Integrated International Transport and Logistics System for North-East Asia

SEMINAR ON OVERCOMING BORDER CROSSING OBSTACLES 5-6 March 2009, Paris

INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

The Korea Transport Institute Contribution provided by Mr. Sungwon LEE

The Korea Transport Institute

Price: 30,000 KRW

ISBN 89-5503-187-4 93320

Foreword

A cohesive, integrated transport network is an essential element for a region to maintain economic competitiveness and sustained economic growth. Although North-East Asia is the one of the most economically vibrant regions in the world, the intra-regional transport and logistics network is not well integrated. Difficulties exist—even in main trunk routes—in providing seamless intermodal transport for connecting major industrial areas in the region. As the region is more geared for international as well as intra-regional exchange, a well functioning integrated transport network needs to be constructed to secure efficient flows of freight. However, such the development of such a network faces physical, institutional, operational, and financial barriers. In order to assist the countries in the subregion in addressing this issue, the United Nations Economic Commission for Asia and the Pacific (UNESCAP), jointly with the UNDP Tumen Secretariat and in collaboration with the Korea Transport Institute (KOTI), initiated a two-year project entitled ―Integrated International Transport and Logistics System for North-East Asia‖. The main purpose of this project is to assist the member countries in North-East Asia in promoting an integrated approach to international transport and logistics planning and policy formulation. This project will contribute to the development of a reliable and efficient international transport and logistics system in North-East Asia, which will improve efficiency and reduce costs and thereby enhance competitiveness of products of the North-East Asian countries in the world market.

Specifically, the research in this report provides an overview of the current transport and logistics conditions in North-East Asian countries; formulates criteria for establishing an integrated network, uses the criteria to propose a network, and selects priority corridors of international significance within the network for further evaluation; evaluates the current conditions, performance, and needs in each specific corridor; evaluates the current transport framework in North-East Asian countries; offers strategies for integrating the North-East Asian transport and logistics system; and identifies special transport and logistics issues facing land- locked countries.

This report is the final outcome of the first joint activity under the Memorandum of Understanding between UNESCAP and KOTI, which was signed in 2002. Under the guidance and coordination of the UNESCAP project team, the KOTI research team of Dr. Sungwon Lee, Dr. Hong-Seok Kim, Mr. Hyeok-Ku Kwon, Dr. Weon-Yong Sung and Mr. Erik Cempel has been deeply involved in survey and research with the assistance of national experts from participating countries (i.e., China, the Democratic People‘s Republic of Korea, Japan, Mongolia, the Republic of Korea and the Russian Federation), who provided data and information in the form of country reports. The views expressed in this report, therefore, should be considered those of the project team, not necessarily reflecting official views of UNESCAP or KOTI.

Meanwhile, I do hope that the information and insights contained in this report will be useful to policy makers, managers, transport professionals, researchers, and public financing professionals who are working in the transport and logistics sector in North-East Asia.

Jae-Hong Kang, Ph.D. President, The Korea Transport Institute

CONTENTS

ONE: INTRODUCTION ...... 1

TWO: OVERVIEW OF TRANSPORT AND LOGISTICS IN NORTH-EAST ASIA .3

2.1 ECONOMIC TRENDS IN NORTH-EAST ASIA ...... 3 2.2 TRANSPORT AND LOGISTICS TRENDS IN NORTH-EAST ASIA ...... 7 2.3 TRANSPORT AND LOGISTICS INFRASTRUCTURE IN NORTH-EAST ASIA ...... 10 2.3.1 Existing conditions and differences between North-East Asian countries ...... 10 2.3.2 Asian highway and the priority road network ...... 12 2.3.3 Trans-Asian Railway development and North-East Asia ...... 13 2.3.4 Major ports in North-East Asia ...... 14 2.3.5 Information, communications, and other logistics facilities ...... 16

THREE: FORMULATION OF AN INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA . 19

3.1 MAIN PRINCIPLES OF FORMULATION OF THE INTEGRATED TRANSPORT AND LOGISTICS NETWORK ...... 19 3.1.1 Main principles of network formulation ...... 19 3.1.2 Main components of the system ...... 20 3.2 PROPOSED INTEGRATED INTERNATIONAL TRANSPORT NETWORK IN NORTH-EAST ASIA ...... 21 3.3 SELECTED INTERNATIONAL TRANSPORT CORRIDORS FOR ANALYSIS ...... 22

FOUR: EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS ...... 24

4.1 CORRIDOR 1: TANGGU (TIANJIN PORT)-TIANJIN–BEIJING–ERANHOT–ZAMIN UUD– ULAANBAATAR-ULAN UDE ...... 24 4.1.1 Significance ...... 24 4.1.2 Current Situation and Prospects ...... 25 4.1.3 Transport Cost and Time Analysis ...... 29 4.2 CORRIDOR 2: BUSAN-SEOUL-PYEONGYANG-SHENYANG-BEIJING-ZENGZHOU ...... 34 4.2.1 Significance ...... 34 4.2.2 Current Situation and Prospects ...... 36 4.2.3 Transport Cost and Time ...... 41 4.3 CORRIDOR 3: BUSAN–POHANG–KOSONG–WONSAN–KIMCHAEK–SONBONG–RAZDOLNOYE– USSURIYSK–KHABAROVSK–BELOGORSK–CHITA–ULAN UDE ...... 46 4.3.1 Significance ...... 46 4.3.2 Current Situation and Prospects ...... 46

4.3.3 Transport Cost and Time ...... 48 4.4 CORRIDOR 4: RAJIN/SONBONG–JILIN–CHANGCHUN–ULANHOT–SUMBER–ULAANBAATAR ...... 53 4.4.1 Significance ...... 53 4.4.2 Current Situation and Prospects ...... 54 4.4.3 Transport Cost and Time ...... 58 4.5 CORRIDOR 5: NAKHODKA/VLADIVOSTOK-USSURISK-POGRANICHNY-HARBIN-MANZHOULI- CHITA-ULAN UDE ...... 63 4.5.1 Significance ...... 63 4.5.2 Current Situation and Prospects ...... 64 4.5.3 Transport Cost and Time ...... 68 4.6 CORRIDOR 6: DALIAN–SHENYANG-CHANGCHUN-HARBIN-HEIHE-BLAGOVESHCHENSK- BELOGORSK ...... 78 4.6.1 Significance ...... 78 4.6.2 Current Situation and Prospects ...... 80 4.6.3 Transport Cost and Time ...... 82

FIVE: INTERNATIONAL FRAMEWORK FOR TRANSPORT IN NORTH-EAST ASIA ...... 87

5.1 RELATED INTERNATIONAL CONVENTIONS ...... 87 5.2 BILATERAL AND MULTILATERAL FRAMEWORK TRANSIT AGREEMENTS IN NORTH-EAST ASIA ...... 92 5.2.1 Summary of Agreements ...... 92 5.2.2 Republic of Korea ...... 92 5.2.3 China ...... 93 5.2.4 Japan ...... 94 5.2.5 Russian Federation ...... 97 5.2.6 Mongolia ...... 101 5.3 NAFTA AND THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN) CASES: IMPLICATIONS FOR NORTH-EAST ASIA ...... 103 5.3.1 NAFTA and transport market change ...... 103 5.3.2 Transport integration in ASEAN and North-East Asia ...... 103 5.3.3 Major transport trend in NortheastNorth-East Asia ...... 104

SIX: PROPOSED STRATEGY AND ACTIONS FOR THE DEVELOPMENT OF THE INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA ...... 105

6.1 ISSUES IDENTIFIED ...... 105 6.1.1 Infrastructure planning and development ...... 105 6.1.2 Logistics and facilitation ...... 105 6.2 STRATEGY AND PROPOSED ACTIONS ...... 106 6.2.1 Strategy ...... 106 6.2.2 Proposed actions ...... 106 6.3 IMPLEMENTATION MECHANISM ...... 107 6.3.1 National level ...... 107 6.3.2 Subregional level ...... 108 6.3.3 Regional level ...... 108

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SEVEN: SPECIAL ISSUES FOR LAND-LOCKED COUNTRIES ...... 110

7.1 ISSUES IDENTIFIED ...... 110 7.1.1 Introduction ...... 110 7.1.2 Economic Dependence on Neighboring Countries ...... 110 7.1.3 Border Crossing Issues ...... 110 7.1.4 Infrastructure Constraints ...... 111 7.1.5 Existing Transportation Conditions within Mongolia ...... 111 7.2 BENEFITS OF AN INTEGRATED TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA FOR LAND-LOCKED COUNTRIES...... 111

REFERENCES ...... 113

WEBSITES ...... 114

APPENDIX: SUMMARY OF COUNTRY REPORTS ...... 115

I. PORT INFORMATION ...... 116

II. CONTAINER TERMINALS, ICD ...... 120

III. INFRASTRUCTURE ALONG THE SELECTED CORRIDORS ...... 122

IV. MISSING LINKS IN THE KOREAN PENINSULA ...... 141

LIST OF TABLES

Table 2-1 Major indicators of North-East Asia ...... 4 Table 2-2 Comparison of North-East Asia with selected major regions ...... 4 Table 2-3 Average annual economic growth rates in North-East Asia ...... 4 Table 2-4 Trade mix of North-East Asian economies ...... 6 Table 2-5 Rail passenger transport trends ...... 7 Table 2-6 Rail passenger transport trends, normalized by population ...... 7 Table 2-7 Rail freight transport trends ...... 8 Table 2-8 Road passenger transport trends ...... 8 Table 2-9 Road freight transport trends ...... 8 Table 2-10 Container throughput trends in major North-East Asian ports...... 9 Table 2-11 Container throughput trends in North-East Asia ...... 9 Table 2-12 Air transport trends in North-East Asia ...... 9 Table 2-13 Air freight throughput trends in major North-East Asian airports ...... 10 Table 2-14 Selected Asian international airports and their expansion plans ...... 10 Table 2-15 Comparison of transport infrastructure in North-East Asian countries ...... 11 Table 2-16 Transport infrastructure per capita in North-East Asian countries ...... 12 Table 2-17 Transport infrastructure per land area in North-East Asian countries ...... 12 Table 2-18 Information systems in the ROK ...... 17 Table 3-1 Dimensions of ISO and non-ISO containers ...... 21 Table 3-2 Selected international transport corridors for analysis ...... 23 Table 3-3 Suggested unimodal/intermodal routes along the six corridors ...... 23 Table 4-1 Major trade partners of Mongolia ...... 25 Table 4-2 Regional distribution of container traffic at Tianjin Port ...... 26 Table 4-3 Overall capacity of Tianjin Port ...... 26 Table 4-4 Rail distance between Tianjin and Ulan Ude ...... 27 Table 4-5 Freight traffic volume in Mongolia by modes ...... 27 Table 4-6 Passenger traffic volume in Mongolia by modes ...... 28 Table 4-7 Road distance between Tanggu and Ulan Ude ...... 28 Table 4-8 Transportation cost and time from Tianjin Port to Ulan Ude ...... 29 Table 4-9 Rail route (U-1.1) from Tianjin Port to Ulan Ude ...... 30 Table 4-10 Intermodal route (I-1.2) from Tianjin Port to Ulan Ude ...... 30 Table 4-11 Transportation cost and time from Kobe Port to Ulan Ude ...... 31 Table 4-12 Major indicators of three metropolitan areas in the BESETO corridor ...... 35 Table 4-13 Estimation of transport cost between Seoul and Shenyang/Beijing by mode ...... 36 Table 4-14 Structure of container freight handled at Busan Port ...... 36 Table 4-15 Regional distribution of container freight handled at Busan Port ...... 37 Table 4-16 Structure of container freight handled at Gwangyang Port ...... 37 Table 4-17 Regional distribution of container freight handled at Gwangyang Port...... 37 Table 4-18 Rail distance between Busan to Beijing ...... 39 Table 4-19 Road distance between Busan to Beijing ...... 41 Table 4-20 Cost and time for transport from Busan Port to Beijing ...... 42 Table 4-21 Rail route (U-2.1) from Busan Port to Beijing ...... 42 Table 4-22 Intermodal route (I-2.2) from Busan Port to Beijing ...... 43 Table 4-23 Intermodal route (I-2.3) from Busan Port to Beijing ...... 43 Table 4-24 Intermodal route (I-2.4) from Busan Port to Beijing ...... 43 Table 4-25 Cost and time for transport from Tokyo to Beijing ...... 44 Table 4-26 Rail distance between Busan to Ulan Ude ...... 47 Table 4-27 Road distance between Busan to Ulan Ude ...... 48 Table 4-28 Cost and time for transport from Busan Port to Ulan Ude ...... 49 Table 4-29 Rail route (I-3.1) from Busan Port to Ulan Ude ...... 50 Table 4-30 Intermodal route (I-3.2) from Busan Port to Ulan Ude ...... 50 Table 4-31 Cost and time for transport from Yokohama Port to Ulan Ude ...... 51

Table 4-32 Comparison of Routes in Corridor 4 and 2: Hunchun-Busan ...... 53 Table 4-33 Comparison of Routes in Corridor 4 and 2: Changchun-Niigata ...... 54 Table 4-34 Statistics of three ports on Corridor 4 ...... 55 Table 4-35 Rail distance between Rajin/Sonbong to Ulaanbaatar ...... 56 Table 4-36 Road distance between Rajin/Sonbong to Ulaanbaatar ...... 57 Table 4-37 Cost and time for transport from Rajin/Sonbong Port to Ulaanbaatar ...... 58 Table 4-38 Road route (U-4.1) from Rajin/Sonbong Port to Ulaanbaatar ...... 59 Table 4-39 Intermodal route (I-4.2) from Rajin/Sonbong Port to Ulaanbaatar ...... 59 Table 4-40 Intermodal route (I-4.3) from Rajin/Sonbong Port to Ulaanbaatar ...... 60 Table 4-41 Intermodal route (I-4.4) from Rajin/Sonbong Port to Ulaanbaatar ...... 60 Table 4-42 Cost and time for transport from Tokyo to Ulaanbaatar ...... 61 Table 4-43 Comparison of Routes in Corridor 5 and 2: Harbin/Suifenhe-Niigata...... 65 Table 4-44 Facts of two ports on Corridor 5 ...... 65 Table 4-45 Capacity and utilization of the Suifenhe-Grodekovo section ...... 66 Table 4-46 Rail distance between Nakhodka to Ulan Ude ...... 67 Table 4-47 Road distance between Nakhodka to Ulan Ude ...... 68 Table 4-48 Cost and time for transport from Nakhodka/Vladivostok Port to Ulan Ude ...... 69 Table 4-49 Rail route (U-5.1) from Nakhodka/Vladivostok Port to Ulan Ude ...... 70 Table 4-50 Road route (U-5.2) from Nakhodka/Vladivostok Port to Ulan Ude ...... 70 Table 4-51 Intermodal route (I-5.3) from Nakhodka/Vladivostok Port to Ulan Ude ...... 71 Table 4-52 Intermodal route (I-5.4) from Nakhodka/Vladivostok Port to Ulan Ude ...... 71 Table 4-53 Intermodal route (I-5.5) from Nakhodka/Vladivostok Port to Ulan Ude ...... 72 Table 4-54 Intermodal route (I-5.6) from Nakhodka/Vladivostok Port to Ulan Ude ...... 72 Table 4-55 Intermodal route (I-5.7) from Nakhodka/Vladivostok Port to Ulan Ude ...... 73 Table 4-56 Intermodal route (I-5.8) from Nakhodka/Vladivostok Port to Ulan Ude ...... 73 Table 4-57 Cost and time for transport from Tokyo to Ulan Ude ...... 74 Table 4-58 Major indicators of Chinese North-East three provinces, 2002 ...... 78 Table 4-59 Regional distribution of overseas tourists and Foreign Direct Investment (FDI) attracted into Dalian ...... 79 Table 4-60 Regional distribution of container freight handled at Dalian Port ...... 80 Table 4-61 Rail distance between Dalian to Belogorsk ...... 81 Table 4-62 Road distance between Dalian to Belogorsk ...... 82 Table 4-63 Cost and time for transport from Dalian to Belogorsk...... 83 Table 4-64 Rail route (U-6.1) from Dalian Port to Belogorsk ...... 83 Table 4-65 Road route (U-6.2) from Dalian Port to Belogorsk ...... 84 Table 4-66 Intermodal route (I-6.3) from Dalian Port to Belogorsk ...... 84 Table 4-67 Intermodal route (I-6.4) from Dalian Port to Belogorsk ...... 84 Table 4-68 Cost and time for transport from Nagoya Port to Belogorsk ...... 85 Table 5-1 Status of UNESCAP member‘s accession or being party to international conventions listed in Commission Resolution 48/11 (March 2005) ...... 88

LIST OF FIGURES

Figure 2-1 Asian Highway Network ...... 13 Figure 2-2 Trans-Asian Railway network ...... 14 Figure 3-1 Proposed Integrated Transport Network in North-East Asia ...... 22 Figure 4-1 Present conditions of railway, Corridor 1 ...... 26 Figure 4-2 Present conditions of road, Corridor 1 ...... 28 Figure 4-3 Tianjin ~ Ulan Ude transit time (road) ...... 31 Figure 4-4 Tianjin ~ Ulan Ude transit time (rail) ...... 32 Figure 4-5 Cost breakdowns (road & rail combined) ...... 32 Figure 4-6 Cost–Distance (Tianjin ~ Ulan Ude) ...... 33 Figure 4-7 BESETO corridors ...... 34 Figure 4-8 Present conditions of railway, Corridor 2 ...... 38 Figure 4-9 Present conditions of road, Corridor 2 ...... 40 Figure 4-10 Busan ~ Beijing transit time (road) ...... 44 Figure 4-11 Busan ~ Beijing transit time (rail) ...... 45 Figure 4-12 Cost-Distance (Busan ~ Beijing) ...... 45 Figure 4-13 Present conditions of rail, Corridor 3...... 46 Figure 4-14 Present conditions of road, Corridor 3 ...... 47 Figure 4-15 Busan ~ Ulan Ude transit time (road) ...... 51 Figure 4-16 Busan ~ Ulan Ude transit time (rail) ...... 52 Figure 4-17 Cost-Distance (Busan ~ Ulan Ude) ...... 52 Figure 4-18 Present conditions of railway, Corridor 4 (Rajin Alternative) ...... 55 Figure 4-19 Present conditions of road, Corridor 4 (Rajin Alternative) ...... 57 Figure 4-20 Rajin ~ Ulaanbaatar transit time (road) ...... 61 Figure 4-21 Rajin ~ Ulaanbaatar transit time (rail) ...... 62 Figure 4-22 Cost–Distance (Rajin ~ Ulaanbaatar) ...... 62 Figure 4-23 Potential East Trade Corridor utilizing Corridor 4 and Corridor 5 ...... 64 Figure 4-24 Present conditions of railway, Corridor 5 ...... 66 Figure 4-25 Present conditions of road, Corridor 5 ...... 67 Figure 4-26 Nakhodka ~ Ulan Ude transit time (road)...... 74 Figure 4-27 Vladivostok ~ Ulan Ude transit time (road) ...... 75 Figure 4-28 Nakhodka ~ Ulan Ude transit time (rail) ...... 75 Figure 4-29 Vladivostok ~ Ulan Ude transit time (rail) ...... 76 Figure 4-30 Cost-Distance (Nakhodka ~ Ulan Ude) ...... 76 Figure 4-31 Cost-Distance (Vladivostok ~ Ulan Ude) ...... 77 Figure 4-32 Dalian-Harbin axis ...... 79 Figure 4-33 Present conditions of railway, Corridor 6 ...... 81 Figure 4-34 Present conditions of road, Corridor 6 ...... 82 Figure 4-35 Dalian ~ Belogorsk transit time (road) ...... 85 Figure 4-36 Dalian ~ Belogorsk transit time (rail) ...... 86 Figure 4-37 Cost–Distance (Dalian ~ Belogorsk) ...... 86

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INTRODUCTION

ONE: INTRODUCTION

Recent political, economic and social developments in North-East Asia have highlighted the benefit of intensifying regional cooperation. In particular, the emergence of China as an active participant in the world market changed substantially the size and structure of interregional transactions of commodity and capital in North-East Asia. Furthermore, the Russian Federation is expected to become a more important participant in North-East Asia‘s economy. In the current international environment characterized by globalization and regionalization, transport and logistics system integration is a prerequisite for countries to maintain competitiveness and has become a key factor for sustained employment creation and economic growth. The case of the European Union (EU) provides an excellent example of transport integration that supports economic integration. The EU has been seeking to provide an integrated transport and logistics network throughout Europe by eliminating missing links, alleviating bottlenecks and securing interoperability of the network. Although some of the countries in North-East Asia are the most economically active in the world, the transport and logistics network is neither sufficient nor well integrated at the international level. In order to assist countries in the subregion in addressing these issues, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the UNDP Tumen Secretariat, in collaboration with the participating countries of China, the Democratic People‘s Republic of Korea (DPRK), Japan, Mongolia, the Republic of Korea (ROK) and the Russian Federation and with the assistance of the Korea Transport Institute (KOTI), have initiated a two- year study entitled ―Integrated International Transport and Logistics System for North-East Asia.‖ The main purpose of this project is to assist the member countries in North-East Asia in promoting an integrated approach to international transport and logistics planning and policy formulation. The project is focused on the following four areas:

 Formulation of an integrated international transport network and an integrated logistics system in North-East Asia;

 Review of existing transport and logistics infrastructure and development plans along the major transport routes in the North-East Asia;

 Evaluation of performance of the network and identification of infrastructure and institutional bottlenecks; and

 The development of guidelines and action plans in collaboration with the participating countries for the operationalization and development of the network. The project will contribute to the development of a reliable and efficient international transport and logistics system in North-East Asia to improve efficiency, reduce costs and improve levels of service and thereby enhance competitiveness of North-East Asian products in the world market. The present report summarizes major findings of the project, consisting of four chapters. Following this introductory chapter, Chapter 2 reviews the existing international transport and logistics facilities in North-East Asia. In Chapter 3, an integrated international intermodal

1 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

transport and logistics system is proposed. Chapter 4 presents an evaluation of system performance and identifies bottlenecks of the selected international transport corridors. Policy guidelines and an action plan for operationalization of the proposed integrated system will be discussed at the expert group meeting and will be documented in additional chapters.

2 OVERVIEW OF TRANSPORT AND LOGISTICS IN NORTH-EAST ASIA

TWO: OVERVIEW OF TRANSPORT AND LOGISTICS IN NORTH- EAST ASIA

2.1 ECONOMIC TRENDS IN NORTH-EAST ASIA North-East Asia is an area with potential for future growth and economic cooperation among neighboring economies. Since the end of the cold war, economic cooperation between North-East Asian economies has increased very rapidly. The emergence of China and the Russian Federation in the free world market changed substantially the size and structure of intra-regional transactions of commodities and capital in North-East Asia. With Japan on one side as one of the most advanced industrial countries and China on the other side as the largest developing economy, North-East Asia has become an economic region composed of diverse and dynamic economies. Further, there are many other important factors that can increase economic ties among these countries. Continuing reduction of government controls and of regulations on domestic production and foreign trade has forced globalization of markets and encouraged the growth of trade and capital flows in North-East Asia. With increasing openness toward the imports of goods and capital from each other, economic interdependence of North-East Asian countries will increase in the future. The complementary production structures and factor endowments of North-East Asian countries, in addition to geographical and cultural proximity, will promote closer economic ties in the region. Table 2-1 illustrates the current economic positions of North-East Asian countries. North-East Asia covers 5.7 percent of the total world area as of 2004, and has 25.8 percent of the total world population as of July 2004. This high population forms an abundant labor pool and a huge intra- regional market. Meanwhile, the combined output of North-East Asia accounts for 18.4 percent of the world GDP and its share of the world‘s freight transport is over 28 percent. The trade volume in this region comprises 17.3 percent (19 percent for export and 15.7 percent for import) of the world‘s trade volume, which is 43 percent of the EU‘s and 75 percent of the North American Free Trade Agreement (NAFTA) region‘s trade volume (see Table 2-2). Traditionally, international trade has provided North-East Asian countries with driving forces for their economic growth. Japan has the largest economy in the region with US$4.3 trillion GDP in 2003, and China is the fastest growing country with an economic growth rate of 10.2 percent on average per annum during the 1990‘s (Table 2-3). North-East Asia‘s share of the world economy will further increase through the economic growth of China and other North-East Asian countries despite the relative contradiction of the Japanese economy, which has shown minimal growth over the last thirteen years. The Russian Federation experienced an average annual growth rate of –5.3 percent in the 1990s due to the massive restructuring of the political and economic systems after the collapse of the former Soviet Union. Mongolia and the DPRK—both heavily dependent on the former Soviet Union for trade, investment, support, and aid—also experienced negative growth in the 1990s. However, the Russian Federation, Mongolia, and the DPRK were able to recover and show positive economic growth again from 2000 to 2003. The existence of all essential factors

3 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

for economic growth – i.e. abundant labor forces and capital, a huge intra-regional market, and a high level of technologies – has resulted in directing international attention to North East Asia.

Table 2-1 Major indicators of North-East Asia Population GDP Export Import Country/Region Area (km2) (thousands) (billion US$) (million US$) (million US$) As of 2004 July, 2004 2003 2004 2003 World 510,072,000 6,379,157 36,400 6421* 6531* North-East Asia* 28,834,251 1,644,010 6,705 1220.47 1,023 (% Share to the World) 5.7 25.8 18.4 19 .0 15.7 China 9,596,960 1,298,848 1409 436 397 Japan 377,835 127,333 4317 447.1 346.6 ROK 99,600.00 48,598 527 201.3 201.3 Democratic People‘s 120,540 22,698 18** 1.044* 2.042* Republic of Korea Mongolia 1,564,116 2,751 1 0.524* 0.691* Russian Federation 17,075,200 143,782 433.49 134.4 74.8 Source: Central Intelligence Agency, USA. 2004. The World Fact Book (As of December 7th, 2004) National Statistics Organization, Republic of Korea, www.nso.go.kr (as of December 7th, 2004) United Nations Statistics Division www.unstats/un.org World Bank www.worldbank.org # Based on F.O.B * 2002 Estimated **GNP is used

Table 2-2 Comparison of North-East Asia with selected major regions % Share of % Share of % Share of Intra-regional Trade Areas Population GDP Trade Dependency* (%) to the World to the World to the World NAFTA 6.7* 33.86 21 22.90# EU 7.1** 30.56*** 39 60.23 North-East Asia 26.0 18.4 17.3 19.40# * As of July 2004 **Based on the statistics of 2003 of the 25 EU countries ***International Monetary Fund, 2003 # As of 2002. Data from , 2003, International Monetary Fund All data on EU is based on EU 15.

Table 2-3 Average annual economic growth rates in North-East Asia (unit: %) Classification 1970∼ 1979 1980∼ 1989 1990∼ 1999 2000-2003 ROK 8.8 9.0 5.4 4.2 China 5.6 10.0 10.2 8.2 Japan 4.6 3.9 1.0 1.1 DPRK 11.9 7.9 -3.1 2.2 Mongolia 5.7 6.2 -0.2 4.1 Russian Federation 5.2* 2.9* -5.3 6.1 The world on average 3.9 3.0 2.3 2.1 *Rate from the former Soviet Union Source : United Naitons Statistics Division http://unstats.un.org

4 OVERVIEW OF TRANSPORT AND LOGISTICS IN NORTH-EAST ASIA

Interdependence of trade between the countries in North-East Asia has been increasing rapidly. The regionalization is expected to deepen with the increasing intra-regional movement of goods and capital (See Table 2-4). The main reason for this expectation is the high level of economic complementariness existing among countries in North-East Asia. While China, for example, has abundant labor forces and a huge market, Japan has a high level of capital and technology. From the perspective of production, if these specialized factors can be combined in an efficient way, these countries will achieve more successful economies. In addition, from the perspective of consumption, these three countries can form a complementary market. That is, China can purchase high-tech products from Japan and the latter can be a major consumer of labor-intensive Chinese products. In this sense, deepening regionalization can give North-East Asian countries mutual benefits. (Nam 2002) Total trade of North-East Asian countries with the world increased from US$238.6 billion in 1980 to 1,327.6 billion dollars in 2000 at an average annual growth rate of 8.1 percent. However, its intra-regional trade amount increased from US$46.6 billion to US$442.9 billion during the same period at an average annual growth rate of 12.1 percent. The intra-regional trade volume of the North-East Asian countries in 1980 was only 19.5 percent of their total global trade volume, but by 2000 it increased to 33.4 percent. Between 1980 and 2000, the ROK showed an increase in its share of intra-regional exports, increasing from 23.3 percent to 34.6 percent. Japan also showed an increase, with intra-regional export volume rising from 19.1 percent to 26.2 percent of its total global trade volume. The Chinese share had increased from 49.6 percent in 1980 to 65.1 percent in 1990 through its foreign open-door policy but decreased to 42.6 percent in 2000. To capture the opportunities of liberalization of trade in the traditional and emerging markets there has to be sustained cooperation among the economies in the region. To a greater degree than Europe and North America, North-East Asia is beset with problems and difficulties arising from political, economic, and historical origins. There have been a series of discussions and suggestions on regional development and infrastructure in North-East Asia. The close link between economic development and infrastructure building has been emphasized in some literature on regional development. Specifically, industrial development and its geographical distribution have direct ties with the availability of transport infrastructure. In North-East Asia, however, regional transport systems are not set up. Regional routes are being operated in most cases by mutual agreements between neighboring countries, which entail subdivided and thus inefficient small markets. Connections through an inland transport system are very limited except for some railway lines. Before China and the Russian Federation entered the free market, there was little opportunity for cooperation among North-East Asian countries on regional development and on transport networks. While policy makers are aware of the benefits of free market economy and the need for change in policy, these policy directions have to filter down to the provincial and ground level. Regulations at border crossings are still strict and complex. Policy makers still tend to favor domestic industries, and flow channels are limited to designated ports. With the emergence of a regional market, a transportation network for the region as a whole should be formulated and operationalized to enhance the cooperation in regional economic development. This will in turn have a substantial impact on market expansion and growth.

5 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 2-4 Trade mix of North-East Asian economies (unit: million US$) Import Russian ROK DPRK China Japan Mongolia North-East Asia World Export Federation 1980 3 3,039 2 3044 17,505 ROK 1990 1 1,533 13,638 519 15691 65,016 2000 152 18,455 20,466 788 55 39916 171,826 1980 1 276 165 334 776 1,093 DPRK 1990 0 285 281 676 1242 1,818 2000 273 37 257 3 570 1,413 1980 3 374 4,032 228 4 4,641 18,319 China 1990 2,268 362 9,210 2,048 28 13,916 64,500 2000 11,293 451 41,654 2,233 111 55,742 249,195 1980 5,393 376 5,109 2,796 4 13,678 130.435 Japan 1990 17,499 176 6,145 2,563 14 26,397 287,678 2000 30,703 207 30,356 570 29 61,865 478,156 1980 9 449 240 1,703 2401 31,936 Russian Federation 1990 333 1,478 2,012 3,064 6887 50,284 2000 972 43 5,233 2,766 182 9196 102,998 1980 0 Mongolia 1990 0 2000 2 193 9 37 241 410 1980 5,406 1199 5,628 8,939 3,360 8 24,540 199,288 North East Asia 1990 20,100 2017 9,975 26,193 5,806 42 64,133 469,296 2000 43,243 853 54,274 65,152 3,631 377 167,530 1,003,998 Source: http://www.kotis.net/main/tradedb.html etc.

6 OVERVIEW OF TRANSPORT AND LOGISTICS IN NORTH-EAST ASIA

2.2 TRANSPORT AND LOGISTICS TRENDS IN NORTH-EAST ASIA Unlike the EU where member countries are more or less homogeneous in terms of economic development level and transport related infrastructure development, North-East Asia consists of countries whose socio-economic characteristics differ vastly. Japan has the world‘s second largest economy with per capita GDP of over US$37,400 while China‘s per capita GDP is still less than US$1,000. As a result of these economic differences, as well as historical differences that have resulted in some modes being more prominent and accessible than others in some areas, transport demand also varies by country. Table 2-5 shows the intercity rail passenger transport trends in North-East Asian countries from 2000 through 2003. Demand in million person-kilometers traveled has remained fairly stagnant in recent years for all North-East Asian countries except China. China also has the highest rail demand among North-East Asian countries. However, China has the world‘s largest population and the world‘s third largest land area. Although China experienced 25 percent more person-kilometers traveled than Japan, for example, it has more than 10 times the population (Table 2-6).

