Transport Connectivity for Landlocked Countries as a tool of development

Transport Connectivity for Landlocked Countries as a tool of development Jan.Hoffmann@UNCTAD.org Lahore, December 2013

1) Bali 2 brief comments upfront 2) UNCTAD s Review of Maritime Transport 2013 just released: How long to implement Bali? Which 4 countries register more than 50% of the world fleet? How many tons of seaborne trade? Who are the South Asian leaders in shipping connectivity? Which 2 countries build more than 2/3 of all ships? see: http://unctad.org/rmt

More trade -> More transport supply -> More competition -> lower freights -> More trade

More income to finance trade facilitation -> Better trade facilitation -> More Trade -> More income to finance trade facilitation

Better services -> More trade -> More income to finance infrastructure -> Better services

Transport Connectivity for Landlocked Countries as a tool of development

Transport networks Transport analysis: Past: Port-to-port Today: Door-to-door Future: Network Sources for maps: http://www.ischool.drexel.edu/gissa/transport.html, http://www.mscgva.ch, Transport for London

Bernhofen et al, 2013 The Economist 18 May 2013 Introducing containerization leads to more trade

(Arvis et al, 2013) Higher Container Shipping Connectivity leads to lower trade costs

Freight rate Better connectivity leads to lower freight rates 3'500 3'000 2'500 2'000 y = 1814.9e -0.0671x R 2 = 0.4348 1'500 1'000 500 0 0 2 4 6 8 10 12 14 16 18 20 (Wilmsmeier and Hoffmann, 2008) Number of Carriers providing direct services

Freight rate more so than distance 3,500 3,000 y = 0.6206x + 1019.9 R 2 = 0.2058 2,500 2,000 1,500 1,000 500 (Wilmsmeier and Hoffmann, 2008) 0 0 500 1,000 1,500 2,000 2,500 Distance

Liner Shipping Connectivity

Trends http://stats.unctad.org/lsci

Transport Connectivity for Landlocked Countries as a tool of development

Trade and Transport Facilitation is needed not to so much to cover distance, but to overcome border crossings.

The number of RTAs with trade facilitation provisions has grown six-fold in the last decade. Among new RTAs, more than 80% include Customs and other trade facilitation measures.

Interest of transit countries Transit traffic requires provision of services. Opportunities for investment in warehouses, vehicles and ports. Transit generates induced economic activities: restaurants & hotels, repairs & workshops, trade of petroleum products Economies of scale and improved connectivity reduce costs of the transit country s own trade

Bali TF agreement: on transit Article 11 Freedom of Transit Article 1 (publication) Article 2 (consultations) Article 6 (penalty prov.) Article 7.7 (AEO) Article 8 (border agency cooperation) Article 10 (formalities) Also cover transit!

Special chapter in UNCTAD s 2013 Review of Maritime Transport Assurance of uninterrupted transit: Consignments between trusted transit operator traders through trusted transit operator logistics providers should not be interrupted by any agency for any reason except in the case of clear evidence of a threat or violation. Assurance of uninterrupted transit should be adopted as a basic feature of all trusted transit operator programmes.

Transport Connectivity for Landlocked Countries as a tool of development

Beyond trade policies TTF is good for development Trade and Transport Facilitation reforms help to formalize trade, save time and frustrations, improve governance, empower women entrepreneurs, strengthen regional integration, modernize public administrations, foster IT capacities, and increase revenue collection.

Beyond trade policies TTF is good for development Trade and Transport Facilitation reforms help to formalize trade

Beyond trade policies TTF is good for development Trade and Transport Facilitation reforms help to formalize trade save time and frustrations

Beyond trade policies TTF is good for development Trade and Transport Facilitation reforms help to formalize trade save time and frustrations, improve governance

Beyond trade policies TTF is good for development Trade and Transport Facilitation reforms help to formalize trade save time and frustrations improve governance empower women entrepreneurs

Beyond trade policies TTF is good for development Trade and Transport Facilitation reforms help to formalize trade save time and frustrations improve governance empower women entrepreneurs strengthen regional integration

Developing ICTs The introduction of ICTs by Customs encourages SMEs to also connect to the internet

Developing Transit A framework for bank guarantees for transit trade helps improve the financial system

Developing trust Increased transparency is good for good governance in general

Developing Single Windows A single window experience for trade may help to introduce single windows elsewhere

Implementation is more difficult for LDCs

More trade -> More transport supply -> More competition -> lower freights -> More trade

More income to finance trade facilitation -> Better trade facilitation -> More Trade -> More income to finance trade facilitation

Better services -> More trade -> More income to finance infrastructure -> Better services

Transport Connectivity for Landlocked Countries as a tool of development

Lower Trade Costs -> More trade -> Economies of scale -> Lower Trade Costs for both: landlocked and transit countries

Transport Connectivity for Landlocked Countries as a tool of development Thank you Jan.Hoffmann@UNCTAD.org Lahore, December 2013