Sukdanont, S., et al. / Asian Transport Studies, Volume 5, Issue 4 (2019), 600–616.
Research Article Possibly Utilizing Intermodal Transport with Coastal Shipping for Thailand– Myanmar’s Cross–border Transport
Sumalee SUKDANONT a, Watchara PECHDIN b, Parcharapat TAWINNORPPANAN c a Transport Institute, Chulalongkorn University, Bangkok, 10330, Thailand; E–mail: [email protected] b Transport Institute, Chulalongkorn University, Bangkok, 10330, Thailand; E–mail: [email protected] c Transport Institute, Chulalongkorn University, Bangkok, 10330, Thailand; E–mail: [email protected]
Abstract: This paper aims to propose alternative modes of transport for Thailand-Myanmar’s cross-border trade at Ranong Province. The intermodal transport concept which connecting coastal shipping to road transport is applied to this study. The transport cost, which comprises of financial cost and environmental cost, is analyzed in aspect of macro view. The result shows that, when only the financial cost is analyzed, single mode of road transport would cost cheaper than intermodal transport while the latter would cost cheaper when environmental cost is included. To enhance sustainable transport and reveal its real cost, this paper suggests that Thai Government should promote this alternative by including environmental costs in the truck license fees. Furthermore, the related private sector such as coastal shipping lines, port operators, truck companies and exporters should cooperate closely on strategy planning.
Keywords: Mini Land bridge, Intermodal Transport, Sustainable Transport, Transport Cost Analysis
1. INTRODUCTION
Most of international trades between Thailand and Myanmar is occurred in middle-lower Myanmar. This is because there are high population density and distributing agency. Particularly in Yangon city, there is the biggest commodity distribution center of Myanmar. Referring to Thai customs statistic of 2016, it concludes that Thailand–Myanmar trade value is around 1.31 hundred-billion Baht in which around 72.82 percent is from cross-border trade, which around 99 percent of cross-border trade is from a trade with middle-lower Myanmar region. Major Thai export commodities are consumable goods, fuel, and construction material such as steel and cement. While Thailand’s import commodities are fresh and processed seafood from Myeik where is the biggest fishery city of Myanmar. Figure 1 represents the major route to trading–partner cities of middle-lower Myanmar. It indicates that Thailand can connect to lower Myanmar by using both land and sea transport. For land transport, Ban Rim Moei pass, Mae Sot district, Tak province generates the highest trade value since it is the nearest pass connecting to Yangon city. As sea transport, it can
Corresponding author. This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License (CC BY 4.0: https://creativecommons.org/licenses/by/4.0).
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Figure 1. Thailand–Myanmar’s cross–border transport route of middle–lower region transport through Ranong pass located in Ranong Province. There is the only gateway located on the Andaman Coast and has the second trade value since the route also leads to Yangon. The route is normally Ranong–Myeik–Dawei–Yangon. For a year, Ranong pass plays as an important role in cross-border trade. This is because Ranong pass located opposite to Tanintharyi division where is governed by central government. Myanmar’s political situation is the significant factor influencing the suspension of passengers and vehicles, including import and export of cargoes or the closure of the border pass. For example, Myawaddy, where is governed by local government, borders with Ban Rim Moei pass, occasionally has political crisis with central government or sometimes with minorities from other local government which leads to suspension of commodity shipment through the border. Supporting by Figure 2, it displays Thailand–Myanmar cross border trade value of each pass/checkpoint. Focusing on 2011, there were many fights between the Myanmar’s Army and a Karen rebel group who lived in Myawaddy and its outskirt. The situation led to Thai government’s decision to temporarily close Ban Rim Moei pass for security reasons. Therefore, it resulted in significant increasing of cross-border trade value at Ranong pass. Hence, it implies that when Ban Rim Moei pass–Yangon, the main route, is detained from proper functioning, pass in Ranong Province will be used for cross-border trade instead.
