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27 Febrary 2010 13:28

During the past week there was observed further development of political and socio-economic relations of the Republic of Uzbekistan with foreign partners.

01 Febrary 2008 12:24

The International Development Association and the International Monetary Fund have issued a joint staff advisory note (JSAN) of the Poverty Reduction Strategy Paper for the Republic of Uzbekistan, prepared jointly by the staffs of the World Bank and the IMF.

31 January 2008 12:23

Tashkent met [the World Bank Regional Vice President] Shigeo Katsu. The purpose of the visit to Uzbekistan was to give an official start to consultations on a new Country Assistance Strategy for this country and to discuss the progress and plans for further cooperation between the World Bank and the government of Uzbekistan.

30 January 2008 14:02

Construction will hopefully start this year on two railways linking China's westernmost Xinjiang with the central Asian nations of Kyrgyzstan, Uzbekistan and Kazakhstan, Xinhua reported quoting sources with the regional government of Xinjiang.

30 January 2008 12:01

With maritime and inland waterways traffic on the increase, enhanced cooperation is needed to meet security and environmental concerns. That is the challenge facing participants of the OSCE Economic and Environmental Forum, which opened in Vienna on 28 January.

 
WORLDWIDE EXPERIENCE OF CREATING MULTI-MODAL LOGISTICS CENTERSAND THE POSSIBILITY OF ITS APPLICATION IN CENTRAL ASIA
15.11.2009 / read 123 times

Nowadays it is hard to find a country that does not participate in global processes, generated in a single world space. At the same time, recent trends indicate that the economic development of these processes occur with the greatest speed. Evidence of this is the current world financial and economic crisis, which affected almost every country in the world. This crisis revealed a number of fundamental issues of sustainable economic growth for both developed and developing countries.

