Presentation on theme: "APEC Transport Ministerial April 27, 2009 Manila, Philippines Choke Points in the Supply Chain Steven R. Okun Vice-President, Public Affairs UPS Asia Pacific."— Presentation transcript:
APEC Transport Ministerial April 27, 2009 Manila, Philippines Choke Points in the Supply Chain Steven R. Okun Vice-President, Public Affairs UPS Asia Pacific
3 Relevance of Supply Chains to Business Globalisation/Expansion Trade Irreversible. Higher Expectations and Demands by Customers. Inefficient Supply Chains result in poor customer service and weaker financial results Companies Compete with Their Supply Chains McKinsey estimates 85% of world’s GDP will be sold across int’l borders within 20 years
4 Contributing Factors that Lead to Choke Points in Supply Chain n Under-Developed Infrastructure n Regulatory Constraints -- Infrastructure = Hardware --Regulatory = Software
5 Overall Ranking for Infrastructure Quality of Selected APEC Economies Road, inland-waterways, airports, and rail need to be upgraded. Note: Vertical line indicates the mean score across the 134 countries. Number next to bar indicates the ranking among 134 countries. Infrastructure investment includes telephone, electricity supply, road, railroad, port and air transport Source: Global Competitiveness Index 2008-2009
6 Throughout China, even with its $1 billion in investment, airports are straining from lack of infrastructure, especially with regard to its air traffic control system. Vietnam is working to expand on deepwater ports but is not capable yet to meet demand. Singapore-Malaysia cross-border capacity does not meet demand. Inadequate Infrastructure (“Hardware”)
7 Regulatory Constraints (“Software”) Express Delivery Not Clearly Defined as Distinct Sector –Postal monopoly scope too broad or outdated –The lack of recognition of logistics networks (express vs. postal) –Cumbersome and/or excessive registration or licensing requirements and fees Market access restrictions –Regulatory restrictions on market access and foreign ownership for logistics –Narrowing scope on types of business structures that foreign logistics providers can operate in –Restricting foreign logistics providers to international gateways only, thereby forcing them to work through local partners –Lack of air rights & restrictive or narrow interpretation of air rights
8 Regulatory Constraints – cont. Security Initiatives Inadequate use of Risk Management Systems Slow progress in mutual recognition between supply chain security initiatives and requirements in Asia Pacific and other regions including the European Union (EU) and the United States (US) even with the WCO Framework of Standards to Secure and Facilitate Global Trade (FoS) Trade Facilitation Need for adoption of international best practices and guidelines – i.e. Revised Kyoto Convention & WCO Immediate Release Guidelines (IRG) Need for ‘de minimis’ in all countries in the region for ease of clearance of low value low risk shipments Lack of modernization of customs – e.g. adoption of EDI & electronic risk-profiling, simplification and harmonization of procedures and documentation
9 Regulatory Constraints – cont. Trade Facilitation – cont. Inability to settle customs duties/taxes by logistics operators by pre-arranged facilitative payment modes e.g. Electronic Funds Transfer (EFT) or bank guarantees. Establishment of “Single Window” programs in many countries still slow and disjointed. The Single Window concept requires that Customs administrations effectively link with other government agencies regulating the flow of goods so that there will be a single point for submission and processing of data, and a single decision-making point for release and clearance within each country. Implementation of Customs regulations not harmonized within many countries – e.g. different provinces/districts/local customs offices have subjective interpretation of laws and processes of implementation.
10 “Logistics” Is Cross-Ministerial -- Logistics does not fall within the realm of one Ministry, but is rather cross-Ministerial. Transport, Finance, Trade/Industry, Postal (usually Communications) all have jurisdiction over logistics providers. --If there is an open aviation agreement but Customs does not recognize the rights within the agreement, the agreement is irrelevant. -- The Roadmap for the Integration of Logistics Services as adopted by ASEAN (with Vietnam as the country coordinator) follows this approach.
11 Economies Need to Recognize “Software” is just as Important as “Hardware” Economies Should Include Regulatory Reform as Part of Infrastructure Stimulus Packages Economies Need to View Logistics From a Holistic Perspective (ASEAN Model) Address laws, rules and regulations on: – Market Access: Foreign Equity Ownership –Trade Facilitation: Customs Clearance –Aviation Regimes: Simplified Filing Processes Industry has much to offer: Need formal consultations on policy/legislation formulation to ensure “win-win” environment Recommendations & Opportunities