Slide1: Responding to global logistics trends with a National Logistics Strategy Bangkok, January 2007 Paul Amos, Transport

Advisor World Bank, Washington DC Contents: Contents What is logistics? What are the global trends? Why have a National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand-key challenges. Contents: Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand-key challenges. Slide4: Support services Equip. hire/leasing Equip. maintenance Sanitary services Security services Trade insurance & finance Core logistics services Line-haul transport Pickup/distribution Storage Loading/unloading Stuffing/stripping Load consolidation Value adding services Packaging Quality control Product testing/repair Assembly Installation Information Inventory control Freight logistics involves many different physical and economic activities I. What is logistics? Not surprisingly, logistics comprise a significant proportion of GDP: Not surprisingly, logistics comprise a significant proportion of GDP Source: Transport & Logistics in the Internet Age: International Summit 2001 I. What is logistics? ..and a substantial proportion of product prices : ..and a substantial proportion of product prices Food Chemical Metal Paper Textile Electrical Automotive AVERAGE 0% 5% 10% 15% 20% 25% 30% 35% Logistics Costs in Relation to Annual Turnover Source: European Logistics Association I. What is logistics Direct transport costs are around 25% of logistics costs: Direct transport costs are around 25% of logistics costs TRANSPORT Storage 20% Storage 25% 11% Management & Control 18% Administration 10% Packaging 16% Inventory Financing Source: OECD Average: Bundesvereinigung Logistik (Germany) I. What is logistics? Contents: Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand - key challenges. The worlds logistics industry is experiencing great change: The worlds logistics industry is experiencing great change II. What are the global trends? Technology Expectations Markets All modes of transport are investing to obtain more efficient, usually larger vessels/vehicles and improved traffic dispatching, monitoring and control capability Global competition in product and service markets is driving higher standards and lower costs in logistics supplier markets Rapid expansion of international trade in most regions, and particularly in Asia: many supply chains are now truly global Competition Despite some industry concentration (eg ports) the freeing of transport markets is creating greater contestability in logistics services and sub-markets ...other changes: ...other changes II. What are the global trends? Security Bottlenecks Energy Higher standards of security in freight transport are being sought in all modes, but particularly in international shipping and aviation Logistics services depend heavily on public infrastructure in roads, railways, ports, airports, shipping channels etc: capacity increments are not matching world freight volume growth The expectation of perpetually cheap energy is waning due both to declining fossils fuel stocks and expectation of higher energy taxes in response to global warming Inter-modality Both standard and specialized containerization continues to grow , facilitating inter-modal transit and multi-modal allocation of traffic Market perceptions: East Asia logistics costs are generally comparable with OECD : Market perceptions: East Asia logistics costs are generally comparable with OECD II. What are the global trends? Market perceptions: East Asia logistics have much greater service problems than OECD: Market perceptions: East Asia logistics have much greater service problems than OECD II. What are the global trends?

Market perceptions: that the low quality of infrastructure in east Asia is a problem : Market perceptions: that the low quality of infrastructure in east Asia is a problem II. What are the global trends? Market perceptions: the performance deficit OECD vs. E Asia is increasing : Market perceptions: the performance deficit OECD vs. E Asia is increasing II. What are the global trends? Contents: Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand - key challenges. Slide16: III Why have a National Logistics Strategy? Why have a National Logistics Strategy? 1. The industry is of national importance to trade& development 3. The industry depends on public infrastructure for its success 4. Government policy and admin. responsibilities are fragmented 5. The private sector is also very diverse, with conflicting interests 2. The external impacts are significant incl. transport safety, emissions etc. Energy efficiency and greenhouse gases: Energy efficiency and greenhouse gases Contents: Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand - key challenges. What should National Logistics Strategy try to achieve? : What should National Logistics Strategy try to achieve? Customer responsiveness Geographic coverage Delivery time Reliability of delivery time Frequency of delivery Safety and security of goods Protection of corporate image Value-adding services Transport & storage tariffs Inventory holding costs Product damage or deterioration Pilferage losses Insurance costs Administration Customs and other clearances Bribes and malicious delays Social & environmental costs Higher customer service Lower service cost IV. National Logistics Strategy: key aims High service at low cost requires the 3Cs: High service at low cost requires the 3Cs IV. Logistics strategy: key aims Contents: Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand - key challenges. Slide22: III National Logistics Strategy scope? What should be in a National Logistics Strategy? 1. Logistics policy principles 4. Stakeholder participation process 5. Public infrastructure framework 6. Monitoring and review mechanism 3. Legal and regulatory changes 2. Audit of current performance Slide23: 1. Logistics policy principles Public policy objectives Roles of markets and of regulations Roles of central and local governments Principles of industry access/licensing Roles of public and private sectors III National Logistics Strategy scope? Slide24: 2. Audit of current performance Problems and bottlenecks Benchmarking of cost performance Benchmarking government functions (for example, customs performance) Research into customer perceptions Benchmarking of service performance III National Logistics Strategy scope? Slide25: 3. Legal and regulatory changes New legislation/regulations if necessary Changes to administrative structures to implement logistics strategy Amendments to existing legislation or regulations May involve trade, transport, economic, and/or environmental legislation and regulations III National Logistics Strategy scope? Slide26:

