Transport and Logistics:
    Forging Sub-Regional Links

   Meeting of Governmental Experts from
Landlocked and Transit De...
Emerging Trends
•Globalization

•Decentralization of production, processing and
marketing

•Economic liberalization

•Dere...
Sub-region of Focus




Countries                             Indian
                                      states
Banglade...
Population
                       Comparative Statistics
                Arunachal Pradesh          Zambia

              ...
Socio-economic Indicators
             GNP      % of pop < % of pop < Infant      Life         Male         Female
       ...
Growth in FDI (1990 and 1997)
70,000.0




60,000.0




50,000.0




40,000.0

                                           ...
Ratio of Total Trade to GDP

60


50


40


30                                                                  1975-1979
...
Exports within Regional Trade
  blocs (% of total exports)
 80

 70
                                                      ...
India : Trade with neighbors
             US $million 1998
                       Export   %      Import   %

 Bangladesh ...
Bangladesh: Trade with neighbors
              US $million 1998
                       Export   %      Import   %

 India ...
Nepal: Trade with neighbors
                   US $million 1998
                       Export   %      Import   %

 India ...
Towards increased regional
           integration
• SAPTA followed by SAFTA
• In terms of absolute value, intra-regional t...
Impediments to efficient transport
    and logistics in South Asia

• Physical infrastructure gaps or inefficiencies
• Pro...
Physical infrastructure: Roads


• The primary mode for freight movement
• Two lane highways, poorly maintained and conges...
Rail
•   Mix of broad and meter gauge in both Bangladesh and India; efforts to
    integrate gauge and links across countr...
Table 10: Border Crossing Documentation

 India to         For India Customs – Customs Export Declaration, Bill of Lading,...
Approach
• Comprehensive approach -- physical and nonphysical barriers in
  transport and logistics

• Development of an a...
Two types of analyses
• identifying the critical impediments along a logistics chain (physical
  gaps and constraints, pol...
Logistics Cost Model
Commodity flow cases studied
                Commodity       Mode on land          Route / Type of commodity
Domestic     ...
• The core set of strategic commodities and
  routes selected for this study, were chosen
  for two reasons:
  – they prov...
Case Studies presented -
• High value trade within the region
• High value commodity exports to
  international market
• M...
Case 1: Yarn Export
              India to Bangladesh
Consignment Attributes
Commodity               Yarn
Shipment Size   ...
Cost        Hours
Transport and Handling
Inland Transport     $ 516        17
Cargo Handling       $ 525        24
Crossbo...
Case 2: Carpet Exports
             Nepal to Germany
Consignment Attributes
Commodity             Carpet

Shipment Size   ...
Route A                   Route B
                         Kathmandu Thru’ Calcutta   Kathmandu thru’ JNPT
               ...
Case 3: General Freight
            Calcutta to Agartala
Consignment Attributes
Commodity              General Freight

Sh...
Route A             Route B              Route C
                            All India Road   Transshipment thru’     Tran...
Constraints highlighted
    by Private Sector User Groups

– Regulatory and physical restrictions to potentially cost-effe...
Constraints highlighted
    by Private Sector User Groups

– Regulatory and physical restrictions to potentially cost-effe...
Public - Private Roles
                            Public sector:
•Facilitate private sector capacity to contract, handle,...
Summary Findings
•   Ports are critical in determining regional routes because of the high logistics
    costs at the port...
Summary Findings (continued)
•   Extension and integration of the BG railway system in Bangladesh and India,
    combined ...
Priorities for the Region should
               address -
• Alternative and more cost-effective routing from
  landlocked ...
Short term priorities
• Improve design/ provision of infrastructure (e.g. warehouses) at
  selected border crossings e.g. ...
Short term priorities (cont)
• Reduce/ eliminate need for transshipment
• Simplification and equally importantly, harmoniz...
Long Term Needs
•   Investments in the road network along with increased maintenance
•   Strengthening and widening bridge...
Recent Developments
•   Subregional Quadrangle under SAARC
•   Emergence of “champions” within the region -- private secto...
Potential/Proposals for Private Sector
                  Participation
•   Direct (private sector operated) flights betwee...
Institutions to Promote Private Sector
                Participation
• I-WIN [WBIDC, ICICI, All India PFI]
• ILFS (India)
...
Transport And Logistics - Forging Sub Regional Links
Transport And Logistics - Forging Sub Regional Links
Transport And Logistics - Forging Sub Regional Links
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  • Dear Agent/Consignee
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Transport And Logistics - Forging Sub Regional Links

