Building domestic capacity

Expanding cross border trade

Vientiane October 8th 2019

29-01-20 1

Trailer Swapping

Background

• The CBTA has been signed for many years but not implemented– Each country wants to protect its own transport industry

– Thailand and Vietnam transport dominates cross border in CLMVT

• There is ongoing resistance to the full implementation of the CBTA. The transport sectors of the GMS countries are not equal in terms of capacity and the ability to compete with one another.

– Myanmar , Laos and Cambodia are well behind in transport development

– “ Early Harvest” does little to redress the imbalance

• Meanwhile the lack of implementation is restricting cross border trade and not allowing it to open up to its full potential.

• Myanmar trucking industry is not equipped to compete with Thailand or Chinese transport. Early Harvest does not address this issue.

Solution : Trailer Swapping

• Allowing trailers to be swapped at the frontier and hauled by local tractor units will not usurp the CBTA, it will offer a half way alternative for those that are unable of unwilling to move toward the opening up of cross border transport and allowing foreign trucks on to their territory.

• It will build local capacity while promoting trade in areas that have previously not been easy to develop due to handling issues. It will reduce the costs for those than embrace the use of integral and specialist trailers.

• It will reduce transit times for Myanmar exporters as it will make it much easier to use Laem Chabang Port and BKK airport .

3/19/14 3

Objective of Trailer Swap Pilot

• To prove that trailer swapping is a viable alternative to the GMS - CBTA Early Harvest, which has failed to provide any benefits to Myanmar (or Thailand) and does not address the current traffic flows or future demand.

• To build a workable transportation system through incremental implementation that has the support of the trucking industries on both sides of the border.

• To build capacity in the domestic markets so that local operators can share in the growth in cross border trade.

3/19/14 4

Trailer swapping already exists : dual registered trailers

Run daily from Bangkok through Malaysia to Singapore

Thai Tractor in Thailand- Malaysian tractor for MY & SIN

29-01-20 5

Trailer Swapping

➢ Trailer swapping at borders an intermediate step towards CBTA implementation

– Reduces border handling costs and times and costs

– Will expand cross border trade by making more possible

– Reduces fuel and hence cost of transport

– Allows door to door transport between Thailand and Myanmar

➢ Gives Local operators a larger stake in cross border operations

➢ Helps to build local Myanmar capacity to compete with other countries

➢ Can operate alongside CBTA Early Harvest

➢ Offers more options than Early Harvest does

➢ Not restricted to only EWEC roads to nowhere

➢ Gives exports better access to Thai ports

6

Step1: Manual transshipments

Step 2: Exchange of containers

Step 3: Exchange of trailers at border

Step 4: Flow of trucks under CBTA

7

More regional integration reduces redundant infrastructure investments

Regional cooperation and integration

Investment in redundant physical infrastructure

Economic Rationale

• Improving the supply chain for products that require specialist and temperature sensitive handling will create trade that does not current exist due to high costs and unacceptable levels of wastage.

• Reduced cost per ton kilometre by the use of higher capacity vehicle with lower running costs. A semi-trailer can carry up to 30 tons, up from 15 using a 12-wheeler

• Semi trailers can expect to get 3 to 3.2 kms per litre of fuel compared with 2.3 to 2.5 with a 12-wheeler. This is an increase of up to 20 % for higher capacity vehicles

• Border transhipment costs would go as there would be no need. The trailers can be swapped within 10 minutes and there is no waiting in line for the transhipment of containers or for the manual labour to be available. The risk of pilferage and damage is also taken out

The Economic Imperative To Make Cross Border Transport Work For The Industry

• Border transhipment imposes unnecessary costs on transport and industry, whereas the swapping of tractor heads at the border to allow trailers to continue under bond to final destinations with will reduce wait times to minutes.

• The risk of pilferage and damage will largely be eliminated further reducing costs to the industry

• The semi trailers is the most cost effective rig available. It will reduce the cost per ton kilometre making the transport industry more profitable whilst substantially growing volumes

• The supply chain for products that require specialist and temperature sensitive handling will be improved to international best practice which will create trade that does not current exist due to high costs and unacceptable levels of wastage.