Table 2-5 Rail passenger transport trends Unit: million person-km Country 2000 2001 2002 2003 ROK 27,788 29,172 28,743 28,379 China 453,260 476,680 496,940 478,860 Japan 384,441 385,421 382,236 384,958 Mongolia 1,062 1,066 Russia 149,500 157,900 Sources: National Bureau of Statistics of China, www.stats.gov.cn Statistics Bureau & Statistics Center of Japan, www.stat.go.jp

Table 2-6 Rail passenger transport trends, normalized by population Unit: km/person Country 2000 2001 2002 2003 ROK 572 600 591 584 China 349 367 383 369 Japan 3,019 3,027 3,002 3,023 Mongolia - 386 387 - Russia 1,042 1,101 - - Source: KOTI

Table 2-7 shows the rail freight transport trends in North-East Asian countries from 2000 through 20031. Demand in million ton-kilometers traveled has remained relatively constant for Japan and the ROK. Like passenger rail, China experiences the highest amount of freight ton-kilometers traveled by rail among the North-East Asian countries. Russia has a similarly high amount of ton- kilometers traveled by rail. Russia and China, however, have the first and third highest land areas in the world, respectively, and long distances are often required for freight transport.

1 Data from the DPRK were not available.

7 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 2-7 Rail freight transport trends Unit: Million ton-km Country 2000 2001 2002 2003 ROK 10,803 10,492 10,784 11,057 China 1,366,300 1,457,500 1,565,800 1,724,700 Japan 22,136 22,193 22,131 22,794 Mongolia 5,288 6,461 Russia 1,385,000 1,434,000 Sources: National Bureau of Statistics of China, www.stats.gov.cn Statistics Bureau & Statistics Center of Japan, www.stat.go.jp

Transport demand by road also varies widely by country (Table 2-8). Despite having a large land area and over one billion people, China has fewer person-kilometers traveled by road than the ROK, whereas Japan—with the strongest economy in North-East Asia but a significantly smaller land area and population—has the highest amount of person-kilometers traveled by road. The average Japanese citizen travels significantly more by rail and road than citizens of any other North-East Asian country.

Table 2-8 Road passenger transport trends Unit: million person-km Country 2000 2001 2002 2003 ROK 74,572 84,255 77,925 77,349 China 66,574 72,071 78,058 76,956 Japan 951,000 954,000 955,000 Mongolia 371 381 Russia* Sources: National Bureau of Statistics of China, www.stats.gov.cn Statistics Bureau & Statistics Center of Japan, www.stat.go.jp Ministry of Construction and Transportation of Korea, Statistics – An Annual Report, www.moct.go.kr Notes: *Complete data on road person-kilometers traveled were not available for the Russian Federation.

Japan also experiences a high level of ton-kilometers traveled by road—twice as many as the Russian Federation (Table 2-9). Relative to rail, Japan relies heavily on trucks for freight transportation. In China, however, rail dominates freight transportation by land.

Table 2-9 Road freight transport trends Unit: Million ton-km Country 2000 2001 2002 2003 ROK 11,412 12,322 13,275 13,006 China 61,294 63,304 67,825 70,995 Japan 313,000 313,000 312,000 Mongolia 130 134 Russia 152,735 159,852 Sources: National Bureau of Statistics of China, www.stats.gov.cn Statistics Bureau & Statistics Center of Japan, www.stat.go.jp Ministry of Construction and Transportation of Korea, Statistics – An Annual Report, www.moct.go.kr As the economy in this region grows rapidly, container traffic and air transport demands also have increased very rapidly. Container movements in major North-East Asian ports have shown spectacular growth except in Japan (Table 2-10). Most Chinese ports have shown more than

8 OVERVIEW OF TRANSPORT AND LOGISTICS IN NORTH-EAST ASIA

tenfold increases during the 1990-2000 period. Overall, the ROK and China have seen steadily increasing container throughput trends (Table 2-11). Air transport in North-East Asia has also increased in most countries (Table 2-12). Both passenger and freight have increased due to rises in income, overseas travel liberalization and increases in intra-regional trade. Although air transport occupies less than two percent in volume, the value of goods transported by air is close to 30 percent (Table 2-13). In order to meet the ever-increasing air transport demand, major Asian countries are planning on expanding air transport related facilities (Table 2-14).

Table 2-10 Container throughput trends in major North-East Asian ports Unit: 1,000 TEU Port 1990 1995 2000 2001 2002 2003 2004 Pusan 2,348 4,503 7,540 8073 9436 10407 9354 Kaoshung 3,495 5,232 7,426 7540 8493 Tokyo 1,555 2,177 2,899 2535 2712 3313 Yokohama 1,648 2,757 2,317 2303 2365 Kobe 2,596 1,464 2,266 2010 1992 Qingdao 135 600 2,120 2640 3410 Tianjin 286 702 1,708 2010 2410 Osaka 483 1,159 1,474 1508 1514 Source: American Association of Port Authorities. Web: www.aapa-ports.org Quoted in Infoplease www.infoplease.com Japan, Ministry of Land, Infrastructure and Transport, www.mlit.go.jp Republic of Korea, Ministry of Maritime Affairs and Fisheries, www.momaf.go.kr * Containerisation International Yearbook quoted in "A Competitive Analysis of Chinese Container Ports using the Analytic Hierarchy Process", Maritime Economics & Logistics, 2004, June

Table 2-11 Container throughput trends in North-East Asia Unit: 1,000 TEU Country 1990 1995 2000 2001 2002 2003 China 1,204 17,232 35,483 43,970 Japan 7,956 10,604 13,621 12,981 ROK 2,348 4,503 8,530 9,990 11,889 13,185 Source: Containerization International Yearbook

Table 2-12 Air transport trends in North-East Asia Unit: million person-km, million ton-km Passenger Freight Country 1998 1999 2000 2001 2002 2003 1998 1999 2000 2001 2002 2003 ROK 47,711 55,344 62,837 84,544 92,175 82,231 7,290 8,098 7,774 11,327 12,606 11,696 China 75,823 80,575 90,960 109,140 126,870 126,320 2,474 2,395 3,900 4,372 5,155 5,790 Japan 154,402 163,019 173,403 162,323 169,741 156,145 7,514 8,226 8,549 7,093 7,979 8,038 Mongolia 539 661 10 9 Russia Federation 46,336 45,863 42,950 742 872 1,041 Source: National Bureau of Statistics of China, www.stats.gov.cn National Statistics Organization of the Republic of Korea, www.nso.gov.kr

9 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 2-13 Air freight throughput trends in major North-East Asian airports Unit: 1,000 tons 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Tokyo Narita 1,547 1,606 1,562 1,676 1,587 1,786 1,876 1,622 1,942 2,089 Seoul Kimpo 1,029 1,216 1,361 1,568 1,425 1,655 1,874 708 302 290 Incheon N.A. N.A N.A. N.A. N.A. N.A. N.A. N.A. 1,706 1,843 Sources: World Air Transport Statistics, IATA Narita Airport, www.naa.jp/en/

Table 2-14 Selected Asian international airports and their expansion plans

Cargo throughput Area Airports Status Runway in 2000 (tons) (hectares) Tokyo (NRT) 1,875,760 Open 700 (1,065) 1(+2) Kansai 999,693 Open 511 (1,040) 1(+2) Japan Chubu N.A. 2005 600 (1,000) 1(+2) Osaka 864,319* Tokyo Haneda 769,747 Seoul Gimpo 1,874,000 Open 732 2(+0) ROK Seoul Incheon N.A. 2001 1,098 (4,743) 2(+2) Beijing 538,424 Shanghai Hongqiao 475,982 Open 455 1(+0) China Shanghai Pudong 208,669 10/1999 600 (2,400) 1(+3) Shenzhen 169,527 Open 1,000 1(+1) Bangkok-Don Muang 809,192 Open 621 2(+0) Thailand Second Bangkok Int. N.A. 2003 3,200 2(+2) Span Int. Open 526 1(+0) Malaysia KL Sepang Open 3,000 (1,000) 2(+3) Singapore Changi 1,522,984 Open 1,663 2(+1) Indonesia Jakarta 292,260 Open 1,800 (3,000) 2(+0) Note: * 1999 figures. Source: Airports Council International (2000).

2.3 TRANSPORT AND LOGISTICS INFRASTRUCTURE IN NORTH-EAST ASIA

2.3.1 Existing conditions and differences between North-East Asian countries Transport related infrastructure development differ greatly among the nations in North-East Asia. The level of motorization is quite different among the North-East Asian countries. The road network is continuously increasing in most North-East Asian countries and the development of railway in some countries is also increasing (see Table 2-15). The Russian Far East has the largest railway network of any of the North-East Asian countries with more than 87,000 km. China has more than 71,000 km. Mongolia, with 1,810 km of rail lines, has the smallest network. China has more than 1.4 million miles of roadway, making it the North-East Asian country with the largest road network. It also has the largest amount of express roads. Japan, despite being the fourth largest country in North-East Asia and being considerably smaller than the top three, has nearly 1.2 million miles of roadway and the largest amount of paved roads. The DPRK has the smallest roadway network.

10 OVERVIEW OF TRANSPORT AND LOGISTICS IN NORTH-EAST ASIA

China‘s large expanses of inland territory are accessed by 121,557 km of navigable waterways. The Russian Far East has 96,000 of waterway. Mongolia, despite being a large, land-locked country has relatively few navigable waterways. Japan, the ROK, and the DPRK all have few navigable waterways. However, these countries are relatively small in land area and either completely or almost completely surround by ocean.

Table 2-15 Comparison of transport infrastructure in North-East Asian countries Rail Rail Rail Express Paved Non-Paved (Broad (Standard (Narrow Waterways Country Road Road Road Gauge) Gauge) Gauge) km km km km km km km ROK 0 3,125* 0 1,996 62,812 22,182 1,608 China 0 68,000 3,600 16,314 297,890 1,088,494 121,557 Japan 0 3,204 20,777 6,455 528,016 627,423** 1,770 DPRK 0 5214* N.A. 0 1,997 29,203*** 2,250 Russia (Far East) 86,200 0 957# 0 358,833 173,560**** 96,000 Mongolia 1,810 0 0 0 1,724 47,526* 580 * Estimated in 2003 **1998 ***1999 ****2000 # Narrow gauge is on Sakhalin Island

The countries of North-East Asia vary considerably by population and land area. When compared to total population, the Russian Far East still has the most substantial rail network (Table 2-16). The Russian Far East has a relatively small amount of people (7.2 million) spread over a considerable land area (6.6 million km2). A large railway network is required to connect such large expanses, though there are fewer people there. Mongolia has the second highest rail kilometers per capita: despite having the smallest rail network in North-East Asia, it also has the smallest population. China, with the largest population in the world, has only 55 km of rail per million persons. The Russian Far East has the most centerline kilometers of roadway per capita, more than four times higher than Mongolia and eight times higher than Japan. It also has nearly 50,000 km of paved road per million persons. Japan has the most centerline kilometers of express road per capita. Despite having the most absolute number of centerline kilometers of roadway of the North-East Asian countries, China has the lowest centerline kilometers of roadway per capita. When compared to population, the Russian Far East has the highest amount of waterways per capita, followed by Mongolia—in part due to their relatively small populations.

11 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 2-16 Transport infrastructure per capita in North-East Asian countries Rail Express Paved Non-Paved Waterways (Total) Road Road Road Country km/million km/million km/million km/million km/million persons persons persons persons persons ROK 64 41 1,292 456 33 China 55 13 229 838 94 Japan 26 51 4,147 4,927 14 DPRK 230 - 88 1,287 99 Russia (Far East) 12,105 - 49,838 24,106 13,333 Mongolia 658 - 627 17,276 211

Table 2-17 compares transport infrastructure per land area for each North-East Asian country. Centerline kilometers of infrastructure per land area gives an indication of the level of accessibility in a country. The DPRK and ROK, with their relatively small land areas, have the highest centerline kilometers of rail per thousand square kilometers of land area. Japan has over 3,000 km of roadway per thousand km2, making it the most accessible North-East Asian country by car or truck. All the North-East Asian countries except Japan and Mongolia have similar rates of waterway kilometers per land area.

Table 2-17 Transport infrastructure per land area in North-East Asian countries Rail Express Paved Non-Paved Waterways (Total) Road Road Road Country km/thousand km/thousand km/thousand km/thousand km/thousand km2 km2 km2 km2 km2 ROK 31 20 631 223 16 China 7 2 31 113 13 Japan 9 17 1,397 1,661 5 DPRK 43 - 17 242 19 Russia (Far East) 13 - 54 26 14 Mongolia 1 - 1 30 0

2.3.2 Asian highway and the priority road network In order to meet increasing demand for reliable and efficient land transportation linkages and services in the Asian Pacific region, Asian Highway (AH) was initiated to promote development of international road transport. Under the auspices of UNESCAP, the member countries2 have adopted the Asian Highway Network of 140,000 km with coordinated alignment, unified standards and signage. At the 60th Commission session held at Shanghai, China in April 2004, 26 member countries3 signed the important International Agreement on the Asian Highway Network. Recognizing the importance of the AH and the catalytic role that road transport plays in regional economic growth, the priority road network has been formulated for the North-East Asia region. Road transport has become the predominant mode of transport in North-East Asia.

2 Afghanistan, Armenia, Azerbaijan, Bangladesh, Bhutan, Cambodia, China, DPRK, Georgia, India, Indonesia, Iran, Japan, Kazakhstan, Kyrgyzstan, Lao People's Democratic Republic, Malaysia, Mongolia, Myanmar, Nepal, Pakistan, Philippines, ROK, Russian Federation, Singapore, Turkmenistan, Sri Lanka, Tajikistan, Thailand, Turkey, Uzbekistan and Vietnam 3 Bangladesh, DPRK, Malaysia, Philippines, Singapore, and Turkmenistan have not signed. Countries have until December 31, 2005 to sign.

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The purpose of a priority road network is to accelerate economic and social development in all countries of the subregion and to support economic cooperation. The objective is to develop a road network for the mutual benefit of all countries concerned through national commitments and coordinated development. (See Figure 2-1)

Figure 2-1 Asian Highway Network

2.3.3 Trans-Asian Railway development and North-East Asia Trans-Asian Railway (TAR) originally consisted of a southern corridor going through South-East Asia, Bangladesh, India, the Islamic Republic of Iran, Pakistan and Turkey, but was later expanded under the Asian land transport infrastructure development (ALTID) project to cover the whole of Asia. It was made possible by a lessening of political tensions between the countries involved, the rapid economic development of China, the possibility of greater economic exchanges with the DPRK and the prospects of accelerated economic development in Mongolia and the Russian Federation. Accordingly, UNESCAP concluded a feasibility study on connecting the railways of China, Mongolia, the Russian Federation and the Korean Peninsula with thoughts given to identifying the TAR routes in the countries concerned. The study also considered route requirements and the border-crossing facilitation measures required to assist in organizing efficient container land-bridges between Asia and Europe that could compete with the shipping services. (See Figure 2-2) The links forming the TAR network (as well as the AH network) were identified by the participating countries in accordance with one or more of the following criteria:

13 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

 capital to capital links (for international transport);

 connections to main industrial and agricultural centers (links to important origin and destination points);

 connections to major sea and river ports (creation of intermodal facilities through the integration of land and sea transport networks);

 connections to major container terminals and depots (creation of intermodal facilities through the integration of rail and road networks). Selected TAR route data received from national experts in each North-East Asian country are provided in the appendix.

Figure 2-2 Trans-Asian Railway network

2.3.4 Major ports in North-East Asia Given the physical geography of North-East Asia, ocean transportation is essential, if not unavoidable to access markets. From the early stages of cargo transportation, sea trade routes and rudimentary cargo movement always seemed to have existed, regardless of political circumstances. In recent years, transport volumes of intra-regional trade have increased significantly through reinforcement of economic cooperation in the region, with far more emphasis placed on the development of coastal shipping than the development of ocean shipping. Surrounded by the sea on three sides, the ROK has a total of 28 international trade ports and 22 coastal ports with an aggregate berth length of 85,888 meters and capable of servicing 564

14 OVERVIEW OF TRANSPORT AND LOGISTICS IN NORTH-EAST ASIA

vessels (handling capacity of 35,993 million tons) in 1997. Total trade volumes reached 770,054 million tons at the 28 trade ports and the top 5 ports account for 70.1 percent of total handling volumes: Woolsan 19.6 percent; Incheon 16.0 percent; Kwangyang 15.1 percent; Pusan 13.8 percent; and Pohang 5.6 percent. In particular, the Port of Pusan handled more than 90 percent of container volumes for import/export trade, while the remaining is handled mainly through Incheon. Only 0.4 percent of passenger traffic occurs on sea transport in the ROK, while sea transport accounts for 60 percent of the cargo transport mode share. In the DPRK, port handling capabilities were considered insufficient until the 1970s. However, since the 1980s port expansion projects have been actively carried out to promote international trade. In 1996, The DPRK‘s ports are estimated to be capable of handling 35 million tons of cargo. In China, where 90 percent of its trade volume is transported by sea, one can see the bustle of activity from ports dotted along the coastline stretching 18,400 km. Today, China has more than 500 ports capable of servicing vessels of more than 10 thousand dwt. However, there are more than 10 ports dealing with 10 million tons annually and the total cargo volume handled in Chinese ports is 700 million tons. As 1.9 percent of person-km and 49 percent of ton-km in China are traveled by ocean vessel, , sea transport plays a very important role in China. Liaoning, one the three provinces in North-East China, has commercial ports in Dalian, Yinkou, Dandong, and Jinzhou. Among these ports, Dalian and Yinlon are the most important in the region. In particular, near Dalian, the construction of a new port at Da Yao Bay in the special state-level economic and technological development zone has already utilized 4 berths (2.90 million tons) since 1988. In Heilongjiang, the inland waterway is relatively well developed with water depths of more than 1 meter that stretch 3,733km. Japan has established a network of around 1,100 ports including 21 specific important ports (trade ports) and 133 important ports that handle 42.2 percent (based on ton-km) of domestic cargo and 99.8 percent of international cargo. These ports include the Pacific coast ports of Yokohama, Tokyo, Kobe, Nagoya, and Osaka, which handle more than 50 percent of total Japanese trade and 90 percent of total Japanese container volume. Kobe is the busiest container port, receiving more than 70 percent of ocean-going vessels entering into Japanese ports. It plays an important role as a hub port of container transshipment between Korea, Hong Kong, and Taipei. Along the coast of the Russian Federation, there are a total of 22 large ports and 100 small ports. The four most important ports are Vladivostok, Nahodka, Vostochny, and Vanino, which are linked with the TSR. Within the region, Nahodka and Vostochny have the single largest port system, handling mostly container cargoes. As a result of inadequate road haulage and railroad linkages, inland waterways play a vital role in this region of the Russian Federation. The largest inland ports are Khabaovsk and Blagoschchensk on the Amur-Ussury river, which is only accessible between the months of May and October. The port of Yakutsk on the Lena River is accessible only 130 days out of one year.

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2.3.5 Information, communications, and other logistics facilities In China, the companies that both operate container terminals and transport containers have their own information systems (i.e., electronic data interchange systems). However, subcontractors do not have such sophisticated computerized management systems and therefore they rely on other equipment to connect and communicate with business partners. The equipment provides the location and status of freight and containers. Some big carriers also have their own global positioning systems (GPS) and geographic information systems (GIS) to track their containers and vehicles. China uses a Transport Management Information System (TMIS). It has the possibility of receiving advanced information on arriving containers, and within the next five to ten years, it will contain a multimodal waybill database for the transport of containers. In the next five years, a railway IT system will connect main ports and customs. In the ROK, the transport and logistics information system can be divided into the government sector and the private sector. In the government sector, each ministry of government has developed various types of systems independently. The Port Management Information System (PORTMIS) was developed by the Korea Maritime and Port Administration (KMPA), known as the Ministry of Maritime Affairs and Fisheries (MOMAF) since 1996. Implemented in 1991, PORTMIS helps manage ships‘ entrances into ports, cargo transport in the port area, port facilities, the decision making, and other port-related issues. The introduction of PORTMIS has served as a catalyst for promoting the information network among the relevant government ministries by reducing logistics costs and providing a paperless process. In 1991, the Ministry of Industry and Energy established the Korea Trade Network Company and developed the Korea Trade Network (KTNet). Under the purvue of the ROK Customs Administration, in 1997 KTNet began to electronically permit imports and exports, give customs clearances, and deal with financing for trading companies, shipping lines, insurance companies, banks, and other relevant parties. KTNet, the first electronic data interchange (EDI) system in the ROK, utilizes the Korean EDI for Administration, Commerce, and Transport (KEDIFACT) standards based on the EDI for Administration, Commerce, and Transport (EDIFACT) EDI standards developed in Europe. The KMPA developed the Korea Logistics Network (KLNet) jointly with shipping lines, forwarders, and other stakeholders because KTNet did not provide cargo flow information to shippers and ports. In order to reduce the time and cost incurred in the process of exporting and importing, KLNet is providing EDI service to all logistics related firms such as shipping lines, forwarders, transport firms, inland container depots (ICD‘s), shippers, the Customs Administration and the National Railroad. In addition, the Ministry of Construction and Transportation has established the integrated logistics network KTLOGIS, funded by manufacturing firms, transport firms, warehousing firms, and other key stakeholders. The first phase of the KTLOGIS development was completed in 1997, and the second phase was completed in 2000. The third phase will be completed in 2015. The main services of KTLOGIS are EDI; the database system of import and export information (DBsystem), and commercial vehicle operations (CVO) for the key stakeholders.

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At the present time PORTMIS is interconnected with KLNet by sharing the DBSystem. In addition to that, KLNet is linked with KTNet and with KTLOGIS by mediating the information. Other ROK transport information systems include the Korea Railroad Operating Information System (KROIS) and the Korea Customs Information System (KCIS). Information communication technology, especially the internet, has developed rapidly in the recent past with the private sector actively promoting electronic commerce. Most of the shipping lines such as Hyundai Merchant Marine, Hanjin Shipping Lines and Choyang Shipping Lines electronically provide their customers with ship schedules, cargo reservations, cargo tracking systems, notices of cargo arrival, and bills of landing. These private companies are competing with KLNet, KTNet, and KTLOGIS in the areas of electric commerce. Hanjin shipping line is allied with Cyber Logitech, an information and communication company, in order to facilitate quick decision making, to increase productivity and to provide inland transport services. Companies such as The Korea Express, Samsung SDS, and SK also are operating logistics information services for their customers and are connecting their network with KTNet, KLNet, and KTLOGIS.

Table 2-18 Information systems in the ROK Services Type and Description Current Trends and Development Plans

- Real time tracking service of - Used by 25,000 vehicles (less than 1% of vehicles and freight total freight vehicles)

- Vehicle operation management - Government will subsidize 50% of the purchasing price of CVO equipment to Commercial Vehicle - Freight transport arrangement increase the usage of this service. Operations (CVO) - Cyberspace logistic information

- Weather, traffic conditions, map information

- Exchange information by logistic - Government: PORT-MIS (11 types), industry using standard electronic KROIS (5 types), and KCIS (39 types) text data Electronic Data - Private: land transport (6 types), sea Interchange (EDI) - PORT-MIS service transport (26 types), foreign exchange (31 types), and insurance (4 types) - KROIS Service

- Integrated database that provides - Logistic industry can receive information on freight status and import/export logistic information service location for efficient management through the internet at KTLogis as of Integrated of import/export freight April 2000. import/export logistic information - Marine transport tracking service, - Other government agencies also provide air transport tracking service, and information on marine transport, customs, transport statistics service rail transport, seaport terminal (KLNet), and KTNet.

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The main issues that have occurred in the process of providing logistics information are the complexity of the working processes and the variety of the interested parties. The first problem is the inadequate interconnecting capability of the service providers in collecting and managing the integrated information, which cannot be provided by individual logistics information providers. The second is the deficiency of the connections within the information network system. The third difficulty lies in the huge difference between the service level of information systems among the logistics companies. In order to overcome these problems, MOMAF will develop a Shipping and Port Internet Data Center (SPIDC) by 2005. The feasibility of the system is being studied by the Korea Maritime Institute. The construction of the integrated EDI network will include the utilization of extensible markup language (XML), introduction of an advanced logistics management system including a cargo tracking system, development of a standard program to connect the Application Service Provider (ASP) and Enterprise Resource Planning (ERP) system, and utilization of the existing logistics information system which has been used fragmentarily by each private company (see Table 2-18).

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THREE: FORMULATION OF AN INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

3.1 MAIN PRINCIPLES OF FORMULATION OF THE INTEGRATED TRANSPORT AND LOGISTICS NETWORK 3.1.1 Main principles of network formulation As the integrated network is to provide reliable and efficient intermodal international transport linkages in North-East Asia to facilitate international trade and tourism, its development objective should be to eventually provide a choice of alternative competitive routes to any of the major economic centers and ports in North-East Asia from any North-East Asian country. The availability of competitive routes will provide each country in North-East Asia with a degree of independence and a real choice in accessing expanding markets. It will also result in lower transport costs and an improved level of transport services. The main principles of the system formulation are as follows: a) Maximum possible use of the existing infrastructure b) Minimum possible number of routes with particular careful considerations of any possible parallel routes as well as missing links c) The system should provide intermodal transport routes to major provincial cities/economic centers including major railway stations with freight and container yards, inland water terminals, container terminals and airports in the following regions: - Provinces of Heilongjang, Jilin, Liaoning and Nei Mongol of China - Far East/Primorsky Territory of the Russian Federation - DPRK - Mongolia - Japan - ROK - Tumen River Development Area (TRDA) d) The system should also include access routes to the following port clusters: - Vladivostok (Ports of Vladivostok, Nakhodka, and Vostochny) - Zarubino (Ports of Zarubino and Posjet) - Rajin (Ports of Rajin, Sonbong, and Chongjin), Nampo - Dalian (Ports of Dalian, and Yingkou), Dandong - Tianjin - Lianyungang - Busan (Ports of Busan and Gwangyang) - Incheon - Tokyo (Ports of Tokyo and Yokohama)

19 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

- Nagoya - Hakata e) The system should eventually meet requirements of international traffic between North-East Asian countries as well as between North-East Asia and other parts of the world f) The system should be designed primarily for efficient transport of ISO and non-ISO containers, which is a main feature of international trade (Table 3-1)

3.1.2 Main components of the system To ensure its reliability and efficiency, the transport and logistics system should integrate infrastructure and logistics components with the following composition:

Infrastructure components

 The main port clusters in North-East Asia

 Intermodal land transport routes comprising priority road and rail routes in North-East Asia, major transport nodes as well as border crossing facilities

 Major container terminals in North-East Asia including ICDs

 The international information and communication system (ICS) in North-East Asia for transport

 Logistics facilities in North-East Asia

Logistics components

 Provision of a necessary legal framework for international transport through:

 Accession and implementation of relevant international conventions with particular emphasis on the implementation of theUNESCAP resolution 48/11 on road and rail transport modes in relation to facilitation measures and the FAL Convention

 Ensuring compatibility with the multilateral agreements already in place and the agreements being formulated by some of the countries such as the members of the Shanghai Cooperation Organization.4

 Improved bilateral agreements with a wider angle of international and transit transport

 Eventual introduction of modern e-based information and communication technology (ICT) for multimodal transport

4 China, Kazakhstan, Kyrgyzstan, Russian Federation, Tajikistan and Uzbekistan (Mongolia as observer)

20 FORMUALTION OF AN INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 3-1 Dimensions of ISO and non-ISO containers

Maximum Freight container External height External width External length gross weight designation (tonnes) ft in mm ft in mm ft in mm ISO 1A 8 00 2,438 8 00 2,438 40 00 12,192 30 1AA 8 06 2,591 8 00 2,438 40 00 12,192 30 1B 8 00 2,438 8 00 2,438 30 00 9,125 25 1BB 8 06 2,591 8 00 2,438 30 00 9,125 25 1C 8 00 2,438 8 00 2,438 20 00 6,058 24 1CC 8 06 2,591 8 00 2,438 20 00 6,058 24 1D 8 00 2,438 8 00 2,438 10 00 2,991 10 Non-ISO (1) 9 06 2,896 8 00 2,435 48 00 14,630 35 (1) 9 06 2,896 8 00 2,435 45 00 13,716 35 (1) 9 06 2,896 8 00 2,435 40 00 12,192 35 (1) 9 06 2,896 8 00 2,435 20 00 6,058 35 (2) 9 06 2,896 8 06 2,591 53 00 16,150 35 (2) 9 06 2,896 8 06 2,591 48 00 14,630 35 (2) 9 06 2,896 8 06 2,591 45 00 13,716 35

3.2 PROPOSED INTEGRATED INTERNATIONAL TRANSPORT NETWORK IN NORTH-EAST ASIA As a starting point, the integrated international transport network is proposed in Figure 3-1. The proposed network is based on previous UNESCAP studies on Trans-Asian Railways and Asian Highways, and in particular recent studies on a priority road network in North-East Asia and an integrated shipping and port system in North-East Asia. The proposed network will be reviewed by national experts of the participating countries (i.e., China, the DPRK, Japan, Mongolia, the ROK and the Russian Federation). The proposed network will also be discussed at the subregional policy-level expert group meeting to be organized as part of the project activities.

21 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Figure 3-1 Proposed Integrated Transport Network in North-East Asia

5 6

1 4

3.3 SELECTED INTERNATIONAL TRANSPORT CORRIDORS FOR ANALYSIS From this integrated network, six important international transport corridors in North-East Asia are selected (Table 3-2) for further in-depth analysis in this study. These selected corridors include road and railway networks linking neighboring countries and providing connections to major port clusters in the North-East Asia. For each corridor, feasible unimodalor intermodal routes along the corridor are suggested as in Table 3-3. Maritime container or ferry service routes are also selected to provide sea links to Japan from the six corridors. The next chapter of this study provides details of the analysis to evaluate transport performance and to identify major bottlenecks on the major unimodal or intermodal routes along the six international transport corridors.

22 FORMUALTION OF AN INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 3-2 Selected international transport corridors for analysis

Russian No Corridor China DPRK Mongolia ROK Federation Tanggu (Tianjin Port)-Tianjin– Beijing– Eranhot –Zamin Uud– Road/Rail/ 1 Road/Rail Road/Rail Ulaanbaatar–Darkhan–Ulan Port Ude Beijing–Shenyang–Dandong– Road/Rail/ Road/Rail/ Road/Rail/ 2 Pyongyang–Seoul–Busan Port Port Port Busan–Pohang–Kosong– Wonsan–Kimchaek–Sonbong– Road/Rail/ Road/Rail/ Road/Rail/ 3 Hasan-Razdolnoye–Ussuriysk– Port Port Port Khabarovsk–Belogorsk–Chita- Ulan Ude Rajin/Sonbong–Jilin– Road/Rail/ 4 Changchun–Ulanhot–Yorshi- Road/Rail Road Port Sumber–Ulaanbaatar Nakhodka/Vladivostok– Road/Rail/ 5 Ussurisk–Pogranichny–Harbin Road/Rail Port –Manzhouli–Chita-Ulan Ude Dalian–Shenyang–Changchun– Road/Rail/ 6 Harbin–Heihe– Road/Rail Port Blagoveshchensk– Belogorsk

Table 3-3 Suggested unimodal/intermodal routes along the six corridors

No Unimodal (U) / Intermodal (I) routes Sea links to Japan U-1.1: Rail route : China-Mongolia-Russial 1 Kobe–Tianjin (Container vessel) I-1.2: China(road)-Mongolia(rail)-Russia(rail) U-2.1: Rail route : China-DPRK-ROK I-2.2: China (Road) – DPRK (Rail) – ROK (Rail) Busan–Shimonoseki (Sea Ferry) 2 I-2.3: China (Rail) – DPRK (Rail) – ROK (Road) Shimonoseki–Tokyo (Railway and Road) I-2.4: China (Road) – DPRK (Rail) – ROK (Road) U-3.1: Rail route : ROK-DPRK-Russia 3 Yokohama–Busan (Container vessel) I-3.2: ROK (Road) – DPRK (Rail) – Russia (Rail) U-4.1: Road route : DPRK-China-Mongolia I-4.2: DPRK (Rail) – China (Road) – Mongolia (Road) Tokyo–Niigata (Railway and Road) 4 I-4.3: DPRK (Rail) – China (Rail) – Mongolia (Road) Niigata–Rajin/Sonbong (Container vessel) I-4.4: DPRK (Road) – China (Rail) – Mongolia (Road) U-5.1: Rail route : Russia-China-Russia U-5.2: Road route : Russia-China-Russia I-5.3: Russia (Rail) – China (Rail) – Russia (Road) I-5.4: Russia (Rail) – China (Road) – Russia (Road) Tokyo–Fushiki (Railway and Road) 5 I-5.5: Russia (Rail) – China (Road) – Russia (Rail) Fushiki–Vladivostok (Sea Ferry) I-5.6: Russia (Road) – China (Rail) – Russia (Rail) I-5.7: Russia (Road) – China (Road) – Russia (Rail) I-5.8: Russia (Road) – China (Rail) – Russia (Road) U-6.1: Rail route : China-Russia I-6.2: Road route : China-Russia 6 Nagoya–Dalian (Container vessel) I-6.3: China (Rail) – Russia (Road) I-6.4: China (Road) – Russia (Rail)

23 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

FOUR: EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

4.1 CORRIDOR 1: TANGGU (TIANJIN PORT)-TIANJIN–BEIJING– ERANHOT–ZAMIN UUD–ULAANBAATAR-ULAN UDE Corridor 1 passes through three countries: China, Mongolia, and the Russian Federation. This corridor has been specifically used as a major transport corridor for the foreign trade of Mongolia. Not only has China provided Mongolia with sea access to other countries through Tianjin Port, but China is also the most important trade partner of Mongolia.

