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Cross Border Transport & Trucking ACMECS March 13, 2007 Paul Apthorp

Cross Border Transport & Trucking ACMECS March 13, 2007 Paul Apthorp. Cross Border Transport & Trucking. Overview of Global Network development The importance of the GMS as a “Cross road “ The current situation along the EWEC Opportunities Missed SMEs What we need to do !.

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Cross Border Transport & Trucking ACMECS March 13, 2007 Paul Apthorp

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  1. Cross Border Transport & Trucking ACMECS March 13, 2007 Paul Apthorp

  2. Cross Border Transport & Trucking • Overview of Global Network development • The importance of the GMS as a “Cross road “ • The current situation along the EWEC • Opportunities Missed • SMEs • What we need to do !

  3. TNT - Road Network Development 1 4 2 3 5

  4. FI SE TKU RU NO EE GB HLB LV DK IE LT BY QAR WAW NXH BZQ HNJ PL DFT DE CZ UA DNG SK VIE GNQ MD AT RO CH HU TSR SI MIL HR FR YU BG BA SOF IT MK PT ES AL MAD GR TR TNT European Road Network

  5. European Road Network – in numbers • Network coverage: • 2,000,000 km per week (50 times around the earth) • 93 million km per year (2325 times around the earth) • Network capacity • 700 trucks daily • 4,500 Europe-wide international line-haul trips per week • 17,500 tons weekly • 620,000 pieces weekly • Resources employees • 12 RMC offices with 150 employees • 85 International own drivers • 1250 International drivers in total

  6. TNT Middle East Road Network Jordan/Levant Kuwait IRAN BAHRAIN Dhahran Doha DXB Riyadh AUH Sila/Batha Muscat JBA United Arab Emirates Jeddah Saudi Arabia Oman Yemen

  7. TNT - Road Network Development 1 4 2 3 5

  8. Illustrative Middle east/Africa (2) South East Asia (5) Future2006Existing Asian Road Network Development China (4) Existing2006Future South East Asia (5)

  9. Modes of Transportation

  10. Existing Economic Corridors

  11. Asian Road Network • Phase 1 • Opened December 2005 • Daily SIN – KUL – BKK • Extra capacity added in First year • Phase 11 • Opened September 2007 • BKK- ZVK- DAD – SGN / HAN • Phase 111 • Due Quarter 3 2007 • HAN – NNG … linking to China Network

  12. China VTE Nanning Myanmar ARN Phase 2 Hanoi Laos Vietnam Thailand Danang Bangkok Cambodia Phnom Phen Ho Chi Minh Malaysia Kuala Lumpur Singapore

  13. Phase 11 • Bangkok – Savanaket – Da Nang • Via EWEC • The Current Situation !!

  14. Bangkok – Savanaket- Vietnam A0400(D3) HAN 22hrs A1100 D1300 D1900 (D0) A00.30(D2) D0600 (HAN/HCM) A0700(D1) D1000 A1600 D1800 BKK Mukdahan (Border) Savanaket (Laos) Lao Bao (Border) DaNang (VN) 11hrs 1hrs 4hrs 5hrs A0600(D3) D0800 BKK--------------------------------------DAD Total 30 hours HCM 24hrs 6hr BKK 19.00 Day 0-----DAD 00.30 Day 2------SGN 06.00 Day3 Total 60 hours

  15. Vietnam – Savanaket- Bangkok D2100(D0) HAN 770km A1900(D1) from HAN A2100(D1) from HCM D23.59(D2) A0700 D0900 A1200 D1400 A1600 D1800 A0600(D3) 22hrs Danang (VN) Lao Bao (Border) Savanaket (Laos) Mukdahan (Border) BKK HCM 250km 280km 20km 800km 950km 24hrs DAD--------------------------------------BKK Total 30 hours A1900(D0) D2100 SGN 19.00 Day 0-----DAD 19.00 Day 1------BKK 06.00 Day3 Total 60 hours

  16. EWEC Transit & Clearance Seno ( LAO ) TH 12.15- VN 13.30 Transshipment & Customs Inspection & Reseal TH- 13.30- VN 12.15 LBO A 17.15 D 19.00 DSW A 16.30 D 17.00 MUK A 07.00 D 10.30 ZVK A 10.45 D 11.45 LBO A 07.00 D.09.00 DSW A 09.15 D 09.45 MUK A 15.45 D 17.00 ZVK A 14.00 D 15.00 MUK- LBO Driving Time 4 hours MUK- LBO Customs Time 6 hours

