Trade Facilitation: Impossible Without Facilitating Logistics

1
Trade Facilitation Impossible Without
Facilitating Logistics

• Contribution of the
• Global Express Association (GEA)
• 2008 WTO Public Forum
• 25 September 2008

2
The First Great Logistics Model
3
A Landmark in Logistics Innovation
4
More Landmarks in Logistics Innovation
5
Logistics Today

• The emergence of a global economy with
  transactions occurring over greater distances
  makes efficient movement of goods increasingly
  important.
• Modern logistics managers (and competent
  governments) are engaged in squeezing time and
  cost out of supply chains ultimately this
  benefits consumers and global standards of
  living.
• Air freight, and express delivery in particular,
  have largely removed distance as a decisive
  factor in trade.

6
Express Delivery Creates New Trade

• International express delivery companies carry
  US2.4 trillion
• in goods across borders annually.
• This is trade that might otherwise not occur.
  Because of the high quality and end-to-end nature
  of services provided, express delivery is a
  higher-priced transport option.
• If traders could maintain the same levels of
  service, speed, and reliability using less
  expensive transport options they almost certainly
  would.
• It is reasonable to conclude that much of the
  merchandise trade carried by international
  express delivery companies occurs because of the
  availability of express delivery.

7
Express Delivery Has Special Value for SMEs

• Globalization offers many opportunities for
  SMEs
• Online SMEs have been especially successful in
  developing global markets.
• However, making the perfect shipping arrangements
  each day for demanding customers in many foreign
  countries is an enormous challenge for a small
  business.
• By integrating all of the steps required to move
  products to customers, express delivery companies
  place world-class logistics within reach of small
  companies everywhere, and allow them to share in
  the benefits of a global marketplace.

8
SME Success Story 1www.poilane.fr
9
SME Success Story 2www.rajanacrafts.org
10
SME Success Story 3www.fpef.co.za
11
Why Governments Should Care About Improving
Logistics

• WTO success in reducing trade barriers will
  create new opportunities for many exporters
  particularly SMEs - that currently have limited
  prospects for growth within their national or
  regional markets. But good logistics are
  critical to exploiting the new opportunities.
• Expanded global competition may force domestic
  exporters to improve their competitiveness by
  developing new sources of materials for their own
  production.
• In response to their own competitive pressures,
  customers in all parts of the world will become
  more demanding about speed and reliability of
  delivery.
• Without better logistics the effectiveness of tax
  incentives offered by governments for investments
  in new production will be undermined.
• Governments know this but reforms that would
  improve logistics efficiency are stymied by
  official schizophrenia.

12
Policy Choice for Governments That Affects The
Quality of LogisticsNational Development
Objectives or Domestic Politics
13
Key Official Restrictions Faced By Express
Delivery Companies

• Anti-competitive practices of government-owned or
  authorized monopolies
• Obsolete restrictions on foreign investment and
  cabotage
• Aviation
• Ground
• Inefficient border procedures

14
Anti-competitive practices of government-owned or
authorized monopolies

• Well into the era of a global economy all but a
  few of the WTOs 151 members maintain public
  postal monopolies, many barely viable.
• In some countries monopoly postal operators and
  private delivery companies co-exist peacefully
  and even enter into partnerships.
• However, in several major developing markets the
  postal operator acts in contravention of national
  development plans and in near defiance of
  economic ministries.

15
Restrictions on foreign investment and cabotage
(aviation)

• No industry in the world is under greater stress
  or more in need of rationalization.
• We must move away from an aviation world
  dictated by 60- year-old rules and based on flags
  on aircraft tails. We cannot go on with the
  archaic system we need to merge, we need to
  integrate. IATA DG Giovanni Bisignani
• Bankruptcy rather than policy is driving reform
  and liberalization of aviation rules, despite the
  resistance
• of governments.

16
Restrictions on foreign investment and cabotage
(ground)

• Fifteen years after the NAFTA was approved
  restrictions on cross-border trucking services
  have not been removed.
• Freight crossing the border is loaded and
  unloaded three times at a minimum before it
  reaches its destination, largely offsetting the
  benefits of duty elimination.
• GATT Article V Freedom of Transit is widely
  ignored a promising Doha effort to give it
  greater effect now appears to have failed.
• The World Banks 2007 Logistics Performance Index
  shows that among the worst performers are
  landlocked countries of Africa and Central Asia
  and their neighbors that (unless they have oil or
  gas revenues) are also among the poorest nations.

17
Inefficient border procedures

• Still too many paper documents
• Limited capability to receive release information
  electronically in advance of arrival
• Absence of automated risk assessment makes
  customs less effective and fosters official
  corruption
• Goods held hostage pending completion of all
  procedures
• Chaotic gangs of agencies other than customs at
  the borders no single window
• Lukewarm commitment by key governments to
  harmonized cargo security regimes
• Dohas finest memorial could be preservation of
  its trade facilitation work

18
Logistics Liberalization the Next Reform
Frontier?

• Even in developed countries, logistics providers
  operate under rules that have barely changed in a
  century.
• WTO members have learned that elimination of
  tariffs and quotas is not sufficient without
  trade facilitation
• Now they must learn that trade facilitation is
  not sufficient without logistics reform.

19
The global economy has changed, but as these
images remind us . . .
20
No matter when or where you are in business . . .
21
The things you sell must still be delivered to
customers.