UN_project_Deliverable_1_presentation_20171013
UN_project_Deliverable_1_presentation_20171013
Landlocked and Least Developed Countries, to link with sub-regional and regional
transport and trade networks
(Capacity-building workshop, 13 October 2017)
Presentation of Report 1
• Non-physical barriers
2
Agenda
• Non-physical barriers
3
Project scope and objectives
Project scope
The project seeks to contribute to the capacities of the stakeholders in the countries of South and Central Asia, especially in
the landlocked and least developed countries (LLDCs and LDCs) to strengthen their links with the sub regional and regional
transport and trade networks.
– Aim 2: Increased skills of government officials, regional groupings and financial institutions to develop and implement
measures, including coordination in policies and plans that incorporate gender dimensions, to enhance connectivity in
the region through application of standards and best practices for trade and transport facilitation at the border
crossings and along the main economic corridors identified
Beneficiary countries
– South and South-West Asia: Afghanistan*,Bangladesh*, Bhutan*, India, Islamic Republic of Iran, Nepal*, Pakistan, Turkey
– Central Asia: Azerbaijan, Kazakhstan, Kyrgyzstan, Turkmenistan, Uzbekistan, and Tajikistan
Notes
• Bold: Landlocked Developing Country (LLDC)
• * Least Developed Country (LDC)
Executing Entity: United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)
Co-operating agency: United Nations Economic Commission for Europe (UNECE)
4
Aim 1 specific objective (Report 1)
Identify key potential road and rail corridors along AH and TAR networks and EATL corridors in the South and
Central Asian sub regions
Focus on the connectivity issues of the LDCs and LLDCs of the sub-region
Evaluate potential benefits especially for LDCs and LLDCs using qualitative and quantitative economic models in
such areas
5
Capacity-building workshop objectives
6
Methodology
Desktop research: A significant number of reports, deliverables, primary data, and papers, have been taken into
consideration for the completion of this deliverable. A list of all references is available at the end of this report
Organization of one Group of experts with representatives from all beneficiary countries
Organization of one sub-regional capacity-building workshop involving active participation with key stakeholders and
multilateral and regional financial institutions
7
Agenda
• Non-physical barriers
8
Euro-Asia trade analysis
It is worth mentioning that Asia has the highest rate of growth for both exports (+4.4%) and import (4.0%) during the
2010-2015 (World Trade Organization, 2016).
9
Selected macroeconomic indicators of central Asian countries
From 2000 to 2010, foreign trade activities in Central Asia (CA) were affected by numerous factors including
macroeconomic, trade and structural policies of the governments and international price developments.
Domestic demand including demand for imported goods expanded substantially in all CA countries
10
Central Asian traffic flows and trends for indicative countries (1/3)
Kyrgyzstan (exports)
Τhe main export commodity of Kyrgyzstan is gold (40-45% of exports) which was directed to different countries
(Switzerland, Germany, United Arab Emirates, China)
Other important export commodities include radioactive elements, electricity, agricultural products and foods
Unlike other CA economies, exports of manufactured goods (machinery and equipment, clothing) constitute a
significant and growing share of exports (14% in 2010)
Exports of Kyrgyzstan
Source: Mogilevskii, 2012
11
Central Asian traffic flows and trends for indicative countries (2/3)
Turkmenistan (exports)
Over the decade its exports more than tripled and imports quadrupled
Turkmenistan, has a persistent positive balance of trade, which went as high as 20% GDP in 2008, but fell in 2009-
2010
In the case of exports, the geography of imports changed significantly over the decade
The key partners of Turkmenistan are Iran and Russia
Exports of Turkmenistan
Source: Mogilevskii, 2012
12
Central Asian traffic flows and trends for indicative countries (3/3)
Turkmenistan (imports)
The commodity structure of imports did not change much except for the increase in the share of metals (Figure 18a).
This is most likely related to the extensive investment program implemented in the country, including the
construction of new pipelines
Turkey has become the largest source of imports of Turkmenistan.
China sharply increased its position on the Turkmen market, and Iran increased its share in total imports.
