Current Status and Issues of Logistics Network in ASEAN

- Outline of ASEAN Logistics Network Map Project Map

Japan External Trade Organization (JETRO)

Workshop on Statistics of Asian Traffic and Transportation March 10-11, 2008 10-

Introduction of JETRO JETRO, or the Japan External Trade Organization, is a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. Originally established in 1958 to promote Japanese exports abroad, JETRO's core focus in the 21st century has shifted toward promoting foreign direct investment into Japan and helping small to medium size Japanese firms maximize their global export potential. JETRO has been conducting a study on logistics environment in ASEAN and India since 2006 as one of the important factors of investment conditions.

What is ASEAN Logistics Network Map ?

Introduction of ASEAN Logistics Network Map Concept Based on Private Sectors Needs Objectives To Make Policy Recommendation To Provide Information Structure of the Study Route Survey
Survey of door-to-door time and cost for each cross-border transport route Quality (Damage, delay, etc) Estimation of Improvement Effect

Logistics Database
Visualized as Maps Web-based Able to Compare Different Countries
4

Route survey: Surveyed Routes

Route 1: Thailand - Malaysia Singapore Route 2: Thailand - Laos - Vietnam (Hanoi) (EWEC) Route 3: Vietnam - South China Route 4: Thailand - Myanmar (EWEC) Route 5: Thailand - Cambodia Vietnam (Ho Chi Minh City) Route 6: Singapore Indonesia Route 7: Thailand - Philippine

Route Survey: Data Sample 1

Transportation Time of Steel Wire from China to Vietnam by Air Fig The relation between process and leadtime8+1304_Route3_Air
30 35 30 25 20 20 15 15 10 10 5 0

25

Leadtime of processH

Accumulared timeH

Leadtime of process Accumulated time

Commodity: Steel wire

5 0
Ex am in at Pa ion ck ag in Lo g ad C in us g to Tra m ns s fe cl ea r ra nc Sh e ip pi Cr Co ng os nt O s ai th bo ne er rd rh s er an tr d Co ans ling po nt ai ne rtai r h on an dl in g O th er s Dr a Un ge lo ad C in In us g to spe m ct s io cl ea n ra nc Tr e an sf er O th er s

China (Guangzhou)

Vietnam (HCMC)

Process

In this sample, the import custom clearance in Vietnam takes most of the time, and it diminishes the merit of air transport.
6

Route Survey: Data Sample 2

Transportation Cost relation between process and from Philippine to Thailand by Sea Fig The of Automotive Parts costs(78_Route7_Sea
800 700 3000

2500

Cost of processUS$

600 500 400 300 200 100 0

Ex am in at Pa ion ck ag in Lo g ad Cu in g T st om ran sf s e cl ea r ra nc Sh e ip pi Cr ng Co os nt O s bo aine the rd r h rs er an tr d Co ans ling po nt ai r ne tai r h on an dl in g O th er s Dr a Un ge lo ad C in In us g to spe m ct s io cl ea n ra nc Tr e an sf er O th er s

2000

Accumulated costsUS$

1500

Cost of process Accumulated costs

http://free-icon.org/data/dl_18/m_01.gif
Commodity: Automotive Parts

1000

500

Philippine

Thailand

Process In this sample, the domestic transportation cost in Philippine holds the largest share, while customs clearance also costs much in both countries.
7

Database: Collected Information

Basic Information: Basic Information, Intra ASEAN Trade, Development Projects, Population Density, Dangerous Areas, etc Road Information: Major Road Network, Basic Information, Traffic Volume, No. of Lanes, Surface Condition, Vehicle Capacity Ratio, etc Port Information: Major Port Location, Basic Information, Lead time to Major Ports, Container Movement, Freight Rate, etc Air Port Information: Major Air Port Location, Frequency of Flight, Lead time to Major Air Ports, etc Railway Information: Railway Network, Basic Information Regulations/Procedures: Custom Procedures, EDI, Legal System, Logistics Education, etc Logistics Column: Hot Issues concerning Logistics in ASEAN
8

Database: Screen Layout

Select Country
Ex. Frequency of Flight from Malaysia to Major Airports in ASEAN region

Select Type of Info

Database: Sample Maps 1

Easy to compare logistics environment of each country.

10

Database: Sample Maps 2

Most of the data are visualized as maps, so that users can grasp image easily.