4.1.1 Significance Corridor 1 is especially important to Mongolia. Its importance can be considered in two respects. On one hand, this corridor is meaningful to Mongolia as a land transport route itself. Mongolia‘s two neighboring countries hold a significant position in its economy. As of 2003, China and the Russian Federation, the most important trade partners of Mongolia, accounted for 32.1 percent and 22.0 percent of Mongolia‘s total foreign trade amount, respectively (Table 4-1). Corridor 1 - which extends from Tianjin, one of China‘s major trade ports, via Beijing and Ulaanbaatar, the capital cities of China and Mongolia, to Ulan- ude, a connecting point to the Trans-Siberian Railway - makes the greatest contribution to Mongolia‘s economic exchanges with its most important economic partners. Furthermore, most of the Mongolian cargos toward Central Asia or Europe are transported via the combination of Corridor 1 and the TSR. On the other hand, Corridor 1 has great importance as a gateway to the sea for Mongolia, a landlocked country. The transport of cargos toward regions other than China, the Russian Federation, and Europe has mainly depended on the combination of Corridor 1 and sea transport. As shown in Table 4-1, the economic exchange of Mongolia with countries besides China and the Russian Federation accounts for 45.9 percent of Mongolia‘s total foreign trade and also holds a crucial position in its economy. In particular, access to the US, which accounts for 16.2 percent of total foreign trade, and to Japan and the ROK, together accounting for 13.0 percent, seems especially important. Tianjin Port plays a decisive role as the only main exit of Mongolia toward the East Sea and the Pacific.

24 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-1 Major trade partners of Mongolia 2001 2002 2003 Export Million Million Million % % % US$ US$ US$ World 521.3 100 524 100 546.9 100 China 231.6 44.4 217.3 41.5 258.1 47.2 USA 144.5 27.7 165.7 31.6 176.8 32.3 Russian Federation 44.9 8.6 48 9.2 34.5 6.3 ROK 20.1 3.9 22.5 4.3 25.6 4.7 Italy 16.9 3.2 8.6 1.6 10.9 2.0 UK 12.4 2.4 17.5 3.3 2.7 0.5 Japan 15.7 3.0 6.3 1.2 6.6 1.2 Austrailia 10 1.9 17.7 3.4 3.8 0.7 HK 6.7 1.3 3.2 0.6 1.4 0.3 Germany 2 0.4 2.7 0.5 6 1.1 Others 16.5 3.2 14.5 2.8 20.5 3.7 2001 2002 2003 Imports Million Million Million % % % US$ US$ US$ World 614.5 100 637.7 100 690.6 100 Russian Federation 206.2 33.6 226 35.4 237.6 34.4 China 109.5 17.8 120.1 18.8 139.5 20.2 ROK 55.6 9.0 58.3 9.1 86.3 12.5 Japan 73.3 11.9 56 8.8 42.8 6.2 Germany 29.7 4.8 30.3 4.8 30.4 4.4 USA 28.4 4.6 14.9 2.3 23.4 3.4 HK 16.2 2.6 16 2.5 28.2 4.1 Singapore 10.6 1.7 10.4 1.6 11.2 1.6 Kazakhstan 6.8 1.1 21.3 3.3 7.2 1.0 France 8.4 1.4 6.2 1.0 4.8 0.7 Others 69.8 11.4 78.2 12.3 79.2 11.5 Source: ADB Country Report 2003

4.1.2 Current Situation and Prospects Port: Tianjin Port is situated in North-East North-East China, 137 kilometers from Beijing on the coast of the Bohai Sea. As one of China‘s five largest container seaports, it has two areas: the Xingang Harbor area for ocean going vessels and the inner harbor of Tanggu used mostly by river traffic. It is protected by two huge breakwaters: they are 5.4 and 8 kilometers long, respectively, with a 1.3km wide opening. Tianjin Port has a plan to expand its capacity to 5 million TEUs in 2005 and to 7 million TEUs in 2010 (Yu et al. 2002). As of 2001, the Port of Tianjin had 57 berths that handle nearly 114 million tons of freight and over 2 million TEUs of container cargos. The quay length of this port is 11,672m with 1.142 million ㎡ of open and 3.09 million ㎡ of covered storage areas. According to ERINA (2002), 4,000 to 5,000 TEUs of Mongolia‘s container freight is handled at Tianjin Port annually. The average cost of unloading at Tianjin Port is about US$78 per TEU and takes about 10 hours per 3000 TEUs to 20 hours per 5000 TEUs. (See Tables 4-2 and 4-3)

25 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-2 Regional distribution of container traffic at Tianjin Port unit: thousands of TEU 1999 2000 2001 Regions Amount % Amount % Amount % Japan 391 30.0 379 22.2 356 17.7 ROK 365 28.0 463 27.1 453 22.5 North America 117 9.0 113 6.6 134 6.7 Europe 130 10.0 211 12.4 260 12.9 Others 299 23.0 542 31.7 808 40.2 Total 1,302 100.0 1,708 100.0 2,011 100.0 Source: Yu et al. 2002:

Table 4-3 Overall capacity of Tianjin Port Total area 200 km2 Average loading time 2.2 hours/thousand tons Total number of berths 77 Customs clearance time: Average water depth 11 m Import 16.8 hours Annual handling capacity 43,250 Export 2.5 hours (000 tons) Warehouse area 141,700 m2 Annual throughput capacity 2 million TEUs Berthing waiting time 4.3 hours

Railway: From Tianjin Port a multi-track line of around 137 km goes to Beijing, and then an additional 501 km of double track line goes to Jining via Datong as illustrated in Figure 4-1. It continues to Erenhot via a single-track line of 338 km. At the border between China and Mongolia, transshipment is needed due to gauge differences. Railroad tracks in Mongolia are broad gauge (i.e. 1,520 mm), while Chinese rail lines use the standard gauge of 1,435 mm. However, the train can travel without any transshipment between Erenhot and Zamyn Uud where both standard and broad gauge rails are available. The rest of the Mongolian and Russian sections are composed of broad gauge single-track railway with a length of nearly 1,400 km (the border area between Hoit and Naushki is an estimate). Table 4-4 also lists major segment distances along this rail route. Over 1,100 km are in Mongolia.

Figure 4-1 Present conditions of railway, Corridor 1

Corridor 1: Railway Double Track Standard Gauge Single Track Broad Gauge Missing Link

Zamyn Uud Darhan Nauski

137 373 128 338 708 252 150 12 261 14 Tianjin Beijing Datong Jining Erenhot Ulaanbaatar Hoit Ulan Ude (Sukhbaatar)

China Mongolia Russia

Sources: Created based on National Reports, Kim et al. (2001), ERINA (2002: 33), and Maps produced by UNDP (2000a; 2000b).

26 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Mongolia has overly high dependency on railway for cargo transportation. Based on tonnage, railway accounts for 86 percent of its total cargo traffic volume in 2002, while road accounts only for 14.0 percent (see Table 4-5). Based on ton-km, the dependence on railway reaches to no less than 97.8 percent. This difference suggests that the railway in Mongolia is used heavily in long-distance cargo transport. Considering Mongolia‘s vast area and sparse population density, railway seems an adequate mode for long- distance cargo transportation. The present condition of its railway system, however, demands more investment to improve transport time and services. ERINA (2002) also mentions about the need for the introduction of reefer containers for dairy products and meat, the main export items of Mongolia.

Table 4-4 Rail distance between Tianjin and Ulan Ude Country From To Distance (km) China Tianjin Eranhot 976 China/Mongolia Eranhot Zamin Uud 14 Border Mongolia Zamin Uud Ulaanbaatar 708 Ulaanbaatar Hoit(Sukhbaatar) 402 Mongolia/Russia Hoit Naushki 12 Border Russia Naushki Ulan Ude 261 TOTAL (Tianjin ~ Ulan Ude) 2,373

Table 4-5 Freight traffic volume in Mongolia by modes 2001 2002 Modes 1000 tons million ton-km 1000 tons million ton-km Volume % Volume % Volume % Volume % Railway 10147.7 69.0 5287.9 97.4 11637 86.0 6461.3 97.8 Road 1658.2 11.3 129.5 2.4 1888.7 14.0 133.6 2.0 Inland Waterway 1.7 0.0 0.4 0.0 1.8 0.0 0.5 0.0 Air 2.9 0.0 9.5 0.2 2.4 0.0 9.0 0.1 Total 11810.5 100 5427.3 100 13529.9 100 6604.4 100 Source: Mongolian Statistical Yearbook, 2002

Road: Paved roads including the Tianjin-Beijing Expressway are available between Tianjin and Jining (Figure 4-2). The Chinese government has a plan to upgrade the Beijing-Erenhot section to expressway standards. Roads on the Mongolian side (1,026 km) are in poor condition. With the exception of the Ulaanbataar-Altanbulag section (345 km) where a motorway is available, most of the Mongolian sections are unpaved. Although the railway has a higher priority than road as a freight transport mode, road seems to play a crucial role in passenger transport in Mongolia. Based on the number of passengers, roads account for 95.9 percent of total passenger travel, although this share decreases to 18.1 percent if passenger-km is considered instead of the number of passengers (Table 4-7). This huge difference suggests that roads carry mainly short distance trips. As Mongolia‘s top priority route, the development of an unpaved road in this corridor is progressing based on the Medium-Term Road Master Plan (MRMP),

27 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

which was formulated in collaboration with the Asian Development Bank and accepted by the cabinet.

Corridor 1 is designated as a North-East Asian section of the Asian Highway byUNESCAP, and provides connections to the Trans-Siberian Trunk Highway. The total length of this route (including the estimated length between Altanbulag and Ulan Ude) is about 2,163km long (Figure 4-7).

Figure 4-2 Present conditions of road, Corridor 1

Corridor 1: Road Motorway Unclassified/Others Paved Road Planned/Under Construction Unpaved Road

Zhangjiakou Zamin-Uud Ulaanbaatar Kyahta 4 2/4 2/4 2 2 1 2 2 2 2 71 94 229 217 362 14 649 32 345 1.5 219 Tanggu Tianjin Beijing Jining Eranhot Nalaikh Altanbulag Ulan Ude

China Mongolia Russia

Sources: Created based on National Reports, Kim et al. (2001), and Maps produced by UNDP (2000a; 2000b).

Table 4-6 Passenger traffic volume in Mongolia by modes 2001 2002 Million Million Passenger- Million Million Passenger- Modes Passengers km Passengers km Volume % Volume % Volume % Volume % Railway 4.1 4.2 1062.2 53.9 4 3.8 1066.5 50.6 Road 94.1 95.5 371.1 18.8 101.4 95.9 380.6 18.1 Air 0.3 0.3 538.9 27.3 0.3 0.3 661.2 31.4 Total 98.5 100.0 1972.2 100.0 105.7 100.0 2108.3 100.0 Source: Mongolian Statistical Yearbook, 2002

Table 4-7 Road distance between Tanggu and Ulan Ude Country From To Distance (km) China Tianjin Eranhot 902 China/Mongolia Eranhot Zamin Uud 14 Border Mongolia Zamin Uud Ulaanbaatar 681 Ulaanbaatar Altanbulag 345 Mongolia/RussiaBor Altanbulag Kyahta 1.5 der Russia Kyahta Ulan Ude 2191 TOTAL (Tianjin ~ Ulan Ude) 2,162.5 1. Data from UNESCAP ―Asian Highway‖ (2001)

28 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

4.1.3 Transport Cost and Time Analysis Based on the survey completed by national transportation experts in each country, the cost and time to transport goods from Tianjin Port to Ulan Ude is reflected in Table 4-8. Since at the time of this publication the Russian Federation had not provided their road and border crossing information, it has not been possible to complete an accurate evaluation of the transport logistic performance for this route. Once the data are complete, the analysis will be able to provide cost and transit time trends, and the most effective transportation mode in this route can be determined.

An analysis of the estimated logistics cost and time is presented for this route. The total cost to transport between Tianjin and Ulan Ude by road is about US$1,571.2 per TEU (for 2,162.5 km) and US$747.5 per TEU (for 2,373 km) with rail.

Without considering transshipment cost, the total cost can be reduced to approximately US$655.9 per TEU if the road and the rail transport can be combined (Table 4-8). This alternative combination of modes includes rail transport in China, road transport in Mongolia between Zamin Uud and Altanbulag/Hoit, and rail transport between Altanbulag/Hoit and Ulan Ude. More accurate analysis can be done when the national experts provide the transshipment costs. Other possible routes to consider include transport entirely by rail or an intermodal route with transport in China by road and Mongolia and Russia by rail. Tables 4-9 and 4-10 show tabular information for transport costs for these routes, and Table 4-11 shows additional transport costs for connecting Japan to this corridor.

Table 4-8 Transportation cost and time from Tianjin Port to Ulan Ude

Road Rail Road/Rail Transit Time Transit Time Cost Cost Cost (hours) (hours) ($/TEU) Min Max ($/TEU) Min Max ($/TEU) Tianjin Port 77.8 10 20 77.8 10 20 77.8 Tianjin ~ Eranhot 690 14 29 168.61 23 40 168.6 Eranhot ~ Zamin Uud (Border) 250 24 120 120 12 24 120 Zamin Uud ~ Ulaanbaatar 95.2 14.8 15.5 150 48 72 95.2 Ulaanbaatar ~Altanbulag/Hoit 48.2 4.4 5 852 482 722 48.2 Altanbulag/Hoit ~ 2503 0.1 0.2 1203 12 24 120 Kyahta/Naushki (Border) Kyahta/Naushki ~Ulan Ude 1604 3.75 7.35 26.16 4.45 8.75 26.1 Total (Tianjin ~ Ulan Ude) 1,571.2 71 197 747.5 157.4 260.7 655.9 $/km 0.66 0.35 0.29 1. The cost reported by expert from China is significantly different fromUNESCAP data (US$500). 2. Estimate based on the cost and transit time of Zamin Uud ~ Ulaanbaatar 3. Estimates based on the cost of Eranhot ~ Zamin Uud 4. Average trucking charge (15ton) between Moscow ~ Vladimir (228km) and Moscow ~ Tver (209km) 5. Estimates based on a maximum speed of 60km/h and minimum speed of 30km/h 6. The cost assumed at US$0.10 per km

29 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Figures 4-3 and 4-4 represent the road and the rail travel times of Corridor 1, the route between Tianjin Port and Ulan Ude. Figure 4-5 represents the transport cost breakdown of the road and the rail combination. Border crossing charges represents about 36 percent of the total cost, while road and rail represent 22 percent and 30 percent, respectively. Figure 4-6 shows the cost-distance relationship in Corridor 1 by transport mode.

Table 4-9 Rail route (U-1.1) from Tianjin Port to Ulan Ude

Rail Cost Transit Time (hours) ($/TEU) Min Max Tianjin Port 77.8 10 20 Tianjin ~ Eranhot 168.6 23 40 Eranhot ~ Zamin Uud (Border) 120 12 24 Zamin Uud ~ Ulaanbaatar 150 48 72 Ulaanbaatar ~Altanbulag/Hoit 85 48 72 Altanbulag/Hoit ~ Kyahta/Naushki (Border) 120 12 24 Kyahta/Naushki ~Ulan Ude 26.1 4.4 8.7 Total (Tianjin ~ Ulan Ude) 747.5 157.4 260.7 $/km 0.35

Table 4-10 Intermodal route (I-1.2) from Tianjin Port to Ulan Ude

Road + Rail Transit Cost Road/Rail Time(hours) ($/TEU) Min Max Tianjin Port 77.8 10 20 - Tianjin ~ Eranhot 690 14 29 Road Eranhot ~ Zamin Uud (Border) 250 24 120 Road Zamin Uud ~ Ulaanbaatar 150 48 72 Rail Ulaanbaatar ~Altanbulag/Hoit 85 48 72 Rail Altanbulag/Hoit ~ Kyahta/Naushki (Border) 120 12 24 Rail Kyahta/Naushki ~Ulan Ude 26.1 4.4 8.7 Rail Total (Tianjin ~ Ulan Ude) 1,398.9 160.4 345.7 $/km 0.61

30 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-11 Transportation cost and time from Kobe Port to Ulan Ude

Road Rail Road/Rail Transit Time Transit Time Cost Cost Cost (hours) (hours) ($/TEU) Min Max ($/TEU) Min Max ($/TEU)

Kobe Port 182 NA NA 182 NA NA 182

Kobe ~ Tianjin 929 501 501 929 501 501 929

Tianjin Port 77.8 10 20 77.8 10 20 77.8

Tianjin ~ Eranhot 690 14 29 168.6 23 40 168.6

Eranhot ~ Zamin Uud (Border) 250 24 120 120 12 24 120

Zamin Uud ~ Ulaanbaatar 95.2 14.8 15.5 150 48 72 95.2

Ulaanbaatar ~Altanbulag/Hoit 48.2 4.4 5 85 48 72 48.2 Altanbulag/Hoit ~ 250 5min 10min 120 12 24 120 Kyahta/Naushki (Border) Kyahta/Naushki ~Ulan Ude 160 3.7 7.3 26.1 4.4 8.7 26.1

Total (Kobe ~ Ulan Ude) 2,682.2 - - 1,858.5 - - 1,766.9

$/km - - - 1. Average Transit Time

Figure 4-3 Tianjin ~ Ulan Ude transit time (road)

250

197.0 200 Min 184.5 Max 169.0 189.7 Average 150 134.0

123.7

Hours 108.5 128.5 100 71.0 62.8 49.0 50 67.3 48.0 20.0 36.5 15.0 24.0 10.0 0 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 Distance (km)

31 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Figure 4-4 Tianjin ~ Ulan Ude transit time (rail)

300

Min 252 250 Max 260.7 Average 228

200 202.5 209.05 184.5 156 153 150

141 157.4 Hours 124.5

100 93 84 60 64.5 50 46.5 45 20 33 15 10 0 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 Distance (km)

Figure 4-5 Cost breakdowns (road & rail combined)

Port 12% $77.8 Border 36% $240

Rail 30% $194.7

Road 22% $143.4

32 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Figure 4-6 Cost–Distance (Tianjin ~ Ulan Ude)

1600 1,571.2 1400 Road Rail 1,411.2 1200 Road/Rail 1,017.8 1,113.0 1000

747.5 800 767.8 629.8 655.9

Cost($/TEU) 600 516.4 601.4 461.6 509.8 400 366.4 366.4 246.4 200 77.8 0 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 Distance (km)

33 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

4.2 CORRIDOR 2: BUSAN-SEOUL-PYEONGYANG-SHENYANG- BEIJING-ZENGZHOU This corridor connects the ROK with China via the DPRK and can be connected to Japan through sea links.

4.2.1 Significance The Beijing, Seoul, and Tokyo (BESETO) corridor is perhaps the most important economic growth axis in North-East Asia (see Figure 4-7). Those regions have played the most crucial role in their national economies as well as in socio-political fields. Each metropolitan area holds 7.9 percent, 46.3 percent, and 26.3 percent of each country‘s total population, and accounts for 12.7 percent, 47.1 percent, and 30.5 percent of each country‘s GDP (see Table 4-12). In total, the BESETO corridor forms a huge intra- regional market composed of a population of over 150 million and GDP of over US$1.7 trillion, even if other metropolitan areas within the corridor e.g., Shenyang, Busan, and Osaka are counted out. Needless to say, these regions have been growth poles for national development, and produced most of North-East Asia‘s transport and logistics demands. This trend is expected to continue or even strengthen.

Figure 4-7 BESETO corridors

34 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-12 Major indicators of three metropolitan areas in the BESETO corridor

Population Gross Regional Domestic Product Indicators (thousands) % Share* (million US$) % Share* Greater Beijing 99,125 7.9 125,226 12.7 Beijing 12,245 1.0 26,263 2.7 Tianjin 9,405 0.7 17,514 1.8 Hebei Province 64,580 5.1 55,186 5.6 Seoul Metropolitan Area 21,354 46.3 191,538 47.1 Seoul 9,895 21.4 87,065 21.4 Incheon 2,475 5.4 19,450 4.8 Gyeonggi Province 8,984 19.5 85,023 20.9 Greater Tokyo 33,418 26.3 1,446,408 30.5 Tokyo 12,064 9.5 603,498 12.7 Chiba Prefecture 5,926 4.7 231,503 4.9 Kanagawa 8,490 6.7 335,303 7.1 Prefecture Saitama Prefecture 6,938 5.5 276,014 5.8 Note: * % share to each country. Sources: Yu et al. 2002: 99, 100; Kim et al. 2002: 113 (See References). Korea National Statistical Office (http://www.nso.go.kr) Statistics Bureau of Japan (http://www.stat.go.jp) National Bureau of Statistics of China (http://www.stats.gov.cn).

Corridor 2 can support transport and logistics demands created along the BESETO corridor. In particular, Corridor 2 could provide China and the ROK with a highly competitive trade corridor via an inland transport connection, although this route is also expected to share part of the logistics demands between Japan‘s southern regions and northern China. According to Kim (1998), land transport via railway is judged to have enough economical efficiency to compete with sea transport between Seoul and Shenyang/Beijing (see Table 4-13). Corridor 2 via railway, especially, seems to have a high comparative advantage in the section between Seoul and Shenyang. More than 55 percent of total transport time by sea can be saved by using rail, while the transport cost gap between the two modes is relatively trivial. Kim et al. (2001) estimates that Corridor 2 will take charge of about 15 percent of the cargo volume between Seoul and Beijing, and 40 to 50 percent of cargo volume between Seoul and Shenyang5.

5 In more detail, see Kim et al. (2001: 67~99). They use a Price Ratio Logit Model to estimate this modal split.

35 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-13 Estimation of transport cost between Seoul and Shenyang/Beijing by mode

Route Sea Railway Road Seoul Shenyang Distance (km) 957 (533+424*) 769 822 Time (hours) 23 (17.5+5.5*) 9.5 8.5 Cost (US$/ton) 13.5 18.3 58.6 Seoul Beijing Distance (km) 1,013 (852+161*) 1,608 1,361 Time (hours) 30.5 (28.5+2.0*) 20.5 14.0 Cost (US$/ton) 9.6 37.5 97.1 Notes: * Railway is assumed as a supportive mode for short distance movement. 1) Basic units for transport time: Road 100km/h, Railway 80km/h, Sea 30km/h. 2) Basic unites for transport cost: Road US$0.07/km ton; Railway US$0.02/km ton; Sea US$0.007/km ton. Sources: Kim, Gyeong-Seok. 1998. ―A study on measures for direct land transport within Republic of Korea and the Democratic People‘s Republic of Korea and Korean reunification. Seoul, the Republic of Korea: The Ministry of Unification. (Recited from Kim et al. 2001: 126).

4.2.2 Current Situation and Prospects Ports: This corridor starts from two major seaports of the ROK, Busan and Gwangyang. As of 2003, Busan, the largest seaport of the ROK, handles 10.4 million TEU, 78.9 percent of total container cargo volumes for the ROK. Although its share is high enough, dependency on Busan Port has gradually decreased from 88.2 percent in 1998 with the opening of Gwangyang Port. Most of the cargos handled at Busan Port are from or toward foreign countries. In 2003, the share of international cargos reached 98.8 percent, which indicates that Busan is essentially an international seaport (see Table 4-14). In reality, Busan is the world‘s fifth largest port based on container handling volumes in 2003. Its share of transshipment has been rapidly increasing from 20.6 percent in 1998 to 40.9 percent in 2003, which is an important factor pulling the container handling volumes of Busan Port. This also shows the potential of Busan as a regional hub port. The most popular regional partners of Busan Port have been North- East Asian countries. In 2003, container cargos to and from North-East Asia accounted for 45.6 percent of the total foreign trade container cargos handled at Busan Port (see Table 4-15). To keep up with rapidly increasing logistics demands, Busan has a plan to upgrade its container handling capacity from 3.8 million TEU to 8.1 million TEU by 2011.

Table 4-14 Structure of container freight handled at Busan Port

1999 2000 2001 2002 2003 Region TEU % TEU % TEU % TEU % TEU % Total 6,439,589 100.0 7,540,387 100.0 8,072,814 100.0 9,453,356 100.0 10,407,809 100.0 Import 2,271,997 35.3 2,483,753 32.9 2,496,764 30.9 2,729,332 28.9 3,029,020 29.1 Export 2,406,194 37.4 2,551,162 33.8 2,513,877 31.1 2,792,399 29.5 3,005,983 28.9 Transshipment 1,632,473 25.4 2,389,956 31.7 2,942,983 36.5 3,887,457 41.1 4,251,076 40.9 Domestic 128,925 2.0 115,516 1.5 119,190 1.5 44,168 0.5 121,730 1.2

36 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Source: Korea Container Terminal Authority, Republic of Korea, www.kca.or.kr Table 4-15 Regional distribution of container freight handled at Busan Port 1999 2000 2001 2002 2003 Region TEU % TEU % TEU % TEU % TEU % World 6,310,664 100.0 7,424,871 100.0 7,953,624 100.0 9,409,188 100.0 10,286,079 100 North-East Asia 2,534,143 40.2 3,071,837 41.4 3,544,006 44.6 4,302,066 45.7 4,688,720 45.6 North America 1,455,069 23.1 1,651,386 22.2 1,711,706 21.5 1,998,273 21.2 2,209,392 21.5 Southeast Asia 599,533 9.5 654,665 8.8 825,525 10.4 896,101 9.5 921,287 9 Europe 690,481 10.9 710,689 9.6 734,927 9.2 873,594 9.3 922,384 9 Others 1,031,438 16.3 1,336,294 18.0 1,137,460 14.3 1,339,154 14.2 1,544,296 14.9 Note: Domestic container cargos are excluded. Source: Korea Container Terminal Authority, Republic of Korea, www.kca.or.kr Gwangyang is the second largest container seaport of the ROK, which opened in July 1998. As of 2003, Gwangyang recorded a throughput of 1.2 million TEU, 96.8 percent of which are international cargos (see Table 4-16). Although this shows its relatively trivial position as a regional hub port compared to Busan (with only ten percent the throughput), the government of the ROK promotes Gwangyang Port as an alternative international container seaport to relieve congestion at Busan Port. According to the Korea Container Terminal Authority, the government of the ROK plans to expand the container capacity of Gwangyang Port from 1.2 million TEU in 2003 to 9.1 million TEU in 20116. Therefore, Gwangyang will become the largest container seaport of the ROK surpassing Busan in container cargo handling capacity in 2011. Since 1999, the most frequent origin or destination for cargo at Gwangyang Port has been other North- East Asian countries, whose share of the total international cargo handled at Gwangyang Port doubled from 28.8 percent in 1999 to 59 percent in 2003 (see Table 4- 17). This trend is expected to continue or increase with the rapid expansion of the ROK‘s economic exchange with China. Table 4-16 Structure of container freight handled at Gwangyang Port 1999 2000 2001 2002 2003 Region TEU % TEU % TEU % TEU % TEU % Total 417,344 100.0 642,230 100.0 855,310 100.0 1,080,333 100.0 1,184,842 100.00 Import 206,304 49.4 282,886 44.0 319,450 37.3 346,024 32.0 387,180 32.68 Export 181,015 43.4 268,312 41.8 326,001 38.1 372,047 34.4 415,492 35.07 Transshipment 28,080 6.7 64,129 10.0 165,727 19.4 314,355 29.1 343,888 29.02 Domestic 1,945 0.5 26,903 4.2 44,132 5.2 47,907 4.4 38,282 3.23 Source: Korea Container Terminal Authority, Republic of Korea, www.kca.or.kr

Table 4-17 Regional distribution of container freight handled at Gwangyang Port 1999 2000 2001 2002 2003 Region TEU % TEU % TEU % TEU % TEU % World 415,394 100.0 615,324 100.0 811,174 100.0 1,032,426 100.0 1,146,560 100 North-East Asia 119,765 28.8 217,217 35.3 386,315 47.6 615,149 59.6 676,327 59 North America 112,272 27.0 178,266 29.0 213,927 26.4 222,287 21.5 256,096 22.3 Southeast Asia 68,954 16.6 153,008 24.9 136,706 16.9 89,844 8.7 123,178 10.7 Europe 90,260 21.7 35,431 5.8 26,590 3.3 33,808 3.3 17,521 1.5 Others 24,143 5.8 31,402 5.1 47,636 5.9 71,338 6.9 73,438 6.5

6 For more detailed information, refer to KCTA‘s website (http://www.kca.or.kr/kor/port/port02_01_04.htm).

37 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Note: Domestic container cargos are excluded. Source: Korea Container Terminal Authority, Republic of Korea, www.kca.or.kr Railway: Corridor 2 spreads over three countries: the ROK, the DPRK, and China. At present, this route is not in operation because of missing links between the ROK and the DPRK (Figure 4-8). However, as the ROK and the DPRK agreed to the reconnection of railways and roads after the two Koreas‘ summit meeting of 2000, this route has attracted public attention as a major subregional corridor. The reconnection of railway seems crucial, because railway is advantageous for long-distance transport, environmentally sound, and preferred by the government of the DPRK. As of July 2003, the ROK‘s sections of Corridor 2‘s missing links have already been restored, but sections of the DPRK‘s missing links still remain at a standstill. To utilize Corridor 2, the 13.8 km section between the demilitarized zone (DMZ) and Gaeseong should be recovered.

Figure 4-8 Present conditions of railway, Corridor 2

Corridor 2: Railway Double Track Standard Gauge Single Track Broad Gauge Missing Link

Qinhuangdao Dandong Pyongyang Munsan Suwon Daegu

449 443 266 3 225 187 14 46 42 121 162 121 Beijing Shenyang Shinuiju Kaesong Seoul Daejon Busan

Electrified Missing Link Electrified

China DPRK ROK

Sources: Created based on National Reports, Kim et al. (2001), ERINA (2002: 33), and Maps produced by UNDP (2000a; 2000b).

However, even if missing links are restored, bottlenecks need to be dealt with in order to increase the total efficiency of the corridor. The railway is the most important transport mode in the DPRK and accounts for 60 percent of the total passenger transport and 90 percent of the total cargo transport. Most of the railway sections consist of single tracks, and inadequate facilities and shortage of electricity supply affect normal operations (Kim et al. 2001: 35). The DPRK section of Corridor 2 also has these constraints. Although electrification has been completed, much work has to be done to ensure its operation as a major international transport corridor. Sections of the corridor in the ROK and China also need to be improved. Until the mid- 1990s, the ROK had not made a considerable investment in improving railway infrastructure. As a result, railway facilities became decrepit and unable to provide a high level of service. As of 1999, the ratio of double-tracked sections was no higher than 28 percent, and just 18 percent of the whole ROK‘s railway sections are electrified, which is a primary reason for the low average train speed of between 50 km/h and 100 km/h, and

38 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

railway‘s low cargo transport share of 15.8 percent7. However, the government of the ROK is striving to relieve this problem with national railway projects. Those projects include the upgrade of existing railways and the construction of new high-speed railway lines. The first high-speed railway line, which has upgraded the ROK‘s railway system to a higher level, opened between Seoul and Busan in 2004. In addition, the section between Seoul (Suwon) and Daejeon (Cheonan), known as a top traffic bottleneck, will be quadruple-tracked. On the other hand, much of China‘s portion of Corridor 2 also experiences traffic demands surpassing its traffic capacity. In particular, the section between Shenyang and Dandong, just 31.3 percent of which is double-tracked8, needs to be electrified and entirely double- tracked. Distance and characteristics data were collected from national transportation experts in each country (except the DPRK). Based on their reports, the total railway length of this route is about 2,077km9 (Table 4-18). The Busan to Munsan section stretches about 490km with primarily double and multi-track, though the line between Munsan and Seoul has only single track. A single-track electrified line runs from Pyongyang to Shinuiju for 225km. At Shinuiju, the railway is linked to Dandong in China by a bridge over the Yalu River. The total railway length from Dandong to Beijing is 1,158km with single track from Dandong to Shenyang and double track from Shenyang to Beijing. China‘s rail track gauge is a standard 1435mm.

