This
paper was prepared, based on a specific request from the Asia
Pacific Economic Conference, Ministerial and the Secretary of
Transportation of the United State,
by Don Breazeale and Associates, Inc. (DBA) for the Pacific Rim
Transportation Ministers, and their delegates, attending a Transportation
Ministerial Meeting in Beijing. Don Breazeale, as an official delegate
of the United States, presented this paper and participated in
round table discussions with the Ministers of Transportation.
General
discussion:
- Accelerating
the turnover of vehicles and vessels.
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- Insuring
a healthy infrastructure through improvement of management
and maintenance.
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- Reducing
vessel port time by shortening port procedures as well as
increasing handling efficiencies at ports.
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- Congestion
Points; current and globally within economies
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- Safety;
marine, roadway, and air
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Specific
discussions:
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The
need to look beyond developing transportation strategy
as individual companies, government agencies, or individual
member economies, and the need to think more on a global
scale.
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The
Ministerial recognizes there is a definite cause and affect relationship
between the integral parts of the transportation system, and this
must be dealt with or the various economies will be faced with
additional infrastructural, operational, and institutional problems
including increased congestion or even gridlock. Trade and therefore
goods movement has accelerated beyond our most optimistic projections
and oftentimes beyond our capabilities to handle the infrastructural,
operational, or institutional issues that come with such accelerated
growth. Mega-ports have evolved and along with them, a demand
on the system for increased technology, infrastructure, equipment,
and a skilled workforce.
New
high speed vessels, with ever increasing capacity, place a demand
on the system for better and more efficient landside facilities
including improvements in infrastructure, more timely response
from governmental agencies, improved technology, and enhanced
service standards from the landside transportation providers,
etc.
Rail
and truck service has improved to coincide with this enormous
growth in trade, the speed of the ocean carriers they serve, and
to be responsive to the demands of the marketplace in general.
These improvements in rail and truck service have been complimented,
in the main, by corresponding improvements in infrastructure,
equipment, operations, technology, and management. Intermodalism
has complimented this accelerated growth and double-stack trains
in particular have greatly increased our capabilities to handle
this ever-increasing volume and, of course, have created efficiencies
and reduced costs for the rail lines and consequently the shipper.
In
particular, the high volume corridors may be tremendously affected
by peak period congestion brought about by decisions made at varying
points along the transportation cycle. The systems, infrastructure,
operations, and institutional elements in place today simply may
not be up to matching the demands placed on them especially during
peak congestion periods. It has been suggested that the Ministerial
should adopt an initiative focused on the development of a strategic
freight transportation plan on a global basis between the member
economies. It is recommended the basic steps in this process should
be as follows:
- Identify
in detail the cause and affect relationships between each
of the integral parts of the freight transportation system
that operates at present between the members’ economies.
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- Identify
the barriers in each of the segments of the global freight
transportation system that currently and in the future
will inhibit the development of an efficient, seamless,
and profitable movement of goods.
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- Create
a well-focused and strategic freight transportation plan
detailing how the economies will proceed and then provide
a process that outlines how they can adjust this plan
as circumstances dictate. The development of such a plan,
if organized through the common efforts of the member
economies in APEC would indeed:
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- Provide
to the global transportation community a strategic plan
for the near, short, and long term, and in addition, provide
for an ongoing, thoughtful, and detailed analysis of that
transportation strategy in a venue that is somewhat neutral
(APEC).
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- Would
suggest solutions to the barriers identified during this
process as affecting the efficient and profitable movement
of freight along this international transportation system.
The details of these suggested solutions would then be
provided back to the member economies so all would benefit
and trade would assumingly be increased.
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- Would
allow us collectively to look beyond our individual companies,
governmental agencies, or individual member economies
for solutions that will in turn allow us to enhance trade
throughout all the member economies by the development
of a more efficient and seamless freight transportation
system.
