Posted: October 20th, 2022

MULTIMODAL TRANSPORT IN VIETNAM IN RELATIONSHIP WITH ASEAN COUNTRIES A CASE STUDY OF ROUTES THAILAND – CAMBODIA – VIETNAM AND LAOS – SINGAPORE

MULTIMODAL TRANSPORT IN VIETNAM IN
RELATIONSHIP WITH ASEAN COUNTRIES
A CASE STUDY OF ROUTES THAILAND –
CAMBODIA – VIETNAM
AND LAOS – SINGAPORE

ACKNOWLEDGEMENTS

ABSTRACT

Title of Dissertation: Multimodal transport in Vietnam in the relationship with ASEAN
countries.
Degree: MSc.
Each country has its own resources, which that country can take advantage of to create
its own strategy. The conditions to develop multimodal transport are one of the factors to
develop the economy. There are some countries that have many chances to develop
door-to-door services with modern port systems as well as infrastructure, but there are
some land-locked countries which have difficulty to exporting and importing cargoes to
and from other countries. This leads to a requirement for transit cargo in a third country
and creates the demand to combine many modes of transport to save time and cost as
well as take the advantages of their own country.
The objective of this research is to analyze the strong points and drawbacks of Vietnam
in developing multimodal transport with neighboring countries in the ASEAN region.
Besides the cooperation, the competition among ASEAN countries is also emphasized.
The main objective of this research is to find the best combination of modes to transport
cargoes within the ASEAN region, especially transport to and from Vietnam and the
possibility that Vietnam can be chosen as a hub port for the ASEAN region in the future.
The research is based on the minimum of total costs, total transit time and total transit
time variability principle to find the best link between the countries. The research took
two routes Laos – Singapore and Thailand – Cambodia – Vietnam as examples by using
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suitable methods to find the best solution for shippers and multimodal transport
operators when choosing suitable means of transport to ship cargoes from their origins to
their destinations.
The concluding chapter examines the results of the zero-one goal program, and gives
some suggestions about potential routes in the future.
Keywords: multimodal transport, Vietnam, cooperation, ASEAN countries, model.
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TABLE OF CONTENTS

Contents
DECLARATION…………………………………………………………………………………………………ii
ACKNOWLEDGEMENTS………………………………………………………………………………….iii
ABSTRACT………………………………………………………………………………………………………iv
TABLE OF CONTENTS …………………………………………………………………………………..vi
LIST OF TABLES…………………………………………………………………………………………….ix
LIST OF FIGURES…………………………………………………………………………………………..xi
LIST OF ABBREVIATIONS ……………………………………………………………………………xii
CHAPTER 1: INTRODUCTION………………………………………………………………………..1
1.1 Background……………………………………………………………………………………………………. 1
1.2 Objectives………………………………………………………………………………………………………. 4
1.3 Methodology ………………………………………………………………………………………………….. 4
1.4 Structure of research ……………………………………………………………………………………… 5
CHAPTER 2: LITERATURE REVIEW …………………………………………………………….7
2.1 Introduction…………………………………………………………………………………………………… 7
2.2 Model applied to solve multimodal transport mode choice problem …………………. 9
2.2.1 Deciding main factors influencing the mode choice determination of
suppliers and shippers…………………………………………………………………………………………… 9
2.2.2 Model used to solve multimodal transport choice……………………………………. 11
CHAPTER 3: MULTIMODAL TRANSPORT SYSTEM IN VIETNAM…………………16
3.1 Introducing the Vietnamese multimodal transport system……………………………… 16
3.1.1 Legal documents and legislation concerning multimodal transport in
Vietnam 16
3.1.2 Introducing Vietnamese multimodal transport operation enterprises………. 18
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3.2 Multimodal transport infrastructure and multimodal transport operation
situation of Vietnamese enterprises………………………………………………………………………….. 21
3.2.1 The real situation of transport infrastructure (each modes of transport:
road, rail, sea, inland water way and air) in Vietnam as a link of multimodal transport
21
3.2.2 The strengths and weaknesses of multimodal transport business of
Vietnamese enterprises………………………………………………………………………………………… 26
3.2.3 Comment on multimodal transport business in Vietnam…………………………. 34
