Transcript Trade and Logistics: An East Asian Perspective

Trade and Logistics: Evolution
of a Product Line
Robin Carruthers
TUDTR
May 2003
Why logistics?
• Increases demand by lowering prices faced by consumers
• Raises profits of producers, encourages production,
increases demand for labor demand and wages
• Encourages price stability by reducing arbitrage of price
differentials caused by regional shortages
• Increases product variety available to consumers by
reducing the number of goods where transport is
prohibitively expensive relative to the value shipped
• Allows a move up the development chain toward more
sophisticated differentiated goods, and higher value
commodities.
• Facilitates diversification of product mix and expands the
set of markets producers can access
• Increases competition in world markets
Structure of Trade and Logistics review
A Regional and national trade patterns
B Scope for impact of logistics as trade
stimulator
C Country diagnoses
D Agenda for logistics actions
A East Asia trade patterns
• For lower income countries, GDP per capita
increases with more trade (but who really
benefits?)
• Little intra regional trade
• Countries are moving up the value chain
• Some country’s exports are still heavily
concentrated on a few high value products
• Export oriented trade is concentrated in port cities,
perhaps not best way to reduce poverty
• Most exports are to US – Japan and EU are distant
second and third
In East Asia, GDP increases with trade in
low-income countries
Intra-regional trade is low but growing
Countries are moving up the value
chain
Commodity concentration
Country
China
Thailand
Indonesia
Korea
Malaysia
Vietnam
Singapore
Philippines
Top 3
exports
13.8%
20.9%
23.6%
27.3%
39.9%
44.3%
48.4%
59.9%
Top 5
exports
21.8%
26.2%
29.7%
38.5%
50.0%
60.3%
60.8%
66.6%
Cambodia
Mongolia
PNG
78.3%
84.5%
64.6%
80.2%
93.4%
74.5%
Telecoms equip.
Office equip.
Gas
Transistors
Transistors
Petroleum
Transistors
Transistors
Products
Computer
Transistors
Petroleum
Cars
Office equip.
Textiles
Computers
Computers
Apparel
Fish
Veneer
Telecom
Computers
Seafood
Petroleum
Office equipment
Garments
Copper
Gold
Timber
Wool
Petroleum
Rice
Hides
Copper
B Scope for logistics impact
• Not much to gain where logistics are
already advanced
• Not much to gain if economy is still
relatively closed
• Inaccessible inland areas stand to gain most
• Improved information technology will
benefit all at relatively low cost
Openness and Logistics
Cost ratios as an indicator of maritime
efficiency
• CIF/FOB ratio more than 2.0 • CIF/FOB ratio less than 1.4
– Vietnam
– Laos
– Cambodia
• CIF/FOB ratio between 1.4
and 2.0
– PNG
– China
– Philippines
Low Wage Countries
– Malaysia
– Singapore
– Hong Kong
– Thailand
– Indonesia
– Taiwan
High/Medium Wage Countries
Smaller ports are growing much faster than
larger ports
Port
1995
1996
1997
1998
1999
2000
2001
Grow th rate
Hong Kong
12,550
13,460
14,567
14,582
16,211
17,800
17,900
6.1%
Singapore
11,846
12,944
14,135
15,136
15,945
17,040
15,520
4.6%
Shanghai
1,196
1,305
2,527
3,066
4,206
5,613
6,310
31.9%
Port Klang
1,134
1,410
1,685
1,820
2,550
3,206
3,759
22.1%
Laem Chabang
n.a.