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Unit: Billion Bath 80.00 60.00 40.00 20.00 ‐ 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Mae Sot C.O. (Administering in Ban Rim Moei Pass)
Sangkhla Buri C.O. (Administering in Three Pogoda Checkpoint, Pu Nam Ron Pass) Pracuap C.O. (Administering in Sing Khon Checkpoint)
Ranong C.O. (Administering in Ranong Pass)
Figure 2. Proportion of Thailand- Myanmar’s Cross-border trade through middle – lower region: Classified by Customs Office (C.O) Source: Calculated from Thailand’s customs statistic, Department of Customs, Thailand However, the transport through Ranong pass is impeded by two big domestic transport problems. Firstly, most of the origin is in Bangkok Metropolitan Region which is approximately 600 kilometers from Ranong Province. There is only land transport by truck and only one accessible way. The existing problem is lack of truck driver. When the freight demand is rapidly growing, a driver needs to work continuously in long hours or sometimes there are overload commodity which frequently leads to road accident and exposes the environmental problem. Secondly, reliance only on land transport is quite risky when it comes to the unexpected situation such as road blockage situation or flooding occasionally. Those situations sometimes lead to 1–2 days road shutdown. Then, the commodities could not be delivered on time. Therefore, the problem needs urgent solutions before it becomes a serious problem. Thus, an alternative mode of transport should be proposed in order to mitigate the problem and enhancing economic development by maintaining freight flow efficiency at the same time. Considering the location of Ranong pass, it is nearby many ports in the Gulf of Thailand. All ports are commercial ports either owned by government or owned by private sector. The closest port to Ranong pass is ports in Prachuab Kirikan Province which is around 220 kilometers from Ranong pass. Therefore, there is potentiality to connect mode of transport using land link. This paper aims to analyze an alternative mode of transport for commodity shipment to Ranong pass by connecting through ports in Prachuap Kirikan Province. Regarding to the conceptual framework, this study is quite original because most previous studies highlighted on enhancing land transport efficiency or Kra Isthmus shortcutting–a concept of connecting both coasts. As a result, this study is limited by lack of transport data. To initiate, the study will focus on a macro view. The results could benefit to the policy maker to effectively solve the existing problem of land transport and initiate the sustainable mode of transport for Thailand– Myanmar border trade both in provincial and national level. Moreover, this study will prioritize in consideration of the existing infrastructure in order that logistics providers can instantly apply to their logistic strategy and planning.
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Rests of this article are as follows; Section 2: Literature reviews regarding intermodal transport and the linking Gulf of Thailand to Andaman concept; Section 3: Related methodology to build Ranong Province-Prachuab Kirikan Province alternative route analysis; Section 4: The study results and finally Section 5: Recommendations on development policy.
2. LITERATURE REVIEWS
The reviews are divided into 4 main parts. Firstly, the background of Short-Sea Shipping (SSS) is introduced to clarify its importance as transport choice together with analyzing in intermodal transport between SSS and land transport. Next part is the concept of connecting Gulf of Thailand to Andaman and its contributions. Then, subsequent part represents the main existing routes of SSS in Thailand. The last part shows the existing facility of both coastal sides to support this proposal. All details are shown as following;
2.1 Short–Sea Shipping in Logistics
Presently, there is no exact definition on Short-Sea Shipping (SSS). The definition is generally based on the objectives of the study. Most factors such as distance, type of vessel, geography, or type of cargoes or passengers are always used to be a definition criterion. In this study, the definition is referred to Arof (2015) as “The movement of goods and people within coastal waters and inland waterways on routes that do not involve transit through the ocean”. This context can imply that SSS is involving the transport by ships along the coasts, to and from nearby islands, within internal waters such as lakes and rivers, and without crossing an ocean. Also, SSS encompasses a large variety of maritime transport activities and a wide range of vessel types, cargoes, port infrastructures, policies and regulations. The SSS concept emerged in 20th century due to increasing in negative externality such as congestion, pollution, accident