3.3 Development strategy for multimodal transport system in Vietnam according to
port development planning and Sustainable Development of Transport System
(VITRANSS2) of Prime Minister (Prime Minister, 2009)……………………………………………. 34
3.3.1 The goals and trend to develop multimodal transport system in Vietnam
from now to the year 2020 ……………………………………………………………………………………. 34
3.3.2 Strategy in developing transportation in Vietnam…………………………………… 36
3.4 Suggesting methods to achieve those goals …………………………………………………….. 38
3.4.1 Government has given some methods to support transportation……………… 38
3.4.2 Creating more capital to develop transport infrastructure……………………… 39
3.4.3 Developing transport industry policies …………………………………………………… 40
3.4.4 International integration and competition policies………………………………….. 40
3.4.5 Organization innovation, administration reform policy…………………………… 40
3.4.6 Applying new technology and science policy …………………………………………… 41
3.4.7 Resources development………………………………………………………………………….. 41
CHAPTER 4: ASEAN AND THE MULTIMODAL TRANSPORT SYSTEM OF
ASEAN …………………………………………………………………………………………………………….42
4.1 Trading and transportation system of ASEAN………………………………………………. 42
4.1.1 ASEAN trading……………………………………………………………………………………… 42
4.1.2 Transport system between member countries…………………………………………. 46
4.2 Transportation cooperation among ASEAN countries……………………………………. 51
4.2.1 Giving reasons and the need for transport cooperation among ASEAN
countries51
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4.2.2 Legal basis and programmes to develop the multimodal transport system of
ASEAN 52
4.2.3 Road and rail transport…………………………………………………………………………. 54
4.2.4 Sea transport and ports…………………………………………………………………………. 56
4.2.5 Air transport and related services………………………………………………………….. 58
4.3 The results reached after cooperation in multimodal transport………………………. 59
CHAPTER 5: THE RELATIONSHIP OF THE MULTIMODAL TRANSPORT
SYSTEM OF VIETNAM WITH THE MULTIMODAL TRANSPORT SYSTEM OF
ASEAN COUNTRIES………………………………………………………………………………………..67
5.1 Transportation and logistics service of ASEAN countries………………………………. 67
5.1.1 Introduction………………………………………………………………………………………….. 67
5.1.2 Some main ports in ASEAN countries. …………………………………………………… 69
5.2 Intermodal transport optimization model ……………………………………………………… 72
5.2.1 Choosing deviation variable factors and weighting each factor ……………….. 72
5.2.2 Weighting main factors………………………………………………………………………….. 80
5.2.3 Scenario when applying zero-one goal programming model combining with
integer liner programming …………………………………………………………………………………… 83
5.2.4 Cases of choosing modes and routes to transport cargoes………………………… 85
5.4 Route number 1: from Laos to Singapore via Bangkok – Thailand or Quy Nhon –
Vietnam………………………………………………………………………………………………………………….. 89
5.5 The case of transport cargoes in route Vietnam – Cambodia – Thailand ………… 99
CHAPTER 6: CONCLUSION AND RECOMMENDATIONS……………………………..107
6.1 Conclusion………………………………………………………………………………………………….. 107
6.2 Recommendation………………………………………………………………………………………… 112
References……………………………………………………………………………………………………….114
Appendix 1 – Questionnaire…………………………………………………………………………….119
Appendix 2 – ASEAN highway network map…………………………………………………..123
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LIST OF TABLES
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Table 4.1: Important events of ASEAN……………………………………………………………….. 44
Table 4.2: Population, GDP per capita and share of total ASEAN trade (2009)………… 45
Table 4.3: ASEAN trade by region (2009)…………………………………………………………… 51
Table 4.4: Throughput comparison of main ports in the ASEAN (2008 to 2010) in
million TEUs……………………………………………………………………………………. 60
Table 4.5: Cargo flow to/from China-South East Asia (in TEU)…………………………….. 61
Table 4.6: EU’s trade balance with ASEAN ………………………………………………………… 62
Table 4.7: ASEAN trade with North East Asia (2007-2009) ………………………………….. 63
Table 4.8: ASEAN trade with US (2007-2009)…………………………………………………….. 64
Table 4.9: UNCTAD liner shipping connectivity index 2008-2010 ………………………… 65
Table 5.1: Comparison of Major Transport Modes……………………………………………….. 68
Table 5.2: Logistics Infrastructure of Countries in ASEAN …………………………………… 69
Table 5.3: Country level costs of trading across border (USD)……………………………….. 72
Table 5.4: the result that shippers, logistics provides ranked the carrier performance… 77