729
1,036
1,425
1,756
2,195
2,424
27.1%
Qingdao
603
810
1,031
1,213
1,540
2,100
2,639
27.9%
Tianjin
702
822
935
1,018
1,302
1,708
2,010
19.2%
Gunagzhou
515
558
687
848
1,179
1,430
1,628
21.1%
Taichung, Taiw an
447
695
842
880
1,107
1,130
1,069
15.6%
Total (East Asia)
54,433
57,836
65,119
68,155
75,155
83,422
94,267
9.6%
HK and Singapore %
45%
46%
44%
44%
43%
42%
35%
Uneven use of information technology in
trade facilitation
Country
Japan
Singapore
Korea
Thailand
Philippines
Indonesia
Vietnam
Laos
Cambodia
Port
Operators
MIS
X
X
X
X
X
X
Traders in
Port EDI
System
Customs
Agency
MIS
X
X
X
X
X
X
X
X
X
X
X
X
Traders in
Customs
EDI
system
X
X
X
X
X
X
All parties
electronically
linked
Electronic
trade in
transport
services
X
X
X
X
X
X
Land access costs remain high
 Transport to the US West Coast of a container
from an inland province of China
C Country Groups and Studies in East Asia
• Group 1: Outward Oriented, highly Accessible
(Singapore, HK, Korea, Taiwan)
• Group 2A: Outward Oriented, more Accessible
(Thailand, Philippines, Malaysia)
• Group 2B: Outward Oriented, less Accessible
• (Inland China, North-East Thailand)
• Group 3: Less Open and Accessible (Vietnam,
Cambodia)
• Group 4: Land Locked and Pacific Island
(Laos, Mongolia, Samoa, PNG..)
Main conclusions of Country Studies
• Non-transport logistics cost impose much higher
trade penalty than transport costs
• Regional trade is suppressed by poor logistics
more than by tariffs
• Domestic marketing arrangements impede
international trade
• Cross border arrangements impose on all small
countries, not only land-locked
• Most trade-related industry is in port cities. Trade
related growth has not reached inland regions
• Port related activities contribute significantly to
congestion and pollution
Poor logistics influence prices and
marketing patterns
• In Laos price of rice varies +/- 25% due to poor
transport affecting market integration
• In Mindanao, Philippines, farm gate prices vary
significantly, northern farmers receive better prices due
to good road access
• Most Mongolian export cashmere is sold to Chinese
merchants as accessibility to China is better than
within Mongolia
• In Vietnam, coffee production in otherwise productive
highlands is constrained by poor accessibility
Logistics limit diversification of exports
• Limited number of markets and shipment
scale
– Reduced trans-pacific shipping costs have
stimulated East Asia’s trade to US, while poor
local logistics have inhibited growth of intraregional trade
• Small export base increases vulnerability
– For three countries, more than 2/3 of export
value derives from three products
Ports, regional growth and the urban
context
• In larger Eat Asian countries, most FDI is
concentrated in port cities, so the benefits of
increased trade are not spread throughout the
country
• Many East Asian ports are in downtown areas, and
they and their associated activities contribute
significantly to congestion and pollution. These
locations are often unsuitable for new generations
of container ships that need deeper draughts that
can only be achieved with expensive and
environmentally risky dredging
D Logistics strategy depends on stage
of economic development
• For already open and accessible economies,
increasing international trade competitiveness
is logistics priority
• For less open economies, improved logistics will
first help make domestic trade more
competitive and efficient
• For these countries, opening of economy is a
higher priority for international trade growth
than improving logistics
• Open but inaccessible countries will benefit
most from improved logistics
Logistics Development Agenda
• Domestic Integration: A high priority in Groups 3 and 4
• Improved infrastructure priority for Groups 3 and 4 but
not sufficient – better services are also important
• Logistics evolution - Advanced in Group 1 and some
Group 2, needs stimulating environment in other Groups
• Regulatory Environment – Transport, Urban
Management, Standardization, Cross-border facilities
• Regional Cooperation between governments and
logistics suppliers will do more to stimulate trade than
reductions in trade tariffs
Priority logistics actions
• Group 2A Outward Oriented Accessible
Improve urban access to ports and upgrade transport services
Relocation non-maritime activities away from port, and consider relocation of
maritime activities out of downtown areas
Restructure MoT to facilitate multimodal transport
• Group 2B Outward Oriented, less Accessible
Promote inland ICDs
Improve road, rail and waterway access to ports and upgrade logistics services
• Group 3 Less Open and Accessible
Improve road, rail and waterway access to ports and upgrade transport
services
Legalize and deregulate freight forwarders
• Group 4 Land Locked and Pacific Island
Simplify land border crossings, negotiate land access rights in neighboring
countries,
Upgrade express logistics services for high unit value goods (eg flowers, exotic
plants, seafood, fashion textiles)
Second Stage Studies
• Use standard indicators to measure trade
competitiveness and openness of economy
• Assess trade potential – products and countries
• Use standard indicators and interviews with
exporters and logistics operators to establish
potential sources of logistics improvement
• Undertake country surveys for Facilitation Audit
• Discuss and develop logistics development agenda
with exporters and government