Logistic Opportunities For Collaboration Between Cambodia and Thailand 20012013 Final

Thai-Cambodia Trade and Logistics
Cooperation for AEC Jan 25, 2013
Agenda:
1. High-level macro economics study
1.1 Current Trade between Thailand and ASEAN countries
1.2 Competitive landscape ASEAN logistics

1.3 Regional trade agreements, macro economic forecast and effects analysis 1.4 Geographical locations interesting for further study 1.5 Scenarios for further development
2. Opportunities for trading between Thailand and Cambodia

2.1 Tariff and Non barrier tariff reduction 2.2 Improving custom clearance services 2.3 Cross border trading
3. Logistics practices
3.1 Cross-docking, Hub and Spoke, Multi modal transportation, and Backhauling 3.2 IT in logistics 3.3 Green logistics and safety management 3.4 Corporate social responsibility 3.3 The collaboration between Thailand and Cambodia towards to operational excellence 4. Export Logistics Model Award (ELMA)
Agenda:


Thailands Export To Entire ASEAN Region

Thailand Export to ASEAN - Millions of US $
Trend line shows the moving average over 12 month
16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0
Q1/2000 Q1/2001 Q1/2002 Q1/2003 Q1/2004 Q1/2005 Q1/2006 Q1/2007 Q1/2008 Q1/2009 Q1/2010 Q1/2011 Q1/2012
Q3/2012 13,844.81
For the past 13 years Thailand's export has been steadily growing with 5% year-on-year.
Thailand Export - Country Ranking

(Based on total value Jan12 Nov12)
The Global Financial Crisis had a negative effect on exports in 2008, but Thailand managed to recover quickly and continue to grow to new record levels.
Country
1 2 3 4 5 6 7 8 9 Malaysia Indonesia Singapore Vietnam Philippines Cambodia Laos Myanmar Brunei
Value of Export
(Millions of US $) 11,287.35 10,265.13 10,176.14 6,196.13 4,508.42 3,436.69 3,293.94 2,796.88 181.72
4 Vietnam 11.9% Cambodia 6.6% Philippines 8.6%
Laos 6.3%
Myanmar 5.4%
Brunei 0.3%
Malaysia 21.6%
Indonesia 19.7%
Singapore 19.5%
Source: Bank of Thailand
Thailands Export To ASEAN Trade Partners

From Q1/2000 to Q3/2012 Millions of US $ Trend line shows the moving average over 12 months Malaysia
4,000 3,000 2,000
Indonesia
4,000 3,000 2,000
1,000
0
1,000
0
Singapore
4,000 3,000 2,000 1,000 0
Vietnam
4,000 3,000 2,000 1,000 0
Out of the 4 countries: Malaysia, Singapore and Vietnam all show a decline in exports over the recent period. Indonesia is still growing, but the rate is starting to show signs of slowing down.
Thailands Export To ASEAN Trade Partners

From Q1/2000 to Q3/2012 Millions of US $ Trend line shows the moving average over 12 months Philippines
1,500 1,000 500 0
Cambodia
1,500 1,000 500 0
Growing
Laos
1,500 1,000 500 0
Myanmar
1,500 1,000 500 0
Out of the 5 countries: Cambodia, Laos, Myanmar and Brunei all have a strong growing trend The Philippines is showing a fluctuating export volume and has a upwards trend
Brunei
60 40 20
Thailands Export By Product Category

For more than 15 years Thailands export has been dominated by the manufacturing industry.
Graph is based on Thailands total worldwide export
100% 90% 80% 70% 60%
50%
40% 30% 20% 10% 0% 1995 1996 1997 1998 1999 2000 Agriculture 2001 2002 2003 2004 2005 Mining 2006 Forestry 2007 2008 2009 2010 2011 Manufacturing Other Exports Fishery Re-Exports
Manufacturing
1 2 3 Electronics Automotive Agro-manufacturing Products
Value of Export (Millions of US $) 30,276.50 26,451.99 26,423.26
% 16.7% 14.6% 14.5%
Table is based on data from Jan12 Nov12 and only shows the 9 largest sub-categories of Manufacturing The 3 largest sub-categories Electronics, Automotive and Agro-manufacturing Products account for 45.8% of the total manufacturing export
4
5 6 7 8 9
Machinery & Equipment

Petroleum products Petro-chemical Products Electrical Appliances Metal & Steel Chemicals
15,815.49
12,152.74 10,764.50 10,654.00 10,251.93 7,695.60
8.7%
6.7% 5.9% 5.9% 5.6% 4.2%
7
Thailands Export To Cambodia Through Cross border

From Jan03 to Nov12 Millions of Baht Trend line shows the moving average over 12 months
Sakaeo and Trat are the main border points for export to Cambodia and both show a steady growth. The other 3 areas are significantly smaller and show a fluctuating export.
5,000 4,000
Sakaeo
Growing
3,000
Trat
Sisaket Surin Sakaeo Chanthaburi Trat
3,000 2,000 1,000 0 500 400 300 200 100 0
2,000
1,000 0
Chanthaburi
200 150 100 50 0
Sisaket
Surin
150 100 50 0
Source: Bank of Thailand, Dept. of Foreign Trade
Overview Thailands Export To Cambodia through Cross border

Thailand Top 20 Exported Products to Cambodia 2012 (%)
% 4.78 4.74 4.23 4.08 3.86 3.70 3.48 3.34 3.13 2.82 2.78 2.60 2.30 2.23 2.18 2.06 1.74 1.72 1.46 1.37
Sugar Internal combustion piston engines and parts Beverages (non-alcohol) Cosmetics Tires Motorcycles and parts Alcohol drink Automobile and accessories Machines and components Aninmal feed Other vehicles and components Fabric and thread Gasoline Iron and steel products.
Thailand and Cambodia Trade Statistics 2008 2012