of road transport. Arof (2015) indicates that this choice of transport was not popular at the beginning because it is slow, unreliable and is obsolete mode of transport. European Commission (EC) was likely to be the first distinctive organization who developed SSS to accommodate to the realistic transport. Suárez-Alemán et al. (2010) states that, from 1992 to 2000, EC carried out the several studies highlighting the role of SSS, in particular Pilot Action for Combination Transport (PACT) programme 167 projects with a budget of €53 million in order to promote SSS as a part of an intermodal chain. Generally, SSS does not serve goods at the origin or destination point. Mostly, goods are transported by truck to and from the port. Hence, ports are connecting point between sea transport and land transport. It definitely requires a seamless connection for on time delivery for which proficient transition process is significant. Each shipment is assured that bottlenecks problem will no longer be in the transport chain. Supporting by Paixao and Marlow (2001) address that weakest point of SSS are related to the port performance and service quality such as efficient port operations, unreliable vessel schedules and excessive paperwork. As well as, the readiness of terminal operations, which is frequently discussed on efficiency of SSS since it leads to unnecessary cost related to handling time. The argument enhanced by Juang and Roe (2010), they find that the most important factors of ports management in intermodal transport is its services namely; service quality, management efficiency, human resource management, and industrial zone management. Likewise, Baindur and Viegas (2011) identify that the barriers of SSS are regarded to four factors namely regulatory, technical, commercial and environmental barrier. The regulatory barrier is mostly accustomed to the standard of inspection which some of them are possibly related to environmental regulation. This is because the inconsistent
603 Sukdanont, S., et al. / Asian Transport Studies, Volume 5, Issue 4 (2019), 600–616. inspection is resulting in carrier costs. The technical barrier is referred to the capacity of system in port station while commercial barrier is referred to investment cost both investment in port and ship. Finally, environmental barrier is about weather conditions. Therefore, intermodal based transport strongly requires cooperation among logistics chain’s stakeholders. The business consolidation among companies is likely to establish for the purpose of collective management. The Vertical Integration is one of favorite strategies, this concept attempts to consolidate the upstream producer till the downstream provider. Notteboom (2002) points that this line will control the link of transport chain which provides economies of scope and encourages the carriers to service more efficiently by information sharing. Likewise, Fossey (2002) shows that direct management through internalizing cost from consolidation will lessen the management cost and greater control over which the operation allows as well as Guy (2003) and Medda and Trujillo (2010) suggest that to overcome the obstacles of connection, it is needed to focus on ports and transport system efficiency as a whole because of competition in transport market. In this regard, that means the sharing of information between nodes can be visualized its drawback and competitiveness which encourage the productive management, as the same time Davindenko et al. (2012) suggest that the full facility support is recognized to be one of the ways to take advantage of its full potential and capacity. It is essential to ensure that successful in land bridge happen when each node in the chain are all available to connect. In addition, the journey distance became the major concerns of SSS’s competitiveness comparing to land transport since it serves the same purpose of saving transport cost in short distance. Regarding to Ng (2009), his results shows that the road transport is competitive within 1,100 km as SSS is competitive from 1,100 km to 2,500 km. Similarly, García ‐Menéndez and Feo ‐Valero (2009) mentioned that an intermodal maritime alternative has a relative competitive advantage over integral road transport in shipments involving distance of more than 1500 km. Contritely, Sundberg et al. (2011) argue that SSS could be competitive in short distance if there is a ROPAX concept. The ROPAX is the concept that cargoes and passengers are transported in the same vessel can increase the economy of scale in transport journey. It can reduce cost per unit along the trip. The evidence shows that the distance of SSS route from Helsinki to Tallinn is only around 80 km and is much less than the European competitive distance but the ROPAX is only economical profitable operation mode on the route.