Russia’s role as a supplier of goods to Turkmenistan fell substantially and Japan lost this market completely
Imports of Turkmenistan
Source: Mogilevskii, 2012
13
Dynamic of intra-regional trade
14
Euro-Asia transportation challenges
Taking into consideration the current status as well as the trend of Euro-Asian trade for the next years, it is vital a
sustainable transport system to be adopted in order to contribute to the social and economic development of rural
areas in developing countries (Carapetis, 1984)
According to UNESCAP (2007), in order to minimize production cost and support social and economic development, we
have to take into consideration 3 factors (related to the role of transport):
• improved transport, lowers the operational cost of the producers and transforms them to more competitive units
• Reliability of transport services: The importance of continuity of input supply increases rapidly as the degree of industrial
sophistication increases
• The quality of infrastructure and support services has been identified as a significant determinant in investment decisions
Creightley (1993) reports evidence that ‘transport improves access to institutional credit, contributes in shifting the
allocation of credit from non-productive to productive activities, and leads to increased demands for credit.
Social and
Quality economic
Reliability of Quality of development
improvement of
transport services infrastructure of rural areas in
transport services
developing
countries
15
Agenda
• Non-physical barriers
16
Transport corridor: Definition
A corridor includes one or more routes that connect centers of economic activity. These routes are composed of the
links over which the transport services travel and the nodes that interconnect the transport services
An international transport corridor connects one or more adjoining countries. It may also connect countries that are
separated by one or more transit countries or provide a landlocked country with access to the sea
They provide transport and other logistics services that promote trade among the cities and countries along the
corridor.
17
Transport corridor: Their contribution to economic growth
The development of a transport corridors reduce the cost of goods throughout the supply chain, including
transportation cost, logistics cost, administrative and documentation cost, and customs
Transport corridors contribute to security and territorial integrity
18
Transport corridors in Asia
Existing initiatives
UNECE /EATL project (9 road
routes, 9 rail routes)
SPECA NETWORK (United
Nations Special Program for
the Economies of Central
Asia) Road & Rail
19
UNECE EATL Rail routes – 9 groups
22
Kazakhstan
Indicative information on transport key facts
Transport Key Facts
Road Transport
Kazakhstan possesses a road network totalling more than 88.9
thousand km, of which 13 thousand km are of international
significance, linking the Asian and European motorways.
The overall road density in Kazakhstan is 32.4 km per 1,000
km2; approximately 94 % of roads are paved
The EATL network in Kazakhstan covers 22 major routes on 23
international roads (AH5, AH6, AH7, AH60-64, AH67, AH68,
AH70, E011-016, E38, E40, E121, E123, E125, E127) totalling
28,472 km of roadways
Rail Transport
The national railway network consists of more than 14,000 km,
and 3,000 km of it are electrified
Kazakhstan railroads are at the crossroad of EATL routes:
railway corridors 1, 2, 3, 4, 5, 7 and 9 pass through the country
In 2016, about 244 million tons of cargoes were transported by
rail and the passenger transportation accounts for 20.3 million
people
By 2020, it is estimated that about 15 million tons will be
transported along the Kazakhstan-Turkmenistan-Iran railway
line. The main advantage of rail transport compared to the sea
transport is the speed, which is about 10-12 days, whereas by
sea it is about 23 days
23
Physical barriers
Physical barriers occur due to natural reasons, technical and technological inconsistency, poor infrastructure
maintenance, shortage of network sections/nodes capacity. A special type of physical barrier is the absence of
particular section of transport network or certain object (bridge, intermodal terminal, logistics centre, etc.) that could
obviously improve the conditions for transportation and trade.