Million of Bath 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 2008 2009 2010 2011 2012 Export Import Balance 67,826.00
Raw materials of cosmetics Fats and oils from plants and other animals
41.39
Other livestock products

Fertilizer Other petroleum products Instant noodles and packaged food Others
Thailands Import From Cambodia Through Cross border

From Jan03 to Nov12 Millions of Baht Trend line shows the moving average over 12 months
Sakaeo is the main border point for import from Cambodia. Trat has seen a major increase in import over the past year. The other 3 areas are significantly smaller and show a fluctuating import.
1,000 800
Sakaeo
Sisaket Surin Sakaeo Chanthaburi Trat
600
400 200
0 500 400 300 200 100 0
70 60 50 40 30 20 10 0
100 75 50 25 0
Trat
Chanthaburi
Sisaket
70 60 50 40 30 20 10 0
Surin
10
Overview Thailands Import from Cambodia through Cross border

Thailand Top 15 Imported Products from Cambodia 2012 (%)
%
Vegetables Steel
Thailand and Cambodia Trade Statistics 2008 2012

Million of Bath 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 2008 2009 2010 2011 2012 6,430.54 6.17 5.52 4.19 3.56 3.48 3.05 1.73 1.51 1.03 0.81 6.88
Aluminum products
Export
Import
Balance
39.25
Vegetable oils and products Copper products Motor generator sets and components Scrap paper
11.38 6.53
Wire and cable insulation Receiver - transmitter equipments (telephone, radio, cable television equipment) Grains Garments Printed circuit board Tools made of metal Other wood products Timber Others
3 1.91
11
Agenda:


12
Competitive landscape ASEAN logistics - Cambodia

0n 19 June 2012, the World Bank released a list that ranks the ease of importing, exporting and transporting goods in different countries. Cambodia moved up 27 places and was ranked 101 out of the 155 countries included in the World Banks report titled: Trade Logistics in the Global Economy. Cambodia scored 2.56 out of 5 on the survey. In the 2010 report, Cambodia scored 2.37 and ranked 129.
World Bank Report: Trade Logistics in the Global Economy - The Logistics Performance Index (Laos and Brunei not covered)
Ranking and scores, out of 155 countries. Overall Customs Infrastructure International Shipments Logistics quality and competence Tracking and Tracing Timelines
Rank
Singapore Malaysia Thailand Philippines Vietnam Indonesia Cambodia Myanmar 1 29 38 52 53 59 101 129
Score
4.13 3.49 3.18 3.02 3.00 2.94 2.56 2.37
Rank
1 29 42 67 63 75 108 122
Score
4.10 3.28 2.96 2.63 2.65 2.53 2.30 2.24
Rank
2 27 44 62 72 85 128 133
Score
4.15 3.43 3.08 2.80 2.68 2.54 2.20 2.10
Rank
2 26 35 56 39 57 101 116
Score
3.99 3.40 3.21 2.97 3.14 2.97 2.61 2.47
Rank
6 30 49 39 82 62 103 110
Score
4.07 3.45 2.98 3.14 2.68 2.85 2.50 2.42
Rank
6 28 45 39 47 52 78 129
Score
4.07 3.54 3.18 3.30 3.16 3.12 2.77 2.34
Rank
1 28 39 69 38 42 104 140
Score
4.39 3.86 3.63 3.30 3.64 3.61 2.95 2.59
13
Competitive landscape ASEAN logistics - Singapore

Singapore
Singapore is a prime location for major logistics firms, with 20 of the top 25 global logistics players conducting operations here. Most of them have set up regional or global headquarter functions in Singapore.
Seaport
One of the busiest ports worldwide Currently serves as a regional logistics hub for many companies in South East Asia Strong support by the government to further enhance its position in maritime sector Statistics: o 29.9 Million TEU in 2011 o 530.5 Million tons of cargo throughput in 2011 o 43.2 Million tons of Bunker sales in 2011
Air cargo
Changhi Airfreight Center is a state-of-the-art location with good logistics support infrastructure connecting to 210 cities in 60 countries 9 airfreight terminals with a combined handling capacity of 3 million tons per annum, making it one of the largest air cargo operations in the world Statistics: o 983,110 tons discharged in 2011 o 882,142 tons loaded in 2011
14
Source: Singapore Department of Statistics
Competitive landscape ASEAN logistics - Thailand

Thailand
The Thai Government has planned to establish a world-class logistics system to support Thailand as Indochinas trade and investment center.
Seaport
2 seaports (Leam Chabang and Rayong) and 3 river ports (Bangkok, Chieng Sean, and Chaing Kong). 3 ports are next to the neighboring countries such as Chieng Sean Port (Laos), Chaing Kong (Laos) and Ranong (Myanmar) Ranked 23rd busiest port of the world Statistics o 5.73 Million TEUs in 2011 (Leam Chabang) o 1.34 Million TEUs in 2010 (Bangkok)
Air cargo
Six international airports. A state-of-the-art facility located at Suvarnabhumi airport currently services 116 airlines and 27 air cargo carriers. Suvarnabhumi has been ranked as the 10th best airport globally. Statistics 1.3 million tons handled in 2010 (international) 4.97 thousand tons handled in 2010 (domestic)
Source: Worldshipping.org, BOI
15
Competitive landscape ASEAN logistics - Cambodia

