Pilot project illustrates that semi-trailer swapping at Mae Sot-Myawaddy border halves the time spent on travelling between Thailand and Thilawa SEZ and is thus an effective cross-border logistics solution

30 Aug 2017

Sending a container from Panomsarakarm to Thilawa SEZ takes 2.5 days, whereas conventional logistics needs 4-5 days and ocean freight takes approximately 3 weeks.

A pilot project which uses semi-trailer swapping with bonded cargo has halved the time needed to reach Thilawa SEZ from Thailand compared to conventional road freight. Despite numerous problems, the scheme represents a step towards efficient and barrier-free trade between Mae-Sot and Myawaddy, making cross-border logistics a potential option for a wide range of suppliers.

The trial was supported by the Ministry of Transport and Communications and carried out by Myanmar International Freight Forwarders Association (MIFFA), Thilawa-headquartered Daizen Myanmar and Malaysia-based Overland Total Logistic Services (OTL).

The Ministry of Transport and Communications and MIFFA outlined four steps to improve logistics at the Thai-Myanmar border’s major trading point between Mae-Sot and Myawaddy. The first step involves manual transloading; the second one refers to the exchange of containers with crane-lifting; the current pilot scheme utilises semi-trailer swapping; and the ultimate goal is to have a system allowing the free flow of trucks cross the border.

U Aung Khin Myint, MIFFA chair and one of the joint-secretaries of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI), told The Myanmar Times that the scheme and trailer-swapping are in line with the transport minister’s aim of achieving seamless transport for cross-border logistics.

“The pilot project illustrates that trailer swapping at Mae Sot-Myawaddy border is an effective intermediate solutions for cross-border logistics.

“The door-to-door service reduces costs and time needed for border operations. This is a right step towards the transport minister’s goal, which is to achieve seamless transport along the road for cross-border logistics,” he said, adding that the project fared better than initial expectations. 

Takaaki Yabe, Daizen’s deputy managing director who was involved in the pilot project, said that taking out transloading from the process increases cost-effectiveness and efficiency.

“With regards to cost, removing the transloading work at the border would contribute to ‘seamless logistics’. 

“This improved efficiency in operations will contribute to the reduction of overall logistics cost,” he said.

Freight forwarders and logistics businesses are now waiting for the government policy on cross-border transport.

“We are awaiting the results of government-government [G-to-G] negotiation for the bilateral initial implementation of the cross-border transport facilitation agreement [IICBTA] between Myanmar and Thailand,” U Aung Khin Myint said.

The next round of IICBTA negotiations will take place at the Asian Development Bank’s office in Bangkok on August 30 and 31. The IICBTA will be implemented in Myanmar on December 1 this year. 

IICBTA covers Cambodia, Laos, Vietnam, Thailand and Myanmar. Myanmar is the last country to implement the Cross-Border Transport Agreement (CBTA).

Following State Counsellor Daw Aung San Suu Kyi’s visit to Thailand in June last year, the two sides agreed to expedite the negotiation process of the CBTA under the IICBTA framework.

Reducing time and risks

The information submitted by MIFFA to the ministry seen by The Myanmar Times suggests that the trailer-swapping scheme significantly reduces the time and resolves the problems prevalent in conventional cross-border logistics in the country. This is because trailer swapping does not involve the risks associated with manual transloading, such as cargoes being damaged or workers being injured. It also saves the time needed for cargo transfer and related operations, such as re-lashing the goods on the new lorry.

The current transloading scheme usually takes four to five days, whereas the pilot project only took two and a half.

“We picked up the cargo in Thailand on Wednesday morning and the cargo arrived at our warehouse in Thilawa SEZ by Friday afternoon. 

“This reduction in time comes from two factors. One is the removal of transloading work and lashing work in Myawaddy and another is the faster clearance process at Thilawa SEZ compared to Myawaddy border customs,” Mr Yabe said.
A fundamental difference between trailer-swapping and conventional logistics is that the former allows containerised cargoes, i.e. cargoes which need to be stored in a container under controlled conditions such as refrigerated cargoes, whereas conventional transloading does not cater for this type of products, according to MIFFA. 

