16^th APEC TPT-WG

Brainstorming Session
Notes for Segment 3: The TPT-WG Means Business
By
Chris Kissling, Co-ordinator, PECC Task Force on Transportation

ISSUES TO BE EXPLORED IN THIS SESSION

 Comment:

My comments cannot purport to speak authoritatively on behalf of business interests and the private sector in the Asia Pacific Region. I have not had the opportunity to undertake widespread consultation with that purpose in mind. Nor have I yet received much feedback from my recently emailed plea for assistance from selected associates.

What do business leaders seek in terms of transport services? The following features appear frequently in the literature related to both freight and passenger transport. Some clearly relate to what client businesses wish to see in terms of key performance indicators for providers of transport services. Others relate to the regulatory environment, which conditions how providers of transport can meet their customer expectations. They apply to domestic as well as international movements.

1. Fast door-to-door service per integrated transport systems operating 24hrs/365 days yr. with terminals, warehouses etc accessible as and when required
2. Dependable reliable – On-time services
3. Reasonable cost for the quality of service provided (not necessarily lowest cost)
4. High frequency of services providing extensive options and choices of route
5. Sufficient uplift capacity to meet demands including seasonal demands
6. Ability to track and trace at any time on behalf of clients (using state of the art communications systems)
7. Low risk of environmental degradation, accidents, damage or theft (including piracy)
8. Minimum bureaucracy and administrative delays (customs clearances etc)
9. Equality of regulation of operational environments between modes (level playing fields)
10. Availability of modern fleet & equipment that can meet specialist needs (reefers etc)
11. Service providers operate in competitive, contestable markets – not monopolies
12. Service providers are customer focussed and internationally best-practice oriented
13. Service providers employ skilled personnel to achieve highest quality assurance standards in the management of supply chains

Does the TPT-WG’s Action Program comply with the priorities of the Asia-Pacific Region’s business/private sector? How might the programme achieve greater compliance with business priorities? How might greater business participation in the work of APEC TPT-WG be achieved? How might the work of APECTPT-WG take better account of advances in technology?

My 13-point checklist above can be viewed alongside the projects and outcomes of APEC’s stated priorities in Appendix A.

Clearly, the long-term goal of free and open trade and investment in the Asia Pacific by further reducing barriers to trade and investment, will help achieve many of the desired qualities in international supply chains activity. Harmonisation of standards in all modes and in IT applications will support this goal.

Benchmarking key performance indicators in the operation of points of transport interchange (sea, air, land) is a means to chart progress to remove friction between modes and to encourage the smooth conduct of logistics systems. Elimination of congestion points is being addressed.

Access is one thing. Quality of access is another. Liberalisation suggests removal of quantitative restrictions, freedom to set competitive prices and openness regardless of time of day or day of the week for unimpeded flows.

There is need for better quantification of the benefits that accrue as a result of liberalisation in aviation services in order to provide persuasive evidence to those airlines and regulatory authorities who remain unconvinced and unwilling to move on this matter despite the overall APEC agenda.

Whilst technical aspects of satellite based navigation and communications systems for air traffic control are well advanced, the process of obtaining the co-operation and participation of existing providers who stand to be marginalised by the new technology, has not been resolved. The benefits from such control systems on airline cost structures stands in jeopardy if agreements for implementation remain clouded in sovereignty issues.

Y2K is almost upon us. It will be instructive to evaluate post Y2K the extent to which warnings were or were not heeded. Learning from the aftermath should be used to promote better co-ordination and co-operation in the future on other issues, particularly in the expansion of e-commerce in the transport sector. The Internet is overtaking EDIFACT, but that should not lessen the efforts by Customs authorities to continue the transition to electronic clearance procedures and on-line database access to tariff information.

Development of Human Capital remains one of the best means for "lifting the game" in both the private and public domains of transport. Training and education opportunities and professional recognition remain spasmodic and woefully uncoordinated in the region. There is a forecast labour shortage for skilled personnel.