2.2 Connecting Gulf of Thailand to Andaman
The connecting of Pracuap–Ranong Province by land transport concept is quite similar to the land bridge concept. This is because both mentioned ports are located in different coast and it can be connected by land. It is only different in terms of the destination which this study only considerably terminates at Ranong pass where is not the destination of commodity shipment. In fact, it also requires same strategy or effectiveness on transport management. Therefore, in this part, the weakness and strength of the previous land bridge concept of both foreign regions and Thailand are summarized in order to contribute to further analysis. Additionally, the coastal connecting concept by shortcutting canal is also reviewed in this part. Eurasian Land Bridge: Eurasian Land Bridge lays its route across Russia, it is the shortest rail route connecting Asia and Far East to Europe. It is also known as Trans–Siberian Railway, begins at Vladivostok and ends at Moscow, Russia and towards 9,288 kilometers with 7 days of shipping in minimum to its destination. This rail route is mostly used for the shipment of commodity that origins in Korea and Japan (Yoon et al., 2007). In the early 21st century, Government of China became the main developer of railway connecting Europe to South Asia under the New Silk Road Project or Belt Road Initiative (BRI) which consists of developing three railways connectivity namely, Trans–Siberian–Kazakh route, Trans–Siberian–Mongolian
604 Sukdanont, S., et al. / Asian Transport Studies, Volume 5, Issue 4 (2019), 600–616. route and following with Trans- Siberian–Manchurian Route. To develop the project, China provided fund and technological support to the involved countries under Silk Road Fund. The project contributes to China’s growing international trade (Branchard and Flint, 2017) and commodity shipment from China’s landlocked area. In the meantime, the original Eurasian Land Bridge was also improved by China. Not only development in infrastructure but also the government decided to allow international logistics provider to invest in the business, for example, Trans Eurasia Logistic Company, in which the biggest shareholders are Deutsche Bank of Germany and JSC Russian Railways of Russia. Currently, the Company has become the main forwarder who provides transport service from Beijing to Rotterdam, Netherland. However, railway construction on Eurasian Land Bridge had to deal with many obstacles since it is international transport route. The problems occurred are; 1) International cooperation: the most important challenge in railway construction since the railway covered area of 7 countries with different condition of society, economy, and politic. In 2006, involved countries agreed on Trans-Asian Railway Network Agreement. The purposes of this Agreement were to harmonize customs clearance, cooperate in investment, and define the route alignment. Significant weakness of the railway is political instability in Kazakhstan, some part of Siberia, and some part in western China. So, continuous and safe shipment along the route needed to be assured. 2) Railways width standard: The railway has two width standards; Standard Gauge with 1.435 meters in China and countries in Europe; and Board Gauge with 1.520 meters in Russia and some Scandinavian countries. The challenge occurred was commodity transit from one railway to another, for example, commodity shipment from China to Germany needed 2 transits of railways which were Standard Gauge in China to Board Gauge in Russia and switch back to Standard Gauge in Europe again. These transits increased cost and shipment time. North America Land Bridge: In the past, transport from North America to other regions had only one mode which is sea transport through Panama Canal. This sea transport had insufficient capacity for Post Panamax vessels and it served slow services. Due to the mentioned problems, logistics providers and commodity manufacturers considered transport using land bridge. America Land Bridge begins at Los Angeles and ends at New York or New Jersey with total length of 3,100 miles. Canadian Land Bridge begins at Vancouver and ends at Halifax with total length of 5,800 miles. These two Land Bridges of North American helps shorten the distance and duration in transport (Yoon et al., 2007). For Instance, transport from Busan, South Korea to New York, USA through Panama Canal usually takes 21 days in minimum but using the Land Bridge shortens duration up to 6 days and shortens distance up to 4,300 Miles. Transport using North America Land Bridge has been driven by private sectors. It became substantial in mid–1972 by sea freighter company Seatrain Lines, together with America Federal Railroad Administration, co-providing logistic service between Far East–Western America–Europe to decrease shipment duration and congestion at Panama Canal. After, when economic of Asia and Europe grew and in 1984, USA reformed sea transport–related law and regulation in order to facilitate transport that used American Land Bridge and resulted in cooperation and alliance among sea freighters (Yoon et al., 2007). The study of Slack and Frémont (2005) and Frémont (2009) indicated that many sea transport providers would play important roles in inter–modal transport using American Land Bridge in order to be competitive in the logistics business.
