8 Nov, 2013
240 Asia-Pacific Sites To Benefit From Milestone U.N. Pact To Boost Dry Ports
Bangkok – A total of 240 Asia-Pacific sites in and around cities stretching from Istanbul to Zamboanga city have been identified for future development as dry-ports under a landmark agreement signed here today. The move will set the stage for the next phase of economic growth in the world’s most populous region by linking coastal and inland ports, better distributing the fruits of prosperity and alleviating poverty in the rural areas. The trickle-down benefits for travel & tourism, especially business travel and the MICE sector, are more than apparent.
The Intergovernmental Agreement on Dry Ports was signed under the aegis of the UN Economic and Social Commission for Asia and the Pacific (ESCAP) as part of the Forum of Asian Ministers of Transport held between 7-8 November. Signed initially by 14 ESCAP member countries (Armenia, Cambodia, China, Indonesia, Iran, Lao PDR, Mongolia, Myanmar, Nepal, South Korea, Russian Federation, Tajikistan, Thailand and Viet Nam), it is one more step “toward achieving the shared vision of an integrated intermodal transport and logistics system.”
At the signing ceremony, Thailand went one step further by becoming the first Party to the Agreement through ratification, thereby initializing the process by which the Agreement will enter into force. The agreement will enter into force after eight countries have become Parties.
Said Dr. Noeleen Heyzer, Executive Secretary of ESCAP at the signing ceremony, “The benefits of economic growth have, for too long, been concentrated mainly in our prosperous coastal communities – with landlocked countries and areas facing challenges of prohibitive costs and complex logistics to get their goods and services to market, and to access regional and global production and supply chains. This Agreement today is our commitment to change that reality.”
She said that as key hinterland hubs, dry ports “will help us to leverage the investments we have already made in road and rail. Together we will create transport and trade corridors of prosperity, transforming landlocked countries into land-linked centres of development.”
India leads the number of sites (34) with existing dry-ports or potential for developing future ones. It is followed by Azerbaijan (21), Turkey (19) and Bangladesh and China (17 each). Other primary beneficiaries will be the Russian Federation (15) Lao PDR (9) and Mongolia (5).
According to an ESCAP report, a “Dry Port” provides all of the services of a port except for the loading of cargo to and from seagoing ships. It may be distinguished from an Inland Container Depot (ICD) in that it can accommodate all types of cargo, whereas an ICD specializes in the handling of containers and containerized cargo. Dry ports create the conditions for the much-needed shift of cargo flows from road transport alone to intermodal options – using road services in combination with more energy-efficient, less polluting alternatives such as rail, short sea shipping and inland waterways.
Dry ports can also improve regional network connectivity by lessening the burden created by mandatory trans-shipments. Their development will also facilitate infrastructure investment, increased financing from international banks and bilateral donors and contribute to the development of an efficient logistics industry in member States.
The Dry Port Agreement builds on the intergovernmental agreements of the Asian Highway (AH) and Trans-Asian Railway (TAR) networks, built through the ESCAP platform. By enabling the efficient, multi-modal transfer of goods it will extend the reach of both the Asian highway and railway networks. Together, the three pacts will promote intra- and interregional connectivity, thereby fostering trade and the movement of people, according to ESCAP.
The signing marks the culmination of a process initiated by ESCAP in 2010. The Agreement was finalized in October 2012, and adopted by member States at the Commission’s annual legislative session held in Bangkok in April 2013. The agreement will be open for signature until 31 December 2014 at United Nations Headquarters in New York.
Number of Sites Listed In the Agreement for Development of Dry Ports (including both current dry ports and those with potential for further development): Afghanistan 8; Armenia 4; Azerbaijan 21; Bangladesh 17; Bhutan 6; Cambodia 7; China 17; Georgia 2; India 34; Indonesia 2; Iran 9; Kazakhstan 5; Kyrgyzstan 2; Lao PDR 9; Malaysia 7; Mongolia 5; Myanmar 8; Nepal 5; Pakistan 12; Philippines 5; Republic of Korea 1; Russian Federation 15; Sri Lanka 2; Tajikistan 7; Thailand 3; Turkey 19; Vietnam 8; Total 240
(Click here to download the full text of the agreement, including the list of the sites).
