The Cost of Being Landlocked

Jean-François Arvis

Description

'The Cost of Being Landlocked' proposes a new analytical framework to interpret and model the constraints faced by logistics chains on international trade corridors. The plight of landlocked developing countries (LLDCs) has naturally received special attention for decades, leading to a specific set of development priorities based upon the concept of dependence on the transit state. Therefore, the standard approach used to tackle the cost of being landlocked has been predominantly aimed at developing regional transport infrastructure and ensuring freedom of transit through regional conventions. But without sufficient attention given to the performance of logistics service delivery to traders, the standard approach is unable to address key bottleneck concerns and the factors that contribute to the cost of being landlocked. Consequently, the impact of massive investment on trade corridors could not materialize to its full extent.
Based on extensive data collection in several regions of the world, this book argues that although landlocked developing countries do face high logistics costs, these costs are not a result of poor road infrastructure, since transport prices largely depend on trucking market structure and implementation of transit processes. This book suggests that high logistics costs in LLDCs are a result of low logistics reliability and predictability, which stem from rent-seeking and governance issues. 'The Cost of Being Landlocked' will serve as a useful guide for policy makers, supervisory authorities, and development agencies.

Sujets

• Rail
• Urban rail transit
• Road
• Routes
• Mode of transport
• Transport corridor
• Transport

Informations

• Publié par: world-bank-publications
• Publié le: 07 juillet 2010
• Nombre de lectures: 19
• EAN13: 9780821384091
• Langue: English
• Poids de l'ouvrage: 1 Mo

Extrait

D I R E C T I O N SI ND E V E L O P M E N T Trade

The Cost of Being Landlocked Logistics Costs and Supply Chain Reliability

JeanFrançois Arvis Gaël Raballand JeanFrançois Marteau

The Cost of Being Landlocked

The Cost of Being Landlocked Logistics Costs and Supply Chain Reliability

JeanFrançois Arvis, Gaël Raballand, and JeanFrançois Marteau

© 2010 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW Washington DC 20433 Telephone: 2024731000 Internet: www.worldbank.org

All rights reserved

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ISBN13: 9780821384084 eISBN: 9780821384091 DOI: 10.1596/9780821384084

Library of Congress CataloginginPublication Data

Arvis, JeanFrançois, 1960 The cost of being landlocked : logistics costs and supply chain reliability / JeanFrançois Arvis, Gaël Raballand, JeanFrançois Marteau. p. cm. Includes bibliographical references and index. ISBN 9780821384084 — ISBN 9780821384091 (electronic) 1. Business logistics—Landlocked states. 2. Transportation—Landlocked states—Costs. I. Raballand, Gaël.II. Marteau, JeanFrançois.III. Title. HD38.5.A78 2010 658.7—dc22 2010024890

Cover design by Quantum Think Cover photo by Gaël Raballand

Contents

Preface Foreword Acknowledgments Abbreviations

Chapter 1Introduction and Overview Notes

Chapter 2Revisiting the Conventional Wisdom on Transportation Costs: Infrastructure Is Only One Part of the Story Operating Costs Trucking Market Regulation and Structure Comparing Effects of Various Transport Cost Factors on a Given Corridor Notes

xi xiii xv xvii

1 11

15 16 19

21 22

Chapter 3The Need for a Revised Conceptual Framework to Assess the Cost of Being Landlocked25 Shortcomings of the Current Macro Approach26

v

vi Contents

Transit Systems and the Supply Chain Conceptual Framework27 The Real World:An Inefficient Chain of Multiple Clearances30 Quantitative Model of a Transit Supply Chain35 An Empirical Application to the Northern Corridor in Eastern Africa during a Project’s Preparation37 Notes40

Chapter 4Delays and Unpredictability Matter More than Transport Costs for Development41 Magnitude and Sources of Delays43 The Observed Unpredictability of Lead Time45 Export Chains47 The Impact of Low Reliability of Logistics on Firm Competitiveness50 The Tradeoff between Cost and Reliability51 Backward Links:The Logistics of Inputs52 Backward Links: Sharing Services and Infrastructure with Imports Impacts the Reliability of Export Chains53 The Impact of Infrastructure on Service Reliability: An Alternative Wayof Considering Infrastructure Impact55 Notes56