Table 5.5: Ranking service related factors …………………………………………………………… 79
Table 5.6: Total distance and time from Bangkok to Ha Noi (Vietnam) ………………….. 88
Table 5.7: Freight, cost and custom clearance charge when three countries across
border of each other ………………………………………………………………………….. 88
Table 5.8: Route, distance and transport time in the route Vientiane – Quy Nhon –
Singapore (Road – Sea)……………………………………………………………………… 90
Table 5.9: Route, freight, cost and custom clearance charge in the route Vientiane –
Quy Nhon – Singapore (Road – Sea) …………………………………………………… 91
Table 5.10: Route, distance and transport time in the route Vientiane – Bangkok –
Singapore…………………………………………………………………………………………. 91
Table 5.11: Route, freight, cost and custom clearance charge in the route Vientiane –
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Bangkok – Singapore…………………………………………………………………….92
Table 5.12: Route, distance and transport time in the route Vientiane – Laem
Chabang – Singapore…………………………………………………………………..92
Table 5.13: Route, freight, cost and custom clearance charge in the route Vientiane –
Laem Chabang – Singapore ……………………………………………………………93
Table 5.14: Route, distance and transport time in the route Vientiane – Lat Krabang –
Port Klang ……………………………………………………………………………………93
Table 5.15: Route, freight, cost and custom clearance charge in the route Vientiane –
Lat Krabang – Port Klang………………………………………………………………94
Table 5.16: Cost, transit time and transit time variable of routes Vientiane –
Singapore ………………………………………………………………………………….94
Table 5.17: Normalized cost, transit time and transit time variable of routes
Vientiane – Singapore …………………………………………………………………95
Table 5.18: Comparing four routes from Vientiane to Singapore …………………………97
Table 5.19: Some shipping lines are operating in the route PhnomPenh – HCMC …99
Table 5.20: Ocean freight, cost, transport time and total time from Bangkok to
Vietnam …………………………………………………………………………………….99
Table 5.21: Cost, transit time and transit time variability of some routes between
Bangkok and HCMC …………………………………………………………………100
Table 5.22: Normalized cost, transit time and transit time variable …………………….101
Table 5.23: Comparing routes between Bangkok and Ho Chi Minh City…………….103
Table 6.1: Intra ASEAN Export …………………………………………………………………….110
Table 6.2: Intra ASEAN Import …………………………………………………………………….110
Table 6.3: The relationship between mode and cargo, distance and service …………113
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LIST OF FIGURES

Figure 1.1: Number of containers transported in the world from 1990 to 2010…………… 2
Figure 2.1: Five components of multimodal transport ……………………………………………. 8
Figure 3.1: Proposed regulatory Framework for multimodal transport…………………….. 20
Figure 4.1: Map of countries in ASEAN ……………………………………………………………… 43
Figure 4.2: Organizational Structure of the ASEAN Strategic Transport Plan (ASTP). 47
Figure 4.3: ASEAN Infrastructure quality …………………………………………………………… 48
Figure 4.4: ASEAN port network system ……………………………………………………………. 50
Figure 4.5: Singapore-Kunming Rail Link …………………………………………………………… 55
Figure 4.6: Container shipping services in South East Asia……………………………………. 57
Figure 4.7: ASEAN trade with EU (2007-2009)…………………………………………………… 62
Figure 5.1: Analytic Hierarchy Process applying multimodal transport …………………… 78
Figure 5.2: Route Vietnam – Laos – Thailand………………………………………………………. 87
Figure 5.3: Route from Ho Chi Minh City to Phnom Penh by inland waterway ……… 105
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LIST OF ABBREVIATIONS

ADB Asian Development Bank
AEC Asian Economic Community
AFAS Asian Framework Agreement of Service
AFTA Asian Free Trade Area
AHP Analytic Hierarchy Process
AHP-ITP Analytic Hierarchy Process – Integer Linear
Program
AHP-LP Analytic Hierarchy Process – Linear Program
AHP-GP Analytic Hierarchy Process – Goal Program
AHP-MILP Analytic Hierarchy Process – Mixed Integer Linear
Program
AHP-PGP Analytic Hierarchy Process – Pre-emptive Goal
Program
AIMO ASEAN Integration Monitoring Office
ASEAN The Association of Southeast Asian Nations
ATAP ASEAN Transport Action Plan
ATM ASEAN Transport Minister
B/L Bill of Lading
BOT Biuld – Operate – Transfer
BT Build – Transfer
BTO Build- Transfer – Operate
CAAV Civil Aviation Administration of Vietnam