Cambodia
Cambodias infrastructure is currently undergoing rapid improvements. Multiple projects are currently in progress to connect the country with its neighbors and the rest of Asia.
Seaport
2 Major ports with Sihanoukville (Kampong Som) being the largest and most important deep sea port. Phnom Penh is the countrys second largest port and is based at the junction of the Bassac, the Mekong, and the Tonle Sap rivers Statistics o 95,333 TEUs in 2012 (Phnom Penh) o 224,206 TEUs in 2010 (Total)
Cambodias foreign trade has seen rapid growth over the past few years and all signs show that this trend will continue in the near future.
With the AEC measures being put into place to further promote inter-ASEAN trade, it is essential for Cambodia to have a modern infrastructure in order to keep up with the rest of the region.
An important step has already been taken by rehabilitating the train line between Samrong, just South of Phnom Penh, and Sihanoukville port. This railway is expected to cover around 40% of freight traffic between the capital and the countrys main deep sea port.
16
Source: Port Autonome De SihanoukVille (PAS), Xin Hua Publishing
Agenda:


17
Development of ASEAN Economic Organization

The Association of Southeast Asian Nations (ASEAN), established in 1967. ASEAN is a geo-political and economic organization of 10 countries located in Southeast Asia; Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Viet Nam. Its aims include the acceleration of economic growth, social progress, cultural development among its members, and the promotion of regional peace.
The Foundation of AEC
Goods
From ASEAN Free Trade Area (AFTA) to ASEAN Trade in Goods Agreement (ATIGA) Tariff reduction for selected items in 1993 to 0% tariff in 2015
Services
Investment
Collaboration
ASEAN Framework Agreement on Services (AFAS) Started in 1995
From ASEAN Investment Area (AIA) to ASEAN Comprehensive Investment Agreement (ACIA) Started in 1998
Agriculture, forestry, food security, intellectual property, infrastructure, E-ASEAN, consumer protection, competition policy, etc..
Source: thai-aec.com, thailandaec.com, gxasean.com, tradelogistics.go.th
18
AEC Blueprint
The ASEAN Economic Community (AEC) shall be the goal of regional economic integration by 2015. AEC envisages the following key characteristics:
1
2 3 4
A Single Market And Production Base
A Highly Competitive Economic Region
A Region Of Equitable Economic Development
A Region Fully Integrated Into The Global Economy
However, ASEAN leaders have decided to delay the launch of the ASEAN Economic Community (AEC) for 12 months from Jan 1 to Dec 31, 2015 to prepare the necessary regulations
(ASEAN Summit, Phnom Penh, November 2012)
Source: asean.org
19
Highlight of AEC Blueprint: Single Market and Production Base

The five (5) core elements of ASEAN single market and production base are:
Free Flow of Goods
0% tariff by 2010 except CLMV by 2015 (Cambodia, Laos, Myanmar, Vietnam)
Free Flow of Skilled Labour

Mutual Recognition Agreement (MRA) for 7 professions (Engineering, Nursing , Architecture, Accountancy services, Surveying, Medical and Dental)
Free Flow of Services

Free flow 4 sectors (e-ASEAN, Healthcare, Tourism, Logistics)
A Single Market And Production Base
Free Flow of Capital

Strengthening ASEAN Capital Market Development and Integration
Free Flow of Investment

Promote and sustain the investment within ASEAN (National treatment)
In addition, the single market and production base also include two important components, namely, the priority integration sectors, and food, agriculture and forestry
Source: asean.org, NESDB
20
Free Flow of Service: Increase % Foreign Ownership

A free and open investment regime is key to enhancing ASEANs competitiveness in attracting foreign direct investment (FDI) as well as intra-ASEAN investment. Sustained inflows of new investments and reinvestments will promote and ensure dynamic development of ASEAN economies.
2006
Priority Integration Sectors (PIS) under AEC
2008
2010
2013
2015
Agro based products Air travel Automotive E-ASEAN (ICT) Electronics Fisheries Healthcare Rubber based products Textiles and apparels Tourism Wood based products Logistics
PIS 4 sectors: E-ASEAN (ICT), Healthcare, Tourism, Air travel
49%
51%
70%
Logistics
Others
49%
30%
51%
49% 51%
70%
70%
Investment and service liberalization: Decrease shareholder restriction of ASEAN investor
Source: ASEAN, Thailand Ministry of Commerce, Press Search
21
Agenda:


22
New Trade Lanes

GMS Economic Corridors
1. The land use policy shall focus on promoting the distribution of economic prosperity of the country and throughout all regions based on the difference in capability of each area
The development of international transport and logistics networks under the existing and future development plan and integration of the linkages within the sub-region and between sub-regions, as well as the cooperation under the Master Plan on ASEAN Connectivity Development of Thailands regions shall be pursued to connect with neighboring countries and Southeast Asia. The major development schemes include the EWEC, NSEC, and SEC under the GMS Scheme Development of border economic zones and border towns shall be undertaken to serve as an economic gateway connecting with neighboring countries.
2.
3.
4.
Source: Ministry of Transport
23
New Trade Lanes Southern Economic Corridor (SEC)

The SEC comprises the following sub-corridors and inter-corridor link connecting major towns and cities in the southern part of GMS:
Central Sub-corridor: Bangkok Phnom Penh Ho Chi Minh City Vung Tau Northern Sub-corridor: Bangkok Siem Riep Stung Treng Rathanakini O Yadov Pleiku Quy Nhon Southern Coastal Sub-corridor: Bangkok Trat Koh Kong Kampot Ha Tien Ca Mau City Nam Can
Inter-corridor Link, which links the three SEC sub-corridors with the EastWest Economic Corridor: Sihanoukville Phnom Penh Kratie Stung Treng Dong Kralor (Tra Pang Kriel) Pakse Savannakhet.
Source: Asian Development Bank
24
New Trade Lanes Southern Economic Corridor (SEC)