The Economic Imperative To Make Cross Border Transport Work For The Myanmar and Thai Economies

• The economies of both Myanmar and Thailand need more cost effective cross border transport to make the flow or more cargo economically viable and promote trade.

• Current border transhipment costs are a major burden that is greatly restricting the potential for cross border trade.

• The Myanmar and Thai transport industries need a balanced flow of freight in both directions to reduce empty running and costs.

• Myanmar land access to a Pacific port in Thailand will ensure an immediate improvement in the balance of freight volumes

• Transportation cost efficiencies will immediately open up land freight volumes that are currently untapped, leaving much current border trade unimpacted

• Refrigerated trailers preserve the cold chain– Frozen one way

– Fresh fish the other way

• Industrial gas tankers .. Makes cross border possible

• Cement carriers

• Fly-ash tankers

• LNG tankers

• Fuel tankers

• Inter-factory movements

All open up more possibilities for cross border trade

Specialist Trailers

• Ideal for carrying FEU containers

• Ideal for cross border operations

• Can swap trailers or containers at border

• Quicker turn around

• Can use different trailer types

• Higher horse power tractors burn less fuel

• Less fuel burn than 12 w rigid

• Tractor interchange < 5min

Articulated semi trailers

29-01-20 12

• Cannot (legally ) carry FEU containers

• Need labour intensive transhipment

• Best used as side loaders

• Designed for high volume –low weight

– Built for high value and air freight

– Design payload is 10 to 13 tons… depending on wheels

• Twin steer 2nd axle hard on tyres and maintenance

• Hard on fuel when heavily loaded

• Already done 6 years plus when imported

• Long second life if well maintained but thirsty if not.

• High tech maintenance skills needed for newer vehicles

12 Wheelers

29-01-20 13

Demand in 000s of tons per day 2030In cross border alone !

Location Direction Moderate case High Demand

China Border On the way Ex China 23 32

To China 81 96

At the border From China 26 36

To China 84 103

Thailand Border On the way From Thailand 105 123

To Thailand 39 51

At the border From Thailand 64 85

To Thailand 47 60

Total Tons 469,000 586,000

Trucks @ 15 tons 31,266 39,267

Trucks @ 20 tons 23,450 29,450

14

JICA Report 2015

How would it work

▪ Regulations

▪ Responsibility

▪ Temporary entry

▪ Customs

15

Regulations

• Mutual recognition

– Trailers must be registered and legal in home country

– Similar to ASEAN & GMS regulations

• Host country haulier

– Responsible for the foreign trailer at all times

– Must check condition of trailer on take over

– Liable for condition of equipment and insurance

• Operation

– Must run to local weight limits of host country

– Allowed in for up to 30 days without permit

– Always the responsibility of host transport company

3/19/14 16

Foreign Trailers

➢ Host country tractor units to be allowed to pull trailers from other GMS countries while on their own territory

➢ Permit properly registered trailers to enter for up to 30 days

➢ Seek reciprocal arrangements under bi-lateral agreements

➢ Trailer to be the responsibility of the traction company

➢ Trailer must be properly registered in country of origin

3/19/14 17

Entry into Host Country

• Limited to 30 days

• Must remain with host haulier …who picked it up

• Must be inspected and signed for by host company / driver

• Host company has a commercial agreement with sender

– Paid by km or

– Paid by trip or

– Revenue share or

– Other commercial agreement

3/19/14 18

Customs

• Record log system with entry up to 30 days

• Must remain in the responsibility of the one company collecting it

• Covered under CBTA Annex 8

– Temporary entry of vehicles

– Similar to vehicle passport system

– Stamped in and out of countries

• Electronic tracking

– Use GPS tags on trailers : visible at all times on line

• E-Seal on loaded trailers

– Fitted at border of entry

– Taken off on departure

– Sends signal if opened en route

3/19/14 19

Project Scope

• 3 month bilateral trial between Myanmar and Thailand

• 40’ skeleton trailers fitted with 40’ ISO containers to be used .