Dialogue with other organisations: Query APEC liaison with the OECD TRILOG project work by its Asia-Pacific Task Force? Their document on Logistics Integration in Asia-Pacific Region is in an advanced stage of preparation.

Greater Involvement of the Business Sector in the APEC TPT-WG programme

I have canvassed opinion from several colleagues in the private sector who are involved in leadership roles in transport businesses to find out what might encourage them into greater participation in the work of APEC and PECC in the transportation programme.

Some quite clear perspectives have emerged. However, it is necessary to understand the nature of the current business environment to appreciate why the response is so pointed.

It is a fact of life that the business environment is becoming more and more competitive with little margin for profit. Rates are being squeezed. Management is therefore fully focussed on the day to day effort to remain viable. For them to give time and energy and financial contributions to high level policy-oriented projects, they would have to see very rapid returns on such investment. There must be a contribution to their bottom lines.

It is perhaps ironical that the more liberal and competitive the marketplace becomes, the less time there is for management to indulge in theoretical musing and long-term strategic policy agendas. That is a fact of life we must face. It is counterproductive to confront managers of transportation enterprises with the full list of APEC TP-WG programmes. It is necessary to target selected enterprises with specific proposals that can be seen to be of value to that enterprise in the relatively short term.

Whilst managers will acknowledge there is merit in some activities because they will eventually lead to better conditions for all participants, they often will not wish to contribute towards that general good unless ALL the beneficiaries make appropriate contributions. They put to me the situation that they are not willing to help fund work of universal benefit to their competitors as well as themselves, if their competitors are not making their contribution as well.

What therefore is an appropriate strategy to involve transport businesses in our work programmes?

1. Create information services that are of immediate practical benefit.
2. Limit the number of projects overall, or target participation more effectively towards those businesses likely to receive bottom line benefits quite quickly.

It was suggested to me that benchmarking performance through ports (sea and air) via an independent and respected agency, would provide a service that the business sector in transport would welcome and probably help fund.

It was also suggested to me that an impediment to logistics planning is the lack of knowledge on how far containers of different dimensions and weights can travel beyond terminal gates. It would be constructive to develop a database (probably made available on the www) that allowed an enquirer to "see" just where their box might get to in specific geographical areas before it would be necessary to unstuff it.

The degree of container penetration varies significantly by economy and within economies. Different weight and dimensional limits apply to road and rail transport. There would be immediate value in such a database, as its utility would simply expand, as additional territories were included. It would not be necessary to wait for universal response before going live.

It is projects and programmes like these that can provide practical benefit to the business sector and they are therefore more likely to become involved. Information that makes their task easier is most welcome.

How might the work of APECTPT-WG take better account of advances in technology?

Clearly the expanding use of the www as a medium for exchange of information and for the conduct of business transactions, points to the way the APEC TPT-WG must itself move. The impediments in the way of making more effective use of new technology relate to at least two areas.

1. Transfer of knowledge on how to apply the technology. For this to occur, satisfactory training of human capital is required. The Internet is providing a channel for some of that necessary training and self-learning. Labour laws also need to be revised to keep abreast of technological developments to ensure that there is a proper fit between man and machine.
   
2. The regulatory environment nationally and internationally has to come to grips with the fact that much new technology, particularly in communication systems, shows scant respect for borders. They operate at global scales. Our institutions largely remain framed within national economies. Few are geared to deal with international domains. It is true for transport. Global airline alliances can be seen as a management mechanism to work around inflexible and conflicting regulatory environments.

APEC TPT-WG and PECC Transportation Task Force must therefore work to ensure that their members can access the full benefits from the application of information technologies to the transport sector in and between all modes. Demonstration exercises are useful tools for aiding the dissemination and adoption of innovations even in conservative socio-economic environments. The visual medium is very powerful. Accordingly use of video and TV exposure to explain benefits is one approach that APEC TPT-WG may wish to embrace enthusiastically.

 Chris Kissling
PECC Transportation Task Force Convenor.
6/Nov/1999

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