CEPT Common Effective Preferential Tariff
COTAC Cooperation in Transport and Communication
DWT Dead weight tonnage
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EDI Electronic Data Interchange
EDIFAC Electronic Data Interchange for Administration,
Commerce
and Transport
ESCAP Economic and Social Commission for Asia and the
Pacific
GDP Gross Domestic Product
HCMC Ho Chi Minh City
ICD Inland Clearance Depot
IFC International Finance Corporation
ISO International Standard Organization
IT Information Technology
KART Kerry Asia Road Transport
MAUT Multi-attribute utility theory
MCDM Multiple criteria decision making
MICT Manila International Container Terminal
MIS Management Information System
MOT Ministry of Transport
MPI Ministry of Planning
MTO Multimodal Transport Operator
ODA Official Development Bank
PPP Public Private Partnership
PTP Port of Tanjung Pelapas
SIDA Swedish International Development Agency
SKRL Singapore – Kunming Rail Link
SOE State Owned Enterprise
SP Stated Preference
SSS Single Stop Service
xiv
STOM Senior Transport Officials Meeting
SWS Single Window Service
TACA Trans Atlantic Conference Agreement
TEUs Twenty Feet Equivalent Unit
THC Terminal Handling Charge
TIR Transport International Routier
UNCTAD United Nations Conference on Trade and
Development
USA United States of America
VICONSHIP Vietnam Container Shipping Line
VINAMARINE Vietnam Maritime Administration
VOSA Vietnam Ocean Shipping Agency
VR Vietnam Railway Corporation
VRA Vietnam Railway Authority
WMU World Maritime University
WTO World Trade Organization
ZOGP Zero-one Goal Progam
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CHAPTER 1: INTRODUCTION
1.1 Background
Containerization was born in the 1950s and has grown consistently since then leading to
the modern concept of multimodal transport that includes the cargo delivery systems
“port to port”, “Container Yard to Container Yard” and “door to door”.
Containerization was born as a prerequisite for multimodal transport to develop.
Multimodal Transport can be viewed as “the chain that interconnects different links or
modes of transport – air, sea, and land into one complete process that ensures an efficient
and cost-effective door-to-door movement of goods under the responsibility of a single
transport operator, known as a Multimodal Transport Operator (MTO) and on one
transport document”. (Al-Muhaisen, 2005)
At first, multimodal transport developed in Western Europe, America and Canada and
Asia after that. In the 1960s and 1970s multimodal transport did not have any chance to
develop because of limitations in technological conditions, organization and especially
in regulation among countries and regions. However, in the 1980s when the United
Nations Convention on the International Multimodal Transport of Goods was adopted,
there were more and more actors joining in: national Multimodal Transport Operators,
train stations, port authorities, institutes and insurance companies. From that time, there
were many conferences and workshops about the development of multimodal transport.
In recent years, Asia has had many chances to promote multimodal transport, for
example in the export and import of containers among countries. The trade between Asia
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and Europe and North of America is the major premise to the development of demand in
multimodal transport. Asian countries are intensifying building infrastructure serving
multimodal transport such as: TransAsian railway line creating a combined sea – rail
transport system to transport cargo intra-Asia and between Asia and Europe.
In 2010, the number of containers transported is estimated to has been more than 150
million TEUs compared to only 29 million TEUs in 1990.
Figure 1.1: Number of container transported in the world from 1990 to 2010
Source: Drewry Shipping Consultants, Container Market Review and Forecast 2006/07
and 2008/09; and Clarkson Research Services, Container Intelligence Monthly,
September 2010.
Multimodal transport is more and more popular with the support from the development
of technology leading to competition among companies and among countries in general,
forcing multimodal transport companies to use some useful tools to create their own
comparative advantage, such as outsourcing, benchmarking and quality management.