  1. 1. Transport and Logistics: Forging Sub-Regional Links Meeting of Governmental Experts from Landlocked and Transit Developing Countries July 30 - Aug. 3, 2001 Uma Subramanian The World Bank
  2. 2. Emerging Trends •Globalization •Decentralization of production, processing and marketing •Economic liberalization •Deregulation of industries and markets •Reduced role of the state and expanding role for the private sector
  3. 3. Sub-region of Focus Countries Indian states Bangladesh Bihar Bhutan W. Bengal Nepal Uttar Pradesh India (East Orissa and N.East) N.E. Region
  4. 4. Population Comparative Statistics Arunachal Pradesh Zambia Manipur Iraq Assam Kenya Orissa Chile & Peru West Bengal Iran Bihar Mexico Japan Bangladesh U.P Brazil 150 125 100 75 50 25 0 25 50 75 100 125 150 Population (millions)
  5. 5. Socio-economic Indicators GNP % of pop < % of pop < Infant Life Male Female per $1/day $2/day mortality Expectancy illiteracy illiteracy capita rate per at birth rate rate 1997 1998 1000 live 1997 1997 births 430 47 87.5 71 63 33 61 Bangladesh 350 50.3 86.7 75 58 50 73 India 210 -- -- 83 57 44 79 Nepal Bhutan 430 -- -- 63 61 -- -- 750 22.2 57.8 32 70 9 25 China 4570 23.6 43.5 34 67 16 16 Brazil
  6. 6. Growth in FDI (1990 and 1997) 70,000.0 60,000.0 50,000.0 40,000.0 Foreign Direct Investment($ mill ions) 1990 Foreign Direct Investment($ mill ions) 1997 30,000.0 20,000.0 10,000.0 0.0 S.Asia East Asia & Latin America Sub Saharan Middle East Europe and Pacific Africa and N.Africa C.Asia
  7. 7. Ratio of Total Trade to GDP 60 50 40 30 1975-1979 1990-1994 20 10 0 World OECD Developing Latin East Asia South Asia Countries America
  8. 8. Exports within Regional Trade blocs (% of total exports) 80 70 APEC 60 NAFTA 50 EU 40 Mercosur SADC 30 ASEAN 20 SAARC 10 0 1980 1985 1990 1994 1995 1996 1997
  9. 9. India : Trade with neighbors US $million 1998 Export % Import % Bangladesh 1038 1.9 65 0.2 Nepal 324 0.6 147 0.5 Bhutan 12 0.0 15 0.05 Other 52987 97.5 28958 99.2 Countries Total 54341 100 29185 100 Source: UN COMTRADE data
  10. 10. Bangladesh: Trade with neighbors US $million 1998 Export % Import % India 55 1.4 1179 16.1 Nepal 18 0.5 14 0.2 Bhutan -- 0.0 5 0.1 Other 3749 98.1 6115 83.6 Countries Total 3822 100 7313 100 Source: UN COMTRADE data
  11. 11. Nepal: Trade with neighbors US $million 1998 Export % Import % India 145 32.9 440 30.7 Bangladesh 10 2.3 6 0.4 Bhutan -- -- -- -- Other 288 64.9 988 68.9 Countries Total 444 100 1434 100 Source: UN COMTRADE data
  12. 12. Towards increased regional integration • SAPTA followed by SAFTA • In terms of absolute value, intra-regional trade is increasing. Between 1988-98: – India exports to Bangladesh increased 6 folds – Bangladeshi exports to India increased by 4 to 5 folds
  13. 13. Impediments to efficient transport and logistics in South Asia • Physical infrastructure gaps or inefficiencies • Procedural inefficiencies --excessive and complex documentation and customs procedures • Constraints due to protocol (on choice of routes, border crossings, restrictions on movements etc.) • Institutional inefficiencies
  14. 14. Physical infrastructure: Roads • The primary mode for freight movement • Two lane highways, poorly maintained and congested in many parts resulting in low speeds (200-400 kms/day) • Small private sector owned and operated trucking services • Competition and low turnover combine to enable low cost operations (average operating cost $ 0.044 to 0.049 per ton/km) • Load limits vary (8.5 tons per axle for Bangladesh versus 10 tons for the others) • Bilateral protocol restrictions
  15. 15. Rail • Mix of broad and meter gauge in both Bangladesh and India; efforts to integrate gauge and links across countries being undertaken • Public sector run organizations in both India and Bangladesh • Characterized by old rolling stock, overstaffing, poor maintenance despite recent efforts to improve performance; in Bangladesh, track maintenance a particular problem in flood prone areas • Declining market share of freight • With CONCOR, increase in container movement in India; • Limited movement of containers in Bangladesh between Dhaka-Chittagong due to anomalies in charges, regulations and problems. Only 10-12% (<40,00TEU) of containers are moved by rail to Dhaka ICD) • Protocol for exchange of wagons between Bangladesh and India