Social and Economic opportunities of the SEC for Cambodia: 12 Million people of the overall Cambodian population are living along the corridor. The development of the SEC will directly and indirectly benefit the majority of Cambodias population Cambodia has world-renowned tourism spots along the SEC which will benefit from a better infrastructure The SEC offers a means for Cambodia to catch up with the more economically advanced member countries Thailand and Vietnam have a strong manufacturing base along the SEC. Interconnecting the manufacturing hubs in Thailand and Vietnam, will create many business opportunities for Cambodia
The relatively young population of Cambodia indicates that there is a growing labor force and an expanding consumer market that could support SEC development
25
Agenda:


26
Scenarios for further development

Key findings: As shown in the previous section, the most feasible option for Thailand to becoming a center of connectivity in the ASEAN region is by road and rail Thailands export to MY, SG, ID and VN is declining, while the export to KH, MM, LA and PH is growing These smaller trade partners are currently undergoing major economic developments with projects to upgrade their infrastructure and industrial capabilities The entire ASEAN region is rapidly moving into the direction of becoming one big economic region.
27
Scenarios for further development Scenario 1: Enhance border trade by developing regional hubs near country borders
As most neighboring countries are still in the process of improving their infrastructure, Thailand can promote land-border trade by setting up local hubs
Advantages of these local hubs are: o With a fixed network of routes, transportation resources can be planned more efficiently o Opportunities to consolidate cargo for economies of scale and lower transportation costs o Possibility to conduct pre-shipment operations at the hub such as sorting, cleaning and packing cargo. This advantage can be very beneficial for Cambodia as nearly 40% of its export to Thailand are vegetables o With a well developed regional road and rail network, multimodal transportation can be utilized for cost efficiency
28
Scenarios for further development Scenario 2: Directly ship cargo to neighboring countries through inter-connecting road and railways
With the ongoing development of an Inter-Asian highway network and a inter-connecting railway network, more opportunities emerge for Thailand to ship cargo directly to its final destination
Advantages of direct shipments are: o Considerable reduction of lead-time as there is no hub-connection o Less likely to suffer delays as it eliminates relying on hub operations o Less chance of cargo damage or cargo waste as it requires less handling
29
Agenda:


30
The Opportunities for trading between Thailand and Cambodia after AEC
AEC also offers greater prospects for further liberalization of the CLMV (Cambodia, Laos, Myanmar, Vietnam) economies, which will put greater importance on trade and investment. However, it also brings along stronger competition. Logistics business can use opportunities offered by the AEC to increase domestic and foreign investment, and create a network of partnership for integrated services. Logistics business can benefit from AEC as following: Tariff and Non-tariff barrier reduction from CLMV Basic infrastructure and transport development Investment support from government
31
Agenda:


32
The opportunities after Tariff and Non barrier tariff reduction
For trade in goods, CLMV will provide more opportunities for the export market in the next period due to the reduction in tariffs
Free flow of Goods 1. Tariff reduction
Past
ASEAN-6 IL=0% SL,HSL=0-5% CLMV IL=0-5%
2012-2013
2015
2017
Vietnam SL=0-5%
CLMV IL=0%
Laos, Myanmar IL=0-5%
Cambodia SL=0-5%
2. Non Tariff barrier reduction
IL=Inclusion list SL=Sensitive list HSL=Highly sensitive list NTBs eg. Additional fee other than import duties, sanitary regulation, product characteristics requirement
33
ASEAN-5(Exp Philippines) NTB reduction
Philippines) NTB reduction
CLMV NTB reduction

Source: SCB EIC analysis
The inclusion list, sensitive list, and highly sensitive list
List
Inclusion list
Cambodia
94-97% of all products 50 items - Living duck, geese - Cut of duck, geese - Fish - Some flowers eg. Orchid, roses - Some vegetables eg. Tomatoes, Onions, Garlic, cauliflower, broccoli, carrot, beans - Pineapples, orange, watermelon None
Thailand
Almost 99% of all products 7 items - Coffee - Copra - Flowers - Potatoes
Sensitive list
Highly sensitive list
None
34
The opportunities after Tariff and Non barrier tariff reduction
% Export from Thailand to Cambodia and expected further tariff reduction
Products which have to reduce tariff by 4-6% are electric motors, sugar, petroleum oils, and automobiles So, the export value from Thailand to Cambodia of theses products is expected to increase in near future.
Source: SCB EIC analysis 35
Exporters/importers study more custom rules for each country Logistic company prepares special trucks for some products such as petroleum and automobiles
Agenda:


36
The opportunities for improving custom clearance services

Problem
Thailand and Cambodia have relatively high cost, substantial paperwork and time-consuming process for import and export.
Solution
Government
Improve the customs system, such as develop the National Single Window (No paper work) Reduce paperwork and time System integration
Private sector
37
Agenda:


38
The opportunities cross border trading between Thailand and Cambodia

Almost 80% of trading value between Thailand and countries next to Thailand (Cambodia, Laos, Myanmar, and Malaysia) is in a form of cross border trading. So, cross border trading is significant for Thailand and Cambodia particularly when AEC becomes effective in 2005. Thailand and Cambodia government aim to increase trading value 30% during 2012 and 2015. (Growth 27% in 2011)
Trading btw Thailand and countries next to Thailand
Cross border trading btw Thailand and countries next to Thailand
1400 1200
1,147 1,007
1000 Billions Baht
833
23.3%
21.6%
22.7%
Others Cross border trade
800
600 400
17.6% 12.3% 7.8% 62.3%
Malaysia
Cambodia Laos
76.7%
200 0 2009
77.3%
78.4%
Myanmar
2010
2011
Source: DFT, Ministry of Commerce

39
Logistics facilities and infrastructure

Road
On June, 14 2012 Thailand and Cambodia open the bridge connecting between Arranyaprathet and Poi pet. This occurs under Cross Border Transport Agreement (CBTA). Both Thailand and Cambodia agree for giving quota of 40 trucks for each countries. This quota is going to increase in near future. The routes under CBTA is divided into as folllowing: 1) Bangkok-Arranyaprathet-PoipetBavet 2) Bangkok-Leam ChabungArranyaprathet-Poipet-Bavet
40