To further develop this discussion within APEC, DBA prepared
the following overview of the transportation system, and
attempted to identify some of the barriers to the efficient
and profitable movement of goods.
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MANUFACTURER:
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- Must
ensure compliance with governmental export requirements
and must obtain an Export license or supply the inputs for
this license to be issued. They must also assist the Importer
vis-à-vis compliance to their government's Customs' requirements.
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Responsible
for obtaining quota allocations for the goods he is producing,
if in fact there is a quota in the country of destination.
This could be an area for reform in the APEC economies
since the manufacturer must buy the quota allocation from
the government or export control agency. This means a
new manufacturer must buy all or some of another manufacturer's
quota, which is sold to the new manufacturer at a profit
by the manufacturer holding the original allocation (there
are exceptions to this). The new manufacturer must secure
this allocation in order to manufacture and ship quota
items during a calendar year.
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May
work through or under the control of a Buying Agent who
may assume some or all of the technical responsibilities,
i.e., banking, export licensing, et al.
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Possible
barriers:
- The
lack of quota or share of the quota, which has obvious
implications for the Importer.
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- What
they obtain under the quota may be too small, and this
would have obvious implications and/or complications for
the Importer.
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Late
production or partial shipment may be an issue.
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- Non-conformance
to export licensing requirements and/or Letter of Credit
requirements is a common experience when dealing with
manufacturers overseas.
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- A
lack of ocean carrier space and/or equipment based on
seasonal aspects of the market would, of course, complicate
their ability to move freight forward.
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- The
lack of technological support to communicate directly
with the steamship carriers, freight forwarders, consolidators,
brokers, governmental agencies, and the Importer.
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- The
lack of revenue to support the technological advancements
needed and to maintain trained staff.
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BUYING
AGENTS:
- Not
always involved in the process and may be out of the picture
if the importer deals directly with the manufacturer and/or
through their own foreign buying office.
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If
involved, may be responsible for assisting in obtaining
quota if applicable, may assist in the preparation of
the Letter of Credit and guarantee Letter of Credit compliance,
may be responsible for preparation of the Export license
and other documents as required, may handle all communications
with the manufacturer, shipping companies, local freight
forwarders, truck/rail contacts, etc. and quality control,
or may second these functions to either the manufacturer
or an intermediary such as a Consolidator, NVOCC (Non
Vessel Operator Common Carrier), or Consolidator/NVOCC.
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Possible
barriers:
Really
the same as those indicated under the Manufacturer, albeit the
Buying Agents may themselves be a barrier to a seamless transaction
since they are really just brokers to some degree although some
are involved in areas such as quality control.
ORIGIN
TRUCK AND/OR RAIL COMPANY:
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Usually
under Free On Board (FOB) terms of sale the manufacturer,
paid for by them, handles this link and then this cost
is passed on in the price of the goods. There are, of
course, countless exceptions, i.e., if Intermodal is developed
in the origin country the steamship carrier will in all
probability have tried to involve themselves and may even
operate the Intermodal piece.
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- Charges
based on weight/cube or on a per unit basis.
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Possible
barriers:
- Untimely
delivery of containers to the manufacturer and/or untimely
delivery of the containers to the steamship piers.
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- Lack
of ocean carrier equipment.
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- Lack
of space on vessels.
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- Congestion
on pier delivery day.
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- No
ability to interface directly with freight forwarders,
consolidators, manufacturers, ocean carriers, etc.
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- Lack
of technology to handle communications and documentation.
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- Lack
of revenue stream to support technological advances needed
to maintain trained staff sufficient to the task.
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LOCAL
FREIGHT FORWARDERS:
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Responsible
for the preparation of the document packet to be forwarded
to the local authorities, Customs in the foreign country,
the banks, and the Importer. May also be responsible for
coordinating local truck/rail and may be asked to book
space on vessels and have containers dispatched to
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- Lack
of space on vessels and lack of equipment for same.
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