Indicative example of missing road links in Pakistan
Source: Ministry of Transport of Pakistan, 2017
Missing links
Missing links
24
Physical barriers
UN agreements define minimum infrastructure standards and some operational parameters in the pan-European region
and the Asian region (TAR/AH). These agreements constitute the first step towards the elimination of non-physical
barriers as they determine the minimum infrastructure standards for a future construction
A number of projects have been launched to improve the physical road and rail infrastructure in Central, Southeastern
and Eastern Europe, the Caucasus, and Central Asia
The 32 Asian Development Bank (ADB) developing member countries, during the next ten years, are expected to need
almost US$8.22 trillion for infrastructure investment. Of the total investment, approximately 49% is estimated to be
needed for energy infrastructure, 35% for transport, 13% for ICT, and 3% for water and sanitation
25
Physical barriers (indicative): Rail infrastructure
Rail transport
Railway gauge change
– The “classic” problem for international rail transportation is the necessity to shift from one gauge to another at certain border points
– Most of the Western European EATL countries as well as China and Afghanistan use standard 1435 mm gauge. Former Soviet Union
states and Finland use the “Russian” 1520 mm gauge
– Τransfer operations are necessary: a) cargo transhipment between different types of railcars or b) (usually in case of passenger
transportation) – change of boogies
– The time required for break-of gauge operations ranges from 2,8 hours to 2,5 hours, the classification of trains from 1,7 hours to 1,2
hours, and the customs clearance from 3,7 hours to 15,1 hours
26
Agenda
• Non-physical barriers
27
Non-physical barriers: definition
Non-physical barriers represent lack of proper policies, non-harmonized legislation, poor regulations and
administrative procedures, lack of cross-border administrative interoperability, failure in application of trade facilitation
standards and best practices, insufficient attention to modern IT equipment for processing and data exchange or
unskilled personnel.
– Besides that, one should not omit issues such as: contradictions of state and private interests and, in some cases,
corruption.
– Non-physical barriers can cause enormous losses of time and money, decrease the quality of service or even create
the serious barriers on particular trade lanes.
Cost of logistics
28
Border crossing (1/2)
Border crossings waiting times and delays constitute a significant share of the overall travel time spent by trucks and
trains on EATL routes and therefore have a strong negative impact on the attractiveness of the routes.
One of the main requirements of supply chains is reliability and punctuality of services. In certain cases, short lead
time is not among the advantages of the certain route but logistic providers prefer this particular route because of its
stable and predictable parameters.
As for many EATL routes, especially in Central Asia, stability and predictability of services are at poor level.
Unpredictable delays, low degree of reliability, the unpredictability of services quality and price create severe
disincentives to invest and increase total logistics costs
29
Border crossing (2/2)
Average border crossing times, Uzbekistan Average border crossing times for selected countries
Source: (UNECE, 2017) Source: (UNECE, 2017)
30
Other non-physical obstacles (1/2)
VISA formalities
Procedures related to visa issuance can also have a strong negative impact on the shipment of cargo along EATL
routes, due to the following issues (UNECE, 2017):
– drivers may have to request visas for several transit countries, because of multiple border crossings along each proposed route;
– in a number of countries, drivers’ visas may not be issued at the border, but only at the Consular Sections
– the procedures for issuing visas can frequently be discriminatory, drivers from some countries may obtain visas quicker and with
fewer formalities than drivers from other countries;
– the visa procedures in the transit countries may not be synchronized (neither in the list of documents required, the charges nor the
length of time required for processing)
– a number of countries did not offer long-term multi-entry visas.
– long processing times and high consular charges were a serious disincentive
Good practice examples related to import documentation include Armenia requiring seven, Bulgaria six, China five,
the Republic of Moldova seven and Georgia requiring only four import documents
EATL landlocked countries are presumed to need more days to export a container than countries with seaports: it
takes on average 82 days to send an export from Tajikistan, 76 days to send an export from Kazakhstan, 74 days to
send an export from Afghanistan and 71 and 63 days from Uzbekistan and the Kyrgyzstan,29 respectively
31
Other non-physical obstacles (2/2)
Intermodal transport
Trucks travelling from Asia to Europe (Caspian Sea, Black Sea) face delays due to the lack of ferry timing information,
and because ferries are primarily geared to transport railway containers
Cost of logistics
Landlocked economies are primarily affected by a high cost of freight services and a high degree of unpredictability in
transportation time
Delays and the low degree of reliability and the unpredictability of services create severe disincentives to invest and
increase total logistics costs.
32
Agenda
• Non-physical barriers
33
Estimation of cost trade: Rail transport
The real challenge is to increase the use of block trains in Euro-Asian transport linkages
Currently, the major block trains operating with some regularity are those organized for particular clients the number
of wagons can vary between 31 and 37, setting train capacity at 62-74 containers, based on 40 TEUs (12-metre)
containers.
The maximum formation length for one block train is usually 1,000 meters
34
Estimation of cost trade: Rail transport – Time schedule analysis
The formulation of an integrated time schedule for a block train is a complex task.