Table 4-18 Rail distance between Busan to Beijing

Country From To Distance (km) Busan Seoul 444.5 ROK Seoul Munsan 46.0 ROK/DPRK Munsan Gaesung 13.8 Border Gaesung Pyongyang 187 DPRK Pyongyang Shinuiju 225 DPRK/China Shinuiju Dandong 3.11 Border Dandong Shenyang 266 China Shenyang Beijing 892 TOTAL (Busan ~ Beijing) 2,077.4 1. Distance data from UNESCAP

Road: As with the railway network of Corridor 2, a missing link between the DPRK and the DMZ hinders the roadway portion of Corridor 2 from activation. At present, the section between Panmunjeom and Gaeseong is disconnected (Figure 4-9). The two countries have

7 Korean National Railroad (http://www.korail.go.kr/100th/year/c.html). 8 Total length of Dandong-Shenyang railway is 283 km, of which 88.6 km is double-tracked (Wang 2001). 9 Democratic People‘s Republic of Korea‘s railway distance is gathered from other sources, Ahn (2001, 2002)

39 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

agreed to the reconnection of the missing link, though no work has been done towards its realization yet. The total length of the roadway portion of Corridor 2 is 1,907km, with over 50 percent of the roadway miles in China (Table 4-19).

Figure 4-9 Present conditions of road, Corridor 2

Corridor 2: Road Motorway Unclassified/Others Paved Road Planned/Under Construction Unpaved Road

Tangshan Shenyang Shinuiju Kaesong Seoul 2/4 2 2 2 2 4 ? 10(4) 8 4 133 148 460 272 6 229 170 14 50 151 275 Beijing Qinhuangdao Dandong Pyongyang Panmunjom Daejon Busan

China DPRK ROK

Sources: Created based on National Reports, Kim et al. (2001), and Maps produced by UNDP (2000a;

2000b).

The road conditions in the ROK are relatively good with the total length of 86,989 km, 2,659 km of which are at expressway standards, as of 2002, and 64,807 km of which are paved, as of 1999. Corridor 2 includes the Gyeongbu and Honam Expressways. Gyeongbu Expressway, which connects Seoul with Busan, has been playing the most crucial role as the first expressway and a main artery in the ROK‘s transportation. All sections of the expressway are composed of 4, 6, or 8 lanes, and its total length is 417 km. Some of the sections are reported as chronically congested sections. Honam Expressway, on the other hand, is an important transport axis that connects Gwangyang with Daejeon. All of its sections consist of 4 lanes and its total length is 249 km. The DPRK considers road as a supportive transport mode to rail. The total length of the national roadway network is about 34,000 km, the pavement rate is 8.1 percent, and some 30 percent of all roads are known as narrow paths with a width of 2.4 m or less through which cars cannot move. Some expressways have 6 lanes and extend 661 km. In the DPRK‘s section of Corridor 2, both a 4-lane expressway and a Grade A road line (4.9 to 7.3 m wide), paved with asphalt and concrete, pass between Gaeseong and Anju. Shineuiju is connected to Anju through a concrete-paved Grade A road (Kim et al. 2001; MOCT 1998). Despite the road conditions, the Gaeseong-Shineuiju section, one of the most important transport corridors to the DPRK, does not seem to have serious difficulties in vehicle movement. The total length is about 400km and the road has the capability of transporting most types of vehicles. In China‘s section of Corridor 2, expressways exist from Shenyang through Beijing to Zhengzhou. This expressway line forms a backbone of China‘s 5 7 national trunk highway system. The section between Dandong and Shenyang, which is used as one of the DPRK‘s

40 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

main trade windows to China, is connected through a Grade A highway. The Chinese government planned to upgrade this section to an expressway by the end of 2002 (Zhu 2001; Kim et al. 2002), but it still is not completed. The Chinese roadway section of Corridor 2 currently has 2 to 4 lanes with a design travel speed of 50 km/hour, except the line between Qinhuangdao and Beijing where the design speed is 80 km/hour. The average annual daily traffic (AADT) of China‘s section of Corridor 2 is about 35,000 vehicles and the segment has an average degree of congestion.

Table 4-19 Road distance between Busan to Beijing

Country From To Distance (km) Busan Seoul 425.5 ROK Seoul Panmunjum 49.8 ROK/DPRK Border Panmunjum Gaesung 13.8 Gaesung Pyongyang 170.0 DPRK Pyongyang Shinuiju 228.8 DPRK/China Shinuiju Dandong 6 Border Dandong Shenyang 272 China Shenyang Beijing 741 TOTAL (Busan ~ Beijing) 1,906.9

4.2.3 Transport Cost and Time Table 4-20 shows the cost and time to transport a container from Busan Port in the ROK to Beijing in China. Since the DPRK did not yet report their information, our analysis is limited to the data reported by the ROK, China and the DPRK‘s data from other sources. The total cost to transport from Busan to Beijing by road is US$2,024 per TEU (for 1,907 km) and US$957 per TEU (for 2,077.4 km) with rail. The all-rail alternative provides the lowest transport cost. In addition to an all-rail alternative, intermodal alternatives with rail only in Korea, rail only in the DPRK, or rail only in China and the DPRK should be considered based on different feasibility issues. The analysis of these routes is contained in Tables 4-21 to 4-24. Table 4- 25 shows additional transport costs for connecting Japan to this corridor. Although the costs are based on the data reported by the national experts, China‘s rail transport cost is significantly different from the road cost. Consequently, these data may need to be reconfirmed with China‘s national transportation expert. The analysis will be complete after all the data are gathered from all countries.

41 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-20 Cost and time for transport from Busan Port to Beijing

Road Rail Road/Rail Transit Time Transit Time Cost Cost Cost (hours) (hours) ($/TEU) Min Max ($/TEU) Min Max ($/TEU)

Busan Port 75 10 20 75 10 20 75

Busan ~ 480 5.1 8 135 7 10 135 Panmunjum/Munsan Panmunjum/Munsan ~ 4201 4.31 28.31 4201 4.31 28.31 420 Gaesung (Border)

Gaesung ~ Shinuiju 199.42 11.53 22.93 82.44 10.33 20.63 82.4

Shinuiju ~ 40 1 12 40 7 12 40 Dandong(Border)

Dandong ~ Beijing 810 15 30 205 17 26 205

Total (Busan ~ Beijing) 2,024.4 46.9 121.2 957.4 55.6 116.9 957.4

$/km 1.06 0.46 0.46 1. Data based on the cost and transit time of road distance between Paju and Gaesung from Hyundai-Asan Co. Ltd. 2. The cost assumed by 0.5$ per km 3. Estimate based on the min and max transit time using maximum speed (40km/h) and minimum speed(20km/h) in DPRK 4. The cost assumed at 0.2$ per km

Figures 4-10 and 4-11 represent the road and the rail travel times of Corridor 2, the route between Busan Port and Beijing. Figure 4-12 represents the cost-distance relationships of road and rail alternatives. As with Corridor 1, border crossing charges and waiting times represent a significant amount of the cost, particularly at the ROK-DPRK border.

Table 4-21 Rail route (U-2.1) from Busan Port to Beijing

Rail Cost Transit Time (hours) ($/TEU) Min Max Busan Port 75 10 20 Busan ~ Panmunjum/Munsan 135 7 10 Panmunjum/Munsan ~ Gaesung (Border) 420 4.3 28.3 Gaesung ~ Shinuiju 82.4 10.3 20.6 Shinuiju ~ Dandong(Border) 40 7 12 Dandong ~ Beijing 205 17 26 Total (Busan ~ Beijing) 957.4 55.6 116.9 $/km 0.46

42 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-22 Intermodal route (I-2.2) from Busan Port to Beijing

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Busan Port 75 10 20 - Busan ~ Panmunjum/Munsan 480 5.1 8 Road Panmunjum/Munsan ~ Gaesung (Border) 420 4.3 28.3 Road Gaesung ~ Shinuiju 82.4 10.3 20.6 Rail Shinuiju ~ Dandong (Border) 40 7 12 Rail Dandong ~ Beijing 205 17 26 Rail Total (Busan ~ Beijing) 1,302.4 53.7 114.9 $/km 0.63

Table 4-23 Intermodal route (I-2.3) from Busan Port to Beijing

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Busan Port 75 10 20 - Busan ~ Panmunjum/Munsan 135 7 10 Rail Panmunjum/Munsan ~ Gaesung (Border) 420 4.3 28.3 Rail Gaesung ~ Shinuiju 82.4 10.3 20.6 Rail Shinuiju ~ Dandong (Border) 40 1 12 Road Dandong ~ Beijing 810 15 30 Road Total (Busan ~ Beijing) 1,562.4 47.6 120.9 $/km 0.81

Table 4-24 Intermodal route (I-2.4) from Busan Port to Beijing

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Busan Port 75 10 20 - Busan ~ Panmunjum/Munsan 480 5.1 8 Road Panmunjum/Munsan ~ Gaesung (Border) 420 4.3 28.3 Road Gaesung ~ Shinuiju 82.4 10.3 20.6 Rail Shinuiju ~ Dandong (Border) 40 1 12 Road Dandong ~ Beijing 810 15 30 Road Total (Busan ~ Beijing) 1,907.4 45.7 118.9 $/km 0.99

43 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-25 Cost and time for transport from Tokyo to Beijing

Road Rail Road/Rail Transit Time Transit Time Cost Cost Cost (hours) (hours) ($/TEU) Min Max ($/TEU) Min Max ($/TEU) Tokyo ~ Hakata Port 439 181 181 2,273 721 721 439 Hakata Port 242 NA NA 242 NA NA 242 Hakata Port ~ Busan Port 470 13.51 13.51 470 13.51 13.51 470 Busan Port 75 10 20 75 10 20 75 Busan ~ Panmunjum/Munsan 480 5.1 8 135 7 10 135 Panmunjum/Munsan ~ 420 4.3 28.3 420 4.3 28.3 420 Gaesung (Border) Gaesung ~ Shinuiju 199.4 11.5 22.9 82.4 10.3 20.6 82.4 Shinuiju ~ Dandong(Border) 40 1 12 40 7 12 40 Dandong ~ Beijing 810 15 30 205 17 26 205 Total (Tokyo ~ Beijing) 3,175.4 - - 3,942.4 - - 2,108.4 $/km - - - Average transit time

Figure 4-10 Busan ~ Beijing transit time (road)

140

Min 120 Max 121.2 Average 100 91.2

79.2 80 84.1

Hours 56.3 60 55.161.6

40 46.9 28 37.9 21.6 31.930.9 20 20 15.0 19.4 10.0 15.1 0 0 200 400 600 800 1000 1200 1400 1600 1800 2000 Distance (km)

44 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Figure 4-11 Busan ~ Beijing transit time (rail)

140

Min 120 Max 116.6 Average 100 90.6

78.6 86.1 80

58.3 64.6 Hours 60 55.1 55.6 39.8 40 38.6 31.6

20 20.0 17.0 15.0 10.0 0 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 Distance (km)

Figure 4-12 Cost-Distance (Busan ~ Beijing)

2100

2024.4 1800 Road Rail 1500 Road/Rail

1200 1214.4 975 1174.4 957.4

900 752.4

712.4 957.4 Cost($/TEU) 630 555 752.4 600 712.4 630

300 210

210 75 0 0 300 600 900 1200 1500 1800 2100 Distance (km)

45 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

4.3 CORRIDOR 3: BUSAN–POHANG–KOSONG–WONSAN– KIMCHAEK–SONBONG–RAZDOLNOYE–USSURIYSK– KHABAROVSK–BELOGORSK–CHITA–ULAN UDE

4.3.1 Significance The goal of this corridor is to run up the eastern side of the Korean Peninsula from Busan, as far as the Rajin-Sonbong Economic and Trade Zone in the DPRK, and then cross the Russian border into the Khasan area and join with the Siberian Land Bridge (SLB) transportation corridor. As with the Western Korean Peninsular Transportation Corridor, because there are no connections between the ROK and the DPRK, this corridor is not yet functioning. In addition to promoting cargo transportation between the ROK and the DPRK, the development of this corridor would secure an overland transportation route from the ROK and the Russian Far East. Furthermore, by connecting up with the SLB corridor, the corridor would diversify transportation routes from East Asia to Europe.

4.3.2 Current Situation and Prospects Railway: It is hoped that this corridor will provide an overland link between the ROK, the DPRK, and the Russian Federation. All of the ROK‘s tracks in this corridor are single track with a standard track gauge of 1,435mm (Figure 4-13). The Russian Federation has broad gauge (1,520mm) double track, except for the single track segment between Hasan and Baranovsky. The DPRK‘s rail information on this specific route is not well defined. Therefore, the infrastructure information is not indicated in the tables below until accurate data can be confirmed. The total length of this rail route is about 5,242km, including the estimated length of the DPRK segment (Table 4-26). The ROK‘s share is about 11 percent of the total length and the remaining 89 percent are The majority of the route (73 percent) is in Russia, with 16 percent and 11 percent in the DPRK and ROK, respectively.

Figure 4-13 Present conditions of rail, Corridor 3

Corridor 3: Railway Double Track Standard Gauge Single Track Broad Gauge Missing Link

Youngju Kangrung Sonbong Baranovsky Belogorsk Chita

112 164 149 45 145 777 50 239 677 658 1,573 96 557 Busan Kyungju Donghae Kosong Hasan Khabarovsk Karimskaya Ulan Ude

Electrified

ROK DPRK Russia

Sources: Created based on National Reports, Kim et al. (2001), and Maps produced by UNDP (2000a;

2000b).

46 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-26 Rail distance between Busan to Ulan Ude Country From To Distance (km) Busan Kyongju 112.3 ROK Kyongju Kangnung 357.3 ROK/DPRK Kangnung Kosong 145 Border Kosong Wonsan 1171 DPRK Wonsan Sonbong 6601,2 DPRK/RussiaBo Sonbong Hasan 503 rder Hasan Ussuriysk 262 Ussuriysk Khabarovsk 654 Russia Khabarovsk Belogorsk 658 Belogorsk Chita 1,669 Chita Ulan Ude 557 TOTAL (Busan ~ Ulan Ude) 5,241.6 1. Data from KOTI ― Plan for an Comprehensive Transport System of Korean Peninsula in Preparation for Unification (1998)‖ 2. Distance between Wonsan and Rajin 3. Distance between Rajin and Hasan

Road: The physical conditions in the ROK and DPRK being the same as described above for Corridor 2, the main issue in this corridor is the lack of connectivity between the ROK and DPRK. Priority therefore needs to be given to pursuing the established transportation agreement between the two Koreas. Moreover, the upgrade and development of road infrastructure in the DPRK may be necessary. In the ROK, the ordinary road from Busan to Kangnung going north along the eastern coastline of the Korean Penninsula is a well-paved road (Figure 4-14). In the DPRK, the road from Kumgangsan to Wonsan is a highway, but the road from Wonsan to Rason (Rajin-Sonbong) is understood to be unpaved. The length from Busan to Sonbong is about 1,111km with about 650km in the DPRK (Table 4-27). Among the 650km of road in the DPRK, 198km are paved with fair condition.

Figure 4-14 Present conditions of road, Corridor 3

Corridor 3: Road Motorway Unclassified/Others Paved Road Planned/Under Construction Unpaved Road

Kangnung Kosong Sonbong Ussuriysk Belogorsk Ulan Ude 4 2(4) 4 2/4 2 2 1/2 69 294 84 14 650 70 262 644 586 1,523 689 Busan Kyongju Kansong Hasan Khabarovsk Chita

ROK DPRK Russia

Sources: Created based on National Reports, Kim et al. (2001), ERINA (2002:33), and Maps produced by UNDP (2000a; 2000b).

47 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-27 Road distance between Busan to Ulan Ude

Country From To Distance (km) Busan Kyongju 68.7 ROK Kyongju Kangnung 293.9 Kangnung Kansong 83.9 ROK/DPRK Border Kansong Kosong 14.2 Kosong Wonsan DPRK Wonsan Kimchaek 6501 Kimchaek Sonbong DPRK/Russia Border Sonbong Hasan 502 Hasan Ussuriysk 262 Ussuriysk Khabarovsk 644 Russia Khabarovsk Belogorsk 586 Belogorsk Chita 1,523 Chita Ulan Ude 6893 TOTAL (Busan ~ Ulan Ude) 4,864.7 1. Data from UNESCAP ―Priority Road Network in North-East Asia‖ 2. Rail Distance between Rajin and Hasan 3. Estimate based on difference between Moscow ~ Chita and Moscow ~ Ulan Ude distance

4.3.3 Transport Cost and Time Table 4-28 below shows the cost and time to transport a container from Busan Port in the ROK to Ulan Ude in the Russian Federation. In the ROK, the cost of road transporting is about US$433 per TEU and the rail cost is about US$225 per TEU. In Russia, the rail cost is about US$636 per TEU for transporting 3,800 km (from Hasan to Ulan Ude). DPRK estimates were based on ROK values. Using rail transportation for all segments except for the Kansung-Kosong segment crossing the ROK-DPRK border provides the lowest transport cost. Due to 145 km of missing track in that segment road is the only currently feasible alternative. In addition to this alternative, an all rail route (with the construction of the missing rail link) and an intermodal alternative with rail only in the DPRK and Russia, and road only in the ROK, should be considered. Results from the analysis of these alternatives are contained in Tables 4-29 and 4-30. Table 4-31 shows additional transport costs for connecting Japan to this corridor.

48 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-28 Cost and time for transport from Busan Port to Ulan Ude

Road Rail Road/Rail

Transit Time Transit Time Cost Cost Cost (hours) (hours)

($/TEU) Min Max ($/TEU) Min Max ($/TEU)

Busan Port 75 10 20 75 10 20 75

Busan ~ 358 4 7 150 4.8 6.8 150 Kansung/Kangnung

Kansung/Kangnung ~ 6001 51 291 NA NA NA 600 Kosong (Border)

Kosong ~ Sonbong 3252 16.33 32.53 196 8.3 11.5 196

Sonbong ~ Hasan 2184 14 34 2184 14 34 218 (Border)

Hasan ~ Ulan Ude 2,0035 61.76 123.56 636 47.5 94 636

Total (Busan ~ Kansung) 433.0 14 27 225 14.8 26.8 225.0 (Busan ~ Ulanude) 3,579.0 144.0 215.0 1,875.0

$/km 0.74 - 0.36

1. Data based on the cost and transit time of road distance between Sokcho and Gumgangsan from Hyundai-Asan Co. Ltd. 2. The cost assumed at US$0.50 per km 3. Estimates based on the min and max transit time using maximum speed (40km/h) and minimum speed (20km/h) in DPRK 4. Estimate based on the cost and transit time of Wonjong ~ Quanhe 5. Average trucking charge (15 tons) between Moscow ~ Ust-Kamenogorsk (3,775km) and Moscow ~ Novosibirsk (3,785km) 6. Estimates based on a maximum speed of 60km/h and a minimum speed of 30km/h

Figures 4-15 and 4-16 represent the road and the rail travel times of Corridor 3, the route between Busan Port and Ulan Ude. Figure 4-17 shows the cost-distance relationship in Corridor 3 by transport mode. Due to the extended length of this corridor and the transport costs in some regions through which this corridor passes, the increased transport times and costs at the border crossings represent a much smaller percent of the total time and cost than with Corridors 1 and 2.

49 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-29 Rail route (I-3.1) from Busan Port to Ulan Ude

Rail

Cost Transit Time (hours)

($/TEU) Min Max Busan Port 75 10 20 Busan ~ Kansung/Kangnung 150 4.8 6.8 Kansung/Kangnung ~ Kosong (Border) NA1 NA1 NA1 Kosong ~ Sonbong 196 8.3 11.5 Sonbong ~ Hasan (Border) 218 1 3 Hasan ~ Ulan Ude 636 47.5 94 Total (Busan ~ Kansung) 225 14.8 26.8 (Busan ~ Ulanude) - - - $/km 1. Missing link

Table 4-30 Intermodal route (I-3.2) from Busan Port to Ulan Ude

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Busan Port 75 10 20 -

Busan ~ Kansung/Kangnung 358 4 7 Road

Kansung/Kangnung ~ Kosong (Border) 600 5 29 Road

Kosong ~ Sonbong 196 8.3 11.5 Rail

Sonbong ~ Hasan (Border) 218 1 3 Rail

Hasan ~ Ulan Ude 636 47.5 94 Rail Total (Busan ~ Kansung) 433 14 27 (Busan ~ Ulanude) 2,083.0 75.8 164.5 $/km 0.41

50 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-31 Cost and time for transport from Yokohama Port to Ulan Ude

Road Rail Road/Rail Transit Time Transit Time Cost Cost Cost (hours) (hours) ($/TEU) Min Max ($/TEU) Min Max ($/TEU) Yokohama Port 168 NA NA 168 NA NA 168

Yokohama Port ~ 430 72 98 430 72 98 430 Busan Port

Busan Port 75 10 20 75 10 20 75

Busan ~ 358 4 7 150 4.8 6.8 150 Kansung/Kangnung Kansung/Kangnung ~ 600 5 29 NA NA NA 600 Kosong (Border)

Kosong ~ Sonbong 325 16.3 32.5 196 8.3 11.5 196

Sonbong ~ Hasan 218 1 3 218 1 3 218 (Border)

Hasan ~ Ulan Ude 2,003 61.7 123.5 636 47.5 94 636 Total 4,177.0 - - - - - 2,473.0 (Yokohama ~ Ulanude) $/km - - -

Figure 4-15 Busan ~ Ulan Ude transit time (road)

250

215.0

200

156.5 150

Hours 98.0 100 91.5

88.5 Min 63.9 56.0 Max 61.9 50 37.5 36.3 Average 19.0 35.3 15.020.0 27.0 10.0 14.0 0 20.5 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 Distance (km)

51 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Figure 4-16 Busan ~ Ulan Ude transit time (rail)

140

Min 135.3 120 Max Average 100 103.45

71.6 Hours 60

38.3 40 32.7

26.8 26.8 20 20 20.8 23.1 15 20.8 10 14.8 14.8 0 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 Distance (km)

Figure 4-17 Cost-Distance (Busan ~ Ulan Ude)

4000

3579 3500 Road Rail 3000 Road/Rail 2500

2000 1875 1576

Cost($/TEU) 1500 1033 1000 1239 1275

825 500 639 433 75 0 225 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 Distance (km)

52 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

4.4 CORRIDOR 4: RAJIN/SONBONG–JILIN–CHANGCHUN– ULANHOT–SUMBER–ULAANBAATAR Corridor 4 provides Mongolia and China with a main exit to Japan, the ROK, and the Pacific. As this corridor spreads over 4 countries, it can be activated and made efficient only with positive cooperation among countries. The UNDP has led to the Tumen River Area Development Program, which covers bordering areas of the DPRK, China, and the Russian Federation, since 1991.

4.4.1 Significance Corridor 4 seems especially important to China, the ROK, and Japan, though the route is also important to Mongolia which can secure another sea access point at the East Sea in addition to Corridor 3. Corridor 4 gives these three countries a good opportunity to establish more efficient transport networks than at present. An example of this is the Hunchun-Busan corridor. At present, most of the freight between the two points is transported via Dalian. In this case, not only is the total transported distance too long (2,300 km), but also there is the high cost of at least 6 days and US$1,400 per TEU (see Table 4-32). However, if Corridor 4 becomes available, the total distance is greatly reduced to 927 km, transport time to 2.5 days, and cost to about US$1,250 and TEU. As a result, Corridor 4 can reduce transport time and cost by 3.5 to 8.5 days and US$100 to $700 per TEU between Hunchun and Busan.

Table 4-32 Comparison of Routes in Corridor 4 and 2: Hunchun-Busan

Items Corridor 2 Corridor 4 Land Hunchun-Dalian (Road) Hunchun-Dalian (Rail) Hunchun-Rajin (Road) Distance (km) about 1,300 1,296 93 Time (days) 4~5 10 0.5 Cost (US$/TEU) 1,300 800 600~700 Sea Dalian-Busan Dalian-Busan Rajin-Busan Distance (km) about 1,000 about 1,000 834 Time (days) 2 2 2 Cost (US$/TEU) 600 600 600 Total (Road-Sea) (Railway-Sea) (Road-Sea) Distance (km) 2,300 2,300 927 Time (days) 6~7 8~11 2.5 Cost (US$/TEU) 1,900 1,400 1,200~1,300 Notes: 1) In the case of ―Land‖, customs clearance procedures and transshipment due to the difference of railway gauges, etc., are considered for the estimation of transport time and cost. 2) In the case of ―Sea‖, time and cost for shipment at each stopover port are considered. Sources: Estimated based on Cho 1999.

Corridor 4 also enables great curtailment of cost between the Chinese North-East three provinces (CNETP) of Liaoning, Jilin, and Heilongjiang and Japan. At present, trade between the two regions depends mainly on Corridor 2, which passes through the Harbin- Dailian land corridor and the Dalian-Niigata sea route. This combination of 1,940 km

53 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

requires 17 to 20 days and US$1,270 per TEU for container cargo transport between Changchun and Niigata (see Table 4-33). Corridor 4, on the other hand, is expected to serve as a more economical trade corridor. If Zarubino Port is chosen, transport distance between Changchun and Niigata decreases to 1,553 km, and time and cost also comes down to 8 to 11 days and US$920 per TEU. Even if Rajin Port is used instead of Zarubino Port, Corridor 4 is also expected to provide a similar level of time and cost reduction. In consequence, China and Japan can save as much as 50 percent and 25 percent of present total transport time and cost, respectively, with Corridor 4.

4.4.2 Current Situation and Prospects Ports: Two Russian ports, Zarubino and Posiet, show a far lower level of freight handling records in comparison with their capacities. Those ports leave over 50 percent of their capacities unused (Table 4-34). According to KOTRA and ERINA, there are a number of problems in using these ports as subregional commercial ports. These include the port facilities and the erosion of wharves and loading/unloading facilities. In addition, storage facilities like refrigeration stores are reported to require further improvements. Meantime, Rajin, a free trade seaport of the DPRK, has over twice the capacity of Zarubino or Posiet. As of 1993, the annual freight handling capacity of Rajin Port was known to be about 3 million tons with the 120-ton cranes. The government of the DPRK planned to promote the capacity to 17 million tons by 2000 and to 100 million tons by 2010. However, it is reported that the plan has not been implemented. As of 1993, the facilities of Rajin Port were not fully used: only 1.1 million tons (35 percent) of its capacity were in use.

Table 4-33 Comparison of Routes in Corridor 4 and 2: Changchun-Niigata

Items Corridor 2 Corridor 4 Land: Railway Changchun-Dalian Changchun-Zarubino Changchun-Rajin Distance (km) 702 673 694 Time (days) 6~9 5~8 5~8 Cost (US$/TEU) 320 420 500 Sea Dalian-Niigata Zarubino-Niigata Rajin-Niigata Distance (km) 1,940 880 930 Time (days) 11 3 3 Cost (US$/TEU) 950 500 500 Total Distance (km) 2,642 1,553 1,624 Time (days) 17~20 8~11 8~11 Cost (US$/TEU) 1,270 920 1,000 Notes: 1) In the case of Land, customs clearance procedures and transshipment due to the difference of railway gauges, etc., are considered for the estimation of transport time and cost. 2) In the case of Sea, time and cost for shipment at each stopover port are considered. 3) It is assumed that one day is spent for shipment at each stopover port. 4) 18 tons are calculated into one TEU. Sources: S. Kim 2000.

54 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-34 Statistics of three ports on Corridor 4 unit: thousands of tons Handling Freight Ports As of Balance Capacity after Expansion Capacity Handled Zarubino 1995 1,200 500 +700 5,000 (final) Posiet 1998 1,500 198 +1,302 n/a 17,000 (2000) Rajin 1993 3,000 1,100 +1,900 100,000 (2010) Sources: ERINA. 1996. North-East Asia. Tokyo: Mainichi. pp. 20 (Recited from Cho 1999). PADECO 1999: 37~38 (See References).

Railway: All sections of Corridor 4 consist of non-electrified, single-track railway (Figure 4-18). If Zarubino or Posiet is chosen as a seaport, transshipment is needed at the border between Russia and China: Russian rails use broad gauge, while Chinese use standard gauge. However, both standard and wide gauges are available between Kraskino and Hunchun, where dual gauge rail tracks were constructed in 1999 (ERINA 2002). On the contrary, if Rajin is used for a seaport, transshipment is not needed at borders between the DPRK and China, because both countries are using standard gauge. This is the biggest benefit of the Rajin corridor that enables more efficient and faster transport than the Zarubino (Posiet) corridor. By rail the distance between Rajin and Sumber at the Mongolian border (rail is not currently available in Mongolia for this corridor) is 1,213 km (Table 4-35). More than 1,100 km are in China alone.

Figure 4-18 Present conditions of railway, Corridor 4 (Rajin Alternative)

Corridor 4: Railway Double Track Standard Gauge Single Track Broad Gauge Missing Link

Wonjong Changchun Ulanhot

54 37 436 333 82 254 17 Rajin Quanhe Baicheng Yoshi Sumber Ulanbaatar

DPRK China Mongolia

Sources: Created based on National Reports, Kim et al. (2001), ERINA (2002: 33), and Maps produced by UNDP (2000a; 2000b).

The combination of railway and sea transport through Corridor 4, however, has several problems to be resolved. First, railway and related transshipment facilities need to be modernized and improved. Present single-tracked and non-electrified railway, which causes slow trains and the shortage of transport capacity, does not meet with the requirements of a major subregional corridor. Transshipment congestion should also be cleared at the Kraskino and Hunchun border stations. Second, three ports on Corridor 4, Zarubino, Posiet,

55 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

and Rajin, need to improve their facilities. For example, at present container cargo transport is not available through the Zarubino corridor, as Zarubino Port has no container cargo handling facilities. Lastly, non-physical, institutional obstacles should be cleared. The short transport distance of Corridor 4 does not result directly in the reduction of transport time due to uncoordinated border crossing procedures that require excessive amounts of time.

Table 4-35 Rail distance between Rajin/Sonbong to Ulaanbaatar

Country From To Distance (km) DPRK Rajin Wonjong 541 DPRK/China Border Wonjong Quanhe 37 Quanhe Changchun 436 China Changchun Yorshi 669 China/Mongolia Yorshi Sumber 17 Border Mongolia Sumber Ulaanbaatar NA2 TOTAL (Rajin ~ Ulaanbaatar) 1. Data from UNDP ― DPRK: Rajin-Wonjong Road Project, Prefeasibility Study Report(2001)‖ 2. Missing link

Road: Chinese sections of the roadway portion of Corridor 4 are in relatively good condition. At present, Class III or higher paved road is available between Ulanhot and Hunchun (Figure 4-19) The Chinese government has a plan to construct an expressway for the Hunchun-Changchun section. The Hunchun-Kraskino section is concrete-paved, and 9 to 12 m wide (Class III). The section from Zarubino or Posiet to Kraskino is partly paved (S. Kim 2000), and a new road was completed for the Quanhe-Hunchun section in 2000 (ERINA 2002). In the Rajin route, the 46 km section between Seonbong and Wonjeong is frequently mentioned as a bottleneck area with the most urgent need for improvement (Kim et al. 2002; Lee et al. 2002; ERINA 2002; PADECO 1999). It is understood that this section is now unpaved, and container trucks have difficulties driving on this road, especially in bad weather. The DPRK plans to construct an expressway for the section and further progress of the plan requires funding. By road the distance between Rajin and Ulaanbaatar is 2,538 km (Table 4-36). Nearly 1,400 km are in China and over 1,000 km are in Mongolia. The road distance in China in this corridor is slightly longer than the rail distance.

56 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Figure 4-19 Present conditions of road, Corridor 4 (Rajin Alternative)

Corridor 4: Road Motorway Unclassified/Others Paved Road Planned/Under Construction Unpaved Road

Quanhe Qianguozhen Ulanhot Sumber Erdene Ulaanbaatar 2 2/4 4 2 2 1 1 1 2 2 54 37 670 155 211 85 240 25 80 853 53 43 32 Rajin Wonjong Changchun Baicheng Yoshi Nomrog Baganuur Nalaikh

DPRK China Mongolia

Sources: Created based on National Reports, Kim et al. (2001), and Maps produced by UNDP (2000a; 2000b).

The Chinese section of Corridor 4 can also be extended to Mongolia. At present, only 11.9 percent (132 km) of the total Mongolian section (1,106 km) is paved (Road Department of Mongolia 2001). Despite the low pavement ratio, the Mongolian government has a strong will to improve the Sumber-Ulaanbaishint section as a major horizontal transport axis of Mongolia. This is a long-term plan, and this road was named the Millennium Road. UNESCAP also classified this section as a part of the Asian Highway‘s North-East Asian section. If this road is completed, Corridor 4 is also expected to perform as a trans- continental corridor that extends from far eastern Asia via Central Asia to Europe.