4. Stakeholder participation process Local government authorities Private suppliers of logistics services Public infrastructure suppliers Gvt. services suppliers (e.g. customs) Customers of transport & logistics Key policy departments Trade, transport, tourism etc III National Logistics Strategy scope? Slide27: 5. Public infrastructure framework Land-use planning (e.g. for transport corridors or logistics centers) Access rights to public infrastructure Pricing and cost recovery policies Public infra. investment priorities Finance and management III National Logistics Strategy scope? Slide28: 6. Monitoring and review mechanism Measurable objectives Clear responsibility and accountability Public transparency and reporting Periodic updating Timetable and milestones III National Logistics Strategy scope? Contents: Contents What is logistics? What are the global trends? Why have National Logistics Strategy? What should be its aims? What should be its scope? Logistics in Thailand - key challenges. Thailand total and manufacturing exports 1990-2004 (USD mills): Thailand total and manufacturing exports 1990-2004 (USD mills) VI Logistics in Thailand key challenges Thailand - non manufacturing exports 1990-2004 USD mills: Thailand - non manufacturing exports 1990-2004 USD mills VI Logistics in Thailand key challenges Thailand total and manufacturing imports 1990-2004 (USD mills): Thailand total and manufacturing imports 1990-2004 (USD mills) VI Logistics in Thailand key challenges Thailand - non manufacturing imports 1990-2004 USD mills: Thailand - non manufacturing imports 1990-2004 USD mills VI Logistics in Thailand key challenges Key Challenges: Key Challenges Build on Success The Thai Logistics Industry has enabled trade growth of 340% in 14 years and manufacturing trade growth of 370%. The industry has performed well...identify the success factors and hold onto and strengthen them. Identify impediments to continuing successand address them VI Logistics in Thailand key challenges Key Challenges: Key Challenges 2. Look to the future Thai manufacturing will become more sophisticated to serve more demanding international markets International amenity services can grow alongside travel, tourism and IT industries especially in Gulf region Logistics services need to be world class for Thailand to win international competitions in goods and amenity services VI Logistics in Thailand key challenges Key Challenges: Key Challenges 3. Match strategy to markets The Thai logistics sector has many and diverse suppliers, services and customers, and is always changing Government departments cannot and should not try to micro-manage the logistics sector Strategy should aim to remove the economic, administrative and infrastructure barriers that prevent logistics markets from working. VI Logistics in Thailand key challenges Tools and Knowledge Resources from the World Bank: Tools and Knowledge Resources from the World Bank Global Facilitation Partnership for Transportation and Trade (GFP) GFP aims at pulling together all interested parties, public and private, national and international, who want to help achieve significant improvements in transport and trade facilitation in Bank member countries Trade and Transport Facilitation: A Toolkit for Audit, Analysis and Remedial Action Logistics Perception Indicators: being developed and aiming to measure global connections Business Climate Surveys World Bank Port Reform Toolkit (updated, 2007) VI Logistics in Thailand key challenges Slide38: Thank you for your attention Questions and comments to: pamos@worldbank.org or zliu@worldbank.org The findings, interpretations and conclusions expressed herein are those of the author and do not necessarily reflect the views of the Board of Executive Directors of the World Bank or the governments they represent VI Logistics in Thailand key challenges