The following details on the operations and benefits of dry ports have been extracted and compiled from various ESCAP reports and documents presented at the Forum.
Provided they are correctly planned and respond to well-identified needs, dry ports can provide significant advantages to shippers, as well as to the governments that support their development. The two different perspectives are presented below.
The “Shipper” perspective
From a shipper perspective, the existence of professionally managed dry ports connected to different transport modes creates the right conditions to realize a shift towards a more efficient transport mode. Having access to well equipped and connected inland logistics centres, shippers can take advantage of the efficiency of rail transport or inland water transport over long or medium distances more easily, while limiting road transport to the “last mile” of their trips.
In addition, dry ports can serve as logistic hubs where functions like distribution, packaging, labelling or warehousing could be outsourced with the objective of reducing the overall cost through economies of scale. Consolidation of LCL (Less than container load) shipments can also be realised at these facilities, resulting in additional cost savings.
Finally, when provided, the possibility of accessing round-the-clock customs services can be very valuable in facilitating the clearance of all administrative documents related to transport activities.
The “Government” perspective
Ideally, national economies would reap the financial benefits from investments in such facilities through trade opportunities triggered by higher logistic efficiency. Meanwhile, governments can collect increased revenues in corporate taxes, the private sector can gain from enhanced competitiveness, and the local population can have access to wider employment opportunities.
Indeed, efficient transport and the clustering of industries and logistics services around intermodal interfaces play a critical role in the decision of industries to establish production units at specific locations. As such, developing dry ports may create economic stimuli by attracting manufacturing, agricultural processing and associated activities. In addition, dry ports could be developed into special economic zones with a much broader industrial and service base. Similar growth potential has existed around seaports that have brought prosperity to coastal areas by clustering economic activity and services, which has in turn attracted further economic factors of production, particularly a constant pool of mobile and well-trained labour, in a self-perpetuating process.
Other positive spillovers can also be expected. For instance, by allowing an increased shift from road to rail for medium-long distance trips, dry ports can have a moderating impact on the number of kilometres travelled by trucks, which should ultimately result in reduced road maintenance costs, fewer road accidents and lower greenhouse gas emissions. This would be particularly significant for port cities, which may also benefit from reduced congestion from trucks servicing their ports.
Finally, budgetary investments should be relatively limited as activities at dry ports have the potential to be profitable, making dry ports a good candidate for private investments through PPP solutions. Public investments would nevertheless be expected to provide connecting transport infrastructure, water supply systems, power supply systems, and customs services. On the other hand, the private sector could finance, provide and operate the container handling equipment.
SELECTED DRY PORT PROJECTS IN THE ESCAP REGION
BANGLADESH
In addition to the existing ICD operating in Dhaka located in a heavily congested area adjacent to the Kamalapur Passenger Railway Station, the construction of a new ICD at Pangaon on the Buriganga River near Narayanganj, about 13 km by waterway south of Dhaka, was completed in late 2012 and is expected to operate from August 2013. This facility, which is being developed jointly by the Bangladesh Inland Waterway Authority (BIWTA) and the Chittagong Port Authority (CPA), will be operated under a contract awarded to a private operator under a competitive bidding process. The overall development cost of this facility is approximately $23 million and it will have an annual handling capacity of 116,000 TEU initially, later expanding to 160,000 TEU. According to CPA representatives, carrying costs through waterway will be much cheaper than by road and railways and it will take 16 hours to carry goods from the Chittagong end.
A second ICD has been proposed at Dhirasram Bazar (close to Tongi industrial area), some 28 km by road and rail north of Dhaka. It is understood that this fa- cility was proposed in conjunction with the development of the deep-sea port at Sonadia. While plans for the development of this facility have yet to be finalized, its expected capacity will be several times that of the ICD at Pangaon. Located on the Chittagong – Dhaka rail corridor, the facilities are expected to substantially reduce the cost of container movements.