All we have witnessed several summits of the so-called G-20 to overcome the crisis and attempt to delineate the ”look” of new rules of the emerging new world economic system. However, according to many experts, these rules will not be able to radically change the current system of economic relations, which is based on the processes of globalization and economic interpenetration of the world. One can list the many elements of the system. Among them, as a manifestation of a growing specialization of production, and deepening of cooperative relations in the world the special role is played by multi-modal logistics centers (MLC), of both regional and global concern. If stock and commodity exchanges are the link in the global economy, meanwhile a multimodal logistics centers serve as their practical and technical support.
However, current processes of globalization, international cooperation, and socio - economic integration will inevitably lead to the need for adjustments of existing models of national economies with the perspectives of further development of its own economic potential and international competitiveness. This qualitative changes taking place in the modern economy, indicate that there has been a substantial rearrangement of the factors and sources that determine economic growth. Shrinking resources of traditional economic growth brings to the fore a wide range of innovative processes that are an integral and important part of economic transformation.
This issue is of some relevance for the countries of Central Asia. For the landlocked countries of Central Asia, economic and social well-being depends largely on the effectiveness of the functioning of transport corridors. Accordingly, in order to achieve economic and social progress the key priority must be given to high quality transport, processing facilities and storage in the hallways. In this vein, the establishment of MLC could help diversify the economies of the region and create the basis for its competitive and innovative industry that would create in the world economy particular ”niche” and can quickly adapt to new economic conditions.
The most active and decisive steps in this direction have been adopted in Uzbekistan and Kazakhstan. Everyone knows about the plans of Uzbekistan to establish an international intermodal logistics center at the airport of Navoi, which will not only be used as a transcontinental freight forwarding hub connecting South-East Asia with Europe, but also help create new high-tech industries in the republic and neighboring regions. In the area of the airport it is being established a free industrial economic zone (FIEZ). Kazakhstan is also in process of creation and development of backbone network traffic centers, consisting of regional freight logistics in the transport corridor West China - Western Europe. In particular, in Kazakhstan MLC will be established around the cities of Astana, Aktau and Almaty. Of course, the implementation of projects of MLC in Central Asia will be accompanied by a study of world experience in this field and its application in the context of local conditions. In this regard, it is interesting to review existing international practice of establishing MLC.
As it is known, the bulk of world trade and economic relations is carried out through the ports, resulting in a de facto monopoly of shipping. As a result of unprecedented growth in the global economy ports began to experience a number of problems in the functional part. In particular, the ports have become sources of the growing problems of access to ports on the land; they are no longer able to fully meet the demands of the inability of regional trade, developing along the corridor Europe-Asia. In the ports is also a very significant environmental problems and shortage of space for the expansion area.
Moreover, the characteristic feature of the current world economy is the globalization of production or the production chain. As transport costs reduce and conditions for the delivery improve it takes place the process of dispersal of production on the basis of narrow specialization of a specific territory. Transnational corporations can prepare the design of new products in its headquarters, but the manufacture and assembly of these products is carried out in different countries, with delivery of materials and components at the most reasonable price and best quality. This form of specialization is closely linked to trends in transport and logistics, which raises new challenges in the development of these areas.
All of these issues and trends are accompanied by the revision of the concept of maritime ports, removal from the territory of the port infrastructure some of its parts. Here the main focus was at the establishment of a certain internal areas away from the seaport, the so-called ”Dry port” on the basis of multi-modal logic centers. And MLC is not limited to the provision of a purely transport services, whose functions may be expanded as the development of trade, and become the industrial and the industrial and financial zone.
Due to the lack of common approach to the definition of MLC, within the overall framework a multimodal complex can be described as a major portal, designed to handle large volumes of cargo. The area of logistics hub may exceed 1 million square meters.  Products are not only stored and processed, and redistributed to other regions. The infrastructure of the complex varies depending on the business and holds a wide range of functional objects of focus. It can be storage and office space, a zone of customs control, refrigerators and freezers, dangerous goods storage area, show-rooms, wash cars, repair area for service vehicles, recreational facilities, etc.
The infrastructure of the complex may vary depending on the specific business location and the main tasks. This form of development allows the consolidation of all the freight in one place, to minimize time processing of goods, to increase the range of services.
An important characteristic of a major distribution center is the opportunity to handle the goods delivered by various modes of transport - road, rail, air, maritime. It is not surprising that in the development of this project the great attention is paid to its location. It must be located in strategically important locations for logistics: in the airport zones, locations of production facilities, marine ports, major highways (roads, railway lines) or the intersection.
While realizing such large projects, particular emphasis is given to social infrastructure. On the one hand, the logistics park may be located near major population centers, which partly solves the issues of employment, on the other hand, the complex could become the nucleus of a certain industrial district with developed infrastructure and various recreational areas.
What a practical value can represent a major distribution center to potential users? Because of an extensive transport infrastructure and available land for industrial purposes tenants can take advantage of a wide range of logistics services. Another advantage of logistics centers is to reduce the time for processing of goods, as well as all concentrated in one place, to carry out any operations on commodities could be as soon as possible. Logistics parks are areas for transshipment of goods from road to rail and vice versa, the largest logistics operators prefer to have on site customs warehouse space.
No less interesting are services of light manufacturing. For example, worldwide it is high demand for VAL-services (value added). This preliminary preparation of the product - repacking, labeling, assembling kits, stickers, inserts instructions in different languages. The need for VAL-services is particularly evident for large retail chains. Also at the park, one can organize assembly manufacture of technical devices that can be attributed to the value-added services.

The diagram shows the potential expansion of MLC as a result of its development. It can be seen from the schemes that in the initial stage MLC is only in the form of more storage space, which accumulates various cargo and containers for further shipment to the destination. The next stage of development of MLC is the provision of various services in this territory, which is the creation of value added products. The final two stages are already mature form of MLC with the process of establishing special economic zones with specific industrial and economic and financial tasks of innovation.


Evolution of logistic centers

1960s-1970s

1980s – early 1990s

Mid 1990s-present

 

 

Materials management

Distribution Services

(national/global)

 

Bonding

Import clearance

Bonding

Inbound transportation

Receiving

Receiving

Receiving

 

Cross-docking

Cross-docking

Storage

Storage

Storage

Inventory management and control

Shipment scheduling

Order processing

Reporting

Picking

Order processing

EDI Reporting

Picking

Orders processing

EDI Reporting

Picking

Order assembly

(Re)packaging

 

Order assembly

(Re)packaging

Stretch-shrink-wrapping

 