  17. ARN Border Transit Clearance LBO SENO MUK BKK DAD DSW SVK Customs Inspection and Seal The Truck VN customs clearance and Entry declared DAD customs clearance and Declared DSW customs clearance with check Seal and Entry declared Customs Clearance Cross Bridge 10:00 A.M. 15:00 P.M. LAO Customs Clearance to Get permission of customs entry BKK customs clearance and Declared Send Information For Pre-Clearance Send Information For Pre-Clearance ETA 12:15 P.M. ETD 13:30 P.M. Customs Check Seal and Switch CARGO ETA 17:30 A.M. ETD 18:30 A.M. ETA 16:30 A.M. ETD 17:00 A.M. ETA 10:45 A.M. ETD 11:45 A.M. ETD 24:00 P.M. ETA 07:00 A.M. ETD 10:30 A.M. ETD 07:00 P.M. ETA 12:00 P.M. ETD 13:30 P.M. 2 Hrs 3 Hrs 1 Hr 1.30 Hrs 1.30 Hrs

  18. Pre- Clearance DAD ( Day 0 ) LBO MUK (Day 0) BKK ( Day 0 ) SENO DSW ( Day 0) SVK ( Day 0 ) VN customs clearance and Entry declared DSW customs clearance and Entry declared Customs clearance with check Seal and Entry declared Customs Formality Process DAD customs clearance and Declared BKK customs clearance and Declared LAO Customs Clearance to Get permission of customs entry Original send by Car to DSW before Truck Arrival Prepare TRUCK permission Send Information For Pre-Clearance Send Information For Pre-Clearance Get Permission 16:00 P.M.( Day 0 ) Get TRUCK permission Prepare Customs Entry for clearance at SVK/DSW ETA 12:00 P.M. ETD 13:30 P.M. Customs Entry and Customs clearance at DSW Customs Check Seal and Switch CARGO ETA 16:00 P.M. ETD 18:00 P.M. ETA 14:00 P.M. ETD 15:00 P.M. ETA 5:30 A.M. ETD 8:30 A.M. ETA 9: 00 A.M. ETD 9 :30 A.M. ETA 06:00 A.M. ETA 12:00 P.M. ETD 13:30 P.M. 3 Hrs 2 Hrs. 1 Hrs. 1.30 Hrs. 30 Min

  19. The Reality of the EWEC 2007 Its 45 minutes faster than before ! • Lao Transit Tax • Still a “ local’ issue • Customs Clearance at Dansawan Border • Pre Clearance required at Savanaket 250 kms away • Original clearance papers must be sent from Savanaket to Dansawan • This is a two day process and requires a 500 km drive !! • Crossing the Mekong • The new bridge has only saved 45 minutes • The Customs process has not improved at Mukdahan or Savanaket

  20. Is The EWEC Missing Opportunities ? • Air Freight • Road feeder services • Road Freight • Unnecessary cost burden • SMEs • Joining the regional supply chain

  21. Transport Cost in the Supply Chain • Time is more expensive than distance ( asset utilisation) • The easiest and quickest route is generally cheaper than a slower shorter route. • Transport takes the route of least resistance • Freight rates are driven by market forces not distance • Airfreight BKK – LAX $ 2.50 / kg • Airfreight LAX– BKK $ 0.90 / kg

  22. Transport Costs in the Supply Chain • Market forces are determined by route capacity • BKK – SIN half the cost of KUL – SIN • 1600 Kms vs 400 Kms • More flights ; more carriers • Air Freight • GMS region has limited freighter capacity • Regional capacity limited… expensive • Road access to high capacity routes essential • Feeder services to Bangkok’s lift capacity

  23. Transport Cost in the Supply Chain • Transport costs can undo the benefits of Labour Costs • Ho Chi Minh to Tokyo US $ 3.00 / kg shorter route. • High demand for freight space • Limited air freight capacity • Alternative Lift from Bangkok • Bangkok – Tokyo $ 1.80 / kg • Road Freight HCM –BKK $ 0.40 / kg …. Via EWEC ( no tax) • Saving $ 0.80 / kg or $ 800 a ton • Based on a 10 ton shipment

  24. Transport – Achieving Economies of Scale • Large vehicles are cheaper to run (per kg) than small • Major costs elements of transport • Vehicle depreciation / capital cost • Driver • Maintenance • Fuel • The only Major cost eliminated in a standing vehicle • Fuel • Holding up vehicles Increases Transport costs • This cost goes back to the ( customer) SMEs ! • Reducing their competitive edge