“This containerisation allows cargoes which are sensitive to temperature or humidity to be transported under controlled conditions, maintaining the quality of cargoes,” Mr Yabe explained.

U Aung Khin Myint told The Myanmar Times that trailer-swapping would mean that Mae Sot-Myawaddy can accommodate a much wider range of cargoes beyond containerised ones.

“Before the implementation of the pilot scheme, I expected only containerised cargoes to benefit from the project. 

“But, after the trial, I have had many enquiries about project cargo, dangerous cargo, and heavy cargo,” the MIFFA chair said.

Bonded cargoes and Thilawa

Bonded cargoes are another dimension of the scheme which enhances efficiency and competitiveness of Mae Sot-Myawaddy trade. Bonded cargoes are introduced in Myanmar earlier this year with the implementation of bonded warehouse. 

Daizen Myanmar, which led the Myanmar part of the trailer-swapping project, became the first company in the country to establish registered bonded warehouses.

Bonded warehouse allows the storage of foreign cargoes held on account, i.e. storing cargoes before paying customs duty and commercial tax.

Hence, the container in the pilot scheme did not have to go through customs inspection or clearance in Myawaddy, and was released within an hour in Myawaddy where custom officials locked the container with an electronic seal, which also tracks the container. The cargo was also exempted from customs duty and commercial tax.

From pickup in Thailand to delivery in Thilawa SEZ, it took the container two and a half days. Compared to ocean freight, the scheme has reduced the duration by 80 percent.

An additional aspect is the significance of Thilawa SEZ in Myanmar’s logistics industry.

“Trailer-swapping scheme and bonded warehouse function could complement each other and the combination of these could enhance cross-border trading,” Mr Yabe observed, “bonded cargoes using this scheme are to be inspected at Thilawa SEZ customs.” 

As bonded warehouse in Myanmar is currently permitted only in Thilawa SEZ, the SEZ is expected to play a bigger role as a logistics hub connecting Thailand and the country.

Existing barriers

Despite the success of the trial, Daizen’s deputy managing director told The Myanmar Times that three issues are standing in the way of accomplishing barrier-free trade for Mae Sot-Myawaddy border.

“Firstly, the manual customs clearance process at the border is still a problem – required documents must physically be submitted at the border customs. Myanmar Automated Cargo Clearance System [MACCS] implementation at the border next year should resolve this problem and speed up the overall process.

“Secondly, insurance is another challenge which needs to be tackled. The question is who will provide the insurance for Thai trailers and containers for the transportation in Myanmar – can Myanmar insurance companies provide services which cover Thai trailers and containers?

“Lastly and most importantly, there is still a huge cross-border trade deficit between Thailand and Myanmar. This means an empty return-trip back to Thailand. The cross-border logistics cost will significantly decrease as Myanmar exports more goods to Thailand by road,” the deputy managing director of Daizen noted.

But future developments suggest that Mae Sot-Myawaddy will present an attractive option for the growing market. The congestion in Yangon ports remain a setback for ocean freight, while the second Mae Sot-Myawaddy Friendship Bridge is expected to be in operation by year-end. 

If this pilot scheme is implemented at the border, it would make Mae-Sot-Myawaddy border a competitive option for a wide range of domestic and foreign suppliers.

“Local and international suppliers will be able to deliver the products to the customers faster as the logistics lead time is reduced,” Mr Yabe said, adding that he expected the growth of trade between Mae Sot and Myawaddy to increase.

“Not only will it improve border trade in terms of efficiency and cost, it will also enhance the security and quality of cross-border logistics.”

Whether similar schemes will be experimented or considered at the Ruili-Muse (Shweli-Muse) border between China and Myanmar depends on the decision of National Transport Facilitation Committee, which is chaired by the transport minister, U Aung Khin Myint told The Myanmar Times.

 

(The Myanmar Times: https://www.mmtimes.com/news/pilot-scheme-speaks-volumes-about-potential-mae-sot-myawaddy-trade.html )