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The Land Bridges in Thailand: The land bridge concept in Thailand was initiated in 1989 with the objective to connect the two coasts of Thailand namely the Andaman Sea and the Gulf of Thailand. Until 2013, there are three concepts of land bridge as follows: 1) Krabi–Khanom Land Bridge (Krabi Province–Nakornsrithammarat Province) 2) Thay Mueang–Khanom Land Bridge (Pang–nga Province–Nakornsrithammarat Province) 3) Andaman Coast–Gulf of Thailand Coast Land Bridge (Satun Province–Songkhla Province) These land bridges are very short in distance comparing to the Eurasian Land Bridge and North America Land Bridge. The distance between two coasts is not exceeding 250 kilometers so that the land bridge is mainly in form of land transport by truck while the Eurasian Land Bridge and The North America Land Bridges mainly use railways. Although they are in short distance, they might have wide impact on economic, society and environment. The project also needed huge amount of budget and involved with several agencies. Due to the factors of impacts, budget, and involvement, the project could not come to actual practice. Kra Isthmus Project: Similar to the land bridge, this project aims to implement connection between the Gulf of Thailand and the Andaman Sea. The project idea is similar to the Panama Canal and Suez Canal. The idea emerged in early 1677 in the reign of King Ramathibodi III, the 27th monarch of Ayutthaya Kingdom. This concept would provide an alternative sea transport through the Straits of Malacca. Plans for a canal was discussed and explored at various times, but have not yet been implemented. The cost and environmental issues have been weighed against the potential economic and strategic benefits. In accordance with feasibility analysis, the updated report from Ad hoc committee for pre–feasibility study of Thai Canal (2013), the results expressed that the optimal path to implement the project was the route of Krabi–Trang–Pattalung–Nakhon Sri Thammarat–Songkhla Province. The canal length was 120 km and the depth was 35–40 meters. The estimated project cost was around 650 billion Baht. Currently, the project is not considered as a priority because of high investments, environmental effects, and unclear management plans. Contributions of land bridge concept: Each land bridge has different rationale, purpose, and management system. According to Eurasian Land Bridge that was implemented by Soviet Union in early–20 century had to be terminated due to the collapse of the Soviet Union. In early–21 century, the Project was brought back by Government of China under One Belt, One Road Project using Silk Road Fund, the fund that was worth more than 40,000 million USD. Due to the difference among Eurasian Land Bridge involved countries, the project management by government was more promising than private sectors. Meanwhile, the North America land bridge development was initiated by private sectors namely internal logistics providers and sea logistics providers including their route, the beginning point, and the ending point, were in the same country so that it could be easily managed by private sectors. The North American Land Bridge did not need much money to invest since then–existing infrastructure was ready. Purpose of The North American Land Bridge was to decrease transport cost and time. For Thailand, even with the capitalism economic system, the Government was the one that initiated land bridge projects. The problems were that the projects lacked of specific purposes, only focused on infrastructure construction, lacked of fund, and was against by people. Moreover, private sectors did not have an opportunity to cooperate on the projects. Thus, the projects have not become concrete until now.
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2.3 The Existing Coastal Shipping Route in the Gulf of Thailand
For years, Thai government has promoted coastal shipping through the Gulf of Thailand. Presently, most transport activities happen in upper or inner of the gulf in order to serve their hinterlands. Bangkok Port and ports located in Eastern region play a major role of international port of Thailand since the ports possess full–service facilities and their hinterlands possess transport networks and economic activities in it. In addition, the ports play as distribution centers from Central region to Southern region through coastal shipping mode. Figure 3 shows the main routes of coastal shipping through the Gulf of Thailand namely, Songkhla, Surattani and Prachuap Kirikan Province, which are the main southern origin–destination port of either Bangkok Port or eastern ports. Most commodity shipments through these ports are containers. In terms of domestic demand, the shipments are usually transported at Bangkok port. This is because most of general consumption commodities are produced at its hinterlands.
3. ANALYTICAL FRAMEWORK
3.1 Scope Area
The concept of connecting Ranong–Prachuab Kirikan attempts to formulate the intermodal transport with connecting Gulf of Thailand Coast and Andaman Coast by land transport. The existing infrastructure is essential to take into account for the analysis because it can support transport right away. As noted at the beginning, the origin of commodity is mostly in Bangkok Metropolitan Region which is around 550 kilometers from Ranong Province, minimum transport duration is 8-9 hours through National Highway No. 4. Type of trucks used is 25 tons. In this study, the proposed concept is shown in Figure 4. The key connectivity is Prachuap Kirikan Province, the city that provides port connection to the Gulf of Thailand and Ranong Province, the territories with ports connecting to Myanmar. Details of each province are as follows; - Prachuap Kirikan Province: Prachuap Kirikan Province located on the west of the Gulf of Thailand. Total coastline length is 247 kilometers. Due to its narrow shape, every districts of the Province borders with Gulf of Thailand. Most of ports in Prachuap Kirikan Province are for fishery. There is only one commodity port located at Bang Saphan District known as Prachuap Port or Bang Saphan Port. Prachuap Port was initiatively established to serve steel industry behind the port. Nowadays, most of shipments are steel products. In fact, the port capacity can support general cargoes, but a few demands are likely to be a big problem of this port. As of port capacity, the port has area of 960,000 square meters, composes of 4 docks with the capacity for international seagoing vessel and coastal shipping vessel. The port depth is 15 meters, the breakwater with the length of 1,500 meters was installed. So, the Port can function throughout the year. With the cross–dock warehouse, the port, by the authority of Prachuap Kirikan Province Customs, can proceed customs clearance for inbound and outbound commodity. There also are bonded warehouse and outdoor cargo storage on the area of 110,400 square meters.