Route 2 (Leam Chabung-Poipet) Products in provinces next to Thailand can be transported to Leam Chabang which is closer than Sihanoukville port.
From To Leam Chabung Banteay Meanchey Oddar Meanchey Battambang Siem Reap
Province Banteay Meanchey Oddar Meanchey Battambang
To Sihanoukville port (km) 618 674 554 541

Product Rice 0.5mt/y, Soy bean 7000 t/y, Cassava 0.8t/y Soybean 1,200 t/y, Cassava 15,000 t/y Rice 0.7 mt/y Cassava 1.3 mt/y
To Leam Chabang(km) 304 430 382 408

Export to THA, VN THA, VN Malaysia, EU, USA. THA, VN Singapore, VN THA, VN
Sihanoukville port
Siem Reap
Crocodile skin 22,000 heads in 2008 Rice 0.05 mt/y, Cassava 8,000 t/y
Source: Trade promotion department, Cambodia
41

When the construction of Dawei deep sea port has finished, Thais and Cambodians can exploit DaweiBangkok-Phnom Penh route for transport goods to Dawei port which is used to export to EU and middle east. The distance travelled by vessel is shorter than going through Singapore.
Export to middle east, Europe Dawei port
Cambodia major export products % by value 2011 Others, Rice, 2% 4% Timber rubber fish, 6%
Distance from Phnom Penh to Dawei 1,073 km
Garment, 88%
Garment and footwear industries Mainly located in Phnom Penh. In 2011, export to US. 1.84 billions $ (43%), export to EU 1.3 billions $ (30%), export to Japan and Canada 0.98 billions $ (23%)
Source: Ministry of commerce, Cambodia
Others, 27% Garment industries can use Dawei port to export to EU.
42
US., 43%
EU, 30%
Logistics facilities and infrastructure

Rail
Thailand and Cambodia have a railway building project, which connects BangkokArranyaprathet-Poi Pet- Sri Sophon- BatambangPhnom Penh. Thai Ministry of Transport is considering between using Ban Klong Luek or Ban Nhong Eian as a connection point with Poi Pet. The railway from Bangkok to Phnom Penh is expected to be used within 2013. The next step is to make an agreement with Vietnam to construct railway to Ho Chi Min city.
Available in 2013
Next phase
43
Source: EXIM bank
More convenience road routes and railways leads to An increase of cross border trading An increase of tourism (Cambodia has a lot of beautiful place eg, Tonle lake (the largest lake in ASEAN) and killing fields in and it will be more interesting if it can connect to Ho Chi Min) An increase of logistics and transportation business An increase of passenger transportation service An increase of truck and car manufacturers
44
Agenda:


45
The needs of logistics practices

Logistics cost to GDP of Thailand is declining. However, it still high comparing Singapore and Malaysia Domestically, Thailand still relies heavily on road transport accounting for 83%. It should change to rail system and maritime transport which have lower energy cost by 3.3 and 5 times, respectively Also, it needs logistics practices to improve efficiency of logistics operations
Logistic cost factors

Transport
16% 6% 8% 32%
Warehousing
38%
Order processing Administration Inventory holding
Source: SCB EIC analysis 46
Logistics business model- Light or heavy asset?

Light asset business = a logistics service provider making little investment in assets (no fleet for transportation or warehouse) Heavy asset business = a logistics service provider making high investment in assets Thai and Cambodian logistic operators with small capital should apply light asset model to generate higher returns without having to invest in many assets
Light asset (C.H.Robinson) Logistics Operator Company structure Main service Extra and specialized service Revenue and asset Revenue/Asset ratio Point/Investment ratio One of the worlds largest third party logistics providers with over 53,000 transportation providers under contract globally Over 53,000 customers, 235 offices and 8,350 employees worldwide Global freight and integrated logistics services, customs brokerage service, warehouse, logistics consulting Product sourcing Money transfer and payment services Largest network of motor carrier capacity in North America
Heavy asset (UPS) The world largest package delivery company and a global leader in supply chain solutions Service to more than 200 countries with 2,879 worldwide operating facilities, 8.8 million customers, and 398,300 employees 101,121 fleets and 223 UPS airplanes Worldwide package delivery service and express delivery service Integrated freight and logistics services, freight forwarder, full truckload, less-than-truckload custom brokerage service, and warehouse Financial service for importer and exporter Special service in logistics such as supply chain design and planning, technical check and repair, reverse logistics
Total revenue in 2011=USD 10.3 billion Total asset in 2011-USD 2.1 billion
4.83 0.55
Total revenue in 2011=USD 53.1 billion Total asset in 2011-USD 34.7 billion
1.53 0.22
47
Agenda:


48
Logistics practices
Hub and Spoke
Carrier A Hub Cross-docking

Full-trailer
Carrier E Carrier B
Full-trailer
Backhauling Management
Multi modal transport
Carrier C Continuous move (c-move)
49
Logistics practices - Cross-docking
Receiving, picking, sorting and issuing with no inventory added

X
Chiengmai Pisanulok
X
Udorn
X X
Korat Pathumthani
Leam Chabang
Surathani Phuket
X Potential are of cross-docking X
Songkla
50
Logistics practices Hub and Spoke and Window delivery