Table 4-36 Road distance between Rajin/Sonbong to Ulaanbaatar

Country From To Distance (km)

DPRK Rajin Wonjong 541

DPRK/China Border Wonjong Quanhe 37

Quanhe Chanchun 670 China Chanchun Yorshi 691 China/Mongolia Yorshi Nomrog 25 Border

Nomrog Sumber 80 Mongolia Sumber Ulaanbaatar 981

TOTAL (Rajin ~ Ulaanbaatar) 2,538 1. Data from UNDP ― DPRK: Rajin-Wonjong Road Project, Prefeasibility Study Report(2001)‖

57 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

4.4.3 Transport Cost and Time Due to limited information on rail transport in each of the countries through which Corridor 4 passes, the rail analysis presented below is based on rough estimates for costs and travel times in each country.. Table 4-37 below shows the cost and time to transport a container from Rajin port in the DPRK to Ulaanbaatar in Mongolia. In China, the cost of road transportation is about US$990 per TEU and the rail cost is about US$198 per TEU. In Mongolia, the road cost is about US$135 per TEU for transporting 981km (from Sumber to Ulaanbaatar). Transportation by rail from Rajin to the Mongolian border, with transportation by road from the border to Ulaanbaatar results in a transport cost of US$747—the cheapest alternative. Due to feasibility and funding considerations, other alternatives should be considered. An all-road route, as well as routes with rail only in the DPRK, rail only in China, or rail in both the DPRK and China are all possible alternatives. Results from the analysis of these alternatives are contained in Tables 4-38 through 4-41. Table 4-42 shows additional transport costs for connecting Japan to this corridor.

Table 4-37 Cost and time for transport from Rajin/Sonbong Port to Ulaanbaatar

Road Rail Road/Rail Transit Time Transit Time Cost Cost Cost (hours) (hours) ($/TEU) Min Max ($/TEU) Min Max ($/TEU) Rajin Port 180 48 96 180 48 96 180 Rajin~Wonjong 271 1.42 2.72 10.83 1.42 2.72 10.8 Wonjong~Quanhe (Border) 218 1 3 218 1 3 218 Quanhe~ Changchun 490 9.5 19 78 12 23 78 Changchun ~ Yorshi 500 12 24 120 14 26 120 Yorshi ~ Sumber (Border) 16.1 1.9 4.2 5 1 2 5 Sumber~ Ulaanbaatar 135.4 19 25 NA4 NA4 NA4 135.4 Total (Rajin ~ Ulaanbaatar) 1,566.5 92.8 173.9 - - - 747.2 (Rajin~ Yorshi) 1,415.0 71.9 144.7 606.8 76.4 150.7 606.8 $/km 0.62 - 0.34 1. The cost assumed at 0.5$ per km 2. Estimates based on the min and max transit time using maximum speed(40km/h) and minimum speed(20km/h) in DPRK 3. The cost assumed at 0.2$ per km 4. Missing Link

Figures 4-20 and 4-21 represent the road and the rail travel times of Corridor 4, the route between Rajin Port and Ulaanbaatar. Figure 4-22 shows the cost-distance relationship in Corridor 4 by transport mode. Due to the extended length of this corridor and the higher road transport costs in the CNETP, the increased transport times and costs at the border

58 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

crossings represent a much smaller percent of the total time and cost than with Corridors 1 and 2. Using rail from Rajin to Mongolia, however, reduces the total transport costs while the border-crossing costs remain the same. As a result, for this road/rail alternative, border- crossings represent 30 percent of the total transport cost.

Table 4-38 Road route (U-4.1) from Rajin/Sonbong Port to Ulaanbaatar

Road Cost Transit Time (hours) ($/TEU) Min Max Rajin Port 180 48 96 Rajin~Wonjong 27 1.4 2.7 Wonjong~Quanhe (Border) 218 1 3 Quanhe~ Changchun 490 9.5 19 Changchun ~ Yorshi 500 12 24 Yorshi ~ Sumber (Border) 16.1 1.9 4.2 Sumber~ Ulaanbaatar 135.4 19 25 Total 1,566.5 92.8 173.9 (Rajin ~ Ulaanbaatar) $/km 0.62

Table 4-39 Intermodal route (I-4.2) from Rajin/Sonbong Port to Ulaanbaatar

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Rajin Port 180 48 96 - Rajin~Wonjong 10.8 1.4 2.7 Rail Wonjong~Quanhe( Border) 218 1 3 Rail Quanhe~ Changchun 490 9.5 19 Road Changchun ~ Yorshi 500 12 24 Road Yorshi ~ Sumber (Border) 16.1 1.9 4.2 Road Sumber~ Ulaanbaatar 135.4 19 25 Road Total 1,550.3 92.8 173.9 (Rajin ~ Ulaanbaatar) $/km 0.61

59 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-40 Intermodal route (I-4.3) from Rajin/Sonbong Port to Ulaanbaatar

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Rajin Port 180 48 96 - Rajin~Wonjong 10.8 1.4 2.7 Rail Wonjong~Quanhe (Border) 218 1 3 Rail Quanhe~ Changchun 78 12 23 Rail Changchun ~ Yorshi 120 14 26 Rail Yorshi ~ Sumber (Border) 5 1 2 Rail Sumber~ Ulaanbaatar 135.4 19 25 Road Total 747.2 96.4 177.7 (Rajin ~ Ulaanbaatar) $/km 0.34

Table 4-41 Intermodal route (I-4.4) from Rajin/Sonbong Port to Ulaanbaatar

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Rajin Port 180 48 96 - Rajin~Wonjong 27 1.4 2.7 Road Wonjong~Quanhe(Border) 218 1 3 Road Quanhe~ Changchun 78 12 23 Rail Changchun ~ Yorshi 120 14 26 Rail Yorshi ~ Sumber (Border) 5 1 2 Rail Sumber~ Ulaanbaatar 135.4 19 25 Road Total 763.4 96.4 177.7 (Rajin ~ Ulaanbaatar) $/km 0.35

60 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-42 Cost and time for transport from Tokyo to Ulaanbaatar

Road Rail Road/Rail Transit Time Transit Time Cost Cost Cost (hours) (hours) ($/TEU) Min Max ($/TEU) Min Max ($/TEU) Tokyo ~ Niigata Port 1,114 51 51 714 481 481 714 Niigata Port 136 NA NA 136 NA NA 136

Niigata Port ~ 1 1 1 1 Rajin Port 850 48 48 850 48 48 850 Rajin Port 180 48 96 180 48 96 180 Rajin~Wonjong 27 1.4 2.7 10.8 1.4 2.7 10.8 Wonjong~Quanhe (Border) 218 1 3 218 1 3 218 Quanhe~ Changchun 490 9.5 19 78 12 23 78 Changchun ~ Yorshi 500 12 24 120 14 26 120 Yorshi ~ Sumber (Border) 16.1 1.9 4.2 5 1 2 5 Sumber~ Ulaanbaatar 135.4 19 25 NA NA NA 135.4 Total (Tokyo ~ Ulaanbaatar) 3,666.5 - - - - - 2,447.2 $/km - - - 1. Average transit time

Figure 4-20 Rajin ~ Ulaanbaatar transit time (road)

180

173.9 Min 150 Max 144.7 148.9 Average

120 120.7 133.4 108.3 111.4 98.7 90 96.0 90.3

Hours 92.8 76.1 71.9 72.0 73.8 60 59.9 50.4 48.0 30

0 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 Distance (km)

61 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Figure 4-21 Rajin ~ Ulaanbaatar transit time (rail)

160 152.7

150.7 140

124.7 120 115.1 113.6 100 101.7 93.6 96.0 77.4 80 76.1

Hours 76.4 72.0 60 62.4 50.4 Min 48.0 40 Max Average 20

0 0 200 400 600 800 1000 1200 Distance (km)

Figure 4-22 Cost–Distance (Rajin ~ Ulaanbaatar)

1600 1415 1566.5 1400 1431.1

1200

1000

915 800 747.2 606.8 611.8

Cost($/TEU) 600 486.8 606.8 611.8

400 486.8 408.8 Road Rail 200 180 Road/Rail

0 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 Distance (km)

62 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

CORRIDOR 5: NAKHODKA/VLADIVOSTOK-USSURISK- POGRANICHNY-HARBIN-MANZHOULI-CHITA-ULAN UDE

Corridor 5 is another major corridor through which the Chinese North-EastNorth-East provinces can connect to the East Sea and the Pacific regions with Corridor 4. This corridor extends from Nakhodka, Vostochny, and Vladivostok, three of Russia‘s five largest seaports, via Harbin, the largest city of Heilongjiang Province, and finally links up with the TSR in Karymskaya (or Chita if traveling by road).

4.5.1 Significance The biggest value of Corridors 4 and 5 is in their complementarity for the Dalian-Harbin corridor (Corridor 6). Despite its major role in the economic exchange of the Chinese North-EastNorth-East provinces with the ROK and Japan, Corridor 2 now faces continuing pressure to develop transport capacity. The improvement of Corridor 2 alone does not seem to be able to deal effectively with rapidly growing transport demands in those regions. Instead, it seems more realistic to find other alternative routes. Corridor 5, together with Corridor 4 mentioned earlier, seems reasonable as an alternative of Corridor 6 (Figure 4-23). These two corridors can not only disperse traffic demands loaded on Corridor 6 but also serve as more economically efficient transport corridors enabling a great degree of transport time and cost reduction. Take, for example, the transport between Harbin and Niigata, and between Suifenhe and Niigata. At present, transport is by a combination of Corridor 6 and by sea. In this case, the Harbin-Niigata route of 2,884 km needs a transport time of 18 to 21 days and the cost of US$1,340 per TEU, and the Suifenhe-Niigata route of 3,432 km takes 21 to 25 days and costs US$ 1,510 per TEU (see Table 4-43). However, if Corridor 5 becomes activated, the transport time and cost altogether can be greatly reduced. The combination of Corridor 5 and sea needs no more than 13 days and US$1,190 per TEU for the Harbin-Niigata route (1,812 km), and at most seven days and US$1,020 per TEU for the Suifenhe-Niigata route (1,264 km). In sum, we can expect the curtailment of 40 to 60 percent of transport time and 10 to 30 percent of transport cost with Corridor 5.

63 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Figure 4-23 Potential East Trade Corridor utilizing Corridor 4 and Corridor 5

Source:Modified from MOT of Japan, 2000, Survey on improving the basis of international logistics in the Sea of Japan.

4.5.2 Current Situation and Prospects Ports: Corridor 5 includes two Russian major ports: Nakhodka and Vladivostok. These ports have been mainly used as connecting points to the TSR by Japan and the ROK. However, the great decrease of freight volume transported via the TSR, which has continued since the late 1980s, has resulted in the low level of freight-handling records of the three ports. As of 1993, 30 to 50 percent of those ports‘ freight-handling capacity was not in use (see Table 4-44). Although Vladivostok Port has the container-handling capacity of no less than 100,000 TEU, container cargos for the TSR are mostly handled at Nakhodka Ports. The improvement of transshipment facilities and the simplification of customs clearance and administrative procedures are frequently mentioned as most urgent future tasks at each of these ports.

64 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-43 Comparison of Routes in Corridor 5 and 2: Harbin/Suifenhe-Niigata Items Corridor 2 Corridor 5 Corridor 2 Corridor 5 Land: Railway Harbin-Dalian Harbin-Vostochny Suifenhe-Dalian Suifenhe-Vostochny Distance (km) 944 1,032 1,492 484 Time (days) 7~10 6~10 10~14 2~4 Cost (US$/TEU) 390 690 560 520 Sea Dalian-Niigata Vostochny-Niigata Dalian-Niigata Vostochny-Niigata Distance (km) 1,940 780 1,940 780 Time (days) 11 3 11 3 Cost (US$/TEU) 950 500 950 500 Total Distance (km) 2,884 1,812 3,432 1,264 Time (days) 18~21 9~13 21~25 5~7 Cost (US$/TEU) 1,340 1,190 1,510 1,020 Notes: 1) In the case of ―Land‖, customs clearance procedures and transshipment due to the difference of railway gauges, etc., are considered for the estimation of transport time and cost. 2) In the case of ―Sea‖, time and cost for shipment at each stopover port are considered. 3) It is assumed that one day is spent for shipment at each stopover port. 4) 18 tons are calculated into one TEU. Sources: S. Kim 2000.

Table 4-44 Facts of two ports on Corridor 5 unit: thousands of tons Handling Capacity after Ports As of Freight Handled Balance Capacity Expansion Nakhodka 1993 15,000 11,040 +3,960 n/a Vladivostok 1993 8,000 4,640 +3,360 n/a Sources: ERINA. 1996. North-East Asia. Tokyo: Mainichi. pp. 20 (Recited from Cho 1999).

Railway: Broad gauge rails are in use in Russia (Figure 4-24). Electrified, double-track railways are available between the ports and Ussuriysk, and non-electrified, single-track railway for the Ussuriysk-Suifenhe and the Manzhouli-Karymskaya sections. Contrary to the Russian Federation, China uses standard gauge track. Therefore, transshipment is needed at the borders between the two countries. Non-electrified, double-track rails are in operation for the Mudanjiang-Hailar line, and the remaining sections in China are composed of non-electrified, single track rails. In taking into consideration the major role of Corridor 5 which supports the transport between both the ROK and Japan and Heilongjiang Province, special attention has to be given to the Suifenhe-Grodekovo section. This section of 26 km can produce a huge impact on the efficiency of the entire Corridor 5. At present, as both wide and standard gauge rails are available for this section, freight for China is mostly handled in Suifenhe, and that for the Russian Federation in Grodekovo. Both stations, meantime, handle far less transshipment freight than their capacities allow. As of 1996, just three percent of Suifenhe‘s freight handling capacity and 60 percent of Grodekovo‘s were in use (see Table 4-45). Therefore, no transshipment bottlenecks exist at either station due to transshipment capacity issues.

65 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Figure 4-24 Present conditions of railway, Corridor 5

Corridor 5: Railway Double Track Standard Gauge Single Track Broad Gauge Missing Link

266 Nakhodka Mudanjiang Hailar Zabaykalsk Ulan Ude

107 129 193 355 299 465 186 30 366 653 26 Vladivosk Ussuryisk Grodekovo suifenhe Harbin Qiqihar Manzhouli Karymskaya

Electrified Electrified

Russia China Russia

Sources: Created based on National Reports, Kim et al. (2001), ERINA (2002: 33), and Maps produced by UNDP (2000a; 2000b).

Table 4-45 Capacity and utilization of the Suifenhe-Grodekovo section

Capacity (1996) Records (1996) Direction Railway Road Railway Road

Freight China to Russia (Suifenhe) 5,000* 149 (3%) 100 1,000 (1,000 tons) Russia to China (Grodekovo) 1,300~1,600 876 (60%) (10%) Passenger (1,000 persons) 1,000 500 485 (32%) Note: * This include the capacity of facilities supposed to be completed in 2000. Numbers in parentheses are utilization to total capacity ratios by modes. Source: S. Kim 2000.

Nonetheless, the capacity of Grodekovo Railway Station needs to be expanded within the near future. As shown in Table 4-29, although some 85 percent of the total cargo volume that needs transshipment is handled at Grodekovo Station, its freight-handling capacity is no higher than 30 percent of Suifenhe Station which handles just 15 percent of the total. Considering that cargo volume using Corridor 5 has gradually increased with the improvement of its general conditions, Grodekovo Station is likely to become a bottleneck which hinders Corridor 5 from performing as a main transport corridor. In addition to the capacity expansion, transshipment facilities at Grodekovo Station, which now depend mainly on manpower, need to be modernized (S. Kim 2000). By rail the distance between Nakhodka and Ulan Ude is 2,968 km and the distance between Vladivostok and Ulan Ude is 2,809 km (Table 4-46). The distance is evenly split between the Russian Federation and China.

66 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-46 Rail distance between Nakhodka to Ulan Ude Country From To Distance (km) Vladivostok Grodekovo 236 Russia Nakhodka Grodekovo 395 Russia/China Border Grodekovo Suifenhe 26 China Suifenhe Manzhouli 1,498 China/Russia Border Manzhouli Zabaykalsk 301 Russia Zabaykalsk Ulan Ude 1,019 TOTAL (Vladivostok ~ Ulan Ude) 2,809 (Nakhodka ~ Ulan Ude) 2,968 1. Data from road distance between Manzhouli ~ Zabaykalsk

Road: In comparison with rail, the utilization of the road network in Corridor 5 for freight transport is very low. No more than 9 percent of the total freight via Corridor 5 travels by road, which corresponds to just 10 percent of the total capacity of the road. Available information suggests that on average the road conditions in Corridor 5 are relatively favorable even for cargo traffic. The entire Russian section consists of paved two lane roads, through which container cargo can pass without any difficulties (Figure 4-25). Although the Grodekovo-Suifenhe section partially includes unpaved roads, they do not produce any serious problems for cargo transport. An expressway is available from Suifenhe via Harbin to Arun Qi. The Chinese government plans to extend this expressway line to Manzhouli. At present, National Highway 301 passes from Arun Qi to Manzhouli (ERINA 2002).UNESCAP designated the section between Nakhodka and Harbin as a subregional Asian Highway route, and the section between Harbin and Chita as an international Asian Highway route. By road the distance between Nakhodka and Ulan Ude is 3,218 km and the distance between Vladivostok and Ulan Ude is 3,049 km, more than 200 km greater than the distance by rail (Table 4-47). The distance is evenly split between the Russian Federation and China.

Figure 4-25 Present conditions of road, Corridor 5

Corridor 5: Road Motorway Unclassified/Others Paved Road Planned/Under Construction Unpaved Road Nakhodka Ussurisk 2/4 267 Suifenhe Harbin Manzhouli Ulan-Ude 4 4 2 2 2 2 2 2 2 98 118 30 180 358 112 183 576 235 30 1,129 Vladivostok Grodekovo Mudnjiang Anda Qiqihar Hailar Zabaykalsk

Russia China Russia

Sources: Created based on National Reports, Kim et al. (2001), and Maps produced by UNDP (2000a; 2000b).

67 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-47 Road distance between Nakhodka to Ulan Ude

Country From To Distance (km) Nakhodka Grodekovo 385 Russia Vladivostok Grodekovo 216 Russia/China Border Grodekovo Suifenhe 30 China Suifenhe Manzhouli 1,644 China/Russia Border Manzhouli Zabaykalsk 30 Russia Zabaykalsk Ulan Ude 1,129 TOTAL (Nakhodka ~ Ulan Ude) 3,218 (Vladivostok ~ Ulan Ude) 3,049

4.5.3 Transport Cost and Time Information on rail is comprehensively reported from both China and the Russian Federation. However, road information from The Russian Federation and border crossing information are have not been reported, and as a result the analysis for this route contains some estimated values. Table 4-48 below shows the cost and time to transport a container from Vladivostok port to Ulan Ude in the Russian Federation via Suifenhe/Manzhouli in China. The road transporting cost in China is about US$1,100 per TEU and takes between 24 hours to 48 hours. The rail transport cost is significantly less and costs only US$227 to transport 1498 km through China. In the Russian Federation, the rail cost between Nakhodka and Godekovo is about US$154 per TEU and US$353 per TEU between Zabaykalsk and Ulan Ude. Transportation entirely by rail results in a transport cost of US$1,034 from Nakhodka and US$960 from Vladivostok—the cheapest alternative. Due to feasibility and funding considerations, other alternatives should be considered. In addition to the less expensive all-rail alternative, an all-road route, as well as the following six rail/road routes are analyzed individually in Tables 4-49 through 4-56:

Intermodal route 1: Russia (rail) – China (rail) – Russia (road)

Intermodal route 2: Russia (rail) – China (road) – Russia (road)

Intermodal route 3: Russia (rail) – China (road) – Russia (rail)

Intermodal route 4: Russia (road) – China (rail) – Russia (rail)

Intermodal route 5: Russia (road) – China (road) – Russia (rail)

Intermodal route 6: Russia (road) – China (rail) – Russia (road) Table 4-57 shows additional transport costs for connecting Japan to this corridor.

68 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-48 Cost and time for transport from Nakhodka/Vladivostok Port to Ulan Ude

Road Rail Road/Rail Transit Time Transit Time Cost Cost Cost (hours) (hours) ($/TEU) Min Max ($/TEU) Min Max ($/TEU) Nakhodka Port 1001 12 22 1001 12 22 100 Vladivostok Port 80 1 2 80 1 2 80 Nakhodka ~ Grodekovo 279.53 6.44 12.84 154 5.3 8.5 154 Vladivostok ~ Grodekovo 1605 3.64 7.24 100 3.5 5.5 100 Grodekovo ~ Suifenhe (Border) 100 1 24 100 12 24 100 Suifenhe ~ Manzhouli 1100 24 48 227.2 24 35 227.2

Manzhouli ~ Zabaykalsk 6 6 6 6 6 6 (Border) 100 1 24 100 12 24 100 Zabaykalsk ~ Ulan Ude 633.57 18.84 37.64 353 12.6 27.5 353 Total (Nakhodka ~ Ulan Ude) 2,313.0 52.2 148.4 1,034.2 66.9 121.0 1,034.2 (Vladivostok ~ Ulan Ude) 2,173.5 49.4 142.8 960.2 65.1 118.0 960.2 $/km (Nakhodka ~ Ulan Ude) 0.72 0.35 0.35 (Vladivostok ~ Ulan Ude) 0.71 0.34 0.34 1. Data from Nakhodka port website 2. Data from Vladivostok port 3. Average trucking charge (15ton) between Moscow ~ Gorokhovech (382km) and Moscow ~ Kostroma (381km) 4. Estimates based on a maximum speed of 60km/h and a minimum speed of 30km/h 5. Average trucking charge (15ton) between Moscow ~ Vladimir (228km) and Moscow ~ Tver (209km) 6. Estimate based on the cost and transit time of Grodekovo ~ Suifenhe 7. Average trucking charge (15ton) between Moscow ~ Novocherkask (1,108km) and Moscow ~ Samara (1,131km)

Figures 4-26 and 4-27 represent the road travel times of Corridor 5, between either Nakhodka or Vladivostok and Ulan Ude. Figures 4-28 and 4-29 indicate the rail travel times. Figures 4-30 and 4-31 show the cost-distance relationship in Corridor 5 by transport mode. Due to the more than 3,000 km length of this corridor, the increased transport times and costs at the border crossings represent a much smaller percent of the total road transport time and cost than with other corridors. Using the cheaper rail-only alternative, however, reduces the total transport costs while the border-crossing costs remain the same. As a result, for this rail alternative, border-crossings represent about 20 percent of the total transport cost.

69 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-49 Rail route (U-5.1) from Nakhodka/Vladivostok Port to Ulan Ude

Rail Cost Transit Time (hours) ($/TEU) Min Max Nakhodka Port 100 1 2 Vladivostok Port 80 1 2 Nakhodka ~ Grodekovo 154 5.3 8.5 Vladivostok ~ Grodekovo 100 3.5 5.5 Grodekovo ~ Suifenhe (Border) 100 12 24 Suifenhe ~ Manzhouli 227.2 24 35 Manzhouli ~ Zabaykalsk (Border) 100 12 24 Zabaykalsk ~ Ulan Ude 353 12.6 27.5 Total (Nakhodka ~ Ulan Ude) 1,034.2 66.9 121.0 (Vladivostok ~ Ulan Ude) 960.2 65.1 118.0 $/km (Nakhodka ~ Ulan Ude) 0.35 (Vladivostok ~ Ulan Ude) 0.34

Table 4-50 Road route (U-5.2) from Nakhodka/Vladivostok Port to Ulan Ude

Road Cost Transit Time (hours) ($/TEU) Min Max Nakhodka Port 100 1 2 Vladivostok Port 80 1 2 Nakhodka ~ Grodekovo 279.5 6.4 12.8 Vladivostok ~ Grodekovo 160 3.6 7.2 Grodekovo ~ Suifenhe (Border) 100 1 24 Suifenhe ~ Manzhouli 1100 24 48 Manzhouli ~ Zabaykalsk (Border) 100 1 24 Zabaykalsk ~ Ulan Ude 633.5 18.8 37.6 Total (Nakhodka ~ Ulan Ude) 2,313.0 52.2 148.4 (Vladivostok ~ Ulan Ude) 2,173.5 49.4 142.8 $/km (Nakhodka ~ Ulan Ude) 0.72 (Vladivostok ~ Ulan Ude) 0.71

70 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-51 Intermodal route (I-5.3) from Nakhodka/Vladivostok Port to Ulan Ude

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Nakhodka Port 100 1 2 - Vladivostok Port 80 1 2 - Nakhodka ~ Grodekovo 154 5.3 8.5 Rail Vladivostok ~ Grodekovo 100 3.5 5.5 Rail Grodekovo ~ Suifenhe (Border) 100 12 24 Rail Suifenhe ~ Manzhouli 227.2 24 35 Rail Manzhouli ~ Zabaykalsk (Border) 100 1 24 Road Zabaykalsk ~ Ulan Ude 633.5 18.8 37.6 Road Total (Nakhodka ~ Ulan Ude) 1,314.7 62.1 131.1 (Vladivostok ~ Ulan Ude) 1,240.7 60.3 128.1 $/km (Nakhodka ~ Ulan Ude) 0.43 (Vladivostok ~ Ulan Ude) 0.43

Table 4-52 Intermodal route (I-5.4) from Nakhodka/Vladivostok Port to Ulan Ude

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Nakhodka Port 100 1 2 - Vladivostok Port 80 1 2 - Nakhodka ~ Grodekovo 154 5.3 8.5 Rail Vladivostok ~ Grodekovo 100 3.5 5.5 Rail Grodekovo ~ Suifenhe (Border) 100 1 24 Road Suifenhe ~ Manzhouli 1100 24 48 Road Manzhouli ~ Zabaykalsk (Border) 100 1 24 Road Zabaykalsk ~ Ulan Ude 633.5 18.8 37.6 Road Total (Nakhodka ~ Ulan Ude) 2,187.5 51.1 144.1 (Vladivostok ~ Ulan Ude) 2,113.5 49.3 141.1 $/km (Nakhodka ~ Ulan Ude) 0.68 (Vladivostok ~ Ulan Ude) 0.69

71 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-53 Intermodal route (I-5.5) from Nakhodka/Vladivostok Port to Ulan Ude

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Nakhodka Port 100 1 2 - Vladivostok Port 80 1 2 - Nakhodka ~ Grodekovo 154 5.3 8.5 Rail Vladivostok ~ Grodekovo 100 3.5 5.5 Rail Grodekovo ~ Suifenhe (Border) 100 12 24 Rail Suifenhe ~ Manzhouli 1100 24 48 Road Manzhouli ~ Zabaykalsk (Border) 100 1 24 Road Zabaykalsk ~ Ulan Ude 353 12.6 27.5 Rail Total (Nakhodka ~ Ulan Ude) 1,907.0 55.9 134.0 (Vladivostok ~ Ulan Ude) 1,833.0 54.1 131.0 $/km (Nakhodka ~ Ulan Ude) 0.61 (Vladivostok ~ Ulan Ude) 0.62

Table 4-54 Intermodal route (I-5.6) from Nakhodka/Vladivostok Port to Ulan Ude

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Nakhodka Port 100 1 2 - Vladivostok Port 80 1 2 - Nakhodka ~ Grodekovo 279.5 6.4 12.8 Road Vladivostok ~ Grodekovo 160 3.6 7.2 Road Grodekovo ~ Suifenhe (Border) 100 1 24 Road Suifenhe ~ Manzhouli 227.2 24 35 Rail Manzhouli ~ Zabaykalsk (Border) 100 12 24 Rail Zabaykalsk ~ Ulan Ude 353 12.6 27.5 Rail Total (Nakhodka ~ Ulan Ude) 1,159.7 57.0 125.3 (Vladivostok ~ Ulan Ude) 1,020.2 54.2 119.7 $/km 0.39 (Nakhodka ~ Ulan Ude) 0.37 (Vladivostok ~ Ulan Ude)

72 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-55 Intermodal route (I-5.7) from Nakhodka/Vladivostok Port to Ulan Ude

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Nakhodka Port 100 1 2 - Vladivostok Port 80 1 2 - Nakhodka ~ Grodekovo 279.5 6.4 12.8 Road Vladivostok ~ Grodekovo 160 3.6 7.2 Road Grodekovo ~ Suifenhe (Border) 100 1 24 Road Suifenhe ~ Manzhouli 1100 24 48 Road Manzhouli ~ Zabaykalsk (Border) 100 1 24 Road Zabaykalsk ~ Ulan Ude 353 12.6 27.5 Rail Total (Nakhodka ~ Ulan Ude) 2,032.5 46.0 138.3 (Vladivostok ~ Ulan Ude) 1,893.0 43.2 132.7 $/km (Nakhodka ~ Ulan Ude) 0.65 (Vladivostok ~ Ulan Ude) 0.64

Table 4-56 Intermodal route (I-5.8) from Nakhodka/Vladivostok Port to Ulan Ude

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Nakhodka Port 100 1 2 - Vladivostok Port 80 1 2 - Nakhodka ~ Grodekovo 279.5 6.4 12.8 Road Vladivostok ~ Grodekovo 160 3.6 7.2 Road Grodekovo ~ Suifenhe (Border) 100 1 24 Road Suifenhe ~ Manzhouli 227.2 24 35 Rail Manzhouli ~ Zabaykalsk (Border) 100 1 24 Road Zabaykalsk ~ Ulan Ude 633.5 18.8 37.6 Road Total (Nakhodka ~ Ulan Ude) 1,440.2 52.2 135.4 (Vladivostok ~ Ulan Ude) 1,300.7 49.4 139.8 $/km (Nakhodka ~ Ulan Ude) 0.47 (Vladivostok ~ Ulan Ude) 0.45

73 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-57 Cost and time for transport from Tokyo to Ulan Ude Road Rail Road/Rail Transit Time Transit Time Cost Cost Cost (hours) (hours) ($/TEU) Min Max ($/TEU) Min Max ($/TEU) Tokyo ~ Fushiki-Toyama Port 1,291 61 61 NA NA NA 1,291 Fushiki-Toyama Port 279 NA NA 279 NA NA 279

Fushiki-Toyama Port ~ 1 1 1 1 Nakhodaka/Vladivostok Port2 872 240 240 872 240 240 872 Nakhodka Port 100 1 2 100 1 2 100 Vladivostok Port 80 1 2 80 1 2 80 Nakhodka ~ Grodekovo 279.5 6.4 12.8 154 5.3 8.5 154 Vladivostok ~ Grodekovo 160 3.6 7.2 100 3.5 5.5 100 Grodekovo ~ Suifenhe (Border) 100 1 24 100 12 24 100 Suifenhe ~ Manzhouli 1100 24 48 227.2 24 35 227.2 Manzhouli ~ Zabaykalsk (Border) 100 1 24 100 12 24 100 Zabaykalsk ~ Ulan Ude 633.5 18.8 37.6 353 12.6 27.5 353 Total (Tokyo~Nakhodka ~ 4,775.0 - - - - - 3,476.2 Ulan Ude) (Tokyo~Vladivostok ~ Ulan Ude) 4,615.0 - - - - - 3,402.2 $/km - - - 1. Average transit time 2. Data from Fushiki-Toyama port ~ Vostochny port

Figure 4-26 Nakhodka ~ Ulan Ude transit time (road)

160

140 Min 148.4 Max 120 Average 110.8

100 100.3

80 86.8 Hours 59.6 72.1 60 52.2

40 38.8 32.4

23.6 33.4 20 8.4

0 0 500 1000 1500 2000 2500 3000 3500 Distance (km)

74 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Figure 4-27 Vladivostok ~ Ulan Ude transit time (road)

160 Min 142.8 140 Max Average 120

100 105.2 96.1

80 81.2 Hours 60 67.9 55.4 49.4 40 33.2 29.6 30.6 20 19.4 2 1.5 5.6 1 0 0 500 1000 1500 2000 2500 3000 3500 Distance (km)

Figure 4-28 Nakhodka ~ Ulan Ude transit time (rail)

140

Min 121.0 120 Max Average 100 94.0

80 69.5 66.9

Hours 60 55.9

40 42.3 34.5 26.4 20 10.518.3 8.4 6.3 0 0 300 600 900 1200 1500 1800 2100 2400 2700 3000 Distance (km)

75 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Figure 4-29 Vladivostok ~ Ulan Ude transit time (rail)

140

Min 120 Max 118.0 Average 100 91.6

66.5 65.1 Hours 60 53.5

40 40.5 31.5 24.0 20 16.5 2.0 1.5 7.5 1.0 6.0 0 4.5 0 300 600 900 1200 1500 1800 2100 2400 2700 3000 Distance (km)

Figure 4-30 Cost-Distance (Nakhodka ~ Ulan Ude)

2500

Road 2,313.0 2000 Rail Road/Rail 1,579.5 1500 1,679.5

1000 1034.2 Cost($/TEU)

681.2 581.2 500 479.5 581.2 354 254.0 254 100 0 0 300 600 900 1200 1500 1800 2100 2400 2700 3000 3300 Distance (km)

76 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Figure 4-31 Cost-Distance (Vladivostok ~ Ulan Ude)

2500

Road 2173.5 2000 Rail Road/Rail

1500 1440 1540

1000 960.2 Cost($/TEU)

607.2

500

240 180 80 0 0 300 600 900 1200 1500 1800 2100 2400 2700 3000 3300 Distance (km)

77 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

4.6 CORRIDOR 6: DALIAN–SHENYANG-CHANGCHUN-HARBIN- HEIHE-BLAGOVESHCHENSK-BELOGORSK This corridor connects the ROK and Japan with the CNETP. Those regions have constantly expanded their economic exchanges with each other. Japan and the ROK already have become not only major investors but also the most important trade partners for the CNETP. Their economic cooperation is expected to strengthen further in the future. The Dalian- Svobodnyy corridor is especially important to support those three countries‘ transport demands.