11

ASEAN Logistics Network Map is Now On Sale

English version as well as Japanese version are now available on our online bookshop. http://books.jetro.go.jp/en/ http://books.jetro.go.jp/ Price: 9,450JPY (about 88USD)

12

Our Study in 2007: ASEAN Logistics Network Map We need to improve data accuracy to enhance reliability.
To focus on 3 routes Thailand Malaysia Singapore Indonesia Thailand Lao PDR Vietnam South China ASEAN India To look at not only cost and time but also quality (i.e. damage, delay, etc) To conduct trial transportation

Policy Recommendations Suggestion for improvement & showing improvement effect We need your cooperation to collect and update data !!!
13

Our Network, Advisors and Supporters which were proud of

Network: ASEAN wide Logistics Forum (Network by business and academic sectors between ASEAN and Japan)
Japan: Japan External Trade Organization (JETRO), Japan Institute of Logistics Systems (JILS) Brunei: The Brunei Economic Development Board (BEDB) Cambodia: Cambodia Freight Forwarder Association (CAMFFA) Indonesia: Indonesia National Shippers Council (INSC), Indonesia Logistics Association (ALI) Lao PDR: Lao National Chamber of Commerce and Industry (LNCCI), Lao International Freight Forwarders Association (LIFFA) Malaysia: Federation of Malaysian Manufactures, Federation of Malaysian Freight Forwarders Myanmar: Myanmar International Freight Forwarders Association (MIFFA), Myanmar Custom Brokers Association (MCBA) Philippines: Centre for Research and Communication (CRC) Singapore: National University of Singapore (NUS) Centre for Maritime Studies (CMS) Thailand: Thai National Shippers Council (TNSC), Thai Federation on Logistics (TFL) Vietnam: Vietnam Standards and Quality Centre (GS1 Vietnam)

Advisors
Dr. Hirohito Kuse (Tokyo University of Marine Science & Technology) Dr. Takao Enkawa (Tokyo Institute of Technology) Dr. Toshinori Nemoto (Graduate School of Commerce and Management, Hitotsubashi University)

Supporters (data resources, data sharing )

Government of Japan (METI, MLIT, MOF), ASEAN Secretariat, JICA, JBIC, Economic Research Institute for ASEAN and East Asia(ERIA), Asian Development Bank (ADB), United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP)

We would like to expand our network with you !!!

14

Economic Development in GMS through Facilitation of Logistics Environment

15

Increasing Attention for GMS as New Economic Region ASEAN6 & China Increasing labor cost, appreciation of currency China: quantity (labor-intensive) quality (high-value added)

GMS: Greater Mekong Subregion Plentiful labor, competitive cost, rich natural resources Efforts by each government and ADB, etc (development of industrial zones and SEZs, facilitation of logistics environment) Industrial agglomeration in Thailand and Vietnam Geographical Importance connecting China and India
16

Possibility of Road Transport on EWEC Drastic time reduction by shortcut compared to sea transport Alternative mode of transport
Slow

Time Comparison
0 Sea 20 40 60 80 100 100 35 14

Time Sea213hRoad74h Air29h Cost (40ft container or 30ton of cargo) Air69,910USD Road5,500USD* Sea2,910USD

Road Ai

Fast High
0

Cost Comparison
20 40 60 80 100 100 8 4

In terms of time, road transport enjoys an advantage over sea, favorably compares with air. However, bottleneck lies in high cost!
*Cost of road transport is estimated under assumption of no return cargo.

Air Road Sea

Low
17

Example of door-to-door cost estimation method (road)

Country Thailand Basic elements of cost Conditions Functions Loading (1)Road transpor charge Transport charge includes loading charge Transport charge including loading Road Transport Distance700km Unit costsetting 1US$/km Transport charge700US$ 200US$ Mukdahan Export custom (3)Document fee 200US$ Suwannaket Transit custom (3)Document fee Transshipment (2)Transshipment fee Setting 100US$in the case using crane Transport charge including loading Suwannaket Road Transport (1)Road transpor Distance250km charge Unit costsetting 1US$/km Den Savan Transport charge250US$ 200US$ Den Savan Transit custom (3)Document fee 200US$ Lao Bao Import custom (3)Document fee Transport charge including loading Lao Bao Road Transport (1)Road transpor Distance700km charge Unit costsetting 1US$/km Hanoi Transport charge700US$ Hanoi Transport charge includes unloading charge Unloading Document processing (3)Document fee (1)Road transpor (2)Transshipment fee Custom document processing fee (3)Document fee Total document processing fee Total Node/Link Bangkok Bangkok Mukdahan cost(US$) 700