(Product) subassembly

Order assembly  

(Re)packaging

Stretch-shrink-wrapping

Palletizing/unitizing

Label/mark/stencil

Palletizing/unitizing

Label/mark/stencil

Palletizing/unitizing

Label/mark/stencil

Shipping

Documentation

Shipping

Documentation

Outbound transportation

Shipping

Documentation

Outbound transportation

Export documentation

FTZ operation

JIT/ECR/QR services

Freight rate negotiation

Carriers/route selection

Freight claims handling

Freight audit/ payment

Safety audits/ reviews

Regulatory compliance review

Performance measurement

Returns from customers

Customer invoicing


In practice, to review the development of transport and logistics industry one can refer to the experience of Europe and Asia as the regions of the most intense exchange of commodity flows. In Europe, initial plans or projects in the sphere of transport and logistics are associated with the development of infrastructure of maritime ports, the nature of trade and industrial cooperation. Against this backdrop, the recent trend in Europe has been the transfer of certain functions of seaports in the inner area, where there are established logistics centers or ”dry ports”. This is due to the growing problem of transportation of goods ”of” and ”to” port through the city, as well as the high cost to build new docks. The result is a favorable situation for the development of ”dry port” or logistics centers, which can functionally replace the ports. According to the results of a study conducted by the UN in 2007, the development of logistics centers as the ”dry port” in the interior regions of Europe can contribute to further economic growth in neighboring regions. The expansion of multi-modal logistics center can create the preconditions for growth in the issuance of regional products, where will be located the transportation infrastructure.
Creation of large logistics centers (hub) in Europe has been started not so long ago. It took only some 10-15 years to isolated examples of multi-modal centers to become an irreversible trend, which has become a key part of the transport, industrial and social infrastructure in European countries. This can be seen in data. The total turnover of only the European market of transport and logistics services in 2007 amounted to 800 billion euros. In turn, the volume of contract logistics in Europe is estimated at 120-140 billion euros annually. Long-term growth in transport and logistics services in Europe is estimated at 4% -8%, which is many times greater than the rate of growth of GDP. Meanwhile, by 2020, experts from the consulting company McKinsey predict a fourfold increase in world trade, which will increase the multiple demand and logistic services. More than half of the industry is concentrated in three countries: Germany, Britain and France.
Germany, which continues to benefit from the expansion of the European market after the EU accession of new countries, has the largest market share in logistics in Europe (more than 3 million m ²). It is followed by France and the UK (an average of about 2.5 million m ²). The share of traditionally-established trade and logistics centers of Belgium and the Netherlands accounted for about 15% of the market.
However, according to experts, clear criteria for what projects should be called a major multimodal hub does not exist. Its infrastructure and development model depends on many factors: the purpose of the establishment, the movement of traffic in the country, etc. Such a project may be realized as a result of private initiative and have a strict definition of a single concept.
Logistic centers in Germany are managed through the monitoring bodies, which are created by different companies - the project participants such as investors or investment consortia, companies for the development, municipalities, professional associations and unions.
In France, for example, initially the major projects to develop multi-modal centers were carried out by two private companies (one of them has become an American developer Prologis, and the other experienced financial difficulties and was nationalized). As a result, we can say that France is typical model for mixed type.
In Spain and Italy the state was the investor of logistics centers. Now these countries are actively developing private investment, but maintained quotas on state participation in managing companies. Similar models have been operating successfully in other countries around the world.
In the UK there are no large intermodal (terminal handling containerized cargo) centers, which are typical for continental Europe, the development of logistics projects is being carried out by private investors. Although initially the establishment of a network of intermodal logistics terminal has been carried out by state-owned British Railways.


In Asia as in Europe, the main logistics centers are formed either directly in the port or in the surrounding areas. Trends of the development of this industry in Asia also confirm the idea of changing of the concept of port expansion and a more specialized nature of its functions. The following chart demonstrates the change in the concepts of ports in Asia over time. In Asia as in Europe, the main logistics centers are formed either directly to the port or in the surrounding areas. Trends in the development of this industry in Asia will also confirm the idea of changing the concept of port expansion and a more specialized nature of its functions. The following chart demonstrates the change in the concepts of ports in Asia over time.

 

Past: 

 

- Functional division between port and logistics centers

 

Present:

 

 

 

- New port concept due to the environmental changes

 

 

Future:

 

 

- Provision of value added-services behind post areas

 

-          Free trade zone with diverse functions

 

Logistic center oriented

(Singapore, Japanese ports)

 

Production oriented

(Kaohsiung, Chinese ports)