4.6.1 Significance The CNETP compose the Bohai economic circle with the Greater Beijing region (Beijing, Tianjin, and Hebei Provinces). The Bohai region is one of the three major economic areas in China with the Zhu River Delta (Shenzhen, Guangzhou, and Hongkong) and the Chiang River Delta (Shanghai). As of 1999, the CNETP hold 8.3 percent of China‘s total population, and 11.1 percent of its GDP (Table 4-58). Populations of cities in the region are shown in Figure 4-32. This region has a huge market backed up by a population of more than 100 million and great growth potential driven by the GRDP of more than US$100 billion. This has resulted in the region being attractive to foreign investors.

Table 4-58 Major indicators of Chinese North-East three provinces, 2002

Population Gross Regional Domestic Product Regions 10,000 % Share* 100 milion yuan %Share* North-East Three Provinces 10,715.0 8.3 11,586.5 11.1 Liaoning 4,203.0 3.3 5,458.2 5.2 Jilin 2,699.0 2.1 2,246.1 2.1 Heilongjiang 3,813.0 3.0 3,882.2 3.7 China 128,453.0 100.0 104,790.6 100.0 Note: * % share to each country. Source: Statistical Yearbook of China, www.stats.gov.cn

Japan and the ROK are playing a crucial role in CNETP‘s economy. Those two countries are not only major investors but also major tourism consumers to the CNETP. For example, 63.1 percent of Dalian‘s total overseas tourists in 1997 and 36.2 percent of Dalian‘s total foreign direct investment in 1998 are from Japan or the ROK (see Table 4-59). A number of Japanese and Korean companies have established factories in the CNETP, which are producing various manufactured goods. In most cases, those factories are specialized in the assembly process. Parts and components for finished products are imported from Japan and the ROK, because the CNETP do not have any industrial basis for their production. This is one factor that leads to the increase of logistics and transport demands between those regions. In addition, CNETP‘s abundant human resources with Japanese and Korean

78 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

language skills are expected to play a crucial role in attracting more and more companies of the two countries (Ohmae 2002).

Figure 4-32 Dalian-Harbin axis

Table 4-59 Regional distribution of overseas tourists and Foreign Direct Investment (FDI) attracted into Dalian

Overseas Tourists (thousands of persons) FDI (thousands of US$) Regions 1996 1997 1998 Total 162.5 (100.0) 205.0 (100.0) 2,569,970 (100.0) Japan 77.9 (47.9) 72.0 (35.1) 484,910 (18.9) ROK 47.8 (29.4) 57.4 (28.0) 445,660 (17.3) Hong Kong 19.1 (11.8) 22.3 (16.7) 621,290 (24.2) Taiwan 10.3 (6.3) 19.0 (9.3) 90,040 (3.5) Source: Dalian Statistical Yearbook (1998). (Recited from W. Kim 2000).

In this sense, it does not seem unreasonable to expect that the CNETP will become another important growth axis of North-East Asia. Herein lies the significance of Corridor 6, which can support transport demands for this region.

79 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

4.6.2 Current Situation and Prospects Ports: Dalian ranks as the fifth largest container seaport of China with a container handling volume of one million TEUs in 200010 (Lee and So 2001). Dalian Port has a plan to increase its present capacity of 1.5 million TEU to 2.5 million TEU by 2011 (Ha et al. 2002). Dalian is also a gateway toward the CNETP. Dalian Port handles 85 percent of the total export cargos produced in the CNETP, and 80 percent of the container freight handled at the port is from the Dalian area, 10 percent from the Shenyang area, and the other 10 percent from the Changchun and Harbin area. Most of the cargos are delivered to Dalian Port by truck while transport via railway accounts just for 3 percent, as of 1998 (ERINA 2000: 42). The ROK and Japan are important trade partners with Dalian. Container volume from or toward those two countries, which accounted for 62.2 percent of the total container freight volume handled at Dalian Port in 1998, increased to 68.3 percent of the total in 2000 (see Table 4-60). Considering increasing inter-dependency between the CNETP and those two countries in the manufacturing industry, this trend is expected to continue far into the future.

Table 4-60 Regional distribution of container freight handled at Dalian Port unit: thousands of TEU 1998 1999 2000 Regions 2001 Amount % Amount % Amount % Japan 216 41.1 324 44.0 451 44.6 NA ROK 111 21.1 199 27.0 240 23.7 NA North America 28 5.3 37 5.0 25 2.5 NA Europe 0 0.0 7 1.0 62 6.1 NA Others 171 32.5 169 23.0 233 23.0 NA Total 526 100.0 736 100.0 1,011 100.0 1,217 Source: Yu et al. 2002: 91

Railway: Electrification of rail on the Dalian - Harbin line (944 km) was completed in November 2001, where container trains are in operation (ERINA 2002). Double tracks are available from Dalian to Suihua, and single tracks from Suihua to Heihe in China (Figure 4- 33). Russia‘s rail in this corridor is run by diesel on a single track. Since the track gauge is different between China and the Russian Federation, completion of the missing link needs to consider two different types of gauges at the border. By rail, the corridor is 1,795 km long, with the majority of the length in China (Table 4-61).

10 As of 2000, China‘s 5 largest container seaports were as follows (Lee and So 2001: 40): Shanghai 5,612,000 TEU; Shenzhen 3,599,400 TEU; Qingdao 2,116,300 TEU; Tianjin 1,708,400 TEU; Dalian 1,008,400 TEU.

80 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Figure 4-33 Present conditions of railway, Corridor 6

Corridor 6: Railway Double Track Standard Gauge Single Track Broad Gauge Missing Link

Shenyang Harbin Blagoveshensk

381 305 242 125 548 85 109 Dalian Changchun Suihua Heihe Belogorsk

Electrified

China Russia

Sources: Created based on National Reports, Kim et al. (2001), ERINA (2002: 33), and Maps produced by UNDP (2000a; 2000b).

Table 4-61 Rail distance between Dalian to Belogorsk Country From To Distance (km)

Dalian Changchun 686 China Changchun Heihe 915

China/Russia Border Heihe Blagoveschensk 85

Russia Blagoveschensk Belogorsk 109

TOTAL (Dalian ~ Belogorsk) 1,795

Road: Road development in the CNETP is progressing at a tremendous rate. By 1998, expressways had been constructed between Dalian and Harbin. The Dalian to Shenyang section was completed in 1990, the Shenyang to Siping section in 1994, Siping to Changchun section in 1998 and Changchun to Harbin section in 2002 (Figure 4-34) (ERINA 2002). The average travel time has also decreased significantly with the new highway systems. It takes about 11.5 hours, on average, to travel from Dalian to Harbin over a distance of 914 km. The road beyond Harbin is paved up to Bei‘an region with a design speed of 60 km/hour; however, the road from Bei‘an to Heihe is not paved. The average travel time for the 604 km from Harbin to the border of the Russian Federation is about 11 hours. The total distance between Dalian and Belogorsk by road is 1,712 km, slightly less than the total distance by rail (Table 4-62).

81 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Figure 4-34 Present conditions of road, Corridor 6

Corridor 6: Road Motorway Unclassified/Others Paved Road Planned/Under Construction Unpaved Road

Shenyang Changchun Bei'an Blagoveshchensk 2 2/4 2 2 2 2 2 2 2 200 196 190 123 205 183 148 273 85 109 Dalian Gaizhou Siping Harbin Mingshui Heihe Belogorsk

China Russia

Sources: Created based on National Reports, Kim et al. (2001), and Maps produced by UNDP (2000a;

2000b).

Table 4-62 Road distance between Dalian to Belogorsk Country From To Distance (km)

Dalian Changchun 709 China Changchun Heihe 809

China/Russia Border Heihe Blagoveschensk 851

Russia Blagoveschensk Belogorsk 109

TOTAL (Dalian ~ Belogorsk) 1,712

1. Data from rail distance between Heihe and Blagoveschensk

4.6.3 Transport Cost and Time The cost and time to transport goods from Dalian Port to Belogorsk is organized in Table 4- 63. The total cost to transport between Dalian and Heihe by road is about US$1,200 per TEU (for 1,518 km) and US$323 (for 1,601 km) with rail. Transportation entirely by rail results in a transport cost of US$419—the cheapest alternative. However, the rail transport cost reported for China needs further clarification. It was reported that the total transport costs between Dalian and Heihe are about US$243 per TEU for 1,600 km, which is significantly different from other reported information (US$500 per TEU for 976 km). Due to feasibility and funding considerations, other alternatives should be considered. In addition to the less expensive all-rail alternative, an all-road route, as well as intermodal alternatives using rail in China and roads in Russia or rail in Russia and roads in China are analyzed individually in Tables 4-64 through 4-67. Table 4-68 shows additional transport costs for connecting Japan to this corridor.

82 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-63 Cost and time for transport from Dalian to Belogorsk

Road Rail Road/Rail Transit Time Transit Time Cost Cost Cost (hours) (hours) ($/TEU) Min Max ($/TEU) Min Max ($/TEU) Dalian Port 80 15 30 80 15 30 80 Dalian ~ Changchun 500 12 24 1041 10 14 104 Changchun ~ Heihe 620 14 27 1391 17 24 139

Heihe ~ Blagoveschensk 2 3 3 2 3 3 (Border) 85 4.3 8.5 85 4.3 8.5 85

Blagoveschensk ~ 4 5 5 6 5 5 Belogorsk 110 1.8 3.6 10.9 1.8 3.6 10.9 Total (Dalian ~ Belogorsk) 1,395 47.1 93.1 418.9 48.1 80.1 418.9 $/km 0.81 0.23 1. The costs reported by Chinese expert are updated withUNESCAP data using cost per kilometers conversion 2. The cost assumed is US$1.00 per km at border crossing 3. Estimates based on a maximum speed of 20km/h and a minimum speed of 10km/h at border crossing 4. Average trucking charge (15ton) of distance (120km) between Moscow and Dmitrov 5. Estimates based on a maximum speed of 60km/h and a minimum speed of 30km/h 6. The cost assumed is US$0.10 per km in Russia

Figures 4-35 and 4-36 represent the road and the rail travel times of Corridor 6, the route between Dalian and Belogorsk. Figure 4-37 shows the cost-distance relationship in Corridor 5 by transport mode. Due to the higher road transport costs in this corridor, the increased transport times and costs at the border crossings represent a small percentage of the total time and cost. Using rail for the entire corridor, however, reduces the total transport costs while the border-crossing costs remain the same. As a result, for this rail alternative, border- crossings represent slightly less than 20 percent of the total transport cost.

Table 4-64 Rail route (U-6.1) from Dalian Port to Belogorsk

Rail Cost Transit Time (hours) ($/TEU) Min Max Dalian Port 80 15 30 Dalian ~ Changchun 104 10 14 Changchun ~ Heihe 139 17 24 Heihe ~ Blagoveschensk (Border) 85 4.3 8.5 Blagoveschensk ~ Belogorsk 10.9 1.8 3.6 Total (Dalian ~ Belogorsk) 418.9 48.1 80.1 $/km 0.23

83 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 4-65 Road route (U-6.2) from Dalian Port to Belogorsk

Road Cost Transit Time (hours) ($/TEU) Min Max Dalian Port 80 15 30 Dalian ~ Changchun 500 12 24 Changchun ~ Heihe 620 14 27 Heihe ~ Blagoveschensk (Border) 85 4.3 8.5 Blagoveschensk ~ Belogorsk 110 1.8 3.6 Total (Dalian ~ Belogorsk) 1,395 47.1 93.1 $/km 0.81

Table 4-66 Intermodal route (I-6.3) from Dalian Port to Belogorsk

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Dalian Port 80 15 30 - Dalian ~ Changchun 104 10 14 Rail Changchun ~ Heihe 139 17 24 Rail Heihe ~ Blagoveschensk (Border) 85 4.3 4.3 Road Blagoveschensk ~ Belogorsk 110 1.8 3.6 Road Total (Dalian ~ Belogorsk) 518 48.1 75.9 $/km 0.29

Table 4-67 Intermodal route (I-6.4) from Dalian Port to Belogorsk

Road + Rail Cost Transit Time (hours) Road/Rail ($/TEU) Min Max Dalian Port 80 15 30 - Dalian ~ Changchun 500 12 24 Road Changchun ~ Heihe 620 14 27 Road Heihe ~ Blagoveschensk (Border) 85 4.3 8.5 Rail Blagoveschensk ~ Belogorsk 10.9 1.8 3.6 Rail Total (Dalian ~ Belogorsk) 1,295.9 47.1 93.1 $/km 0.76 .

84 EVALUATION OF PERFORMANCE AND IDENTIFICATION OF BOTTLENECKS OF THE SELECTED CORRIDORS

Table 4-68 Cost and time for transport from Nagoya Port to Belogorsk

Road Rail Road/Rail Transit Time Transit Time Cost Cost Cost (hours) (hours) ($/TEU) Min Max ($/TEU) Min Max ($/TEU)

Nagoya Port 234 NA NA 234 NA NA 234

Nagoya Port ~ Dalian Port 182 72 168 182 72 168 182

Dalian Port 80 15 30 80 15 30 80

Dalian ~ Changchun 500 12 24 104 10 14 104

Changchun ~ Heihe 620 14 27 139 17 24 139

Heihe ~ Blagoveschensk 85 4.3 8.5 85 4.3 8.5 85 (Border) Blagoveschensk ~ 110 1.8 3.6 10.9 1.8 3.6 10.9 Belogorsk Total 1,811 - - 834.9 - - 834.9 (Nagoya ~ Belogorsk)

$/km - - -

Figure 4-35 Dalian ~ Belogorsk transit time (road)

100

93.1 90 89.5

80 81

70 70.1 67.4 60 61 54 50

Hours 45.3 47.1 40 40.5 41

30 30 27 22.5 Min 20 15 Max 10 Average

0 0 200 400 600 800 1000 1200 1400 1600 1800 Distance (km)

85 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Figure 4-36 Dalian ~ Belogorsk transit time (rail)

80 76.5 80.1 70 68.0 61.4 60 64.1

55.0 50 46.3 44.0 48.1 Hours 40 42.0 34.5 30 30.0 Min 25.0 22.5 Max 20 15.0 Average 10

0 0 200 400 600 800 1000 1200 1400 1600 1800 Distance (km)

Figure 4-37 Cost–Distance (Dalian ~ Belogorsk)

1400 1395 1285 1200 1200

Road 1000 Rail Road/Rail 800

600 580 Cost($/TEU) 408 418.9 400 323 408 418.9 323 200 184 80 0 0 200 400 600 800 1000 1200 1400 1600 1800 Distance (km)

86 INTERNATIONAL FRAMEWORK FOR TRANSPORT IN NORTH-EAST ASIA

FIVE: INTERNATIONAL FRAMEWORK FOR TRANSPORT IN NORTH-EAST ASIA

5.1 RELATED INTERNATIONAL CONVENTIONS International conventions related to transit transport are essential in facilitating the movement of goods, especially in border crossing situations. They reduce redundancies in formalities and thus the time required. Since 1992, UNESCAP has had an active role in demonstrating the benefits of accession to seven international transit conventions by the countries of the region. The main vehicle for UNESCAP in this role is Resolution 48/11 of the 48th Commission Session held in Beijing in April 1992. The seven international conventions covered by Resolution 48/11 are listed in Table 5-1 below, which also indicates the status of each country with respect to accession. Of the seven conventions, two are of particular relevance to rail transit. These are theCustoms Convention on Containers, created in 1972, and the International Convention on the Harmonization of Frontier Control of Goods, created in 1982. Both of these conventions are of great potential benefit to signatory nations, since they codify rules for rapid customs inspection of containers at land borders. The principal feature of these rules is that they confine border customs formalities to a quick inspection of container seals and of documentation (only for the purpose of establishing that they are intact and complete). If adopted and put into effect by the countries of the region, they are likely to result in a marked reduction in border crossing delays and dwell time, which can only serve to benefit rail freight customers. Of the six countries in North-East Asia, only China, the Russian Federation and the ROK had acceded to the Customs Convention on Containers as of 5th October 2001. The International Convention on the Harmonization of Frontier Control of Goods scores a much lower rate of accession: at this point in time, only the Russian Federation has acceded. Table 5-1 shows the status of each UNESCAP member‘s accession or being party to the seven conventions recommended by Resolution 48/11. Following the table are brief summaries of each of the conventions, including their purposes and obligations of contracting parties.

87 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Table 5-1 Status of UNESCAP member’s accession or being party to international conventions listed in Commission Resolution 48/11 (March 2005)

Country Convention Convention Customs Customs Customs International Convention or area on Road on Road Convention Convention Convention Convention on Traffic Signs and on the on the on on the the Contract (1968) Signals International Temporary Containers Harmonization for the (1968) Transport of Importation (1972) of Frontier International Goods of Control of Carriage of under Commercial Goods Goods by Cover of Road (1982) Road TIR Vehicles (CMR) Carnets (1956) (1956) (1975)

China x

DPRK

Mongolia o o o o

ROK x x x x

Russian Federation x x x x x x

.. Japan ..

Notes: Two dots (..) indicate that data are not applicable. x - party/acceded. o - acceded after adoption of resolution 48/11.

88 INTERNATIONAL FRAMEWORK FOR TRANSPORT IN NORTH-EAST ASIA

Convention on Road Traffic (Vienna, 8 November 1968) 1 Purpose of the Convention is to facilitate international road traffic and to increase road safety through the adoption of uniform traffic rules. 2 Major obligations of Contracting Parties are:

2.1 To take appropriate measures to ensure that the rules of the road conform in substance to the provisions of the Convention.

2.2 To take appropriate measures to ensure that the rules concerning the technical requirements to be satisfied by motor vehicles and trailers conform to the Convention.

2.3 To admit to the territories in international traffic motor vehicles, trailers, etc, which fulfils the conditions laid down in the Convention and whose drivers fulfill the conditions laid down in the Convention.

2.4 To communicate to any other Contracting Party which requests the information necessary to determine the identity of the person in whose name a motor vehicle or a trailer is registered if the vehicle has been involved in an accident.

2.5 To ensure that any measures which Contracting Party have taken or may take either unilaterally or under bilateral or multilateral agreements to facilitate international road traffic conform to the object of the Convention.

Convention on Road Signs and Signals (Vienna, 8 November 1968) 1 Purposes of the Convention are to facilitate international road traffic and to increase road safety by keeping uniformity of road signs, signals and symbols and of road markings. 2 Major obligations of Contracting Parties are:

2.1 To accept the system of road signs, signals and symbols and road markings described in the Convention and to undertake to adopt it as soon as possible.

2.2 To undertake to replace or supplement, not later than four years from the date of entry, any sign, symbol, etc., which is used with a different meaning from that assigned to in the Convention.

2.3 To undertake to replace, within fifteen years from the date of entry, any sign, symbol, etc., which does not conform to the system prescribed in the Convention.

2.4 To limit number of types of sign and marking they adopt to what is strictly necessary, although the Contracting Parties are not required to adopt all the types of sign and marking prescribed in the Convention.

89 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Customs Convention on the International Transport of Goods Under Cover of TIR Carnets (TIR Convention) (Geneva, 14 November 1975) 1 Purpose of the Convention is to facilitate the international carriage of goods by road vehicle by simplifying and harmonizing administrative formalities in the field of international transport, in particular at frontiers.

1.1 Major obligations of Contracting Parties include:

1.2 To allow goods carried under the TIR procedure to be transported without the payment or deposit of import or export duties and taxes at Customs office en route.

1.3 To cause to be published the list of the Customs offices of departure, Customs offices en route and Customs offices of destination approved by it for accomplishing TIR operations.

1.4 To consult other Contracting Parties to agree upon corresponding frontier and upon their opening hours.

1.5 To communicate to other Contracting Parties, on request, information necessary for implementing the provisions of the Convention, and particularly information relating to the approval of road vehicles or containers and to the technical characteristics of their design.

Customs Convention on the Temporary Importation of Commercial Road Vehicles (Geneva, 18 May 1956) 1 Purpose of the Convention is to apply provisions similar to that of the Customs Convention on the Temporary Importation of Private Road Vehicles (New York, 4 June 1954), so far as possible, to the temporary importation of commercial road vehicles and, in particular, to provide for the use, for those vehicles, of the Customs documents prescribed for private road vehicles in order to facilitate international movement of goods. 2 Major obligations of Contracting Parties include:

2.1 To grant temporary admission without payment of import duties and import taxes and free of import prohibitions and restrictions, subject to re-exportation and to the other conditions laid in the Convention, to vehicles imported and used in international road traffic for commercial use.

2.2 To allow the driver and other member of the crew of the vehicle to import temporarily a reasonable quantity of personal effects.

2.3 To admit the fuel in the ordinary supply tanks of vehicles without payment of import duties and import taxes and free of import prohibitions and restrictions.

2.4 To admit component parts for the repair of particular vehicle already temporarily imported without payment of import duties and import taxes and free of import pr ohibitions and restrictions.

2.5 To endeavour not to introduce Customs procedures which might have the effect of impeding the development of international commercial road traffic.

2.6 To endeavour to place Customs offices and posts close together and to keep them open during the same hours in order to expedite Customs procedures contiguous.

90 INTERNATIONAL FRAMEWORK FOR TRANSPORT IN NORTH-EAST ASIA

Customs Convention on Containers (Geneva, 2 December 1972) 1 Purpose of the Convention is to develop and facilitate international carriage by container. 2 Major obligations of Contracting Parties include:

2.1 To grant temporary admission to containers fulfilling the requirements laid down in the Convention, whether loaded with goods or not, which shall be re-exported within three months (with possible extension) from the date of importation.

2.2 To grant temporary admission to accessories and equipment of temporary admitted containers.

2.3 To communicate to one another, on request, the information necessary for implementing the provisions of the Convention, and more particularly information rela ting to the approval of containers and to the technical characteristics of their design.

International Convention on the Harmonization of Frontier Controls of Goods

(Geneva, 21 October 1982) 1 Purpose of the Convention is to facilitate the international movement of goods by reducing the requirements for completing formalities as well as the number and duration of controls, in particular by national and international co-ordination of control procedures and of their methods of application. 2 Major obligations of Contracting Parties include:

2.1 To undertake, to the extent possible, to organize in a harmonized manner the intervention of the Customs services and the other control services.

2.2 To ensure that the control services operate satisfactorily by providing a sufficient number of qualified personnel, equipment and facilities suitable for inspection, and official instructions to officers.

2.3 To co-operate with other Contracting Parties and to seek necessary co-operation from the competent international bodies.

2.4 To take appropriate measures whenever a common inland frontier is crossed to facilitate the passage of the goods.

2.5 To provide, whenever possible, simple and speedy treatment for goods in transit, especially for those ravelling under cover of an international Customs transit procedure, taking into account the situation of the land-locked countries.

Convention on the Contract for the International Carriage of Goods by Road (Cmr) (Geneva, 19 May 1956) 1 Purpose of the Convention is to standardize the conditions governing the contract for the international carriage of goods by road, particularly with respect to the documents used for such carriage and to the carrier’s liability. 2 Major obligation of the Contracting Parties is: To ensure that the Convention is applied to every contract for the carriage of goods by road in vehicles for reward, when the place of taking over of the goods and the place designated for delivery, as specified in the contract, are situated in two different countries, of which at least one is a Contracting Party.

91 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

5.2 BILATERAL AND MULTILATERAL FRAMEWORK TRANSIT AGREEMENTS IN NORTH-EAST ASIA Bilateral or multilateral agreements govern transit by road, rail, or both at the borders and border stations between countries in the corridors. Due to limited responses from national experts, some countries‘ agreements have not been obtained. Those that have been obtained are listed in detail in Sections 5.2.2 through 5.2.6 below.

5.2.1 Summary of Agreements Until 1996 shipping and port policy in the ROK had been controlled and led by the government. Not only foreign companies but even ROK shipping companies could not enter the shipping market without the government's permission. In joining OECD members in 1996, the ROK opened the shipping market and abolished a number of restrictions on entering the market in the field of shipping and ports. The deregulation almost entirely liberalized and opened the ROK shipping and port industry. Currently the ROK has bilateral agreements with numerous nations around the world, but should become multilateral with the introduction of the World Trade Organization (WTO). China has bilateral agreements with all the other countries in North-East Asia, primarily related to maritime transport or access to maritime transportation. China also adheres to three international conventions for transport documents and the multimodal transport of goods. Mongolia has bilateral agreements with China, the Russian Federation, and several other Asian and European nations. They adhere to numerous multilateral international agreements and conventions on freight transport and standards. Japan adheres to the Freedom of Maritime Transport standards for international marine transport, and tries to avoid intervention in coordination between shipping companies. The Russian Federation government has ratified 36 different international conventions and agreements for international transport. The Russian Federation is involved in ten different bilateral agreements with countries in Asia (including Mongolia and China), Europe, and North America. It is even involved in a trilateral transport agreement with Slovakia and the Ukraine. The Primorskiy Kray and the Chinese province of Heilongjiang have an additional regional agreement.

5.2.2 Republic of Korea Until 1996 shipping and port policy in the ROK had been controlled and led by the government. Not only foreign companies but even ROK shipping companies could not enter the shipping market without the government's permission. In joining OECD members in 1996, the ROK opened the shipping market and abolished a number of restrictions on entering the market in the field of shipping and ports. The deregulation almost entirely liberalized and opened the ROK shipping and port industry. The ROK entered into the UNCTAD Liner Code in 1983, Korea established shipping agreements with 14 countries such as the US, Germany, England, and China who mainly enjoy most favored nation treatment (see Table 5-2). However, the shipping agreements

92 INTERNATIONAL FRAMEWORK FOR TRANSPORT IN NORTH-EAST ASIA

with Belgium and Senegal are not in effect because these two countries want to change the contents of agreement. The ROK government is trying to establish shipping agreements with an additional eight countries: Russia, Iran, Ukraine, Latvia, Egypt, Thailand, Bulgaria, Israel. Those shipping agreements are not multilateral but rather bilateral. In general the bilateralism should be transferred to multilateralism with the introduction of the WTO. Cooperation in the shipping market, especially in North-East Asia, should give way to multilateralism in the market as it did in the EU and the NAFTA countries. On the other hand, ROK ports have set up sisterhood relationships with 17 ports in the world for securing and promoting friendship. The Port of Pusan established sistership with six ports around the world such as the Port of Southampton in the UK, the Port of Seattle, the Port of Osaka, the Port of Rotterdam, the Port of New York/New Jersey, and the Port of Shanghai. The Port of Incheon set up sistership with six ports and the Port of Ulsan with two ports.

Table 5-2 The status of shipping agreements with the ROK

Country Data of Signature Effective Data Remark U.S 56.11.28 57.11. 7 Treaty of friendship Germany 65. 4. 9 70.12.30 Protocol Denmark 80. 1. 9 80. 1.11 Singapore 81. 5.26 81. 5.28 Norway 84. 9.17 84. 9.17 Pakistan 84. 3. 3 84. 4. 1 Effective Malaysia 88. 7.21 88. 9.23 Nigeria 89. 8.17 90.10. 4 China 93. 5.27 93. 6.29 Annual meeting England 94. 8.11 95. 7.10 Netheland 93. 6.15 96.11.11 Vietnam 95. 4.13 96.11.11 Non Belgium 87. 1. 9 signature Not accept effective Senegal 85. 7. 9 Provisional signature

5.2.3 China International conventions on multimodal transportation

(1) United Nations Convention on International Multimodal Transport of Goods, 1980.

(2) Uniform Rules for a Combined Transportation Document, 1973.

(3) UNCTAD/ICC Rules for Multimodal Transport Documents, 1991.

93 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Bilateral Agreements

(1) Agreement on maritime transport between the People‘s Republic of China and Japan, 4 June 1975.

(2) Agreement between the government of the People‘s Republic of China and the government of the Mongolian People‘s Republic on access to and from the sea and transport by Mongolia through China‘s territory, 6 August 1991.

(3) Agreement on maritime transport between the government of the People‘s Republic of China and the government of the Republic of Korea, 27 May 1993.

(4) Agreement between the government of the People‘s Republic of China and the federal government of the Russian Federation on maritime transport cooperation, 27 May 1993.

(5) Agreement between the government of the People‘s Republic of China and the government of the Democratic People‘s Republic of Korea on maritime transport, 14 June 2002.

National laws on highway, railway, and water transport

(1) The international maritime regulation of the People's Republic of China, 1 January 2002.

(2) The international container multimodal transportation administrative rules, 1 January 2003.

(3) Guidelines concerning accelerate transport enterprise to develop logistics business and services, 28 February 2001.

(4) The guidelines on speedup modern logistics of our country, 1 March 2003.

Regulations on freight forwarders and logistics companies

(1) The regulations on freight forwarder administration, 1995, 1998 revised.

(2) The international maritime regulation of the People's Republic of China, 1 January 2002.

(3) The regulation of implement the international maritime regulation of the People's Republic of China, 1 January 2003.

5.2.4 Japan Ship Act, article 3

Non-Japanese vessels are prohibited to call non-opened-trade ports and to be engaged in transporting passengers and/or cargo between Japanese ports.

94 INTERNATIONAL FRAMEWORK FOR TRANSPORT IN NORTH-EAST ASIA

Before 1996: Ministry of land, infrastructure and transport (MLIT) has managed opportunities of new participation in transport sectors judging from harmonization of demand and supply, because public transportation should be operated safely through avoiding too much competition. Consequently, administration to restrict new comers, to control the transportation charges, and to take safety measures has been undertaken.

In 1996: The MLIT decided to review and change drastically the above basic policy and abolish the regulations on controlling the number of transporters within the scheduled date, in principle, in all fields of transportation of passenger and cargo.

(1) Example: Regulation of cargo truck transport

Definition: Cargo truck transport is a common service dealing with transporting another person‘s cargo using trucks in return for transport charge.

Procedures to start the service: The relevant person has to get permission from the MLIT.

Requirement to grant the permission:

- Operation area should be limited within the prefecture where the relevant firm is situated.

- Operation office does not break a city planning law.

- Five or more trucks should be owned by the firm.

- Parking area should be in the same neighborhood as the operation office.

- The firm should file the transport charge before starting service and get approval on the transport contract from MLIT beforehand.

(2) Example: Regulation of port-related transport

Definition: Port-related transport is a common service dealing with works of loading and unloading onto/from a vessel, bringing cargo into/out of bonded area for tentative storage or cargo sorting, measuring weight and tallying the amount of cargo or providing proof of acceptance or delivery.

Requirement for starting the service: The person who wants to start the general work of port-related transport should get a license or permission from the MLIT (in the large scale ports of nine, permission is applied). Tally men, sworn measurers, or surveyors should get licenses from the MLIT.

Criteria of license (permission): Most important is that the total supply volume does not outstrip the total demand volume too much by introduction of the type of service license requested.

95 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Implementation status of international agreements regarding international transport facilitation

Basic policy:

The Japanese government deals with international maritime affairs based on the international practice called the freedom of maritime transport, avoiding intervention in coordination among shipping companies as much as possible.

Regulation of non-domestic vessel operation

Definition: Non-domestic vessel operation is vessel operation between a Japanese port and a non-Japanese port or between non-Japanese ports.

Kinds: 1.Regular operation for passengers, 2.Regular operation for cargo, and 3.Tramper operation

Procedures to start the service of above 1.: The relevant person has to file necessary document with MLIT at least 30 days before starting operation.

Procedures to start the service of above 2.: Filing at least ten days before starting operation.