Laos

200 200 100 250 200 200 700

Vietnam

Total Total

200 1,650 100 800 200 2,750

Cost of each phase of transportation is estimated under conditions above. Total cost will be double without return cargo in case of charter service.
18

Some Issues concerning EWEC No return cargo due to unbalanced trade volume Maintenance of hard infrastructure, e.g. roads Implementation of CBTA Improvement of convenience: longer business hours for customs Low weight limitation of bridges Negative impacts accompanying increasing traffic volume
Congestion at Cross Border Points Damage on Road Surface Environmental Load (Cost) Traffic Accidents Infectious disease, etc

Actions before a problem occurs will enhance competitiveness of GMS

19

JETROs Trial Transport on EWEC

Key points: Loaded trucks run from both Bangkok and Hanoi, and meet in Savannakhet, where containers are transshipped. No unloaded running cost reduction 700km Hanoi

Loaded

Transshipment of Loaded Containers

Densavan (Lao PDR) / Lao Bao (Vietnam)

EWEC

250km

Loaded

750km Bankok

Mukdahan (Thailand) / Savannakhet (Lao PDR) (2nd Mekong Bridge)

20

JETROs Trial Transport on EWEC Thailand

Existing Trials

Lao PDR

Vietnam

Loaded
Unloaded

Unloaded

Loaded

Transshipment of Containers in Savannakhet

250km

Our Trial

Loaded Loaded

Loaded Loaded

21

JETROs Trial Transport on EWEC

Country City M ovem ent of Trucks and C ontainers
De pt from te rm inal (ea st bound) / De pt from fa ctory (w e st bound)

T hailand Mukdahan Bangkok

Lao PDR Savannakhet

Densavan

Vietnam Lao Bao Hanoi

Loaded Transshipment Loaded

Arrive at Customs
31-Oct-07 8:00 25:30 744
Waiting time: 50mins (Mukdahan Customs) Customs clearance and X ray inspection: 1 hour and 15 mins (2nd Mekong Bridge)

Loaded Loaded
Arrive at CY

Arrive at Customs
31-Oct-07 10:45 28:15 755
Cutom clearance: 13mins

Arrive at Customs
1-Nov-07 10:20 51:50 1,004
Custom clearance: 20mins

Arrive at Customs
1-Nov-07 10:45 52:15 1,005
Cutom clearance: 55mins Running at nig ht ( Dong Ha to Thanh Hoa)

Arr a t fa ctory (e a st bound) / Arr a t te rm ina l (w e st bound)

Date Bangkok to Hanoi (east bound)

Accum. Time (h)
Accum. Distance (km)

30-Oct-07 6:30 0:00 0

Stay overnight in Mukdahan

31-Oct-07 11:05 28:35 760

Stay overnight in Savannakhet

2-Nov-07 11:55 77:25 1,719

Arr at factory, devanning

Remarks Date Hanoi to Bangkok (west bound)

Accum. Time (h)
Accum. Distance (km)

1-Nov-07 23:00 84:20 1,724

31-Oct-07 13:30 50:50 994

Custom clearance and X ray inspection: 55mins (2nd Mekong Bridge), Custom clearance: 1hour 50mins (Mukdahan) Stay overnight in Mukdahan

30-Oct-07 19:00 32:20 975

Stay overnight in Savannakhet

31-Oct-07 10:00 47:20 981

30-Oct-07 10:15 23:35 725

Custom clearance: 1hour 15mins

30-Oct-07 9:30 22:50 723

Cutom clearance: 45mins

29-Oct-07 10:40 0:00 0

Remarks

After dept from Savannakhet Customs, transshipment at CY

22

Estimation of Improvement: Time

96:00
Time M odel

84:00 72:00 Time (h) 60:00 48:00 36:00 24:00 12:00 0:00

Trial Transport including waiting time for return carg o Synchronized with opening time of custom house + shorter transshipment time Synchronized + Sing le stop

rt

or

rt

ce

en

ce

en

en

en

en

ce

rt

po

si gn

po

ra n

ra n

ip m

ip m

op

op

op

an

po

ns

cl ea

cl ea

co n

ar

of f ic e

of f ic e

of f ic e

Tr an

Tr an

at

cu st om

oa

oa

us to

in g

to

oa

cu s

ad

rt c

to

to

to

Lo

rt

si t

rc us

rc us

rc us

po

po

Tr an

Ex

fo

fo

ai tin g

ai tin g

Trans port Proces s

Single stop cross-border system is the most effective for time saving.
23

Estimation of Improvement: Cost (1st STEP)