Upper North Upper Northeast
Lower North
Chiangmai Hub
Lower Northeast
Nonsomboon Hub
West
DC. East
Suraththani Hub
Metro
Samkok Ladlumkaew Bangbuatong Pakgred
DC Rangsit TL Klong Lhang Patumtani Thunyaburi
Hadyai Hub
Bangkaen Lumlugka Nontburi Donmuang Ramintra Bangkapi BanggrayJatujak Rat. Bungkum Sapansung Minburi Nongjok Prachachun,Bangsu Ladprow Ramkumhang Puttamonton Huykhang Ladkrabang Klongton Pinglowna sai 2 Nonkam nakornchaisri Phayati Klongtoey Bang Pomprab Pravest Bangple Petkasame Boromrat koknoi Mahaprutaram chachonnanee Bang Prakanong Bangna kokyai Satorn Jomtong Bangkolam Srinakarin Yanawa Bangsaotong Suksawas Samutprakarn Bangkuntian Thonburi Prapadang Ratburana Thinoi
South
51
Logistics practices Continuous move
Minimize Deadhead & Combine transport
Before
Saraburi
C-Move
Saraburi
Samparn
Lard Krabang
Samparn
Lard Krabang
Full load
Empty load
Dead head
52
Logistics practices Multi modal transportation

Truck Mode
Train Mode Waterway Mode
Bagged Cement Building Material Product
Advantages Reduce road congestion Reduces carbon emissions Increased weight capacity Disadvantages Possible journey time increase Double handling cost
Poipet
Phnom Penh
Gypsum ore Bagged Cement
Kampot
Building Material Product Gypsum board
Limitations Rail infrastructure not always conductive due to low bridges and different width of rail among countries Inland waterways susceptible to tidal influences
53
Bagged Cement
OMP Port Kam Pong Som Port
Ho Chi Minh City
Building Material Product
Logistics practices Multi modal transportation (Sea-Air, Air-Truck)
Phitsanulok
International airport Port Road

54
35% of the total value goods moved is by air freight. 60% of air freight is carried on passenger aircraft. Sea-Air = Vessel + Aircraft Air-Truck= Aircraft + Truck Since air mode needs road transportation on either side (Origin or Destination), airport having a lot of road going through will be advantageous. Thai government is considering to upgrade Phitsanulok airport to international airport since it is a center of many road access Combining shipment to one airport and then distributed cross countries by trucks is going to increase when road is improved, and custom procedure is simplified.
Logistics practices Backhauling management
Truck Mode
Poipet
Waste Paper
Phnom Penh
Fertilizer
Benefits Improve truck utilization Reduce cost Reduce carbon emissions Reduce fuel consumption
55
OMP Port Kam Pong Som Port
Logistics practices Example of logistic practices in Cambodia

Example of cross-docking and backhaul
Product: Bag Cement , Roof tiles , Sanitary Ware Cambodia Poipet Siemreap Destination Crossdocking Product: Bag Cement , Roof tiles , Sanitary Ware Phnom penh Destination
Warehouse
Backhaul Management From Siemreap-Poipet
Example of cross-docking and contd move

Thailand Cambodia Poipet Warehouse
Cross docking
Port
Continuous move Roof tiles to Siemreap 120 Km.
Port
56
Agenda:


57
Logistics practices IT in Logistics
E-Ordering
SAP : SD, MM, FI, WMS
Digital Map
Logistics Network Database
TMS
Order Staging System
External Customer System
GPS/ RFID
Objective
Document Management
IT Platform
System E-Ordering SAP Digital Map Order receiving via internet
Order checking : Credit , Product availability Plot destination
Order Staging System (OSS)

Transportation Management System (TMS) Logistics Network Database (LND) GPS / RFID Document Management System (DMS)
Split order
Optimize load & Tender Assign registered truck / driver Status Tracking Tracking return document 58
Logistics practices IT in Logistics: Basic needs for IT Supports
Complicated logistics network Various type and size of trucks Different customers needs The restriction related to transportation (eg. Truck ban time and zone) Cost efficiency
Upper North Low er Nort h Lower Northeast West
Chiangmai Hub
Upper Northeast
D C.
Nonsomboon Hub
East
Suraththani Hub
Met ro
Samkok Ladlumkaew Bangbuatong Pakgred
Patumtani Thinoi
DC Rangsit TL Klong Lhang
Thunyaburi
Bangkaen Lumlugka Nontburi Donmuang Ramintra Bangkapi BanggrayJatujak Rat. Bungkum Sapansung Minburi Nongjok Prachachun,Bangsu Ladprow Ramkumhang Puttamonton Huykhang Ladkrabang Klongton Pinglowna sai 2 Nonkam nakornchaisri Phayati Klongtoey Bang Pomprab Pravest Bangple Petkasame Boromrat koknoi chachonnanee Bang Mahaprutaram Prakanong Bangna kokyai Satorn Jomtong Bangkolam Srinakarin Yanawa Suksawas Samutprakarn Bangsaotong Bangkuntian Thonburi Prapadang Ratburana
Hadyai Hub
South
59
Logistics practices IT in Logistics: Digital map
60
Logistics practices IT in Logistics: Transportation Management System

TMS is Transportation Management System designed for Third Party Logistics Providers to execute and manage the full life cycle of the transportation process, from order management through load processing, customer service and financial settlement. Web-based
System Function Automate routing by optimization function Job assignment based on - Customers requested date - Transport condition & restriction - Product condition (weight & volume) - Truck availabilities by equipment type - Origin & Destination condition Web-based status tracking Digital map printing via internet (plot by customer) Truck and Driver controlling by Logistics Network Database (LND) Document controlling by Document Return System Automate Billing
61
Logistics practices IT in Logistics: Transportation Management System function
Customer, MFG, DSSC: - Create Sales Orders - Mark ship-to location
Logistics Planners: - Order Splitting - Load Build (Manual or Auto) - Load Tender
Carriers: - Tender Response (Accepted or Rejected) - Print Shipment Doc. - Assign truck to pickup goods
Transportation Management System (TMS)
CTL Accounting: - Create AP / AR
Transportation Document return