It may be noted that at the heart of these changes are logistics hubs with wider functional objectives. Today, all major regional and global ports of Asia maintenance of their competitive advantage see through the capacity of this component. In particularm, in this context one can refer to such ports as Bangkok (Thailand), Shanghai and Tianjin (China), Gwangyang and Pusan (Korea), Singapore. In these ports, special attention is given to expanding the range of logistics services directly into the port to improve the profitability and reach new levels of development. Moreover, for Singapore, a leading regional and international logistics hub in South-East Asia, the logistics industry with value-added plays a strategically important role in the economy, turned in its engine. The logistics industry creates about 10% of GDP and employes more than 6% of the working population. All international trade of Singapore is carried out through the logistics centers. Of course, in the development of logistics centers, or hubs in Asia, there is no generally accepted form. The development occurs on the basis of local conditions, economic goals and objectives identified by the State. Below is table which reflects the functional tasks of logistics centers of the Asia-Pacific:

Economies

 

Major functions

Singapore 

Storage, processing, assembly, classifications, consolidation, transshipment, labeling, packaging, inspection, etc.

Manufacturing is partially allowed.

 

 

 

 

 

 

 

China 

 

China 

Manufacturing, storage, processing, assembly, consolidation, packaging, labeling, exhibition, sampling.

Export and import, intermediate trade, finance and logistics.

Hong Kong, China 

As a free port, all functions are allowed, including manufacturing, storage, processing, assembly, classification, exhibition, sampling, and transshipment.

 

 

 

Taiwan 

Province of China 

Export Processing Area

Manufacturing, processing, assembly, packaging, and labeling.

Science Industrial Area

Research and Development, manufacturing support, and education for high-tech products.

Special Area

Trade, warehousing, and transport for building international logistics center in Asia-Pacific region.

 

 

 

 

 

Japan 

Foreign Access Zone

Storage, classification, inspection, testing, processing, assembly, labeling, packaging, and exhibition of imported goods.

Free Trade Zone

Manufacturing, assembly, processing, storage, inspection, testing, transformation, packaging, labeling, export, and exhibition

Korea 

Material handling, storage, exhibition, distribution, processing, repair, and other international logistics activities.