Cost (USD) per 30 ton by road transport

60,000 50,000 40,000 30,000 20,000 10,000 0 10 20 30 40 50 60 70 80 90 100

Loading rate (%) W ith return cargo (In the case of trial transport) 2,750 USD! com petitive level with sea transport W ithout retrun cargo (roundtrip cost: present transport charge)

The most effective way to reduce cost is to get return cargos, and the second is to increase loading rate by LCL (Less-than-Container Load).
24

ai tin g

fo

Im

nl

oa

di ng

at

co n

t ra

t ra

ss h

ss h

cl e

t ra

to

to

to

si g

ns

ns

ne

Estimation of Improvement: Cost (2nd STEP)

Fuel is the main component of land transport cost. Energy saving means cost saving!
A c c u m u l a t e d c o s t 3 ,0 0 0 2 ,5 0 0 2 ,0 0 0 1 ,5 0 0 1 ,0 0 0 500 0
an ss hip m en tr t an sp or tc do ha cu rg m e en tp ro ce do ss cu in m g en tp ro ce ro ad ss in tr g an sp or tc do ha cu rg m e en tp ro ce ss in g ro ad ha rg e ro ce ss in g ro ce ss in g
Loading Rate 100% with Return Cargo Improvement lev el 1 Improvement lev el 2

U S $

an sp or

tc

um en tp

um en tp

ro ad

tr

do c

do c

tr

Tr a n s po r t P r o c e s s

Improvement 1 : 10% Fuel saving by eco-friendly driving (eco-driving: green transport) Improvement 2 : 20% Fuel saving by eco-friendly driving (eco-driving: green transport)
25

Estimation of Improvement: Quality

In case of careful transport with container transshipment by high-level truck drivers and staffs for material handling, the shock level is the same as expressways in Japan.
Shock (G) level

Vertical vibration on freight container (not on cargo itself)

Thailand
Bangkok
times

Laos
Mukdahan Savannakhet Deng Savan Lao Bao

Vietnam
Hanoi

Frequencies of vertical vibration

shock level (G)

Source: JETROs trial transport on EWEC

26

Issues and Possible Measures to Commercialize EWEC

Hard infra & Custom Clearance are being improved. Then, what do we need ?
Cost No Return Cargo due to unbalanced trade volume Possible measures: Cooperative transport (in-group and related companies) Institutional framework for LCL Time Freight distribution center in Laos, etc Need to be competitive compared with sea Possible measures: 24-hour service of custom Full implementation of Single stop service at border Street lights to enable to run even at night Quality Need to improve service level of transportation Possible measures: HRD for logistics service provider in Laos, etc Proper use of transport package

Cost Down!

Faster !

Level Up !
27

High Priority Issues for Japanese Private Sector For shippers 1st: cost reduction : secure return cargo by information sharing between in-gourp and related companies 2nd: cost reduction : increase loading rate 3rd : to secure transport quality by proper way of packing

For logistics service providers 1st: to make institutional framework for LCL 2nd: to make transport insurance system 3rd: to implement Single stop cross border system ASAP
28

Efforts by Both Public and Private Sectors are Needed Private Sector Shipper Secure return cargo Cooperative transport Improve logistics management level Forwarder Cost reduction Regular service Alliance with or Support HRD for logistics service provider in region Public Sector Maintenance of hard infrastructure, e.g. roads Implementation of CBTA Harmonize institutional framework Upgrade logistics infrastructure Support HRD for logistics service provider in region

29

Efforts by Both Public and Private Sectors are Needed

Efforts by both public and private sectors in collaboration are needed for improvement of logistics performance.

Quality
Improvement of Transport Quality Improvement of logistics management skills Genba Kaizen, etc. Improvement by private sector

Improvement of Average Speed Maintenance and development of hard infrastructure Simplify export & import procedures, etc. Improvement by public sector

Cost
Improvement of Cost per Ton-Kilometer Encourage a competitive environmente.g.. loosen entry regulation, etc. Cooperative transport Improvement of logistics management skills Genba Kaizen, etc. Improvement by both public & private sector
30

Time

Logistics Database: Proposal to ASEAN Develop statistical information database concerning logistics environment using common format throughout ASEAN Logistics efficiency benchmarks

Provide information for private sector for their logistics management. Logistics efficiency benchmarks become an incentive for each country to improve its logistics environment, and through a positive competition among countries, the competitiveness of the region will be also strengthened.

31

Thank you very much for your kind attention!

Please contact: Tetsuo Shibata, Mr. Yu Yoshida, Mr. Asian Cooperation Division, JETRO TEB@jetro.go.jp
32