62
Plants: - Good Issue
Logistics practices IT in Logistics: Transportation Management System function

Route optimization by Transportation Management System (TMS)
Shipment Parameters Shipper / Consignee Facilities
Carriers
Delivery Window Pick-up Window Classification Dimensions Weight Count
Restrictions Hubs/Terminals Hours of Operation Performance Metrics Equipment Availability
Optimization
Appointments Dock Restrictions Hours of Operation Carrier Restrictions Loading Unloading Restrictions
Carrier Tariffs/Rates
Optimized Loads
End Results
Service Level Conditions Options Lanes Rates
Each Shipment is Dispatched with the Best Service at the Lower Cost
63
Logistics practices IT in Logistics: Warehouse Management System
Warehouse Activities
Receive Stock Assign Location
Keep Goods
Count Stock
Report Stock Balance
Replenishment
Picking List
Monitor Stock Level
Issue Picking List
Pick goods from picking list
Prepare goods to be loaded on truck
Pack Goods
Issue Stock
64
Logistics practices IT in Logistics: Warehouse Management System application

Warehouse Activities
Receiving
Put-away
Packing
Weighting
3 cm.
H5604F
2 cm.
4B090125-00001
Before Loading
After Loading
Truck Scale
65
Logistics practices IT in Logistics: Import & Export paperless with e-Custom
/SCT&CTL
Import & Export web
1.) Send INVOICE CSV file to supplier
INVOICE CSV file
SCTL
3. Create shipment list 4. Approve & Digital Sign
Web Service Client(1)

2. Upload Invoice CSV file to system 5. Data sent to custom department
EZYPLUS Ex/Im
G/W TIFFA
6.) Receive confirmation from custom department
(Web Tracking)
Web Service
EzyPlus
Web Service Client (2)
RTC
7.) data and documentaion sent back to web
66
Logistics practices IT in Logistics: GPS system

Hardware Bulk Cement Truck
Fixed GPS Module with sensor Signal loading/unloading status Control driving behavior
Standard feature
Software
Truck
Lighter
Lighter
Fixed GPS Module with water level sensor and solar cell Signal loaded/empty lighter Use solar cell for power supply while operate anchorage point
Feature Real time Truck / Lighter status tracking Interface with TMS system : on/off duty , loaded/empty
Additional feature
Feature Estimated time arrival Alert via e-mail / SMS Wrong destination Out of route Delay delivery Over speed limit Enter to restricted area Report Utilization Driver performance
Mobile GPS
Mobile GPS for general truck Flexible to relocate among truck
67
Logistics practices IT in Logistics: GPS Application : Track & Trace
Display routing
Display current location Display remaining Show current location distance
68
Logistics practices IT in Logistics: GPS Application : Proactive Monitoring

Over Speed Limit
Over speed Location
69

Enter Restricted Area
Restricted Area
70

Unloading outside assigned destination
Alert point
Destination
71
Logistics practices IT in Logistics: GPS Application : Backhaul management
Loaded small barge
Empty small barge

No. of Lighter and status
Vessel
72
Agenda:


73
Logistics practices Green logistics

The Wheel of Green Logistics
Optimize storage space Renewable & Efficient Energy usage Construct Green Warehouse
Optimize good movement and handling
Green Warehousing
Green Logistics
Pollution Reduce cost prevention Fast Emission deliveries control
Reduce inventory Reverse Logistics

Reduce Fossil fuel Consumption
Multimodal operation
Appropriate mode selection

Maximize utilization
Green Transportation Reduce movement & optimize routes

74
Reduction in empty running
Fleet Management

Alternatives fuels (Natural gas vehicle, NGV)
Source: (Emmett&Sood, 2010)
Larger vehicles
Vehicle monitoring system Aerodynamic vehicles Drivers training
Logistics practices Green logistics
Natural gas vehicles (NGV)
Aerodynamic vehicles
75
Large vehicles
(Allowing in Australia, New Zealand)
Logistics practices Green logistics: A case study of unloading clinker and coal Dust Control
1 Install Bag Filter for collecting dust Investment Electricity cost Power 2 10 Million Baht 300,000 Baht/month 3,500 CFM
Install dust measurement
Schedule port cleaning time Entrance and road cleaning 08.00-09.00 a.m. Vacuum truck 10.00-11.00 a.m. Water spraying 13.00-14.00 p.m. Vacuum truck 15.00-16.00 p.m. Entrance and road cleaning 16.00-17.00 p.m. Cleaning wheel-cleaning pool 16.00-17.00 p.m
76
Logistics practices Green logistics: A case study of unloading clinker and coal Dust Control
4 Set up procedure Clinker 1) Trucks needs to totally get inside before unloading, Then close a curtain 2) Barge needs to be covered by canvas during loading Coal 1) Cover barge with canvas all time during unloading 2) Spray water during unloading
3) Specify the area of Backhoe to prevent

splatter
3) Open bag filter during loading and unloading
77
Logistics practices Green logistics: A case study of unloading clinker and coal Water Treatment
Water out pipe
Water treatment system Pond (1) : filter oil Pond (2) : filter resolvent chemicals Pond (3): Temporary leave
Clarifier
After cleaning, water will be moved to natural well.
78
Logistics practices Safety management

Factors influence transportation safety Engineering Automotive engineering (Truck) Roadway and traffic engineering Road user Driver performance Driver behavior
Truck
Truck
Traffic management Driver
Physical inspection /Tire and equipment Install GPS for monitoring and limiting driving speed
Driver
Wear uniform and PPE Needs to have training and orientation before driving Drug Test and Alcohol Test Tool Box (Monthly training)
79

Traffic management
o Specify the safety parking area o Limit driving speed o Set up traffic sign o Install flashing light at the entrance
80