  16. 16. Table 10: Border Crossing Documentation India to For India Customs – Customs Export Declaration, Bill of Lading, Invoice, Pacling Bangladesh List, Letter of Credit, For Bangladesh Customs – Import Permit, Bill of Lading, Packing List, Letter of Credit, Consignment Insurance Cover, Certificate of Registration (VAT), Importer Pass Book , and for goods for EPZ (bonded warehouse licenses, Value bonded Form, Risk and Duty Bond Nepal to India For Nepal customs – Customs Transit Declaration, Customs Export Declaration, Duty Insurance Certificate, Invoice, Packing List, Certificate of Origin , Certificates of Registration (income tax, VAT, company), Letter of Credit, For India Customs – Customs Transit document, duty Insurance, Invoice, Packing List, Letter of Credit, Certificate of Origin Bangladesh to For Bangladesh Customs – export Registration Certificate, Invoice, Letter of Credit, Nepal Packing List, Certificate of Origin, Truck Receipt For Nepal Customs – Customs Import Declaration, Invoice, Packing List, Certificate of Origin , Import License, Letter of Credit, Health/ Quarantine Certificate and Equipment Interchange Receipt and Duty Insurance Coverage for Containers Bangladesh Exports – Export Bill of Entry, Invoice, Packing List, Export Permit, Undertaking by Ports Export of Company and Outpass Statement Letterhead, Export Permit, Risk Bond Indian Ports Imports - Customs Transit declaration, Bill of Lading, Invoice, Packing List, Certificate of Origin , Import License, Letter of Credit, Health/ Quarantine Certificate and Equipment Interchange Receipt and Duty Insurance Coverage for Containers Exports – Customs Transit Document Source: Annex A
  17. 17. Approach • Comprehensive approach -- physical and nonphysical barriers in transport and logistics • Development of an analytic framework that would facilitate rational dialogue among public and private sector and among countries • Inter-active or participatory approach to AAA; continual national, and regional consultations with stakeholders from various sectors in order to build ownership in the countries. • Combining detailed case studies of commodity flows with transport- logistics systems in the region • Knowledge sharing with global case-studies from other regional trade blocs such as Mercosur, NAFTA, SADC.
  18. 18. Two types of analyses • identifying the critical impediments along a logistics chain (physical gaps and constraints, policies, procedures, commodity type and market conditions, helped determining where improvements in the short term can bring about significant returns in terms of efficiency improvements • comparing among alternative routes (and modes), as a means toward the more cost-effective route. The comparative analysis not only provides information on the potential savings if these routes were operationalized, but also allows a dynamic analysis of how improvements in the components of both logistics chains would affect overall benefits and route selection.
  19. 19. Logistics Cost Model
  20. 20. Commodity flow cases studied Commodity Mode on land Route / Type of commodity Domestic Cement Indian Rail Domestic/ low value bulk General Indian Truck Domestic/ med value bulk freight Regional Cement Ind-BGD barge/truck Regional/ low value bulk Agr. produce Nep-BGD trucks Regional/ Med value Limestone Bhutan/BGD trucks Low value/bulk Yarn Ind/BGD trucks High value/ containerizable International Wool Ind-Nep trucks High value/container Tea Indian truck Med value/break bulk Carpet Nep-Indian trucks High value/container Polypropelene Indian-trucks Med value/ break bulk Garments BGD trucks High value/containerizable
  21. 21. • The core set of strategic commodities and routes selected for this study, were chosen for two reasons: – they provide opportunities for landlocked areas to reach markets; – they are critical commodities that link the sub- region to the global market.
  22. 22. Case Studies presented - • High value trade within the region • High value commodity exports to international market • Medium value commodity movement within the region
  23. 23. Case 1: Yarn Export India to Bangladesh Consignment Attributes Commodity Yarn Shipment Size 14.8 tonnes Origin Calcutta, India Destination Dhaka, Bangladesh Landing Port Benapole, Bangladesh Shipment Value $ 38,000 Mode of Transport Truck Distance 360 kilometers
  24. 24. Cost Hours Transport and Handling Inland Transport $ 516 17 Cargo Handling $ 525 24 Crossborder Procedures Cargo Transfer $80 156 Customs Inspec $97 73 Trade Related Logistics Time Cost of $158 Transport Other (Insurance, $817 Documentation /Forwarding, L/C processing Total $ 2193 270 Transport Logistics Cost $ 2193 Logistics Time 270 hours