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The ultimate goal is to “deliver greater value to customers or create compatible value at
a lower cost, or do both” (Al-Muhaisen, 2005).
Nowadays, multimodal transport forms are variable:
 Sea/air between Far-East and Europe, Europe and North America.
 Road/air: trucks are used at the beginning and the end of the process mainly for
consolidation and gathering cargo at airports and after that cargo will be
transported over a long distance trans-Pacific and trans-Atlantic or
intercontinental.
 Rail/road: this form is used commonly in America and Europe because of its
flexibility, safety and speedy.
 Rail/road/inland water way/ sea.
 Land bridges: the land route is supposed to be the bridge to connect two oceans
with the purpose of reducing cost and time.
 Mini-bridge: usually used on the routes between America and Far-East, America –
Europe, America – Australia. In this form, a through Bill of Lading is used from
the port of loading to port of discharging, after that cargoes are shifted into train
wagons and carried to another port in the same country.
 Micro bridge: the same as mini-bridge form, but the difference is that the
destination is industrial centres.
 Piggy-back: is the combination of road and rail, where containers are transported
by rail from one terminal to another and when coming to the destination they are
placed on trailers and transported by roads.
 Sea-rail: is the innovation in multimodal transport, where containers are placed in
the wagons and rail systems are connected with each other through sea transport.
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1.2 Objectives
The objectives of this dissertation are:
– To analyze the strong points and drawbacks of multimodal transport in Vietnam
and the ability to cooperate with other countries in ASEAN region.
– To review the methods used for solving multimodal transport problems in
choosing suitable modes to minimize cost and time.
– To apply one of these methods to some cases with specific figures, solve
problems and give a conclusion.
– To give some suggestions to improve multimodal transport in Vietnam and
other ASEAN countries.
1.3 Methodology
The author has used various methods in this research and conducted it in four steps:
Step 1: By acquiring knowledge and collecting information – in order to identify the
topic, useful knowledge from books, lectures, articles and field trips have provided a
basic overview of transport in general and through presentations, seminars and
discussion with professors and friends, the author has had a tendency to focus on the
topic related to multimodal transport.
Step 2: By making a literature review – there are many methods in solving multimodal
transport choice of modes. The author has used some of these methods as a tool to find a
suitable way to transport cargo at the minimum cost and while spending the least time.
This step expresses the understanding of the author about the topic selected.
Step 3: Using questionnaires and applying a model – at first, zero – one goal program
modeling was chosen to find the best way to transport cargoes in two cases. After that,
questionnaires were collected from logistics providers, forwarders, shipping lines and
shippers to decide which factors affect the choice of modes of shippers or multimodal
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transport operators. When there were sufficient factors gathered, an analytic hierarchy
process was applied to calculate the weight of each factor.
Step 4: Using solver program in Microsoft Excel to get the result – data was collected
based on many sources and previous research. The result coming out was used for
supporting to the model that was selected. From this result, the author could analyze
why Vietnam had not been chosen as a transshipment port for some countries in the
ASEAN region.
1.4 Structure of research
The study is divided into 6 chapters as follow:
Chapter 1: Introduction – this chapter gives an overview and objectives of the research,
besides, the structure and methodology applied for this research are also mentioned.
Chapter 2: Literature review – this chapter focuses on previous research of other authors
involving in multimodal transport developing countries and models applied to choose
modes in transport cargoes from origins to destinations.
Chapter 3: Multimodal transport system in Vietnam – this chapter analyzes the strong
points and drawbacks of multimodal transport in Vietnam (infrastructure, legal basis,
and so on). After that the author judges the opportunity for the development of
multimodal transport as well as a hub port in Vietnam in the future.
Chapter 4: Multimodal transport system in ASEAN – the cooperation in multimodal
transport of ASEAN countries is mentioned in this chapter, how the legal framework on
multimodal transport affects ASEAN countries. The competition among ASEAN
countries in terms of multimodal transport is also given.
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Chapter 5: The relationship of the multimodal transport system of Vietnam with the
multimodal transport system of ASEAN countries. Case studies of Laos and ThailandCambodia-Vietnam route – this chapter uses actual figures as the input for applying a
model to solve the problem of multimodal transport in choosing modes. Based on the
results the author analyzes the strong points as well as the weak points of each route that
is chosen and is not chosen. Moreover, the author analyzes the opportunities for other
routes in the future.