Chapter 5The Impact of Market Structure and Business Practices on the Cost of Being Landlocked59 Small Is Not Beautiful:The Curse of Small Shipments and Exports60 Transit’s Extreme Vulnerability to RentSeeking Activities62 Inefficient Logistics Chains beyond RentSeeking Activities68 Notes69

Chapter 6Policy Recommendations71 Why a Supply Chain Framework May Change the Way to Address the Cost of Being Landlocked71

Policy Recommendations Notes

Appendix 1Sequencing of Transit Logistics

Appendix 2Details on the Supply Chain Model

Contents vii

73 79

81

83

Appendix 3Revealed Modal Choices and the Value of Time89

References

Index Boxes 1.1 TheAlmaty Programme of Action (2003) 1.2 AreExports from Landlocked Countries Constrained Like Imports? 2.1 Breakdownof Vehicle Operating Costs 3.1 Shortcomingsof the Current Macroestimation of Transportation Costs 3.2 ThePurpose of Transit Systems: Delayed Customs Clearance 3.3 SupplyChain Fragmentation in Inefficient Transit Regimes: Some Key Elements 4.1 Assessingthe Value of Time 5.1 Whatabout Rents in Exports Logistics? 6.1 Proposalsfor Reengineering Transit Systems and an Application to the Douala Corridor Pilot Scheme Serving Chad and the Central African Republic Figures 1.1 TheVicious Circle of Logistics for Landlocked Countries 1.2 ALogical Framework with the Service Provider as the Core of the System 2.1 Comparisonof Transport Prices in Different Parts of the World, 2006–07 2.2 AverageTruck Mileage for Selected Countries 2.3 TruckingPrice and Trucking Market Structure 3.1 TheGeneric Series of Transit Operation for Imports

91

95

3

8 17

26

29

32 42 68

75

6

7

17 18 21 28

viii Contents

3.2 OperationalResponsibilities and Costs33 3.3 LognormalDistribution of Lead Time37 3.4 TheNorthern Corridor38 3.5 ExpectedImpact of the East Africa Project on Transport Predictability40 4.1 Distributionof Dwell Time for Transit Containers in DaresSalaam Port, 200846 5.1 TheVulnerability of the Supply Chain to Rent Seeking Activities63 3.A1 RailTransit Time versus Hedging Inventory Level Estimated from Road Premium90

Tables 1.1 TheNumber of Multilateral Legal Instruments with Relevance for Transit Trade in Africa5 1.2 Regionswith Poorly Performing Landlocked Countries Based on LPI5 1.3 PotentialImpact of Trade Facilitation Measures on Various Costs10 2.1 Comparisonof Trucking Operating Costs in Western Europe, Eastern Europe, and Africa16 2.2 TheImpact of Trucking Liberalization in Various Countries20 2.3 ImpactEstimate of Various Measures in a Competitive Environment22 2.4 ImpactEstimate of Various Measures in a Regulated Environment22 3.1 Comparisonbetween Landlocked and Coastal Countries in SubSaharan Africa and South Asia31 3.2 TheThree Components of Total Logistics Costs33 3.3 Contributionof Selected Supply Chain Links to Cost Factors34 3.4 Notationsand Definitions35 3.5 InventoryLevels and Transport Time, Standard Deviation37 3.6 Baselineand Expected Outcomes of the Project on the Mombasa–Kigali Corridor39 3.7 SimulatedInventory Gains Depending on the Sensitivity of Shippers to Stockout40

Contents ix

4.1 VariousTransport Times in Mombasa Port and on Transit between Kenya and Uganda, 200546 4.2 LandlockedCountry Corridors: Distribution of Transport Time among the Different Stages of Transport48 4.3 Comparisonbetween the Four Possible Trading Routes for Malawi52 5.1 Comparisonof Transport Costs from Central Asia to Antwerp, Belgium, and Rotterdam, the Netherlands, for Large and Small Exporters61 5.2 Simulationof Transit Overheads from Lomé, Togo, to Ouagadougou, Burkina Faso66 6.1 Importanceof Service Quality to Supply Chain Competitiveness79 1.A1 Sequencingof Transit Logistics82