Crisis Management seminar
Simulate the emergency situations - Fire - Riot - The contamination of cargoes in sea or river
81
Agenda:


82
Logistics practices Corporate social responsibility

Improving sport field for local people Build a library
Organizing the sport activities in the evening and health check activities in holiday
83
Agenda:


84
The collaboration between Thailand and Cambodia towards to operational excellence

Human capital
Network and knowledge sharing
Logistics operators sharing network and knowledge Industrial operator sharing their transportation demand and routes Setting up international labor center to increase drivers and unloading staff.
Regulation
The collaboration towards Operational excellence Infrastructure
Foster linkage of rail and road Study potential area of international hub Prepare rail and port facilities to avoid congestion Sharing information of port shut down and future renovation plan
85
Harmonizing regulations and setting the same criteria, eg. custom, loading weight, safety, driving speed.
System integration
Introducing IT in logistics by government support Applying EDI (Electronic Data Interchange)
Agenda:


86
Export Logistics Model Award (ELMA)
From Thailand Logistics Model Award
2011
to ELMA
2007
2007-2010
National Standard Beginning of the award
International Standard
2011 ELMA Award Objectives
To upgrade the award program to meet international standard To help LSPs and Exporters increase logistic efficiency through comprehensive health-check program To enhance competitiveness of LSPs and Exporters in the international arena.
Comprehensive Award Program
87
Export Logistics Model Award (ELMA) - Criteria
Following International Logistic Standard

ELMA
Malcolm Baldridge
Cross-Committee Evaluation
Committees for Exporters
SCOR Model
Committees for Academic Panel LSPs Academic Panel
LSP Panel
User Panel
88
Export Logistics Model Award (ELMA) - Award Categories

1 2
Small-Medium (5 awards)
Large (5 awards) Certificates for those who are scored over 80%, Awards for winners
LSPs (3 awards)
Exporters (2 awards)
LSPs (3 awards)
Exporters (2 awards)
If you are looking for partners, looking for ELMA.

89
Export Logistics Model Award (ELMA) - Benefits to Award Participants
Overall Health Check
Benchmarking companys operation with INTERNATIONAL Standard Making effort to compete with yourself and striving for improvement Defining the opportunity to increase efficiency in logistic operation
Valuable Marketing tool
For Exporters ELMA will increase the presence of the company into the international arena, while heightening the level of competitiveness amongst others. ELMA will help exporters gain confidence from importers/buyers For LSPs ELMA will guarantee the quality of your operation while opening the gateway to international logistic network
Brand Ambassador
Award recipients will become the brand ambassador of ELMA Your company will be presented and highlighted with DEP logistics activities Improving corporate image and overall PR gain
90
THANK YOU!
Q&A
91

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Thai-Cambodia Trade and Logistics

Cooperation for AEC Jan 25, 2013

1.2 Competitive landscape ASEAN logistics

2. Opportunities for trading between Thailand and Cambodia

1.2 Competitive landscape ASEAN logistics

2. Opportunities for trading between Thailand and Cambodia

Thailands Export To Entire ASEAN Region

Thailand Export - Country Ranking

Source: Bank of Thailand

Thailands Export To ASEAN Trade Partners

Source: Bank of Thailand

Thailands Export To ASEAN Trade Partners

Thailands Export By Product Category

Value of Export (Millions of US $) 30,276.50 26,451.99 26,423.26

% 16.7% 14.6% 14.5%

Machinery & Equipment

Source: Bank of Thailand

Thailands Export To Cambodia Through Cross border

Sisaket Surin Sakaeo Chanthaburi Trat

3,000 2,000 1,000 0 500 400 300 200 100 0

200 150 100 50 0

Overview Thailands Export To Cambodia through Cross border

Thailand and Cambodia Trade Statistics 2008 2012

Other livestock products

Source: Bank of Thailand, Dept. of Foreign Trade

Thailands Import From Cambodia Through Cross border

Sisaket Surin Sakaeo Chanthaburi Trat

Overview Thailands Import from Cambodia through Cross border

Thailand and Cambodia Trade Statistics 2008 2012

1.2 Competitive landscape ASEAN logistics

2. Opportunities for trading between Thailand and Cambodia

Competitive landscape ASEAN logistics - Cambodia

Competitive landscape ASEAN logistics - Singapore

Source: Singapore Department of Statistics

Competitive landscape ASEAN logistics - Thailand

Source: Worldshipping.org, BOI

Competitive landscape ASEAN logistics - Cambodia

Source: Port Autonome De SihanoukVille (PAS), Xin Hua Publishing

1.2 Competitive landscape ASEAN logistics

2. Opportunities for trading between Thailand and Cambodia

Development of ASEAN Economic Organization

The Foundation of AEC

ASEAN Framework Agreement on Services (AFAS) Started in 1995

Source: thai-aec.com, thailandaec.com, gxasean.com, tradelogistics.go.th

A Single Market And Production Base

A Highly Competitive Economic Region

A Region Of Equitable Economic Development

A Region Fully Integrated Into The Global Economy

Highlight of AEC Blueprint: Single Market and Production Base

Free Flow of Goods

0% tariff by 2010 except CLMV by 2015 (Cambodia, Laos, Myanmar, Vietnam)

Free Flow of Skilled Labour

Free Flow of Services

A Single Market And Production Base

Free Flow of Capital

Free Flow of Investment

Free Flow of Service: Increase % Foreign Ownership

PIS 4 sectors: E-ASEAN (ICT), Healthcare, Tourism, Air travel

Investment and service liberalization: Decrease shareholder restriction of ASEAN investor

Source: ASEAN, Thailand Ministry of Commerce, Press Search

1.2 Competitive landscape ASEAN logistics

2. Opportunities for trading between Thailand and Cambodia

New Trade Lanes