Chapter 6: Conclusion – the complete work is summarized in this chapter. Although it
still has many limitations, the author suggests some possible trends to research in the
future to improve and develop this topic more.
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CHAPTER 2: LITERATURE REVIEW
2.1 Introduction
The important changes in the world liner shipping began 50 years ago when container
vessels replaced the conventional liner vessels. The intermodal transport system was set
up depending on the transportation of containers from door to door. (ISL, 1991)
Containerization covered both inland and ocean transport and the advantages of
containers are reducing of handling time and the convenience for development of
intermodal and transmodal operations.
Multimodal transport was born as a prerequisite for the development of logistics service.
It also means that shippers or logistics providers want to find suitable modes to transport
cargoes to save costs, but still assure the quality of the service provided.
Multimodal transport is defined as a system in which only one Multimodal Transport
Operator (MTO) is responsible for transport activities. In a research of D’Este (1996), he
gave a theory with five components of multimodal transport that the MTO managed and
co-ordinated in door to door services. (D’Este, 1996)
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Figure 2.1: Five components of multimodal transport
Source: An event-based approach to modeling intermodal freight systems, D’Este (1996)
In Europe, multimodal transport has developed for a long time. It began with traditional
multimodal transport service, including inland transport to the port, cargo handling at
both ends, sea transport and inland transport at destination. Then, multimodal transport
developed in Europe when a liner shipping conference was set up named the Trans
Atlantic Conference Agreement (TACA) which introduced a new definition about
“multimodal transport hub and spoke system”. This new model was based on the rail
transfer for inland transport instead of road transport. In addition, the research of
Rawindaran VNP Nair, Bernard M Gardner & Ruth Banomyong, mentioned that TACA
believed the collective price fixing for the trunk leg of multimodal transport service
brings benefit, not only to the trade but also to customers. The development of
multimodal transport in Europe could be reached when members of TACA verified with
the European Commission and followed the European competition rules. (Rawindaran
VNP. Nair, Bernard M Gardner & Ruth Banomyong, 2011)
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2.2 Model applied to solve multimodal transport mode choice problem
Multimodal mode choice depends on many factors and many studies have mentioned
those factors in different view. In order to solve this problem, there are three steps and
many models can be used in each step. The first step is finding the main factors affecting
the shippers’, forwarders’, multimodal transport operator’s or logistics supplier’s
decision.
Each country has its own infrastructure and conditions to develop multimodal transport
in different ways. Questionnaires are a good method to collect different ideas about this.
The second step is making a decision on which factor will be the main factor and to
identify the weight for each. AHP (Analytic Hierarchy Process) is the most used choice
for factor analysis. The last step is choosing a route with different modes. There are
many methods used by many authors, and in this dissertation the zero-one goal program
modeling was used to choose suitable routes for cargo.
2.2.1 Deciding main factors influencing the mode choice determination of
suppliers and shippers
Weighing the main factors based on AHP (Analytic Hierarchy Process):
In 1980, Saaty developed the AHP model to apply for multiple criteria decision making
(MCDM). The application of AHP is more and more popular, and it is also easy to
integrate with other models to quantify and qualify factors. There are about 35 articles
integrating AHP with mathematical techniques, for example: AHP – LP (Linear
program), AHP – ILP (Integer Linear Program), AHP – MILP (Mixed integer linear
program) and AHP – GP (Goal Program). (Ho, 2007)
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The study of carrier selection was researched a long time ago. McGinnis (1977, 1978
and 1979) and other authors in the early years gave the criteria based on countable things
like costs and time. However, the uncountable things like security of product,
relationship or reputation of carriers are not mentioned much. And these researches from
this period did not weight the salience of each criterion.
Ms Brook (1990) had conducted a study on “Ocean carrier selection criteria in a new
environment”. In this research she mentioned the selection criteria, which are important
to shippers and also the performances that carriers compared on those criteria using the
Analytic Hierarchy Process. Each shipper was required to evaluate the performance of
each of the carrier alternatives available and weight each criteria factor. In this study, Ms
Brook confirmed the importance of “salient criteria” to develop strategies to attract and
meet the requirement of global market, for example: cost of services, frequency of
sailings, transit time, on-time pick-up and delivery and so on.