Procedures to start the service of above 3.: Filing within 30 days after starting operation (at least 30 days before starting in case of passenger transport)

Criteria to accept the filing: There are no specific requirements.

National laws on road/rail/maritime transport and transport intermediaries

Definition: Transport intermediary is common service provider dealing with transport service entrusted to other transporter (real transporter) to convey the cargo that a consignor requests to the relevant intermediary person in response for paying charge. The responsibility for the transport to the consignor is taken by the intermediary person.

There are two kinds of transport intermediary.

- 1st category is the common service dealing with cargo transport preceding or following the air transport, railway transport or maritime transport, by using cargo truck.

- 2nd category is the common service excluding the 1st category. International freight forwarder falls into the category.

Requirement for starting the business:

In case of 1st category, relevant person should submit registration form to MLIT. He should prepare the transport contract and get permission from MLIT.

96 INTERNATIONAL FRAMEWORK FOR TRANSPORT IN NORTH-EAST ASIA

In case of 2nd category, relevant person must get permission from MLIT. The transport contract has to have ministry approval. Requirement to get permission from MLIT is that 1) he has an appropriate management plan, 2) that MLIT recognize he has ability and capability enough to undertake the work, and so on.

5.2.5 Russian Federation The Major International Conventions and Agreements in the sphere of transport, ratified by the Russian Federation:

(1) European Agreement concerning the International Carriage of Dangerous Goods by Road (ADR), 30 September 1957.

(2) European Agreement on Main International Traffic Arteries (AGR), 15 November 1975.

(3) European Agreement on Main International Railway Lines (AGC), 31 May 1985

(4) European Agreement on Important International Combined Transport Lines and Related Installations (AGTC), 1 February 1991

(5) European Agreement concerning the Work of Crews of Vehicles engaged in International Road Transport (AETR), 1 July 1970.

(6) Convention on the Contract for the International Carriage of Goods by Road (CMR), 19May 1956.

(7) Customs Convention on the International Transport of Goods under Cover of TIR Carnets (TIR Convention), 1959, 1975.

(8) Convention on Road Traffic, 1949, 1968.

(9) European Agreement concerning the Work of Crews of Vehicles engaged in International Road Transport (AETR), 1 July 1970.

(10) Convention on Road Signs and Signals, 8 November 1968.

(11) Chicago Convention of International Civil Aviation 1944.

(12) Convention on the Contract for the International Carriage of Goods by Road (CMR), 19 May 1956.

(13) Convention on the Contract for the International Carriage of Passengers and Luggage by Road.

(14) Convention Concerning Customs Facilities for Touring, 1954.

97 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

(15) Customs Convention on the Temporary Importation of Private Road Vehicles, signed in New York on 4 June 1954.

(16) Customs Convention on Containers, 2 December 1972.

(17) International Convention on the Harmonization of Frontier Controls of Goods, 21 October 1982.

(18) European Agreement on Main Inland Waterways of International Importance (AGN), 19 January 1996.

(19) Convention relating to the Unification of Certain Rules concerning Collisions in Inland Navigation, of 15 March 1960.

(20) Convention on the Measurement of Inland Navigation Vessels, 15 February 1966.

(21) Convention relating to the Limitation of the Liability of Owners of Inland Navigation Vessels (CLN), 1 March 1973.

(22) Convention on the Contract for the International Carriage of Passengers and Luggage by Inland Waterway (CVN), 6 February 1976.

(23) European Agreement Concerning the International Carriage of Dangerous Goods by Inland Waterway (ADN), 25 May 2000.

(24) Convention on Facilitation of International Maritime Traffic, 1965.

(25) International Convention for the Safety of Life at Sea, 1974 (SOLAS-74), including corresponding to the SOLAS codes (ISPS CODE, ISM Code, etc.);

(26) International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto (MARPOL-73/78);

(27) Convention on the International Regulations for Preventing Collisions at Sea, 1972 (COLREG-72);

(28) International Convention on Load Lines, 1966 (ILLC-66);

(29) International Convention on Tonnage Measurement, 1969 (Tonnage-69);

(30) International Convention on Standards of Training, Certification for Seafarers and Watchkeeping, 1995 (STCW-95);

(31) International Convention on Civil Liability for oil pollution Damage, 1969 and relevant protocol 76 (CLC-69);

(32) International Labour Organization (ILO) Conventions;

98 INTERNATIONAL FRAMEWORK FOR TRANSPORT IN NORTH-EAST ASIA

(33) International Telecommunication Conventions, including Global Maritime Distress and Safety System (GMDSS) rules;

(34) International Convention on Maritime Search and Rescue (SAR-79), 1979, 2000 edition;

(35) Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (SUA-88), 1988

(36) Athens Convention relating to the Carriage of Passengers and their Luggage by Sea (PAL-74), Protocols 1989, 1990, 2002.

Bilateral agreements

(1) Agreement between the government of the Russian Federation and the government of the Azerbaijan Republic about International Automobile Communication, 2001.

(2) The agreement between the government of the Russian Federation and the government of the Republic of Albania about sea transport, 1996.

(3) The agreement between the government of the Russian Federation and the government of the Republic of Slovenia about cooperation in the sphere of sea transport, 2002.

(4) The agreement between the government of the Russian Federation and the government of the United States of America on sea transport, 2001.

(5) The agreement between the government of the Russian Federation and the government of the Republic of Belarus about principles of cooperation and conditions of mutual relations in the sphere of transport, 1992

(6) The agreement between the government of the Russian Federation and the Government of the Latvian Republic about principles of cooperation and conditions of mutual relations in the sphere of transport, 1995.

(7) The agreement between the government of the Russian Federation and the government of the Portuguese Republic about international automobile communication, 1994.

(8) The agreement between the government of the Russian Federation and the government of Ireland about international automobile communication, 1994.

(9) The agreement on the international transport corridor ―The North - the South‖, 2000.

(10) The agreement between the Government of the Russian Federation and the Government of the Republic of Panama about merchant navigation, 2003.

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Trilateral agreements:

(1) The agreement between the Ministry of Railways of the Russian Federation, the Ministry of Transport, Mails and Telecommunications of the Slovak Republic and the Ministry of Transport of the Ukraine about international railway cargo messages between the Russian Federation, Slovak Republic and Ukraine and transit messages on railways of these states, 1999.

Regional agreement:

(1) Protocol on cooperation between Primorskiy Kray and the Chinese province Heilongjiang, 2004.

National laws on road/rail/maritime transport

(1) Common tasks

- The Civil Code of the Russian Federation 1995, Chapters 40 "Carriage" and 42 " Transport Expedition ".

- The Resolution of Government of the Russian Federation ―About Provision of Navigation, Flight and Transport Movement Safety‖, 1993.

- The Federal Law ―About Transport Expedition Activity‖ 2003.

- Draft of the Federal Law "About safety of transport".

(2) Railway transport

- The Federal Law ―About Railway transport in the Russian Federation‖.

- The Federal Law ―The Code of Railway Transportation in the Russian Federation‖.

- The Federal Law ―On Features of Management and the Order Property of Railway Transport‖.

(3) Automobile transport

- The Code of Automobile Transport in the USSR, 1969.

- The Federal Law ―About Safety of Traffic‖.

- The Resolution of Government of the Russian Federation from June 10, 2002, № 402 "About licensing for carriage of passengers and cargoes by automobile transport".

- The Resolution of Government of the Russian Federation "Regulations about the admission of the Russian carriers to realization international carriage by road ".

100 INTERNATIONAL FRAMEWORK FOR TRANSPORT IN NORTH-EAST ASIA

- Draft of the Federal Law “About Paid Highways”.

- Draft of the Federal Law “The Code of Automobile Transport of the Russian Federation”.

(4) Maritime transport

- Merchant Shipping Code of the Russian Federation, 1999.

- The Federal Law ―About Inland Sea Waters, Territorial Sea and Adjacent Zones of the Russian Federation‖, 1998.

- Draft of the Federal Law “About Sea Ports in the Russian Federation”.

- Draft of the Federal Law “About the Russian International Register of Ships”.

National laws/regulations relating to transport intermediaries

(1) The Civil Code of the Russian Federation, 1995, Chapter 42 "Transport Expedition" and ―Agency Service‖.

(2) The Federal Law ―About Transport Expedition Activity‖, 2003.

(3) Merchant Shipping Code of Russian Federation, 1999, Chapters 14 ―Agreement of Sea Intermediary‖ and 13 ―Agreements of Sea Agency Service‖.

(4) The General Rules of carriage of cargoes by automobile transport, 30 July 1971.

5.2.6 Mongolia International/regional/trilateral/bilateral agreements regarding international transport facilitation

Road transport

(1) Road Transport Agreement with China was approved on 24 June, 1991

(2) International Road Transport Agreement with the Ukraine was approved on 25 June, 1995

(3) International Road Transport Agreement with the Russian Federation was approved on 7 February, 1996

(4) International Road Transport Agreement with Turkey was approved on 2 June, 2002

(5) International Road Transport Agreement with Belorus was finalized on 20 December, 2003

101 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

(6) International Road Transport Agreement with Kirgistan was finalized on 1 March, 2004

(7) International Road Transport Agreement with Kazakstan was approved in 2004.

Railway transport

(1) Agreement on freight transit from the Russian Federation to Mongolia, 1991

(2) Agreement on freight transit from China to Mongolia, 1991

(3) Agreement on international railway freight communication (SMGS)

(4) Agreement on international railway passenger communication (SMPS)

(5) The Uniform Transit Tariff (ЕТТ)

(6) The UN convention on sea use

(7) The UN convention on transit trade within the continent

(8) The Rules on wagon use (PPV)

(9) Rules on clearing in international passenger and freight communications

National laws on road/maritime transport

The Law on Roads was ratified on 2nd of January 1998. The Law on Roads regulates issues related to the terminologies of international roads, road charges, road construction, maintenance, protection, solving disputes connected with land scale and its use, and other matters.

Mongolian membership in the main conventions of international maritime organizations forms the legal framework of implementation of the Maritime Law of Mongolia. The Maritime Law was approved in 1999. Now more than 500 registered ships with a Mongolian flag are traveling the oceans.

Mongolia abides by the following international conventions: the Customs Convention on the International Transport of Goods Under the Cover of TIR Carnets, the Convention on the Contract for the International Carriage of Goods by Road, and the Conventions on Road Traffic and on Road Signs and Signals.

National laws and regulations to services and intermediaries/freight forwarders

Issues related to the intermediaries are regulated by the Law on Companies, approved in 1999, and the item ―Transportation‖ in Chapter 35 of the ―Law on Citizens‖, approved in 2002.

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In addition, the international conventions, TIR, International road transportation agreement, law on road traffic safety, and the agreements on road transportation relations regulate the intermediaries‘ issues.

Mongolia concluded many road transport agreements with China, the Republic of Ukraine, the Republic of Turkey, the Russian Federation, the Republic of Belarus, and others, and pays special attention in their implementation.

5.3 NAFTA AND THE ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN) CASES: IMPLICATIONS FOR NORTH-EAST ASIA

5.3.1 NAFTA and transport market change NAFTA‘s effects on transport have been limited since:

 Air transport services with the exception of specialized services were excluded from the agreement;

 All maritime services were also excluded from NAFTA by the U.S.; and

 Land transport between the U.S. and Canada was largely deregulated and operating in an integrated manner even before NAFTA. Truck transport across the Mexican border still does not take place, as should have been the case under the NAFTA schedule. NAFTA is a rule-based agreement that facilitates trade and unlike the EU it does not seek to impose harmonization of industrial and government practices. However, NAFTA has resulted in changes in transport relations with Mexico. The land transport standard subcommittee was created to address compatible standards and other issues related to land transport equipment and their operations. Indirectly, NAFTA affected the North American economy by:

 Further facilitating the integration of economies and encouraging businesses to pursue global standards;

 Making business outlooks supply chain oriented; and

 Causing a government transport policy shift from protection of transport companies to the protection of customers and the economy.

5.3.2 Transport integration in ASEAN and North-East Asia The ASEAN transport cooperation has focused on the development of the Trans-ASEAN transport network, formalization of the ASEAN transport facilitation agreements, policy and development projects and studies, capacity building programs and mutual sharing of best practices and experiences. For the transport sector as a whole, ASEAN member countries concluded nine regional transport agreements since 1998. These are for the mutual recognition of commercial

103 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

vehicle inspection certificates, ASEAN highway network development, goods in transit facilitation and its five implementing protocols and for air freight service facilitation. For maritime transport, cooperation and integration between ASEAN member countries is well in place and there exists a well-defined regional transport infrastructure development and integration plan. Although there exists sensitive issue like cabotage in short sea shipping, market integration in the maritime sector is accelerating with the launching of the WTO system.

5.3.3 Major transport trend in NortheastNorth-East Asia Unlike the EU where member countries are more or less homogeneous in terms of economic development level and transport related infrastructure development, North- East Asia consists of countries whose socio-economic characteristics differ vastly. Transport related infrastructure development and transport and logistics demands also differ greatly among the nations in North-East Asia. First of all, the level of motorization is different among the North-East Asian countries and so are the transport and logistics demands. Road network is continuously increasing in most North-East Asia countries with the development of railway in some countries of the North-East Asia region. As the economy in this region grows rapidly, container traffic and air transport demands also has increased very rapidly. Container movements in major North-East Asia ports have shown spectacular growth in most cases except in ports in Japan. Especially most Chinese ports have shown more than tenfold increase during the 1990-2000 periods.

Air transport in North-East Asia has increased in most countries. Both passenger and freight have increased due to rise in income, overseas travel liberalization and increase in intra-regional trade. Although air transport occupies less than 2% in volume, the value of goods transported by air is close to 30%.

104 PROPOSED STRATEGY AND ACTIONS FOR THE DEVELOPMENT OF THE INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

SIX: PROPOSED STRATEGY AND ACTIONS FOR THE DEVELOPMENT OF THE INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

6.1 ISSUES IDENTIFIED

6.1.1 Infrastructure planning and development In North-East Asia, unimodal transport infrastructure developments such as ports or airports are at times pursued vigorously. While goods move in and out of the ports by road or rail, intermodal linkages where the road and rail converge with inland container depots, and linkages to the inner hinterlands and major economic centers within the country and with neighboring countries are often inadequate. Missing road sections and linkages can be found in several parts of North-East Asia. These infrastructure-related problems act as an impediment to efficient flow of freight and increase logistics related costs and thus impair the economic competitiveness of the region.

6.1.2 Logistics and facilitation Efficient movement of goods and services is often impaired by institutional barriers such as complex border crossings, inadequate transit documentation, and bureaucratic procedures. Customs related delays and complexities are also a major reason for increased cost and time in international freight transportation. Efficient border crossing of freight is important to economic integration among countries in a region. These uncertainties become costly when introduced into the logistics system, especially in industries where deliveries have been planned to arrive on a just-in-time basis. Issues relating to the facilitation of the trade of goods and services have traditionally been incorporated in bilateral agreements between countries. As goods begin to move along international transport corridors the need for harmonization of laws and processes amongst a larger group of countries becomes clear. Slow progress is being made in the implementation of UNESCAP resolution 48/11 on road and rail transport modes in relation to facilitation measures, which recommended that countries in the region should consider the accession to seven international conventions in relation to transport facilitation. Along with the move towards accession of international conventions there has also been a move at the subregional level to develop trilateral and multilateral agreements on transport within the ―subregion‖ as an interim measure. Countries in North-East Asia are also party to some of these agreements. In this context the initiative of the countries of the Shanghai Cooperation Agreement (including China and the Russian Federation) to formulate a multilateral agreement on international road transport is of particular interest to North-East Asian countries as it may later be logical to extend the geographical scope of application of this agreement. The

105 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

agreement, which is being formulated with the assistance of UNESCAP, makes provisions for the accession to the international Conventions and takes into account the provisions of other multilateral agreements amongst ECO countries along important transport corridors linking Asia with Europe.

6.2 STRATEGY AND PROPOSED ACTIONS In order to develop and improve transport integration and intermodal connectivity and promote logistics and transport facilitation in North-East Asia with a goal of facilitating regional and international trade, the strategy and actions of the following sections are proposed.

6.2.1 Strategy The strategy is based on further promotion of cooperation among the countries in North- East Asia at national, subregional and regional levels for the mutual benefits of the countries, maximum possible use of existing infrastructure, and the joint investment among the countries and free flow of capital. The strategy consists of the following components:

 Improvement of transport integration and intermodal connectivity;

 Promotion of logistics and transport facilitation; and

 Implementation mechanisms at the national, subregional and regional levels

6.2.2 Proposed actions To improve transport integration and intermodal connectivity:

 Adopt the proposed integrated international transport and logistics network for North- East Asia with its mix of major routes and corridors (appropriate roads, railways and waterways), with connections to major sea ports and with intermodal interfaces such as ICDs, freight terminals and distribution centers, as well as border crossings, as a subset of the Asian Highway network and the proposed Trans Asian Railway or other arrangements;

 Formulate early the Trans Korean Railway as part of the Trans Asian Railway, which will contribute to the completion of the missing links and facilitate trade between countries in North-East Asia;

 Identify and remove bottlenecks on routes of the network to improve their efficiency. Particularly, attention should be given to transport of all types (ISO and non-ISO) of containers;

 Examine the prospect of establishing dry ports as a trigger for economic development;

 Review and update the network also considering further possible sea links between Japan and continental North-East Asia;

106 PROPOSED STRATEGY AND ACTIONS FOR THE DEVELOPMENT OF THE INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

 Operationalize the networks within the near future by restoring missing links and improving conditions of related infrastructure and identify and prioritize infrastructure development requirements;

 Promote coordinated efforts to improve transport and logistics infrastructure along the network;

 Develop and maintain a database on traffic volumes (total volume in tons as well as containers in TEUs) along the routes and border-crossings; and

 Implement capacity building programs for policy makers to raise awareness of the integrated approach to transport and logistics planning and implementation. To promote logistics and transport facilitation:

 Simplify and harmonize transport and trade procedures and documentation, particularly related to border-crossings along the selected transport routes, and consider unification of such procedures and documentation;

 Promote the accession and implementation of international Conventions on transport facilitation including UNESCAP Resolution 48/11;

 Strengthen the position of transport and logistics intermediaries including freight forwarders, MTOs and logistics service providers;

 Carry out a study on the role of ICT in transport facilitation and logistics with the development of guidelines for ICT application in North-East Asia;

 Develop and enhance capacity and skills of policy makers on issues relating to transport facilitation including the international conventions and multilateral agreements on transport facilitation; and

 Develop capacity and skills of the logistics industry throughout North-East Asia so they could provide multimodal transport and logistics services to the trade.

6.3 IMPLEMENTATION MECHANISM To ensure the sustainable implementation of the strategy and action plan at the national, subregional and regional levels the following implementation mechanisms are proposed.

6.3.1 National level At the national level, it is recommended that national trade and transport facilitation committees be established or the competent authority in charge of transport establish a suitable mechanism at the highest possible level, with participation of all stakeholders from different ministries, authorities, and associations from both the public and private sectors. The committees (or equivalent bodies) should have clear terms of reference and the assistance of an interdisciplinary working group to be able to undertake the following:

 Analyze the trade and transport markets to determine possible traffic volume in tons as well as number of containers (TEUs) for the transport corridors under consideration;

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 Prioritize the routes and identify the infrastructure requirements including intermodal connections along the network;

 Harmonize and coordinate the interactions between different parties from the public and private sectors;

 Collect relevant data and manage the database;

 Undertake route analysis applying the UNESCAP cost/time distance model to identify and address physical and non-physical bottlenecks;

 Conduct studies with regard to the accession and implementation of international and regional transport agreements and the evaluation of national transport and logistics performance;

 Further develop national action plans which could include facilitating competition, ensuring good connections between roads and ports and integrating unimodal ICT systems; and

 Support research and information exchange relating to integrated logistics and freight transportation.

6.3.2 Subregional level At the subregional level, it is proposed that the UNDP Tumen Secretariat act as coordinator to develop and operationalize the Network, ensuring close cooperation with participating countries and other related organizations, particularly UNESCAP, World Bank, ADB, ERINA and OSJD to undertake the following:

 Review the progress of the development of the Network;

 Organize annual meetings between North-East Asian countries including meetings of national trade and transport facilitation committees (or equivalent bodies) to harmonize and coordinate policies on transport and logistics development, to exchange best practices on transport and logistics planning and facilitation, to evaluate progress and determine annual actions;

 Undertake a study on bilateral and trilateral agreements in place amongst countries in North-East Asia in order to study and consider the possibility of a unified agreement covering different aspects of transport;

 Consider ways of unifying the technical standards applicable with regard to transport infrastructure;

 Initiate resource mobilization for infrastructure development and improvement and in order to operationalize the Network; and

 Enhance subregional cooperation by providing a neutral forum to identify constraints and balance conflicting interests and priorities

6.3.3 Regional level At the regional level, it is proposed that UNESCAP collaborate with the UNDP Tumen Secretariat to consider ways in which the integrated transport network of North East Asia could be linked with the transport networks of other subregions particularly moving west to

108 PROPOSED STRATEGY AND ACTIONS FOR THE DEVELOPMENT OF THE INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

markets in Europe and South Asia. UNESCAP can accomplish this through the following steps:

 Coordinate the analysis of trade and transport markets and traffic volume to be undertaken by countries at the national level with studies at the subregional and regional levels to provide countries with traffic forecast on the identified routes.

 Identify best practices in transport facilitation with results to be exchanged among the countries;

 Within the context of the Asian Highway and Trans Asian Railway, help North-East Asian countries to prioritize investment needs, showcasing such requirements at meetings attended by major donors and providing an opportunity for them to see how the investment needs could fit into their plans;

 Consider ways in which the integrated transport network of North-East Asia could be used as a model for the development of integrated transport networks in other regions;

 Provide a regional forum where the trade and transport facilitation committees of the countries in North-East Asia could discuss common issues with trade and transport facilitation committees of other subregions along specific transport routes;

 Assist trade and transport facilitation committees to undertake the route analysis using the UNESCAP time/cost-distance model.

 Assist the North-East Asian countries to raise awareness and to enhance capacity and skills of policy makers on issues relating to transport facilitation including the international conventions and multilateral agreements on transport facilitation;

 With the UNDP Tumen River secretariat, assist countries in North-East Asia to network with other subregions and implement the sustainable program of capacity building and skills development in freight forwarding, multimodal transport and logistics for policy makers and industry professionals that is being developed by the UNESCAP secretariat.

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SEVEN: SPECIAL ISSUES FOR LAND-LOCKED COUNTRIES

7.1 ISSUES IDENTIFIED

7.1.1 Introduction Land-locked countries face unique transportation challenges that directly affect their economic prosperity. With no direct access to ocean ports, trading by sea with island nations—such as Japan—or nations on other continents—such as the US—can be difficult, expensive, or potentially even impossible. Trading with non-neighboring nations by overland routes can be subject to the same hurdles. Land-locked nations must face institutional hurdles that accompany transporting goods through neighboring nations. Shipping by land or river through other countries to access a seaport or access a non-neighboring nation can be expensive, as it is subject to the tariffs of that nation. Using another nation‘s ports can also be expensive and prices and tariffs are outside the control of the land-locked country. Customs issues at border crossings can be time consuming. Political issues or instability in neighboring countries can render foreign trade nearly impossible. Transportation infrastructure in neighboring countries—which land-locked nations must use in order to trade with non-neighboring foreign nations—is outside the control of the land- locked nation. This infrastructure could be overcongested, underdeveloped, or even non- existant. Rail systems could be at different gauges. In North-East Asia Mongolia is the only land-locked nation. This section outlines Mongolia‘s current transportation situation and its benefits from an integrated transport and logistics system with the rest of North-East Asia, while considering the issues unique to land-locked nations.

7.1.2 Economic Dependence on Neighboring Countries Institutional, financial, political, and infrastructure issues can hinder trade for land-locked nations. These limitations on Mongolia‘s foreign trade are evident through its high level of trade dependence on neighboring countries. Based on US dollar values, about 55 percent of Mongolia‘s trade is with its neighboring countries, the Russian Federation and China (see Table 4-1 in Section 4.1). No other country in the region relies so heavily on its immediate neighbors for trade.

7.1.3 Border Crossing Issues Customs regulations and tariffs at border crossings can increase the time and money spent for shipments across international borders. The border between Mongolia and China faces an additional constraint: railway gauge differences. China uses narrow-gauge railway while Mongolia and Russia use broad gauge. This issue is particularly critical to Mongolia, which relies heavily on rail transport for cargo transportation. With 86 percent of its total cargo

110 SPECIAL ISSUES FOR LAND-LOCKED COUNTRIES

traffic volume in 2002 traveling by rail, and 98 percent of all ton-km traveled on rail, Mongolia almost entirely relies on its rail system for long-distance freight transportation. This infrastructure issue increases the time and cost incurred at the already time and money consuming Mongolia-China border. An estimate of transport costs along the identified Corridor 1 in Section 4.1 indicates that 36 percent of those costs can be attributed to border crossings.

7.1.4 Infrastructure Constraints Besides issues with gauge differences at the Mongolia-China border, there are few situations in which infrastructure in neighboring countries is inferior to Mongolian infrastructure and causing constraints on foreign trade for Mongolia. The identified Corridor 4 includes an additional link to the sea for Mongolia through the Port of Najin. Currently, the existing transportation infrastructure between the China-DPRK border and Najin is a major constraint to the feasibility of this route as a transport corridor for Mongolian cargo.

7.1.5 Existing Transportation Conditions within Mongolia Mongolia has 1,026 km of roads. With the exception of the Ulaanbataar-Altanbulag section (345 km) where a motorway is available, most of the Mongolian sections are unpaved. Although rail has a higher priority than road as a freight transport mode, road seems to play a crucial role in passenger transport in Mongolia. Based on the number of passengers, roads account for 95.9 percent of total passenger travel, although this share decreases to 18.1 percent if passenger-km traveled are considered instead of the number of passengers. This huge difference suggests that roads carry mainly short distance trips. As Mongolia‘s top priority route, the development of an unpaved road in this corridor is progressing based on the Medium-Term Road Master Plan (MRMP), which was formulated in collaboration with the Asian Development Bank and accepted by the cabinet. The present condition of Mongolia‘s railway system demands more investment to improve transport time and services. There is also a need for the introduction of reefer containers for dairy products and meat, the main export items of Mongolia (ERINA 2002).

7.2 BENEFITS OF AN INTEGRATED TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA FOR LAND-LOCKED COUNTRIES An integrated regional transport and logistics system helps to remove or minimize many of the transport, institutional, and economic issues faced by land-locked countries. Several of the corridors identified as part of this study have a direct impact on these issues for Mongolia. Corridor 1 passes through three countries: China, Mongolia, and the Russian Federation. This corridor has been specifically used as a major transport corridor for the foreign trade of

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Mongolia. Not only has China provided Mongolia with sea access to other countries through Tianjin Port, but China is also the most important trade partner of Mongolia. Corridor 1 is especially important to Mongolia. Its importance can be considered in two respects. On one hand, this corridor is meaningful to Mongolia as a land transport route itself. Mongolia‘s two neighboring countries hold a significant position in its economy. Corridor 1 - which extends from Tianjin, one of China‘s major trade ports, via Beijing and Ulaanbaatar, the capital cities of China and Mongolia, to Ulan-ude, a connecting point to the Trans-Siberian Railway - makes the greatest contribution to Mongolia‘s economic exchanges with its most important economic partners. Furthermore, most of the Mongolian cargos toward Central Asia or Europe are transported via the combination of Corridor 1 and the TSR. On the other hand, Corridor 1 has great importance as a gateway to the sea for Mongolia, a landlocked country. Tianjin Port plays a decisive role as the only main exit of Mongolia toward the East Sea and the Pacific. According to ERINA (2002), 4,000 to 5,000 TEUs of Mongolia‘s container freight is handled at Tianjin Port annually. Infrastructure improvements along this corridor, as well as increased coordination and efficiency at the border crossings along this corridor, would therefore be extremely beneficial to Mongolia. Corridor 4, which connects the Port of Rajin to the CNETP, can also be extended to Mongolia. At present, only 11.9 percent (132 km) of the total Mongolian section (1,106 km) is paved (Road Department of Mongolia 2001). Despite the low pavement ratio, the Mongolian government has a strong will to improve the Sumber-Ulaanbaishint section as a major horizontal transport axis of Mongolia. This is a long-term plan, and this road was named the Millennium Road. UNESCAP also classified this section as a part of the Asian Highway‘s North-East Asian section. If this road is completed, Corridor 4 is also expected to perform as a trans-continental corridor that extends from far eastern Asia via Central Asia to Europe.

112 REFERENCES AND WEBSITES

REFERENCES

Ahn, Byung Min and Jaekyung Lim (2002), A study on the role-sharing between central and local government to facilitate the development of transport system in South and North Korean Border Area: Phase 1, Report 2002-07, The Korea Transport Institute. Ahn, Byung Min and Ji Eon Sohn (2001), A plan to improve legal and administrative systems for vitalizing the transportation of passengers and goods between Republic of Korea and Democratic People’s Republic of Korea, Report 2001-13, The Korea Transport Institute. Ahn, Byung Min and Yeonkyu, Kim (2000), A strategy for the establishment of cooperative system in transport and logistics within three Far Eastern Asian countries (Korea, China, and Japan), Report 2000-04, The Korea Transport Institute. Chang-Jae Lee, et al. (1999), A new strategy for North-East Asian economic cooperation, KIEP, p.12. Ha, Hun-Koo, Sungwon Lee and Choongyeol Ye (eds.) (2002), Comprehensive study on building a regional distribution and logistics hub in Korea, 2002 Special Report, The Korea Transport Institute and North-East Asia Economic Forum. Kim, Gyeong-Seok (1998), A study on measures for direct land transport within Republic of Korea and the Democratic People’s Republic of Korea and Korean reunification, Seoul, the Republic of Korea: The Ministry of Unification, from Kim et al. (2001), p.126. Kim, Hun (2002), Maintenance plan for metropolitan and regional railway network for connection of inter Korea rail link: Phase 1, Report 2002-05, The Korea Transport Institute. Lee, Young-Kyun, et. al. (2001), A study on transport network integration between Republic of Korea and Democratic People’s Republic of Korea: Phase 1, Report 2001-12, The Korea Transport Institute. Nam, Kyung-Min (2002), Major transport corridors in North-East Asia: From an intra- regional perspective, UNESCAP Internship Final Report. UNESCAP (1996), Trans-Asian Railway route requirements: Feasibility study on connecting rail networks of China, Kazakhstan, Mongolia, the Russian Federation and the Korean Peninsula. UNESCAP (1997), Joint ESCAP-Japan Symposium on Asian Highway Development.

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UNESCAP (1998), TREDA: Transport forecast study, Volumes I and II, Tumen River Area Development Programme UN/DESA. UNESCAP (2002), The Priority Road Network in North-East Asia. United Nations (2002), International Trade Statistics Yearbook 2000, New York: United Nations. USESCAP (2003), Transit transport issues of landlocked and transit developing countries: Case study of Mongolia, China, and the Russian Federation.