INDIA
In India, in view of the region’s containerization trends, the Government set up the Container Corporation of India Limited (CONCOR) in March 1988 with the prime objective of managing changes in India’s logistics industry. Since its creation, CON- COR has put in place an extensive network of 62 Inland Container Depots, of which 48 are export-import depots. The terminals are almost always linked by rail to the Indian Railway network, unless their size or location dictates that they be linked by road. The efficiency of interfaces between agen- cies and modes has seen CONCOR container traffic jump from 1,044,728 TEU in the year 2000-01 to 2,604,311 in the year 2011-12 (mainly transported by rail).21 The dry port policy of CONCOR is taking on new relevance under the Government’s Delhi-Mumbai Industrial Corridor project, which includes the construction of a dedicated freight corridor (DFC) with a number of logistics parks along the route.
INDONESIA
In Indonesia, the Government has long been implementing several dry port projects, most notably at Gedebage, Surabaya, Solo and Cilegon. However, the Government’s flagship project in the area of dry port development is the Cikarang Dry Port, strategically located in Jababeka Industrial Estate, which lies in the heart of the biggest manufacturing zone of west Java and is a manufacturing base for over 2,500 industrial companies. These companies generate over half the total container throughput of Indonesia’s main container port at Tanjung Priok which, in 2011, handled over 4.7 million TEU. Approximately 200 hectares are allocated for Cikarang Dry Port, which is accessible by the highway and railway system. Being the extension gate of Tanjung Priok, document formalities for port clearance and customs clearance are completed at Cikarang. The development of Cikarang Dry Port is one of several initiatives by the Government of Indonesia to streamline and increase the country’s competitiveness.
KAZAKHSTAN – CHINA
The Governments of China and Kazakhstan have been cooperating on the development of the “Khorgos-East Gate” free economic area located in the south-east of Kazakhstan, just a kilometre away from Kazakhstan’s border with China. The area includes Khorgos International Centre for Cross-Border Cooperation, centres for trade activities, a dry port, a transport and logistics complex, an industrial area and space for industrial companies. The project, which is included in the strategic plan for the development of Kazakhstan by 2020, has an estimated cost of around $3.5 billion, of which around 75 per cent is to be covered by private investments.
REPUBLIC OF KOREA
In the Republic of Korea, Uiwang Inland Container Depot (ICD) – located 25 kilometres from Seoul – was developed in 1992 by Korean Rail- road and a number of private transportation companies. It currently handles over 1 million TEU per year. The provision of rail sidings at the site has contributed to a modal shift towards rail transport and contributed to reducing road congestion and CO2 emissions along the Seoul-Busan corridor. Currently, the site has a capacity to handle 36 trains per day. The facilities at Uiwang have also contributed to reducing congestion at the port of Busan while providing employment to 1,000 people and generating tax revenues for local government.
NEPAL
The Government of Nepal has developed the Birgunj ICD with World Bank financial support. The ICD has a 12 km rail link to the Raxaul railhead at the Nepal-India border with further rail connection to the Kolkata/Haldia port complex in India. It is equipped with the automated United Nations-sponsored system for customs data (ASYCUDA). To ensure smooth movements of trade the Government of Nepal concluded a rail service agreement with India for the operation of dry ports. The Birgunj facilities are leased to the private sector for operation. It currently handles containers, tank wagons for liquid cargo, and flat wagons for bilateral break-bulk cargo, receiving an average of around 15 – 16 freight trains per month. In a country in which climate change and global warming can have serious consequences, the potential for emission reduction of the rail-based Birgunj facilities is an important reason behind the further development of the facilities.
UZBEKISTAN
The Government of Uzbekistan is developing intermodal corridors and dry ports in the country, in particular at Angren in the Tashkent region, to serve the Andijan, Namangan and Ferghana regions of eastern Uzbekistan, and Navoi, 350 kilometres south-west of Tashkent. The Navoi dry port has been developed in connection with the Navoi Free Industrial Zone (FIZ) close to the international intermodal hub at Navoi airport which began operation in 2009 under management of Korean Air. The facilities are located along major subregional road, rail and aviation routes to capitalize on the country’s transit potential. Concomitantly, the Government has implemented a number of policies in the form of tax incentives and exemption of customs fees to encourage industries to cluster in the Navoi FIZ.
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