  25. 25. Case 2: Carpet Exports Nepal to Germany Consignment Attributes Commodity Carpet Shipment Size 1 TEU Origin Kathmandu, Nepal Destination Germany Landing Port Port Bremen Shipment Value $ 90,000 Mode of Transport Truck and Ocean freight Distance >1200 kilometers
  26. 26. Route A Route B Kathmandu Thru’ Calcutta Kathmandu thru’ JNPT Cost Hours Cost Hours Transport and Handling Inland Transport $ 480 117 $ 740 88 Cargo Handling $ 260 74 $ 463 155 Ocean Freight $ 1200 528 $ 750 336 Cross Border Procedures Cargo Transfer 164 $80 37 Customs Inspec 20 $97 7 Trade Logistics Time Cost of Transport $1252 $864 Other (Insurance, $1485 $1485 Documentation /Forwarding, L/C processing Total $ 5343 $ 2193 Transport $ 5343 $ 2193 Logistics Cost Logistics Time 903 623
  27. 27. Case 3: General Freight Calcutta to Agartala Consignment Attributes Commodity General Freight Shipment Size 8 tonnes Origin Calcutta, India Destination Agartala, India Border Crossings Petrapole - Benapole Akhoura – Agartala Shipment Value $ 24,000 Mode of Transport Truck Distance >1600 kilometers
  28. 28. Route A Route B Route C All India Road Transshipment thru’ Transit thru’ Bangladesh Bangladesh Cost Hours Cost Hours Cost Hours Transport and Handling Inland Transport $ 760 180 $ 263 41 $ 263 41 Cargo Handling $ 278 18 $ 270 20 $ 270 20 Cross Border Procedures Cargo Transfer -- -- $ 106 35 $0 0 Customs Inspec -- -- $125 152 $75 12 Trade Logistics Time Cost of Transport $ 73 $ 96 $96 Other (Insurance, $ 396 $ 516 $516 Documentation /Forwarding, L/C processing Total $ 1507 $ 1,376 $ 1220 Transport Logistics $1507 $1,376 $ 1220 Cost Logistics Time (hours) 198 248 73
  29. 29. Constraints highlighted by Private Sector User Groups – Regulatory and physical restrictions to potentially cost-effective transit corridors – Poor physical facilities and infrastructure at border points – Poor harmonization of documents and complementary time- consuming procedures – Delays caused by current customs procedures, facilities and communications – Regulatory and physical restrictions to operation of cost-effective vehicles including container transport – Poor dialogue between public sector as facilitator and private sector as user, as beneficiary of regulatory systems and as potential contributor to public investments and facilities – Constraints due to bilateral protocols and agreements – Need for eliciting views from user groups before choice of transit corridors in inter-country agreements
  30. 30. Constraints highlighted by Private Sector User Groups – Regulatory and physical restrictions to potentially cost-effective transit corridors – Poor physical facilities and infrastructure at border points – Poor harmonization of documents and complementary time- consuming procedures – Delays caused by current customs procedures, facilities and communications – Regulatory and physical restrictions to operation of cost-effective vehicles including container transport – Poor dialogue between public sector as facilitator and private sector as user, as beneficiary of regulatory systems and as potential contributor to public investments and facilities – Constraints due to bilateral protocols and agreements – Need for eliciting views from user groups before choice of transit corridors in inter-country agreements
  31. 31. Public - Private Roles Public sector: •Facilitate private sector capacity to contract, handle, and transport the country’s foreign trade •Update and conduct bilateral negotiations to improve transit protocols and bilateral agreements •Interact on a continual basis with private sector through trade associations Private sector: •Keep government informed through trade associations of constraints and realistic needs •
  32. 32. Summary Findings • Ports are critical in determining regional routes because of the high logistics costs at the port. Elimination of delays in cargo handling and customs procedures will move cargo to more efficient ports. • Containerization of high value cargo at the earliest point in the logistics chain would reduce inefficiencies at the port • Customs clearances are not the only factors that constrain cross border movements. Onerous procedures, inadequate preparation of document, multiple copies and signatures, limited number of gates receiving cargo, limitations on working hours etc. all add to inefficiencies • High value goods in the region will continue to move mainly by truck. Constraints at border crossings would be reduced if cargo was allowed to move unrestricted across borders in bond. • Intraregional shipments of perishables require tighter logistics by emphasizing reliability and delivery time, minimizing damages/ losses. Allow cargo to move in a single truck from origin to destination with minimum delays a borders.