• Pilot operation will be carried out jointly by the Myanmar and Thai road transport industries

• 4 Specific routes ( within Myanmar):– Myawaddy – Thilawan

– Myawaddy- Thar Gyi Dry Port

– Myawaddy - Mingalardon industrial zone x 2 locations

20

Project Objective

• Prove trailer swapping is a cheap and efficient alternative

• Reduce transit times for manufacturing importers– Gases and liquids in by road

– Interfactory movements without transhipment

• Reduce costs for traders on both sides

• Make the export of perishable products possible – Fresh fish to market Bangkok in 30 hours

– Added value sea foods

– Added value agricultural products

• Garment exports by road to BKK airports

• Laem Chabang Port in 36 hours from Yangon

21

Yoma Fleet Limited Commitment

• 20 x 40’ skeleton trailers fitted with 40’ ISO containers will be supplied free of charge by Yoma Fleet Limited for 60 days.

• The trailers will be insured for use in both Myanmar and Thailand (USD 2 million umbrella coverage)

• An investment in the Myanmar trucking industry – To help operators compete in the cross border market

• All trailers will be fitted with GPS to ensure customs tracking

3/19/14 22

Summary

• More products moving and a reduction in transport costs and transit times while building capacity in the lesser developed transport markets can only be seen a positive move in trade facilitation.

• A move to lighter trucks means fuel and emissions savings on a ton/ kilometre basis by reducing the unladed weight of vehicles.

• Many more transport linkages become possible when the need for border transhipment is removed. Aside from the cost reduction, the move to trailer swapping will create trade linkages that were not previously practical .

• More Myanmar products exported by road with lower costs

• More industrial inputs arriving faster and cheaper

• Building Capacity and Knowledge in the Myanmar Trucking Industry

Creating Trade

• 2008 Thailand to China via Laos & Vietnam

– Complicated ( & expensive ) transit of Laos

– Complicated transit of Vietnam with dummy import / export

– About 25 loads per week went this way to China

• 2010 Thailand to China

– Transit issues solved in Laos 2008

– Transit issues solved in Vietnam 2010

– Traffic grows to 2000 trucks a week

• 2018 Thailand to China

– 5000 loads per week now moving

– Many diverted from air freight

– Huge growth in Vietnamese Transport industry

2429-01-20

Role of logistics in the economy

• Logistics contributes 11.6% of World GDP, 12.8% of GDP in average for countries in the Asia-Pacific

• Efficient logistics infrastructure investment improves the productivity and the competitiveness of the country

• Logistics industry creates revenues and jobs

• Thailand 14.5 % …. Down from 18 %

• Vietnam 20% ….. Growing through trade to China

• Myanmar 10% ….missing the opportunity

• Cambodia 8% …. International dominated by Vietnam

• Laos 4 %..... International dominated by Thailand

29-01-20 Sponsored by "Yoma Fleet Limited" 25

Can be shipped unaccompanied -Swap tractor at Ferry or Border

Thank you for your attention

29-01-20 Sponsored by "Yoma Fleet Limited" 26

27

1. Trailer details

Trailer number Trailer owner / operator

Trailer axles………..wheels………………tare weight………………..

Trailer type:

A) Flat trailer Container chassis (with / without container)

B) High-sided open-top

C) Tilt or curtain-side

D) Box-van

E) Reefer / reefer container on chassis

F) Tanker

G) Other (please specify)……………………………………..

Trailer en route from (city) ………………..to (city)………………………………………

Trailer running empty? .............................or Loaded?

................................................

Company taking over the trailer……………………………….

Rep…………………………………………..position……………………………..

Tel #………………………….

Taking over from Company…………………………………….

Rep…………………………………………..position……………………………..

29-01-20 Sponsored by "Yoma Fleet Limited"

28

Item Condition

Pass Fail n/a Comments

Trailer / container/ accessories

Tyres Should have tread over the whole surface and no visible damage.

Spare tyre How many? 1? Condition as above?

Air hoses Connection type? Function when connected?

Electrical connections Lights function when connected?

Lights on trailer Fitted with correct coloured covers? Function when activated?

Trailer brakes Function when connected?

Landing gear – trailer legs Damaged or bent in any way? Wind up – down as required?

Any damage visible on trailer and/or container?

Tarpaulin Distinguishing marks/ colour/company brand? Intact? Holes/tears?

Ropes / lashings Number and type used?

Curtain sides Intact? Any holes/ tears?

Soft top on trailer/container Any holes/tears?

Container on the trailer Container number?

29-01-20 Sponsored by "Yoma Fleet Limited"