Development of seamless rail-based intermodal transport services in Northeast and Central Asia Report on Transport Facilitation procedures and documentation in Republic of Korea 1. Introduction A mission to the Republic of Korea was conducted by a staff member and a consultant of the UNESCAP Transport Division for the express purpose of collecting information on border crossing procedures and documentation in the ROK. The NRL expert from ROK working with the Transport Division assisted the mission team in arranging meetings with the relevant government agencies and freight forwarding organizations, as well as organizing travel within the ROK. The mission was conducted from 11-14 April 2016, during which period visits were made to: The Busan Port Authority in Busan City; The Hanjin Container Terminal and the rail sidings at Busan New Port North; The Korea Customs Service at Busan New Port; The Busan Port Authority at Busan New Port The Ministry of Oceans and Fisheries in Sejong City The Korean International Freight Forwarders Association in Seoul This report outlines and reviews the main points of discussion at all meetings, 1. Meeting with Busan Port Authority, Busan City Meeting held at the headquarters of the Busan Port Authority (BPA) at 1000 hours on 11 April 2016. Present at the meeting were: Park Ho-Chul, Senior Director, BPA; Park JI-Seon, Assistant Manager, BPA; Chun Dong-Hee, Assistant Manager, BPA; Park, Jeongsu, NRL Expert, UNESCAP Transport Division; Fedor Kormilitsyn, Economic Affairs Officer, UNESCAP Transport Division; and Peter Hodgkinson, Consultant UNESCAP. (i) Connection of Busan Port to Vladivostok and the TSR Busan Port is handling an increasing volume of cargo to/from Vladivostok, either for loading to/from the Trans-Siberia Railway (TSR) or for transfer between northeast China and ROK or between Chinese origins and destinations. For example, automobiles for Moscow move from Busan via Vladivostok and the TSR, while cargoes originating in Heilongjiang Province of China move by rail to Vladivostock and thence by sea to Chinese ports via Busan, for distribution to other Chinese provinces. The latter cargo flow occurs because the rail distance between the origin in Heilongjiang Province and Vladivostok is only 300 km, whereas the rail distance to the nearest Chinese port (Dalian) is 1,000 km. Chinese rail rates are too expensive to transport cargo directly by rail. 1 In another case, China is importing logs from Russia for furniture manufacture and re-export from Harbin. Proximity to the TSR should suggest an advantage for transport of furniture in containers by rail, but the reality is that the Russian rail tariff is too high. The tariff for transport of a 40ft container from Harbin to Finland is about US$ 4,000 by rail and only US$ 500 by sea. By comparison, transit time by rail is about 14 days, but sea transit time is twice this number of days. In this case also containers are transported from Harbin to Finland via Vladivostok and Busan, demonstrating that the cargo is more price, than time, sensitive. (ii) Border crossing problems Substantial delays are occurring in ports and at land borders within the Northeast Asia to Europe corridor, owing to inconsistencies in the application of customs regulations between neighbouring countries. These problems are compounded by the failure of a majority of governments to introduce EDI (Electronic Data Interchange) and the single window concept across their borders. It is considered that governments are slow to take these initiatives owing to concerns about transparency, but that if these problems can be overcome, there will be a WIN-WIN situation for all concerned. (iii) Problems related to imbalanced cargo flows The imbalance of westbound and eastbound cargo volumes constrains the cost effectiveness of the TSR and limits the ability of rail to match cheap sea tariffs. Russia and the CIS countries do not generate sufficient export volume. (iv) BPA views on customs procedures and documentation issues People transporting goods are the people who must declare goods. In the case of goods arriving in Vladivostok, the shipping line must declare the cargo manifest. Then the party arranging the rail transport must prepare and submit the relevant documents. For dangerous goods special certificates may be required and transit times will be long. The BPA Senior Director considers that document processing at borders can be accelerated if information is generated as part of a single window base which is made available electronically to all ports and border posts throughout the route. It was suggested that the cargo manifest should be used as the single information base Consignments must be declared as bonded cargo for inland destinations, for which the originating customs authority will issue an “under bond” transportation certificate and will affix customs seals which cannot be broken until the consignment arrives at its final destination – unless it is stopped en-route for inspection. Border clearance procedures should involve quarantine inspection first, followed by customs declaration and inspection (if required), then collection of customs duties. This is the procedure applied by the ROK authorities. The introduction of EDI will be essential for the instantaneous dissemination of the single data set to multiple border control authorities. It was noted that EDI had been applied in ROK since 1995. It was suggested that UNESCAP should propose a format for a single data base and then conclude an MOU with the participating countries for application of this system. 