs are a bigger component of total trade costs than tariff barriers. Poor logistics means that firms have to hold more inventory. Holding more inventory ties up capital, leading to 7 Febré, G. and Pérez Salas, G. (2012) ‘Intelligent transport systems in Latin American sea port logistics’, Facilitation of Transport and Trade in Latin America and the Caribbean.( Issue No. 305) UN ECLAC. 8 World Bank Development Research Group (2009) Weathering the Storm: Investing in Port Infrastructure to Lower Trade Costs in East Asia. Policy Research Working Paper 4911. 9 ibid 10 Australian Productivity Commission (2006) Road and Rail Freight Infrastructure Pricing: Road transport Forum New Zealand. (Report no. 41) Available at: http://www.rtfnz.co.nz/cms_show_download.php?id=267 11 Dennis, A. and Shepherd, B. (2007) Barriers to Entry, Trade Costs and Export Diversification in Developing Countries. World Bank Working
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