Liberatore, Matthew J, Miller, Tan (1995) had a research on “A decision support
approach for transport carrier and mode selection” saying that there are many methods
related to multi-criteria choice for example: multi-attribute utility theory (MAUT),
scoring models, goal programming and AHP. The authors also gave the advantages and
disadvantages of each method. It was said that goal programming was used most
popularly in spite of this method being limited to the scalable criteria and with factors
that can be quantitative such as average transit time or late transshipment.
Saaty had given the “eigenvector method” to calculate the weights of each factor based
on a pairwise comparison matrix. Bagchi (1989) illustrated Saaty’s method to solve the
carrier selection problem in which he gave an example to evaluate criteria as follows:
rates, customer service, claims handling, equipment available for flexible schedules and
financial stability. After that there were some more authors applying the AHP method
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like Banai (2000) and Dantas et al. (2001) to connect with a geographic information
system in transit oriented development and find out the suitable location for a terminal.
In 2008 Meethom and Kengpol are the two authors who had a study finding out the
weight of criteria for Thailand Quality Award based on AHP, Weiss and Rao used the
tool for designing for large scale systems, Wang et al. with pairwise comparison of
artificial neutral networks or Zahedi with the decision support systems
In a research of Cullinane and Toy (1999) about identifying influential attributes in
freight route/mode choice decision in which they applied the Stated Perference (SP)
technique in freight route/mode choice to find out which factors affect the decisions.
Besides, this study also used systematic, quantitative analysis by simple methodology,
such as question and hypotheses, sample analysis, category construction, system of
enumeration and units of analysis to set up the most important factors influencing the
mode choice decision. The result that they got from those above methods includes the
five ranked category: cost, speed, transit time reliability, characteristics of the goods and
service. (Kevin Cullinane and Neal Toy, 1999)
Tuna (1999) on the other hand measured the expectations of shippers, freight forwarders
and logistics providers who are the customers of Izmir Port. He found that shippers
really want to have accurate B/L production, safe and without damaged cargoes. (Okan
Tuna and Mustafa Silan, 1999)
2.2.2 Model used to solve multimodal transport choice
In 1955, the Goal Programming was used firstly by Charnes, Cooper and Fergusion,
they explained it as a technique that helps people to find the optimal goal but require the
ordinal and cardinal information for multiple objective decision-making.
In choosing routes for multimodal transport modes, there are a lot of surveys using
different methods to find the most suitable way to transport cargo from the origin to
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destination. Banomyong (2001), Bookbinder et al. (1998), Min (1991) and Chang (2008)
had some researches on quantitative criteria with the purpose of minimizing cost as well
as time.
Athakorn Kengpol, Sopida Tuamee and Markku Tuominen (2004) had a study named
“Design of a decision support system on selection of multimodal transportation with
environmental consideration between Thailand and Vietnam”, which also has a goal of
minimizing cost and time, but related to minimum risk and limiting the effect on
environment.
Jing and Wang (2004) measured and quantified the transportations’ reliability,
infrastructure and degree of public participation. They also gave the goals for
transportation: mobility, accessibility, safety, environmental and public involvement.
(Mingzhou Jin and Haiyuan Wang , 2004). Capelle (1994) showed the potential goals
and performance indicators in his research including mobility, finance, environment,
economics, safety and others. (Capelle, 1994)
The framework of a transportation system and problem of Mr. Paul Battaglia had given a
summary that used four components: the objective, the decision variables, the
constraints and the parameters. He stated that the goal is not only the minimum cost but
also multiple goals and this model gave the chance to know the various connections
between technology and integration at multiple levels. (Battaglia, 2007)
In terms of decision variables, many authors gave their ideas about them, for example
Bragdon and Berkowitz (1999) who emphasized that a transport system which operated
effectively and efficiently is contributing to the standard of life, makes people and
society healthier, more economical and more secured. Boardman (2005) applied the
method using least cost paths such as traditional costs and transfer costs.