  33. 33. Summary Findings (continued) • Extension and integration of the BG railway system in Bangladesh and India, combined with efficiency improvements and capital investments in comaptible rolling stock, may help capture some of the medium value bulk cargo. • IWT role in transporting low value bulk cargo could be enhanced if the low travel speeds could be compensated by improvements to facilitate night navigation, and improvements in port operations to reduce turnaround time. •
  34. 34. Priorities for the Region should address - • Alternative and more cost-effective routing from landlocked countries/ regions to international markets • Increased capacity in the region to trade in higher value goods • Easier movement of goods between eastern and N.E.India • Regional markets for exports from Bhutan and Nepal, a lot which would be perishables • Increased trade between Bangladesh and neighboring countries
  35. 35. Short term priorities • Improve design/ provision of infrastructure (e.g. warehouses) at selected border crossings e.g. Benapole; Birgunj; Bhairawa; Phulbari; Akhoura) and market centers (e.g. Noapara; Siliguri) • Use of freight operations information system for real time monitoring of cargo and wagons. Tracking system for transit cargo by road • Extend movement of container traffic particularly for high value commodities (such as yarn). Concept for extending container movements within Bangladesh is important. • Expand e-commerce opportunities more broadly for remote sector/ regions for small enterprises to reach markets • Improve port performance through multiple measures (e.g. create greater competition among ports through flexible routings; dedicated terminals operated by private sector so that feeder vessels can operate to a fixed schedule; etc.)
  36. 36. Short term priorities (cont) • Reduce/ eliminate need for transshipment • Simplification and equally importantly, harmonization of documentation and procedures • Electronic communication among shippers and customs • Reform of regulations on carriage of goods by different modes (assign clearer liabilities for tighter intermodal operations • Assignment of liability for goods carriage and harmonization across borders
  37. 37. Long Term Needs • Investments in the road network along with increased maintenance • Strengthening and widening bridges (Bangladesh and N.E. India) • Information services (e.g.EDI); introduction of smart card system • Third party logistics providers
  38. 38. Recent Developments • Subregional Quadrangle under SAARC • Emergence of “champions” within the region -- private sector forum • Revision of the IWT protocol • India and Bangladesh have launched a direct bus service between Dhaka and Calcutta • Transshipment for Indian cargo through Bangladesh is being debated • Rail integration (new border crossings open; Dhaka-Akhoura-Agartala) • Phulbari treaty • Pre-shipment Inspection introduced for selected imports in Bangladesh • Agreement to air flights between Dhaka and Gauhati (Private sector led) • Bus link between Dhaka -Sylhet to Shillong/Gauhati
  39. 39. Potential/Proposals for Private Sector Participation • Direct (private sector operated) flights between Dhaka and Gauhati • Inland water transport vessels (sp. refinery products from Numaligarh) • Port terminals • Bonded warehouses/ ICD at strategic market centers and sea/ land ports • Cold storage warehouses/ trucks for perishables • Containers/ tractor trailers • Joint industrial ventures – cement factories; gas cracker plants • Small enterprises - several possibilities – horticulture, floriculture (orchids; medicinal herbs) – handicrafts – eco-tourism (cultural heritage) • Third Party Logistics Provision
  40. 40. Institutions to Promote Private Sector Participation • I-WIN [WBIDC, ICICI, All India PFI] • ILFS (India) • Infrastructure Investment Facilitation Center (GOB, WB, DFID, CIDA) • Infrastructure Development Company Limited (GOB and WB)
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