WEBSITES

http://www.kotis.net/main/tradedb.html http://www.kca.or.kr (Korea Container Terminal Authority) http://www.stats.gov.cn (National Bureau of Statistics of China)

114 APPENDIX: SUMMARY OF COUNTRY REPORTS

APPENDIX: SUMMARY OF COUNTRY REPORTS 11

11 Data for Democratic People‘s Republic of Korea were compiled from various sources. 115 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA I. PORT INFORMATION

A. PORTS OF CHINA

Throughput Port Capacity (2001) (2001) Storage Area Handling Capacity (or Name of Quay Port Connectivity (Thousand m2) Capacity utilization in %) Total Container Ports No. of Length Road/Rail/Inland Water/Airport Container (Million (Million Berths (m) Total Open Covered (Million ton) TEU) (Million ton) TEU) Dalian 55 11,233 716 319 100.4 1.13 110.33 1.209 Dalian Airport Tianjin Tianjin Airport (35 km); Railway 57 11,672 1,142 309 113.7 1.98 113.7 2.011 (Xingang) available inside the port area. Yantai 21 3,456 33 24 21.9 0.12 17.74 Yantai Airport (30 km) Qingdao Airport; 7.4 km of railroad Qingdao 40 8,001 513 67 104 2.62 103.98 2.638 running directly to main wharves Lianyungang 20 4,096 413 52 30.6 0.16 30.59 Railroad links to 11 provinces

Hongqiao International Airport (30 Shanghai 86 14,219 221 6.34 221.02 6.330 km) Lishe Airport; Hangzhou-Ningbo Ningbo 40 6050 550 110 128.5 1.16 126.58 1.213 railroad

116 APPENDIX: SUMMARY OF COUNTRY REPORTS B. PORTS OF DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA

Port Capacity (2001) Throughput(2001) Quay Storage Area Port Connectivity Name of Handling Capacity (Thousand m2) Ports No. of Length Total Container Berths (m) Total Container (1,000 ton) (1,000 TEU) Road/Rail/Inland Water/Airport Open Covered (1,000 ton) (1,000 TEU) Chungjin 12 8,000

Nampo 11 7,500

Heungnam 11 4,000

Najin 11 3,000

Haeju 10 2,400

Sunbong 7 2,000

Wonsan 7 1,690

Songlim 11 1,000

117 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA C. PORTS OF REPUBLIC OF KOREA Throughput Port Capacity (2001) (2001) Port Connectivity Name of Storage Area Quay Handling Capacity Total Container Ports No. of (Thousand m2) Length (1,000 (1,000 Road/Rail/Inland Water/Airport Berths Total Container (m) Open Covered ton) TEU) (1,000 ton) (1,000 TEU) Kimpo airport (32 km); Incheon Incheon 76 10,802 1,847 62 61,515 747 120,680 663 international Airport (45 km); Dong Incheon Station (1.5 km) Busan 113 21,854 1,797 72 102,375 3,828 149,661 8,073 Kimhae Airport (17 km)

Gwangyang 63 13,590 848 7 89,424 960 140,954 887

D. PORTS OF THE RUSSIAN FEDERATION Throughput Port Capacity (2001) (2001) Name of Storage Area Port Connectivity Quant. Quay Handling Capacity Total Container Ports (thousand m2) Road/Rail/Inland Water/Airport of Length (million (million Total Container Berths (m) Open Covered ton) TEU) (million ton) (million TEU) Vladivostok Airport (100 km); Vladivostok 15* 2968 137.7 58.7 6.05 0.056 6.0 0.082 Railway connected to TSR 27 km of rail track in the port Nakhodka 18 2962.3 214.8 173.9 4.86 0.004 8.0 - connecting to TSR Vladivostok Airport (250 km); Vostochny 16 3718 378.4 100.0 16.51 0.08 19.5 0.32 Starting point of TSR Vanino 19 2789 153.8 20.27 5.65 0.021 14.3 0.036 Shakhtersk 4 290 13.3 - 0.379 - 1.3 - (Sakhalin)

118 APPENDIX: SUMMARY OF COUNTRY REPORTS E. PORTS OF JAPAN

Port Capacity (2001) Throughput Storage Area Handling Capacity Port Connectivity No, of Berths Quay (Thousand ㎡) Ferry/ Container Name of Ports Road/Rail/Inland (Ferry/ Length Container (Million Total Container Water/Airport Container) (m) Open Covered (Million (Million (Million ton) TEU) ton) TEU) Kobe (Ferry) 3 697 65 n.a. n.a. n.a. 16.9 ---- Good

Hakata (Ferry) 2 371 61 n.a. n.a. n.a. 0.25 ---- Good Yokohama 23 6,040 1,968 n.a. n.a. n.a. 34.7 2.25 Good (Container) Niigata 2 535 170 n.a. n.a. n.a. 1.25 0.10 Good (Container) Fushiki-Toyama 1 280 88 n.a. n.a. n.a. 0.47 0.04 Good (Container) Nagoya 14 3,720 1,210 n.a. n.a. n.a. 32.0 1.74 Good (Container)

119 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA II. CONTAINER TERMINALS, ICD

A. CONTAINER TERMINALS OF CHINA

Location Handling Nearest Name of ICD Possibility of Nearest ports Nearest major (indicate Area and Connecting Connecting airports or Cargo handing 20 foot and (name + cities (names + route (m2) Storage Roads Rail lines (name + Terminal 40 foot container distance) distance) concerned) Capacity distance) Beijing Route 1 N/A 20 foot and 40 foot 11 Tianjin 183 Capital 45 Tianjin 137km Shenyang Route 2 N/A 20foot and 40 foot 7 Dalian 413 Taoxian 38 Fushun 47 Changchun Route 4 N/A 20foot and 40 foot 5 Dalian 718 Changchun 28 Jilin 128 Jilin Route 4 N/A 20foot and 40 foot 4 Dalian 946 changchun 128 Mudanjiag Route 5 N/A 20foot and 40 foot 5 Dalian 1283 Tumen 248 Harbin Route 5 N/A 20foot and 40 foot 8 Dalian 928 Harbin 37 Changchun242 Qiqihar Route 5 N/A 20foot and 40 foot 4 Dalian 1267 daqin 68 Manzhouli Route 5 N/A 20foot and 40 foot 2 Dalian 1878 Yakeshi 268

B. CONTAINER TERMINALS OF REPUBLIC OF KOREA

Handling Equipment Distance Name of ICD Distance Area and (Possibility of Connecting Connecting from Distance from or Cargo Location from nearest (m2) Storage handing 20’ and Roads Rails nearest nearest City (km) Terminal Airport (km) Capacity 40’ containers) Port (km) Gyunggido 1 million Seoul Uiwang ICD 1 483,321 Express Route 1 Gyungbu line Incheon Incheon Uiwang si TEU 39km 553,000 Seoul Uiwang ICD 2 ― 255,072 Express Route 1 Gyungbu line Incheon Incheon TEU 39km Kyungnam 1.14 million Yangsan ICD 951,940 Express Route 1 Gyungbu line Kimhae Kimhae Busan Yangsan si TEU

120 APPENDIX: SUMMARY OF COUNTRY REPORTS C. CONTAINER TERMINALS OF THE RUSSIAN FEDERATION

Location Possibility of Nearest Name of ICD Handling Nearest ports Nearest major (indicate Area handing 20 foot Connecting Connecting airports or Cargo and Storage (name + cities (names + route (m2) and 40 foot Roads Rail lines (name + Terminal Capacity distance) distance) concerned) container distance) Забайкальск Route 5 100/ + + Chita (Chabaikalsk) Находка – Восточная Route 5 350/ + + Vostochny Vladivostok (Nahoska- Vostochny) Владивосток Route 5 270/ + + Vladivostok Vladivostok (Vladivostok)

D. CONTAINER TERMINALS OR CARGO TERMINALS OF JAPAN Handling and Equipment (Possibility of Distance from Name of Cargo Connecting Connecting Location Area(㎡) Storage handling nearest Port, Terminal Roads Rails Capacity 20’ and 40’ containers) Airport and City Okayama No crane to lift up/down the 20‘ and Prefecture Truck Okayama City 104,263 2,230ton/day good good Vicinity 40‘ Terminal Hiroshima City No crane to lift up/down the 20‘ and West Truck Hiroshima City 52,550 2,700ton/day good good Vicinity 40‘ Terminal Keihin Truck Tokyo No crane to lift up/down the 20‘ and 242,068 12,000ton/day good good Vicinity Terminal Metropolitan city 40‘

Note: Cargo Terminal is situated in outskirt of a large city to avoid passages of large truck inside the city as much as possible and functions as transshipment site where domestic cargo carried by large inter-large cities trucks is sorted or classified by destined area and reloaded onto smaller trucks entering into the inside. The reverse case is possible. Cargo Terminal does not deal with custom clearance. It has not railway track usually in the precinct.

121 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA III. INFRASTRUCTURE ALONG THE SELECTED CORRIDORS

A. Corridor 1 (Tanggu-Tianjin–Beijing–Eranhot–Zamin Uud–Ulaanbaatar-Ulan Ude) 1. Road

Sections Total Paved Design Average Possibility of No. of Condition AADT Degree of Length or Speed Travel Carrying Lanes of Route (2001) Congestion Route Start End Point (km) Unpaved (km/hour) Time containers

CHINA

Tanggu Tianjin 87 4 P fair 80 1.2 12500 2 yes Tianjin Beijing 94 2/4 P fair 80 1.3 8500 2 yes Beijing Xuanhua 195 2/4 P fair 80 2.5 12000 2 yes Xuanhua Zhangjiakou 34 4 P good 80 0.6 11000 2 yes Zhangjiakou Jining 217 2 P fair 60 3.5 3500 3 yes Jining Saihan Tal 240 2 P fair 80 3.5 300 5 yes Saihan Tal Eranhot (Border) 122 2 P fair 60 2 500 5 yes

MONGOLIA

Zamin-uud Ulaanuul 121 1 U 3 - 161 min 243 5 Yes Ulaanuul Saynshand 98 1 U 3 - 130 min 243 5 Yes Saynshand Airag 124 1 U 3 - 165 min 135 5 Yes Airag Choir 105 1 U 3 - 140 min 120 5 Yes Choir Maanit 129 1 U 3 - 172 min 120 5 Yes Maanit Nalaikh 72 1 U 3 - 96 min 150 5 Yes Nalaikh Ulaanbaatar 32 2 P 1 80 25 min 1728 5 Yes

122 APPENDIX: SUMMARY OF COUNTRY REPORTS Ulaanbaatar Ulaanbaatar 19 2 P 1 80 14 min 1362 5 Yes Checkpoint 22 Ulaanbaatar Yes Bayanchandmani 48 2 P 1 80 36 min 1362 5 Checkpoint 22 Bayanchandmani Baruunharaa 87 2 P 1 80 65 min 857 5 Yes Baruunharaa Darkhan 71 2 P 1 80 55 min 857 5 Yes Darkhan Orkhon 53 2 P 1 80 40 min 506 5 Yes Orkhon Sukhbaatar 43 2 P 1 80 35 min 506 5 Yes Sukhbaatar Altanbulag (AH) 24 2 P 1 80 20 min 608 5 Yes RUSSIAN FEDERATION Kyahta Ulan Ude ------

2. Rail From To Track gauge Distance (km) No. of Tracks Traction mode Siding length (Station name) (Station name) (mm) CHINA Tianjin Beijing 137 MT(3) 1,435 DIESEL NO STASTISTICS Beijing Datong 373 DT 1,435 DIESEL NO STASTISTICS Datong Jining 128 DT 1,435 DIESEL NO STASTISTICS Jining Erenhot 338 ST 1,435 DIESEL NO STASTISTICS MONGOLIA Zamyn Uud Ulaanbaatar 708 ST 1,520 Diesel 32,3 Ulaanbaatar Darhan 252 ST 1,520 Diesel 19,3 Darhan Hoit 150 ST 1,520 Diesel 5,9 RUSSIAN

FEDERATION Naushki Ulan Ude 261 ST 1,520 Diesel NO STASTISTICS

123 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

3. Development Plans (Road)

Investment Sections Possibility of Amounts Time Forecast AADT carrying Major measures planned (US$ or frame to (2006 and 2011) containers Local complete Route Start End Point (2006 and 2011) currency)

CHINA

Tanggu Tianjin (101 KM) 4 lanes of expressway 25000 - 40000 yes completed yes Tianjin Beijing (44 KM) 4 lanes of expressway 25000 - 40000 completed yes Beijing Zhangjiakou (148 KM) 4 lanes of expressway 15000 - 25000 completed

MONGOLIA

To complete construction of paved road with 7 m 2006 – 472 veh/day 2006-294 trk/day width carriageway by Second Road Development Nalaikh Choir 25 mln US$ 3 years Project /No.1700-MON/ Under loan, Asian 2011- 734 veh/day 2011- 448 trk/day Development Bank in 2004. (200 km). 2006- 402 veh/day 2006- 229 trk/day To complete the Feasibility Study of this road in 67.2 mln Choir Zamiin Uud 2004 under ADB‘s technical assistance and start 5 years US$ construction work in 2007. (448 km) 2011-1046 veh/day 2011- 321 trk/day

124 APPENDIX: SUMMARY OF COUNTRY REPORTS 4. Development Plans (Rail)

Investment From Improved possibility To Distance No. of Traction Amounts Brief description of measures and time (Station of transit of (Station name) (km) Tracks mode (US$ or Local frame to complete name) containers currency) CHINA

Tianjin Beijing 137 MT Electric YES High Speed Railway 2008 Electric Beijing Datong 373 DT YES Improve Speed 2008 Electric Datong Jining 128 DT YES Improve Speed 2008

Jining Erenhot 338 ST Diesel YES 1 Billion RMB Part DT, Improve Speed 2008

MONGOLIA

Improvement of the 100 million The extension of Hoit siding‘s track has Naushki Sukhbaatar 30 1 Diesel passing capacity tugrugs been made on July 2003.

Improvement of the 500 million The industrial line is being constructed and Tolgoit Ulaanbaatar 7 1 Diesel passing capacity tugrugs opened on October 2003. Track extension work is being done at Improvement of the 250 million Ulaanbaatar Choir-Sainshand 247 1 Diesel Bayan8 Choir and Shivee-Ovoo stations, passing capacity tugrugs 2003.

125 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA B. Corridor 2 (Beijing-Shenyang-Dandong-Pyongyang-Seoul-Busan)

1. Road Total Paved Condition Design Possibility of Sections No. of Average AADT Degree of Length or of Speed carrying Lanes Travel Time (2001) Congestion Route Start End Point (km) Unpaved Route (km/hour) containers CHINA Beijing Tangshan 133 2/4 P good 80 1.8 13000 2 yes Tangshan Qinhuangdao 148 2 P fair 80 2 5500 3 yes Qinhuangdao Suiizhong 83 2 P fair 50 2 4500 3 yes Suiizhong Goubangzi 177 2 P fair 50 3.5 5000 3 yes Goubangzi Shenyang 200 2 P fair 50 4 4000 3 yes Shenyang Dandong (Border) 272 2 P fair 50 6 3000 3 yes DPRK1 Shinuiju Pyongyang 228.8 2 P (83km) Fair 80 3 4 yes Pyongyang Kaesong 170 4 P good 100 2 3 yes Kaesong Panmunjom 6.2 ROK Panmunjom Seoul 49.8 10 (4) P Good 90 30min 38,300 5 Y Seoul Daejon 151.0 8 P Good 100 2hrs. 178,179 2 Y Daejon Busan 274.5 4 P Good 100 3hrs. 30min 68,553 3 Y JAPAN 205,588- Hakata Port Tokyo (Expressway) 1110 4-6 P Good 80-120 18 4 Y 414,840 20ft:Y Hakata Port Tokyo (Ordinary Road) 1200 4 P Good 60-80 33 4 40ft:Y (*) 1. Democratic People’s Republic of Korea’s data are based on the report from Ahn etc. (2001, 2002)

126 APPENDIX: SUMMARY OF COUNTRY REPORTS 2. Rail

From(Station name) To(Station name) Distance (km) No. of Tracks Track gauge(mm) Traction mode Siding length

CHINA Beijing Qinhuangdao 449 DT 1,435 Diesel Qinhuangdao Shenyang 443 DT 1,435 Diesel Shenyang Dandong 266 ST 1,435 Diesel DPRK1 Shinuiju Pyongyang 225 ST Electric Pyongyang Kaesong 187 ST Electric ROK Munsan Seoul 46 ST 1,435 Diesel Seoul Suwon 41.5 MT 1,435 Electric Suwon Daejon 120.6 DT 1,435 Electric Daejon Daegu 161.8 DT 1,435 Electric Daegu Busan 120.6 DT 1,435 Electric JAPAN

Fukuoka Cargo Station Tokyo Cargo Station 1184 2 1067 Electricity n.a. 1. Democratic People‘s Republic of Korea‘s data are based on the report from Ahn etc. (2001, 2002)

127 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA 3. Development Plans (Road)

Investment Sections Possibility of Forecast AADT Amounts Time frame to Major measures planned carrying containers (2006 and 2011) (US$ or Local complete Route Start End Point (2006 and 2011) currency) CHINA Beijing Shenyang 4 lanes of expressway (658 km) 20000 – 35000 yes completed Shenyang Dandong 4 lanes of expressway (208 km) 15000 - 25000 yes completed Republic of Korea Crossing Border Panmunjeom National Route 1 (5.5 km) 87.3 billion won Munsan Seoul 570 billion won 7 yrs

128 APPENDIX: SUMMARY OF COUNTRY REPORTS 4. Development Plans (Rail)

Improved Investment From To Distance No. of Traction possibility of Amounts Brief description of (Station name) (Station (km) Tracks mode transit of (US$ or Local measures and time frame name) containers currency) to complete CHINA Beijing Qinhuangdao 449 DT ELC. YES 3.9 B. RMB Improve Speed 2008 Qinhuangdao Shenyang 443 DT ELC. YES 3.7 B. RMB Improve Speed 2008 REPUBLIC OF KOREA

Munsan Border 12.0 ST 66.3 billion won 85% complete

From ST to DT Munsan Yongsan DT Complete in 2006

Shintanri Border 16.2 ST 86.6 billion won

Chulwon Border 32.5 ST 250.4 billion won

From ST to DT and Electric Suwon Cheonan 55.6 DT Electric 1072 billion won (‗90~‘03) Cheonan Chochiwon 32.7 ST Electric 107.1 billion won Convert to Electric (‗99~‘03) Chochiwon Daegu 158.0 ST Electric 549.1 billion won Convert to Electric (‗02~‘09) 2.8times High Speed Rail (reduce High Speed Seoul Pusan 444.5 ST (from 390,000TEU 7966 billion won travel time to about 2hrs) Electric to 3,000,000 TEU) (‗92~‘04)

129 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA C. Corridor 3 (Busan–Pohang–Kosong–Wonsan–Kimchaek–Sonbong–Razdolnoye–Ussuriysk–Khabarovsk–Belogorsk–Chita)

1. ROAD

Paved Design Possibility of Sections Total Length No. of Condition of Average AADT Degree of or Speed carrying (km) Lanes Route Travel Time (2001) Congestion Route Start End Point Unpaved (km/hour) containers REPUBLIC OF KOREA Busan Kyongju 68.7 4 P Good 100 1hr. 5min 61,638 3 Y Kyongju Kangnung 293.9 2 (4) P Good 60 5 hrs. 8,843 5 Y Kangnung Kansong 83.9 4 P Good 80 1hr. 18,037 5 Y DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA Kosong Wonsan Wonsan Kimchaek Kimchaek Chongjin Chongjin Sonbong Total 6501 P (198km) fair RUSSIAN FEDERATION No Report 1. Data from UNESCAP ―Priority Road Network in North-East Asia‖

130 APPENDIX: SUMMARY OF COUNTRY REPORTS 2. RAIL

From (Station name) To (Station name) Distance (km) No. of Tracks Track gauge Traction mode Siding length

ROK Busan Kyungju 112.3 ST 1,435 Kyungju Youngchon 37.6 ST 1,435 Youngchon Youngju 126.1 ST 1,435 Youngju Choram 87 ST 1,435 Choram Donghae 61.5 ST 1,435 Donghae Kangrung 45.1 ST 1,435 Kangrung Kosong 124.2 ST 1,435 DPRK

RUSSIAN FEDERATION Hasan Baranovsky 239 ST 1,520 Diesel Baranovsky Ussuryisk 23 DT 1,520 Electric Ussuryisk Khabarovsk 654 DT 1,520 Electric Khabarovsk Belogorsk 658 DT 1,520 Electric Belogorsk Bamovskaya 592 DT 1,520 Electric Bamovskaya Karimskaya 981 DT 1,520 Electric Karimskaya Chita 96 DT 1,520 Electric Chita Ulan Ude 557 DT 1,520 Electric

131 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA 3. Development Plans (Road) Sections Possibility of carrying Investment Major measures planned Forecast AADT containers Amounts Time frame to Route Start End Point (2006 and 2011) (US$ or Local complete (2006 and 2011) currency) REPUBLIC OF KOREA

Busan Ulsan 40 km 62000 (2004), 81000 (2009) 2006, 2011 680 billion won 2006 Ulsan Pohang 2011 2009 Pohang Kosong 2019

4. Development Plans (Rail) Investment Distance Traction Improved possibility Amounts Brief description of measures and From To No. of Tracks of transit of (km) mode (US$ or Local time frame to complete containers currency) REPUBLIC OF KOREA

Kangreung Border 127 ST 1,727 billion won Construction plan complete Donghae Kangreung 45.1 ST Electric 47.4 billion won Convert to Electric (‗01~‘04) Pohang Samchuck 171.3 DT Electric 2,695 billion won From ST to DT and Electric (‗02~‘14) Ulsan Pohang 73.2 DT Electric 2,059 billion won From ST to DT and Electric (‗03~‘10) RUSSIAN FEDERATION

Plans of Ministry of Railways of the Russian Federation provided through 2010 to Hasan Baranovsky 239 ST Diesel carry out reconstruction of separate sites of a direction, second-order construction of the bridge through r. Amur at Khabarovsk, and also reconstruction and modernization Baranovsky Ulan Ude 3561 DT Electric zh.d. Stations Hasan with construction of the container terminal.

132 APPENDIX: SUMMARY OF COUNTRY REPORTS D. Corridor 4 (Rajin/Sonbong–Jilin– Changchun–Ulanhot–Sumber–Ulaanbaatar) 1. ROAD Possibility Sections Total Condition Design No. of Paved Average Degree of of Length of Speed AADT Lanes or Unpaved Travel Time Congestion Carrying Route Start End Point (km) Route (km/hour) containers CHINA Quanhe Hunchun 59 2 P fair 40 1.5 2500 4 yes (Border of DPRK) Hunchun Yanji 118 2 P fair 40 3 2500 4 yes Yanji Dunhua 148 2 P fair 50 3 2200 4 yes Dunhua Jilin 225 2 P fair 50 4 1500 4 yes Jilin Changchun 120 2 P fair 80 1.5 3000 3 yes Changchun Qianguozhen 155 2/4 P good 80 2 4500 3 yes Qianguozhen Baicheng 211 4 P good 80 3 3000 4 yes Baicheng Ulanhot 85 2 P fair 60 1.5 2000 4 yes Ulanhot Arshan 230 2 P fair 50 4.5 1000 5 yes Arshan Border of Mongolia 10 2 P fair 50 0.3 1000 5 yes MONGOLIA Nomrog (Border) with Sumber 80 1 U 3 - 106 min 65 5 Yes China) Sumber Choybalsan 324 1 U 3 - 432 min 78 5 Yes

Choybalsan Bayan-ovoo 192 1 U 3 - 256 min 185 5 Yes

Bayan-ovoo Ondorhaan 130 1 U 3 - 173 min 185 5 Yes

Ondorhaan Jalgalthaan 93 1 U 3 - 124 min 186 5 Yes

Jalgalthaan Baganuur 114 1 U 3 - 152 min 239 5 Yes

133 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA

Baganuur Erdene 53 1 P 1 80 45 min 322 5 Yes

Erdene Nalaikh 43 2 P 1 80 30 min 771 5 Yes

Nalaikh Ulaanbaatar 32 2 P 1 80 25 min 1965 5 Yes

JAPAN

Niigata Port Tokyo(Expressway) 330 4-6 P Good 80-120 5 182,577 3 Y 20ft:Y Niigata Port Tokyo(Ordinary Road) 350 4 P Good 60-80 8 4 40ft:Y (*)

2. RAIL From(Station To(Station name) Distance (km) No. of Tracks Track gauge Traction mode Siding length name) DPRK

CHINA

Tumen Jilin 403 ST 1,435 DIESEL

Jilin Changchun 128 ST 1,435 DIESEL

Changchun Baicheng 333 ST 1,435 DIESEL

Baicheng Ulanhot 82 ST 1,435 DIESEL

Ulanhot Yirxie 254 ST 1,435 DIESEL

MONGOLIA

JAPAN Niigata Cargo Station Tokyo Cargo Station 347 2 1067 Electricity n.a.

134 APPENDIX: SUMMARY OF COUNTRY REPORTS 3. Development Plans (Road)

Sections Possibility of Investment Time Major measures planned Forecast AADT carrying Amounts frame to Route Start End Point (2006 and 2011) containers (US$ or Local (2006 and 2011) currency) complete Republic of Korea

Jilin Changchun 4 lanes of expressway (84km) 15000 – 23000 yes completed

To start Detailed Design of this road in 2004 under Japanese technical assistance, start construction work 2006-599veh/day 2006 – 192 in 2005, and complete construction in 2008 under trk/day Baganuur Ondorkhaan 45.4 mln US$ 3 years loan. Feasibility Study of road completed in 2002 under Technical assistance of Japanese Government. 2011 – 832 veh/day 2011-269 trk/day (228km)

4. Development Plans (Rail)

Investment Distance No. of Traction Improved possibility Amounts Brief description of measures and time From To of transit of (km) Tracks mode (US$ or Local frame to complete containers currency) CHINA

Tumen Jilin 403 ST ELC. YES Improve Speed , 3.3 B RMB Jilin Changchun 128 ST ELC. YES Enlarge Capacity 2010

135 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA E. Corridor 5 (Nakhodka/Vladivostok -Ussurisk-Pogranichny-Harbin-Manzhouli-Chita-Ulan Ude) 1. ROAD

Sections Total Paved Condition Design Average Possibility of No. of Degree of Length or of Speed Travel AADT carrying Lanes Congestion Route Start End Point (km) Unpaved Route (km/hour) Time containers

RUSSIAN FEDERATION No Report CHINA Suifenhe Mudanjiang 180 2 P fair 80 2.3 2200 4 yes (Border of Russia) Mudanjiang Harbin 358 2 P fair 60 6 1800 4 yes Harbin Anda 112 2 P fair 80 1.5 2300 4 yes Anda Qiqihar 183 2 P fair 60 3 2000 4 yes Qiqihar Hailar 576 2 P fair 50 11 1500 4 yes Manzhouli Hailar 235 2 P fair 50 5 900 5 yes (Border of Russia) RUSSIAN FEDERATION No Report JAPAN Osaka 136,481- FushikiToyama Port 380 4-6 P Good 80-120 6 3 Y (Expressway) 247,988 Osaka 20ft:Y FushikiToyama Port 400 4 P Good 60-80 9 4 (Ordinary Road) 40ft:Y (*)

136 APPENDIX: SUMMARY OF COUNTRY REPORTS 2. RAIL

From To Distance (km) No. of Tracks Track gauge Traction mode Siding length (Station name) (Station name)

RUSSIAN FEDERATION Nakhodka Uglovaya 164 DT 1,520 Electric Vladivostok Uglovaya 33 DT 1,520 Electric Uglovaya Baranovsky 56 DT 1,520 Electric Baranovsky Ussuryisk 23 DT 1,520 Electric Ussuryisk Grodekovo 118 ST 1,520 Diesel CHINA Suifenhe Mudanjiang 193 ST 1,435 DIESEL Mudanjiang Harbin 355 DT 1,435 DIESEL Harbin Qiqihar 299 DT 1,435 DIESEL Qiqihar Yakeshi 383 DT 1,435 DIESEL Yakeshi Hailar 82 DT 1,435 DIESEL Hailar Manzhouli 186 ST 1,435 DIESEL RUSSIAN FEDERATION Zabaykalsk Karymskaya 366 ST 1,520 Diesel Karymskaya Ulan Ude 653 DT 1,520 Electric

137 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA 3. Development Plans (Road) Sections Possibility of carrying Investment Major measures planned Forecast AADT containers Amounts Time frame to complete Route Start End Point (2006 and 2011) (US$ or Local (2006 and 2011) currency) CHINA

Harbin Anda 4 lanes of expressway (130 km) 20000 - 28000 yes completed

4. Development Plans (Rail) Investment Distance No. of Traction Improved possibility of transit Amounts Brief description of measures and From To (km) Tracks mode of containers (US$ or Local time frame to complete currency) CHINA Suifenhe Mudanjiang 193 ST Diesel YES 0.6 B RMB Improve Speed, Enlarge Capacity Mudanjiang Harbin 355 DT Diesel YES 2010

Hailar Manzhouli 186 ST YES 1.9 B RMB DT Imp.Spd , Enl. Cap. 2010

RUSSIAN FEDERATION

Nakhodka Ussuryisk 243 DT Electric

Vladivostok Ussuryisk 112 DT Electric Reconstruction and modernization zh.d is provided. The stations serving ports the Find and Vladivostok, zh.d.stantsii Grodekovo with construction of the container terminal, Ussuryisk Grodekovo 118 ST Diesel amplification of throughput of site Karymskaja Zabajkalsk with construction of the second ways with the further electrification, development of station Zabajkalsk Zabaykalsk Karymskaya 366 ST Diesel

Karymskaya Ulan Ude 653 DT Electric

138 APPENDIX: SUMMARY OF COUNTRY REPORTS F. Corridor 6: Dalian–Shenyang–Changchun–Harbin–Heihe–Blagoveshchensk– Belogorsk

1. ROAD Total Sections No. of Paved Condition Design Average Degree of Possibility of Length Lanes or of Speed Travel AADT Congestion carrying Route Start End Point (km) Unpaved Route (km/hour) Time containers

CHINA Dalian Gaizhou 200 2 P fair 80 2.5 5000 3 yes Gaizhou Shenyang 196 2/4 P fair 80 2.5 14000 3 yes Shenyang Siping 190 2 P fair 80 2.5 4500 3 yes Siping Changchun 123 2 P fair 80 1.5 6000 3 yes Changchun Harbin 205 2 P fair 80 2.5 5500 3 yes Harbin Mingshui 183 2 P fair 60 3 3000 4 yes Mingshui Bei'an 148 2 P fair 60 2.5 1400 4 yes Heihe Bei'an (Border of Russia) 273 2 U fair 50 5.5 1100 4 yes

2. RAIL From To Distance (km) No. of Tracks Track gauge Traction mode Siding length CHINA Dalian Shenyang 381 DT 1,435 Electrification Shenyang Changchun 305 DT 1,435 Electrification Changchun Harbin 242 DT 1,435 Electrification Harbin Suihua 125 DT 1,435 DIESEL Suihua Heihe 548 ST 1,435 DIESEL RUSSIAN FEDERATION Blagoveshensk Belogorsk 109 ST 1,520 Diesel

139 INTEGRATED INTERNATIONAL TRANSPORT AND LOGISTICS SYSTEM FOR NORTH-EAST ASIA 3. Development Plans (Road)

Sections Possibility of Investment Major measures planned Forecast AADT carrying containers Amounts Time frame to complete Route Start End Point (2006 and 2011) (US$ or Local (2006 and 2011) currency) CHINA

Dalian Shenyang 4 lanes of expressway (375 km) 30000 – 50000 yes completed Shenyang Changchun 4 lanes of expressway (297 km) 23000 – 32000 yes completed Changchun Harbin 4 lanes of expressway (230 km) 20000 - 28000 yes completed

4. Development Plans (Rail)

Improved Investment Distance No. of Traction possibility of Amounts Brief description of measures and time frame to From To (km) Tracks mode transit of (US$ or Local complete containers currency) CHINA

Harbin Suihua 125 DT DES YES 1.1 B RMB DT Imp.Spd , Enl. Cap. 2010

RUSSIAN FEDERATION

The nearest years Ministry of Railways of the Russian Blagoveshensk Belogorsk 109 109 Diesel Federation construction zh.d is not provided for Station Blagoveshchensk.

140

IV. MISSING LINKS IN THE KOREAN PENINSULA

A. Missing Rail Links in Korean Peninsula

Rail Lines Missing Links Length(km) Kyungeuisun ROK: South Limit∼ DMZ 1.8 (Seoul∼ Shineuiju) DPRK: DMZ∼ Gaesung 12.0 Kyungwonsun ROK: Shintanri∼ DMZ 16.2 (Seoul∼ Wonsan) DPRK: DMZ∼ Pyunggang 14.8

Gumgangsansun ROK: Chulwon∼ DMZ 32.5 (Seoul∼ gumgangsan) DPRK: DMZ∼ Naegumgang 84.1 Donghaesun ROK: Gangneung∼ DMZ 127.0 (Gangneung∼ Anbyun) DPRK: DMZ∼ Onjungri 18.0

B Missing Railway Links in Korean Peninsula

141

C. Missing Road Links in Korean Peninsula

Roads Missing Links Progress National road #1 Panmunjum∼ Gaesung Road pavement to Panmunjum completed National road #3 Chulwon∼ Pyunggang Expansion to Yunchon completed National road #5 Whachon∼ Pyunggang Pavement to Gumgok completed National road #7 Gansung∼ Jangjun Expansion to Gansung under construction National road #31 Yanggu∼ Baekhyunri Pavement to Imdang completed National road #43 Shinchulwon∼ Geundong Construction to Gimwha under construction

D. Kyungeui and Donghae Rail and Road Connections

Links Mode Capacity Connecting Points Distance(km) Kyungeuisun Line Rail Single track Gaesung Station∼ Dorasan Station 17.1 (Seoul-Shineuiju) Road 4 Lane Gaesunggondan∼ Dorasan Station 8.8 Rail Single track Onjungri∼ Jeojin 27.5

Donghaesun Line Road 2 Lane Gosung∼ Songhyunri 14.2 Temporary 2 Lane Gosung∼ DMZ 1.5 Road

E. Kyungeui and Donghae Rail and Road Connections

142

143