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Figure 2. (Left) Current coastal shipping routes in the Gulf of Thailand (Right) Alternative route concept through Ranong–Prachuap Kirikan Province
- Ranong Province: Every seaport in Ranong Province located on Kraburi River, Mueang Ranong District. Most of them are fishery ports and passenger ports. There is only one commodity port called Ranong Port, run by Port Authority of Thailand. The primary purposes of Ranong Port were to be land bridge connecting Andaman and Gulf of Thailand, and facilitate trade with Myanmar and to connect with port in Chumphon Province. Ranong Port has area of 504,000 square meters, composes of 2 docks; 1 general dock with the capacity to accommodate 2 vessels of 500 gross tonnages at the same time; and 1 shipping vessel dock with the capacity to accommodate 1 vessel of 12,000 deadweight tonnages at a time. The length of watercourse is 27 kilometers, average depth is 8 meters. The Port has 1 cross–dock warehouse with the area of 1,500 square meters and outdoor cargo storage. Comparison between two ports as shown in Table 1
Table 1 Facilities at Prachuap Port and Ranong Port Capacity width length depth Port Berth (deadweight tonnages) (meters) (meters) (meters) A 100,000, 2 vessels 25 450 15 B 20,000, 2 vessels 25 245 8 – 12 Prachuab 110,000, 2 vessels 450 14 Kirikan Port C 50 20,000, 4 vessels 442 8 D 2,200, 4 vessels 50 250 8 1 50,000, 2 vessels 26 134 8 Ranong Port 2 12,000, 1 vessel 30 150 8
The study shows that two seaports has the same level of capacity and with the similar type of commodity shipped, there is possibility to connect these two ports. According to the
608 Sukdanont, S., et al. / Asian Transport Studies, Volume 5, Issue 4 (2019), 600–616. reviews, it indicates that the existing transport infrastructure which are port and road are sufficient. Thus, private sectors involved in logistics chain, which are seaport providers, coastal shipment providers, land transport providers, and border trade entrepreneurs, could possibly cooperate in the land bridge development
3.2 Data and Assumptions
Data collected from 2 sources. First, data regarding the potential of route and facility supports including present situations of the study area are collected by field survey and in–depth interview from key stakeholders. Another source, secondary data, the transport cost is retrieved from the Travel Demand Freight Movement Survey for National Transport Planning (2017) by the Office of Transport and Traffic Policy and Planning, Ministry of Transport, Thailand. As well as, other statistic data is collected from corresponding government agency of Thailand namely; National Statistic Office, Ministry of Commerce, and Ministry of Finance. The references are appeared in their context. By Assumptions, as noted earlier, this study attempts to display the possible utilization of intermodal with coastal shipping to solve the transport problems which is quite original study. Therefore, some of indicators or parameters are obtained from previous study as well as a model is simplified by assumptions suitable for current transport conditions. Firstly, unit cost of both financial and environmental cost through the period is calculated from a representative commodity as all–in full container load price. A representative commodity is referred to the commodity which is transported as a general cargo shipment. The assumption implies that the cost can be calculated by lump–sum method. It is extremely important to make an assumption despite its unrealistic. This is because most of shipment information about transport cost in Thailand is hardly to collect and access for analysis. It is then difficult to classify each of commodity in each shipment. Nevertheless, this assumption may lead to the result biased from ignoring the effects, but in fact its result can be used as a benchmark for the cost comparison. Subsequently, the speed of vessel is also assumed to be constant with consistent fuel consumption. In this regard, the representative commodity is assumed to be regularly delivered to the destination on specific time. In accordance with size of vessel, it is only given to consider at 2,000 ton-gross. The main reason is that the mentioned size is frequently used for coastal shipping in the Gulf of Thailand as the general cargo recorded by Office of Transport and Traffic Policy and Planning (2017). Therefore, it could provide enough data to estimate. In case another size is included to the model, particularly large vessel, it is unlikely to occur since its capacity is not for the short distance shipment (Bangkok–Prachuap Port). However, the other size of vessel should be included into the model when the route is extended to accommodate the demand from far region. Each given value for cost calculation is shown in Table 2.
