Wednesday, March 27, 2013

ASEAN Freight Update as Container Shipping Extended and China Cracks Down on Road Haulage Trucks

Eastern Nations Confederation Concentrates on Integration and Cooperation Whilst Elsewhere Safety Concerns Prompt Action
Shipping News Feature

ASIA – EUROPE - Freight and trade alliances are strange creatures, whilst each side wishes to develop through cooperation nationalistic tendencies are always at the front of the partners minds, thus we currently see such problems in the Eurozone affecting all the nations involved. Certainly one currency makes everyday trading easier but the cost of not being able to use the fluctuation of ones own sovereign legal tender as a tool to control inflation and to boost exports is proving to be a hard road for many to follow.

When Iceland’s banks collapsed so spectacularly many felt that the effect on such a small state would be calamitous for generations to come but the ability to devalue has given a huge boost to the tourist trade with teeming visitors bring in much needed cash and, coupled with a seemingly boundless source of geothermal energy and the rich natural fishing resources it has had to defend so vigorously just off the country’s shoreline, things really aren’t looking as bad as predicted.

Far to the East the Asian nations under the auspices of the Association of South East Asian Nations (ASEAN) group are playing an entirely different ball game. The geographical make up of the area means that, whilst there will be stiff competition from any country in the region with access to deep water port facilities, the need to cooperate, both socially and with the transport infrastructure necessary to carry all manner of export and import goods throughout the region (especially with the huge engine which is China sitting atop the heap and the Indian subcontinent alongside) is essential for the economic future of all involved.

For many in Europe a modernised form of the old European Free Trade Agreement (EFTA) now looks preferable to the constricts of the current EU format, certainly many in Britain will say that the vote which signed them up to what was then the Common Market never mentioned the development of a single currency or legislative ties and it is now hard to envisage that any future UK Government would readily adopt the Euro as the coin of choice.

In Asia the ASEAN member countries (Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) are both vying for trade whilst also realising that few could thrive without the development of transport infrastructure useful to all, or at least one which also supports the interests of their particular near neighbours in the group.

With an eye firmly on their bigger neighbours in 2010 the partners keep a close eye on indicators such as the ‘Southeast Asian Economic Outlook: with Perspectives on China and India (SAEO)’ published since 2010 by the Organisation for Economic Co-operation and Development (OECD). This annual publication focuses on the economic conditions of the ASEAN area, and also addresses relevant economic issues in China and India to fully reflect economic developments in the region.

The latest report states that growth forecasts for Cambodia, Lao PDR, Myanmar and Viet Nam (the CLMV bloc) over the medium term is expected to be between 6-7%, outperforming economies of the ASEAN-6 countries prompting the OECD and the ASEAN conglomerate to update a set of indices showing the disparities between the neighbouring countries and making ‘Narrowing the Gap’ a formal policy of ASEAN.

Monitoring of progress in this regard is handled by the ASEAN Integration Monitoring Office (AIMO) and the launch of the Initiative for ASEAN Integration (IAI) in 2000 was specifically meant to deal with issues on narrowing the divide where equitable and inclusive development will be a defining feature of ASEAN's integration efforts. When the IAI Work Plan II (2009-2015) was initiated in a meeting at Thailand’s Cha Am resort it set out a six year plan designed to plough through the obvious obstacles which bedevil any such resolve to lessen the disparities in wealth between nations.

The ASEAN representatives understand that only by equalising welfare standards between their respective countries can they hope to develop a suitably streamlined and integrated transport system to serve all their purposes and to this end are working within the framework of an Asian Economic Community (AEC) blueprint. Whether the nations involved have the political will to put aside enough of their own vested interests to ensure the resultant infrastructure is efficient and completely fit for purpose only time will tell. Certainly representatives are aware of the dangers of pursuing individual interests with Dr Aladdin Rillo, Head AIMO at the ASEAN Secretariat saying this month:

"Evidence suggests that welfare gains from the AEC can reduce economic disparities in the region. To this end, Member States must pursue with vigour its implementation of the programmes in the AEC Blueprint as a strategy for sustained growth in the region."

The test for the ASEAN aspirations of a completely integrated set of countries cooperating at every level will come as the balance of power at first equalises and then shifts with any disparity of wealth which then develops. In the field of freight transport this may well see cargo loaded or offloaded in one state and then having to pass through several others hence the importance of any future arterial routes, by road or rail, within the Thai, Vietnam, Laotian, Cambodian, Myanmar bloc whilst the island nations have a more maritime influence, seeing comparatively wealthy, tiny Brunei sharing Borneo with Malaysia and Indonesia all three sitting amongst the other island partners, each with varying economic and social status and its own plans and interests.

The intention now is to begin negotiations to establish the Regional Comprehensive Economic Partnership (RCEP) this year joining the ASEAN group together with China, Japan, South Korea, India, Australia and New Zealand with the intention of forming a giant free trade cooperative to further stimulate intra country business. With the IMF’s World Economic Outlook report published in January 2013, ASEAN is forecast to attain economic growth rates of 5.5% in 2013 and 5.7% in 2014 and this has already encouraged one company at least, Taiwan’s Evergreen Shipping Line, to launch its new CPM container service linking South China, Philippines and East Malaysia from mid April 2013.

In addition to providing regional transportation links for shippers in three countries, the new loop will connect to Evergreen’s global service network via Hong Kong with initially two ships each of 1,700 TEU deployed. The first sailing is planned from Shekou on the 15th of April 2013 and the port rotation of the weekly service will be: Shekou – Hong Kong – Manila – Kota Kinabalu – Bintulu – Shekou.

Meanwhile in China this month we are promised what many consider a long overdue crackdown on road haulage operators whose standards are often lamentable to say the least. This is no idle criticism, the development of trade in the country means that every thirteenth vehicle on the country’s roads is a commercial truck, some nineteen million of them, yet 28% of all road traffic accident deaths involve a haulage concern according to statistics from the Ministry of Public Security’s Traffic Management Bureau whilst they are twice as likely to be involved in any form of crash than other road users.

Starting on 1st April the authorities say they will be commencing an intense prosecution of every type of offence and this purge will last until the beginning of October, by which time they hope to have considerably reduced the problem.

Whether the campaign will target one of the country’s other major problems, that of pollution, is doubtful given the quality of fuel often available but drivers can expect no mercy for any form of bad driving, overloading of trucks (a common scenario), poor maintenance and vehicle condition and fatigue, often a factor in serious accidents. The authorities say they are looking at ways to instigate effective legislation to negate the problems and regulate the road haulage industry more effectively.

Photo: Standards in the Chinese road haulage sector are sometimes considered abysmal by Western onlookers.