The number of countries, operating conditions in these countries, stopovers and the reasons for these stopovers all
directly influence the time schedule.
Regional characteristics are also important and constitute a significant factor. For instance, in Commonwealth of
Independent States (CIS) countries, there are trans-shipment stopovers due to gauge changes and security. In
western European countries, there are stopovers because of passenger train priority
The timetable and its reliability are the most important marketing tools of train operators, even more so than tariffs,
and track and trace services
Challenges
– The development of the timetable and its reliable implementation is a particularly difficult task, not only because of the usual factors
that influence transportation but also because of the particularities of a specific route.
– Technical issues: railway gauge change, railway system change (i.e. signalling)
35
Estimation of cost trade: Rail transport – Cost analysis
Factors that typically influence tariff structures and their level are:
– Different tariffs for the same routes are quoted by forwarders and state rail organizations
– State rail organizations charge different clients differently. A forwarder, a shipper, a small trader with one container or a big
manufacturer with 1,000 containers per year pay different tariffs
– The actual, charged tariffs are different from the published tariffs
– Tariffs differ depending on whether:
• it is bulk or container cargo
• it is carried in wagons or by a block train
• the client is a forwarder or a shipper
• the amount of cargo is large
• it is a long-term contract with a guarantee for the quantity
• terms of payment
36
Rail transport – Cost analysis
Case study: The Islamabad-Tehran-Istanbul Container Train
37
Estimation of cost trade: Road transport
Trucks move containers from the shipper to the port of origin and from the port of destination to the final client.
Road transport to these destinations is round trip as the truck picks up the empty containers from the storage place
of the shipping lines/forwarders – normally close to the port – brings it to the shippers’ warehouse, waits for the
container to be loaded and, finally, moves the loaded container to the port of origin.
Indicative flat rates for a truck delivering a container (20- or 40-foot) in a 20-km radius of the port
38
Rail vs. Road transport (Islamabad to Istanbul)
Road transportation
39
Agenda
• Non-physical barriers
40
Main challenges: Overview
Building Transport and Trade Facilitation (TTF) partnerships: Arrangements in which two or more organizations join to
advance their objectives for better facilitation of legitimate trade, combined with better controls of noncompliant
trade.
Electronic commerce and business: The relation of e-commerce and business in the context of trade and transport
facilitation can be broadly defined as facilitation of business-to business (B2B) and business-to-administration (B2A)
operations in the course of commercial transactions by optimally using ICT for issuing, submitting, accepting, and
processing electronic documents between the involved parties.
Customs issues: Those topical issues currently under discussion, being given consideration, or actively receiving
attention, which relate to the policy, operational, or technical environment of the international customs community.
Border agency modernization: Comprehensive streamlining of processes, formalities, procedures, and documents
handled by institutions and agencies involved with trade, supported by an improved legal and regulatory framework,
institutional strengthening, information technology solutions, and improved human resources.
41
Regional connectivity: SWOT Analysis
Strengths Weaknesses
Political willingness for regional collectivity Lack of implementation mechanisms and financial resources
Significant amount of transport initiatives (14 initiatives) Lack of preparing bankable projects
IFI’s involvement Lack of corridor concept
Significant amount of success stories, case studies and best Significant amount of transport initiatives (14 initiatives)
practices Political willingness
Willingness for cooperation (between Central Asian countries) Missing links
Knowledge sharing and capacity Harmonization of border-crossing procedures
Trade promotion Lack of attracting cargo
Existence of regional and international legal instruments Lack of awareness of business community
Opportunities Threats
Involvement of shippers and cargo movers Significant amount of transport initiatives (14 initiatives)
Euro-Asian region: Significant amount of developing countries Lack of financial resources
Technology and GIS applications Lack of innovative ways to finance projects
New approaches from IFI’s (holistic approach, i.e. not only Lack of capacity to prepare bankable projects
infrastructure development but also tackling of soft barriers Physical security
such as cross-border facilitation) No cooperation and strict initiative focus
Integrated services and marketing tools No political willingness
R&D and Innovation actions Protracted/ unresolved conflict
Exchange of experience between countries Bureaucratic processes between states
Political preferences in the classification of project
prioritization
42
Thank you very much for your attention
43