2 2. Visit to Busan New Port North Container Terminal (12 April 2016) (i) Port facilities The existing container terminals at Busan New Port are: The North Container Terminal with a total berth length of 4,300 metres and a design capacity of 5.7 million TEU per year. This terminal can accomodate 13 vessels at a time and is divided into three sections, one operated by Hanjin and the other two by a joint venture between DP World and Samsung. Container stacks in this terminal are worked by high capacity RMGs (rail mounted gantry cranes). The South Container Terminal with a total berth length of 3,600 metres, accommodating 11 vessels at a time, can handle 3.52 million TEU per year. This terminal is divided into two sections, both operated by Hyundai Corporation. Container stacks are worked by straddle-carriers. Photo 1: Terminal 1, Busan New Port Photo 2: Terminal 2, Busan New Port (ii) Port rail connections Both terminals are rail served, although only the North Terminal regularly receives and despatches trains at present. Korean Railways (Korail) operates container trains mostly between Uiwang ICD near Seoul and Busan. Trains, comprising 33 wagons (66 TEU), are hauled by electric locomotives to the Busan New Port station, about 6km north of Terminal 1 (See Figure 1 below). At this station, traction is changed to diesel and trains are hauled directly (and intact) into the loading/unloading tracks at Terminal 1. There are 4 such tracks, each with a length of about 1,000 metres. None is electrified, even for the first few metres, meaning that trains cannot be placed or extracted by mainline electric locomotives. The railway loading/unloading sidings at Terminal 2 are understood to be outside of the port boundary, which will impose additional constraints on the competitiveness of rail. 3 Busan New Port Railway Station Source: Busan Port Authority, Busan Port Information Brochure (2016) Figure 1: Layout of Busan New Port, showing rail access and loading/ unloading tracks The rail sidings at Terminal 1 are worked by 4 RMGs (Rail Mounted Gantry cranes). Containers are lifted from rail wagons to yard trailers for movement to container stacks behind the berths. This system involves at least two container lifts between wagons and the container stacks, as compared with only a single lift for containers brought in directly by 4 road. In some cases, where yard trailers are unavailable, containers are grounded beside the railway tracks and require an additional lift to reach the stacks (as illustrated in Photo 3). Clearly the multiple handling imposed on containers moved to the port by rail puts rail at a competitive disadvantage with road transport. This factor, coupled with the short haulage distance to/from Seoul, would largely explain the loss of mod al share by rail. Photo 3: Container transfer from Photo 4: Four siding tracks under wagon to stack the RMGs 3. Meeting with Korea Customs Service, Busan New Port Meeting held at the offices of the Korea Customs Service, near Busan New Port at 1545 hours on 12 April 2016. Present at the meeting were: Kwon Oh-ju, Senior Customs Inspector, New Port Import Facilitation Section, Korea Customs Service; Chun Dong-Hee, Assistant Manager, Overseas Business & Cooperation Department, BPA; Park, Jeongsu, NRL Expert, UNESCAP Transport Division; Fedor Kormilitsyn, Economic Affairs Officer, UNESCAP Transport Division; and Peter Hodgkinson, Consultant UNESCAP. Main points of discussion (i) Customs procedures: imports 1. When import consignments arrive for clearance at the port, Customs require just two documents: a sea import cargo manifest and a discharged cargo declaration.1 Both documents are provided in electronic format to customs by shipping lines, 24 hours before vessel arrival in the case of manifest data. 2. Customs then check these documents for missing items or suspicious cargoes. 3. If it is decided that cargo is suspicious, X-ray scanning is used in the terminal. 4. If X-ray scans indicate possibility of illegal goods, container is brought to off-port customs inspection site and is completely discharged for inspection. 11 Samples of these documents are given in Attachment 1. 5 5. If consignment consists of dangerous goods, agricultural products etc, other documents, such as bills of lading, certificates of origin, commercial invoice and packing list, etc, will be required.