  25. Wide Range of Customers

  26. Customer Segmentation

  27. What SMEs need from Transport ? • Access to Markets • The ability to send samples and trial shipments • Consolidation services • Regular scheduled services • Guaranteed , time definite services • Understandable and transparent customs services • Competitive Transport service • Unit ( kg / m3) based costing for LCL cargo • The benefits of co-loading through economies of scale • Access to lower cost / higher capacity air routes • Local consolidation and ICD centers …for own account delivery

  28. What do we need to do to help SMEs • Border Crossings & Customs • Smooth and Consistent Customs Clearance • Inland Clearance Depots … in FTZs and population centers • “Express” Clearance for documents and parcels • Bonding arrangements for transit to ICDs • Bonded Warehouse facilities to off load and store un-cleared goods • 24 hour transit for bonded or ICD transit vehicles • Long opening hours for customs ..16 hours ?

  29. For SMEs to be part of the Value Chain • They need • The ability to ensure on time delivery every time • Competitive transport with easy connections to Global routes • Consolidated feeder services for economies of scale • ICDs for local consolidation / distribution • Ease of import / export procedures • They don’t need • Uncertain transit times • Expensive feeder services due to lack of capacity • Paying for dedicated vehicles to ensure smaller quantities are dispatched in time to meet deadlines

  30. Updating Transport – Competition and Moderisation • London to Paris 1981 $ 900 One way • No channel tunnel …….. Ferry costs $ 300 one way. • No open market • Permits required • Customs clearance .. With costs • 12 meter Trailers ( 40 ft) • 18 ton maximum pay load • $ 0.05 per kilo • London Paris 2006 $ 900 One way • Channel tunnel • No permits • Reduced customs procedures • 13.6 Meter Trailers • 24 ton maximum pay load • $ 0.0375 per kilo

  31. Updating Transport – Competition and Moderisation • London to Paris 1981 $ 900 One way • @ 18 tons = $ 0.05 per kg • Using UK inflation • $ 900 in 1981 = $ 2300 in 2006 • 2006 price should be $ 0.1275 per kg • Current Price $ 0.0375 per kg

  32. Transport Reality in the GMS

  33. Thesis • “The lack of an affective Transport Industry in Laos makes it difficult for the country to take advantage of the available regional supply chain” • …made possible by the EWEC ( & NS)

  34. Laos is Landlocked • Without a rail system • Without an affective cross border transport system • Without the ability to send its own vehicles to major regional ports or airports with competitive freight lift. • Without reciprocal the rights that allow Thai and Vietnamese trucks to run in Laos. • Without the ability or capacity to become part of the regional supply chain…….

  35. Laos Has • Common borders with 4 other GMS countries • Greatly improved trunk routes • Light traffic and good transit times • A four hour transit time from Thailand to Vietnam ! • Low labour costs • Trucks from 3 neighbouring countries on its roads ! • No access to neighbouring countries !!

  36. Laos Should be… • A base for Cross border International Trucking • The Automatic choice for Foreign Trucking companies wanting to service the wider GMS region. • A Flag of Convenience for International Transport

  37. The Road Transport Industry as a percentage of GDP • USA 1.2 % • Japan 1.9 % • Australia 4.9 % ……accentuated by Ton / Kilometres • Thailand 5 % • China 5.5 % • India 7 % • Laos 2 %………………….Why not 7 % ? • Cambodia ?

  38. What is Missing ? • A Competitive Cross Border Transport Sector • Poor vehicle Standards • Overloading • Breakdowns • Poor driving standards • Lack of access for Lao Vehicles of Good quality • Smooth and efficient Border Processes • Easy Market Access for SME exports • Regional ICDs and Consolidation Points

  39. Cross Border Transport Agreement • Signed but Not Implemented …… • It Covers • Annex 2 “ registration of Vehicles in International traffic” • Annex 9 “ Criteria for Licensing of Transport for Cross Border operations “ • Eligibility, reliability, professional competency, financial solvency ..all covered ! • Annex 12 “ Border Crossing and Transit Facilities’ • Annex 13b “ Criteria for Licensing Inter-modal operators’ • Protocol 2 “ Transit Traffic” • It is there… it needs to be implemented !

  40. Things ARE Improving

  41. Great New Infrastructure In Place

  42. But Only 45 minutes faster …thus far !

  43. Don’t Waste the Investment !

  44. Implement the CBTA • Urgently !

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