In general, it can be noted that the process of establishing MLTS in Europe and Asia, have as common points, and features. Also, it should be emphasized that in these regions are concentrated the best practices in the logistics industry because of the deepening of specialization in the transport and logistics sector, industry and manufacturing. Expansion of these processes on a global scale will cover all key regions, without exception. In this context, the countries of Central Asia are no exception, as evidenced by the existence of certain prerequisites. First, the period of global financial and economic crisis - this is a time when the countries of Central Asia can build capacity in the transport and logistics area with the perspective of a stable post-crisis growth. It is obvious that after this crisis, the epicenter of world economic development will shift to the East, and major commodity flows will be generated in the triangle of China, South Korea and India, the main markets of which are the western countries. Current projections suggest that the trends observed since the beginning of this century, may continue in the time interval from 15 to 20 years, even with the small decline. According to expert estimates, until the global crisis, trade turnover between the countries of the Asia-Pacific and Europe comprised six hundred billion dollars a year. Meanwhile, the transport component ranged from 50 to 120 billion dollars, while its expected annual growth was of no less than 6% per year. Secondly, one of the features of the growth of trade between Europe and Asia will be the intensive involvement of a group of countries, from Europe to China, and the important role played by Russia and the countries of Central Asia. These partners create a new dynamic along the axis passing through the continent of Eurasia - partners that have in many cases the rich raw material resources, including oil, a key asset for the new take-off of the economy. And third, intermodal transport is one of the viable alternatives that would cope with the anticipated increase in traffic between Europe and Asia. Today, land transport is positioned as a link in the chain of maritime transportation as a means of access to ports, as well as the main mode of transport over long distances across Russia and Central Asia into China. Economic analysis shows that in some cases the ground connection may be as a viable alternative to sea transport, significantly improve the transport accessibility of the countries through which it passes, and to assume a rather significant portion of the projected large growth in traffic, particularly container. And fourthly, it should not be ruled out and the growth of the economies of Central Asia and Russia, which will promote the development of trade relations with China, South Korea and India. In recent years there has been an intensification of trade and economic ties with Central Asian countries and China. Of course, the global crisis will have its impact on its pace, but the basis of these relations is a long-term infrastructure projects. In particular, the construction of a pipeline from Central Asia to China, oil pipeline projects in agriculture, construction of roads and others. In addition, the annual volume of trade between countries has been increasing. In the fifth, the entry of China and other Asian countries to the WTO provides a historic opportunity to strengthen the road transport sector. Membership in the WTO, in addition to setting requirements on freedom of transit traffic and the liberalization of bilateral transport, contributes to the direct investment, as well as the international transfer of advanced foreign management concepts, logistics solutions, technologies, expertise and experience in the transport sector. In the sixth, it should paid particular attention to the fact that at the initial stage of the main points of export in Asia, especially in China, were focused primarily on the sea coast, causing an explosive development of major urban centers, which are also ports, and bringing people from rural areas . This new Asian economy was still oriented to the sea. But the aim of the current governments in Asia is the development of inland areas and to limit internal migration and to establish centers of economic growth in the depth of countries such as China. For business it is winning the hinterland, facilitated by the construction of roads, of air and rail transport, provides the advantage of cheaper labor force than in coastal cities, where per capita income exceeded the average for the country in four or five times. Now, growth is observed in the major industrial centers in the depths of China, especially in Xinjiang, which directly borders with Central Asia.Of course, in the face of fierce competition in the world of transport and cargo flows, the creation of an extensive transportation and logistics infrastructure in the countries of Central Asia, taking into account the trends of the world economy will only increase the potential of the region in transcontinental traffic. It tells the world experience, intensively developing those multimodal logistics centers which are being established in key transport corridors, near to the territories of industrial raw material and human potential. Additionally, these hubs should be crucial for the nucleus of a broader transportation and production infrastructure, focusing on foreign markets. In particular, in Uzbekistan focus is shifted to the creation of an international multi-modal hub with association of capacities of free industrial economic zone (FIEZ) in Navoi. Free Industrial and Economic Zone Navoi is located in the heart of multimodal transport and logistics hub Navoi in close proximity to the international airport, highways and rail routes of international importance. In a radius of 2000 km from FIEZ Navoi are the capitals of the 11 States, more than 40 major cities of Central Asia, the Middle East, India and China. Through Navoi pass all the main rail routes of the region to the south to the ports of Iran and Turkey, to the west and north - to the ports of the Black Sea and Baltic Sea. The shortest rail route from China to Europe also passes through Navoi. With the commissioning of the railway Guzar-Baysun-Kumkurgan, it became possible the shortest transit to Afghanistan, Pakistan and India. One of the key factors of attraction and success of establishing FIEZ Navoi is its proximity to large markets, location in the center of 5 largest and fastest-growing markets - the CIS, Central and Eastern Europe, South and Southeast Asia, the Middle East. FIEZ Navoi have the facilities necessary for the creation of export-oriented enterprises with a complete production cycle from raw material to finished products in all industries. In Kazakhstan, Kyrgyzstan and Tajikistan the establishment of industrial and logistics infrastructure is implemented within the framework of the Eurasian Economic Community, in accordance with the Concept of “Strategy of creation and development of international logistics centers EurAsEC”. The concept is to create a 4-strong network of logistic centers. Logistic Centers - Eastern Gate - will be located on the territory of Kazakhstan: Almaty and Border Dostyk - Horgas. With regard to the South Gate area of Tajikistan is proposed, the area of Kurgan-Tube. But the South Gate could be expanded with the inclusion of Osh (Kyrgyzstan). At the same time it will be set up logistics centers in other cities of EurAsEC. In Kazakhstan in the cities of Astana, Aktau, Alma-Ata, in Kyrgyzstan – near Bishkek. Also, these countries are involved in similar projects within the SCO. In particular, in accordance with the concept of the project ”Dostyk” (Kazakhstan) it is proposed the establishment of a special economic zone Dostyk with border container terminal and industrial and logistics parks. This infrastructure will be created in the development of international transport corridor China-Europe. In Turkmenistan, the establishment of multimodal logistics centers will enhance the efficiency of cargo flows of both regional and macroregional levels. This is due to the advantageous location of Turkmenistan, on the territory of which come together the nodes of transport corridors North-South and TRASECA. In addition, the dynamic development of Turkmenistan will be an important factor in generating demand and freight traffic in the region. In general, it can be noted that, thus far the world financial and economic crisis has once again updated the problem of diversifying the economies of Central Asia and the holding of industrial and innovation policies in the region. Creation of multi-modal logistics centers on the basis of international experience fits into this context as the “Breakthrough project”, which will connect the Central Asian countries to world science, technology and innovation processes. Given the fact that Central Asia is surrounded by or located in proximity to the regions, where today are generated basic economic, trade and financial flows, the post crisis development of the world economy will connect the region to those flows. In this vein, we can assume that this is a time when on can build an industrial and logistics infrastructure projects, which in post-crisis time will pay off with usury. 

Nodir Jumaniyazov, Ph.D.

Center for Political Studies


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