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Table 2 Cost-cost related Variable for calculation Parameter Detail Remark Truck Capacity (Ton/Trip) 20 Vessel size (Ton-gross) 2,000 Land Distance Bangkok–Ranong 550 (Km) Prachuap–Ranong 210 By Average Origin in Bangkok– Bangkok Port 20
Fuel Price: Diesel (THB/Liter) 30 By Average Port Service Charges (THB/TEUs) 250 Price charge is obtained from in–depth interview of private sector. The charge is included warehouse, Lift on/off and relevant expenses
3.3 Cost Examination Method
This examination is based on transport cost to Ranong Province by comparing the cost of single mode of transport with the cost of proposed mode. The cost of transport is vital factor to be considered by freight providers. Apart from the financial cost itself, external impact factor cost is also included in the analysis.
3.3.1 Financial cost
Financial cost analysis is divided into 2 categories depending on its data source.
1) Freight cost. Its cost is estimated from the transport cost calculation program Version 1.2.2 developed by Department of Land Transport, Thailand. This program is very useful and well–known instrument for carriers to estimate the transport cost due to its reliable database of transport provider in Thailand. The program calculates as a linear function by given the input factors. This examination is applied with the Standard mode by given only stand factors namely; type of truck, fuel price, distance and operation cost. The other variables and parameters are followed the initial value which is calculated from database. 2) Coastal shipping cost. Cost Function Method is used for cost estimation. This method analyzes functional relationship between variables that affect the cost. The method is suitable for cost calculation of new product since it can refer to existing statistics. For sea transport, Case and Lave (1970) proposes that 4 variables are used; shipment volume, production volume, shipment time or distance, and number of business of the industry. While the studies of Zhang and Pel (2016), Kongsawatvorakul (2016) and Konings et al. (2013) propose the additional variable for sea transport cost calculation which is sea level, since the sea level affects speed and safety in sea transport. Regression Method is used to find a coefficient of variation.
In this study, the variables are distance and size of vessel. The distance is used as a proxy variable for the shipment duration since its correlation is strongly when the travel speed is consistent.
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Meanwhile, variables in accordance with the production volume and number of business of the industry as proposed by Case and Lave (1970) are categorized as exogenous factors since in fact; those variables are derived from the final consumption. Moreover, only one size of vessel is used in the analysis following the given assumption in Table 2. The distance variable is therefore the only variable as shown in the equation (1)
ln(Fcost i ) 0 1 ln(Dist i ) i (1)
As in the equation (1); sea transport cost ( Fcosti ) distance (Distance: Disti ) and error term i with Ordinary Least Square Method is used to minimize error. When coefficient is estimated, the shipping cost will be calculated by using equation (1). Unit cost of transport is used in comparison. Furthermore, the statistical problems will be verified to ensure the accurate relation among the variables. Namely heteroscedasticity, collinearity, and omitted variable problem are found, the econometrical solution will be used.
3.3.2 External impact factor cost
This Study uses Benefit Transfer Method of analysis. The method is used for environmental value assessment by referring to the existing value assessment of study site. Both benefit and impact of such environment can be transferred. This method, even has some limitation, is accurate with study’s time and cost saving. Plus, environmental economics study is quite new in Thailand, the Benefit Transfer Method can be used efficiently. Environmental Benefit Transfer can be achieved in two ways; transfer of function and transfer of value. According to Ready and Navrud (2006) and Lindhjem and Navrud (2007), transfer of function method is more complicated and needs more information for calculation while the accuracy is close to unit value transfer method. Transfer of Value Method is transfer of number from cost estimation with some adjustment, depending on the context of the study. The adjustments to be considered are at least people income adjustment, exchange rate adjustment, and price adjustment. Pollution emitted from transport, both land and sea transport can be divided into two groups; air pollution and climate change. Diesel engine used in truck mainly emits CO2, dust particle (referring to PM10), NOX, SO2, and VOC. Practically, to find the cost of external factors, Maibach et al. (2008) proposes to find the cost from “willingness to pay” to avoid such external problem. So, the cost of external impact factor can be calculated from pollution emission volume, emission factor, and avoidance cost of each type of pollution. Each type of pollution has different effect. NERA (1993), finds that high pollution intensity has effects towards human health, and agriculture, which has indirect effects to human health in mortality rate and illness. Forkenbrock and Schweitzer (1997) find different effects of different pollutions, for instance, SO2 leads to acid rain, VOC and NOx leads to dust problem affecting directly to human health, and CO2 leads to greenhouse effect. Unfortunately, these pollutions emission is part of the transport. Lee et al. (2010) studies external factor cost of Short Sea Shipping compare to land transport in Taiwan. The study finds that external factor is neglected by freight providers while the community is the one who bear that burden. Therefore, the estimation of external impact factor cost will apply the concept of Transfer of Value by using the cost of pollution emission avoidance only, since the impact regarding accident and noise pollution are in micro level. This Transfer of Value estimation will be based on the study of Lee et al. (2010). The study compared external impact factor cost of coastal transport with land transport in Taiwan, with the similar problem to Thailand. Based on the study of Lee et al. (2010), this study adjusts 3 values of income
611 Sukdanont, S., et al. / Asian Transport Studies, Volume 5, Issue 4 (2019), 600–616. difference, price, and exchange rate. External impact factor cost analysis calculated from Avoidance Cost, the cost that happened from environmental protection. Pollution took into account are CO2, PM10, NOx, SO2, and VOC since they are the pollution emitted from transport activity, have significant effect to climate change. Moreover, pollutions emitted by truck and vessel depend on emission factor coefficient which is different, based on type of pollution. Most of the studies, the emission factor often refers to Intergovernmental Panel on Climate Change (IPCC) and Organization for Economic Co– operation and Development (OECD) because they monitor environmental issues regularly. Therefore, the emission factor of this study is based on the study of OECD.
4. RESULTS
The findings of the Study are divided into two parts such that empirical results and comparison of transport choice as follows;
4.1 Empirical Result
1) Financial Cost: Result of Equation (1) is shown in Equation (2). It is found that the equation can be used to explain relationship among variables at 89% with the coefficient variable of coastal shipping distance at 0.98 which is compiled to the shipping cost. So, the 1% increasing in distance consistently costs 0.98% higher which is statistical significance.
ln(Fcost ) 7.52 0.98ln(Dist ) i i (2) R 2 0.89
In addition, the relationship between distance and freight cost is quite constant, implying that the elasticity of distance impacting to its cost is unitary. It can be reminded that the shipping cost and distance is nearly close to linear relationship.
2) External Cost: All transferred values from Lee et al (2010) are deflated by related indicators which is based on year 2017. The income is deflated by Gross Domestic Product (GDP), the exchange rate is deflated by Effective Exchange Rate and lastly the price is delated by Consumer Price Index (CPI). Then, avoidance cost and adjusted emission factor can be shown in Table 3, the result implies that even if PM10 has the lowest emission, but it damages miscellaneously. PM10 particles are so small but they effectively act as a gas. When breathed in they penetrate deep into the lungs, it results in a number of health impacts ranging from coughing and wheezing to asthma attacks and bronchitis to high blood pressure, heart attack, strokes and premature death. So that it becomes a higher avoidance cost. On the contrary, CO2 has the lowest avoidance cost but it has the highest emission factor. This implies that CO2 is generally easier to avoid than the others.
Comparing to overall, the factors regarding to external impact suggest that the vessel impact to environment less than the truck especially PM10 particles. It will be beneficial to the society when the transport moves forward optimally at sea transport.
612 Sukdanont, S., et al. / Asian Transport Studies, Volume 5, Issue 4 (2019), 600–616.
Table 3 Factors regarding external impact analysis Emission Factor (g/veh – km)2 Gas Avoidance Cost1 Truck Vessel PM10 2,272,160 1.5 1.2 NOx 30,176 20.3 57.0 VOC 8,402 1.3 2.4 SO2 84,385 0.6 10.0 CO2 157 554.0 3,170.0 Applied from: Lee et al. (2010) and OECD (2003). Remarks: Referred truck is 20 tons and coastal vessel is 2,000 tons
4.2 Mode Comparison
The estimated result as shown in