13
In a research of Mr. Chang (2007) about “Best routes selection in international
intermodal networks”, he mentioned three main characteristics of problems: shippers
have different targets so the goals should be multiple objectives, existing mode
schedules and delivery times have to be included in the model as constraints and total
weight transported by different modes are not the same, so the author suggested that the
calculation of cost in related to economy of scale. (Chang, 2007)
However, another research of Barnhart and Ratliff (1993) had a study on finding the
good route with low cost when cargoes were transported in trailers. Both of them used
the method to research without depending on the three main characteristics that Chang
mentioned.
The research of Mr. Min (1991) based on a chance-constrained goal programming model
in which he identified four main key factors of international intermodalism: cost factors,
service factors, risk factors and international factors. These factors affected directly on
modal choice, selection of port and foreign trade. The purpose of this research was
applying the model which is cost-minimization, delay of shipment minimization, intransit inventory minimization and Just-in-time requirement satisfaction. He concluded
that the mode’s speed affected the choice of mode rather than the rate of freight or the
variable delivery time and he also improved that the priority of goals had much greater
effect on the choice of mode than the change of the para-metric factors – cost, time and
variability. (MIN, 1990)
Zero-one Goal Programming (ZOGP)
Goal programming was discovered by Charnes et al. in 1955 and it was developed in
1960’s by Ijiri. After that the book about Goal programming was applied in many
aspects, especially for making a plan such as in agriculture or accounting. (M. Tamiz,
D.F.Jones and El-Darzi, 1995)
14
As Srinivasan and Thompson studied in their research involved in choosing a best mode
that met the requirements of minimizing the cost and minimizing the transport time.
There was a method using the operator theory of parametric programming that was
suggested in this research to find the optimal routes as well as optimal modes of
transportation. (Srinivasan, V. & Thompson, G.L., 1977)
In a research of Selcuk Percin, he integrated the analytic hierarchy process and multiobjective goal programming to solve the problem and select the best carriers with
minimum defects rate, minimum late delivery, minimum cost and suppliers’ scores and
after – sales service levels. He confirmed that the integrated AHP-PGP (Analytic
Hierarchy Process – Pre-emptive Goal Programming) model is very necessary for
enterprises to select suppliers. (Percin, 2006)
In research of Kengpol, Meethom and Tuominen about the support system in
multimodal transportation routes in the Mekong sub-region countries, the authors used
the AHP method to weigh three factors cost, time and risk, combined with the ZOGP
method to find the optimal transportation cost, routing time and risk of route. This
method had an advantage, which is that the optimal multimodal transportation route and
needed significant weight can be given by users as they want. (Athakorn Kengpol,
Warapij Meethom, Markku Tuominen, 2011)
Recently, Ms Yang (2009) had a Masters research titled “Intermodal Transportation in
Major Asian Ports” applying the mixed integer linear programming and solver 2007
software to solve the problem of choosing modes to transport cargoes from China to
India. The goal of the research’s model is reducing cost, transport time and transport
time reliability. The significance of this research was the quantitative analysis of the
competitiveness of routes as well as suggesting improvements for people who do
business in this aspect. She mentioned in her research that she found the optimal choice
15
for carriers, shippers and improved the constraint for government and policy makers
also. (Xuejing, 2009)
In another research of Bookbinder and Fox (1998) with the aim of optimizing routings
for intermodal transport containers from Canada to Mexico, they analyzed the
comparative advantage of each route between five origins in Canada and three
destinations in Mexico based on cost and transport time. After that they evaluated the
competitive route options taking the inventory cost, total cost and analyzing the
competitiveness of trucking in order to suggest the potential of expanding intermodal
services. (James H. Bookbinder and Neil S. Fox, 1998)
16
CHAPTER 3: MULTIMODAL TRANSPORT SYSTEM IN VIETNAM
The development of trade not only within the country but also between countries all over
the world has led to door to door services becoming more and more popular. Multimodal
transport is one of the most significant tools to help multimodal transport operators
provide door to door service.
While multimodal transport in the world developed from the 1950s with the
establishment of containerization. In Vietnam, multimodal transport is still in the first
stage because the government has not invested enough money to improve the
infrastructure serving for multimodal transport and enterprises are not good enough to
take a risk with multimodal transport service.
Therefore, in this chapter the author wants to introduce the multimodal transport system
in Vietnam and give some comments about the advantages and disadvantages for the
future development of this system.
3.1 Introducing the Vietnamese multimodal transport system
3.1.1 Legal documents and legislation concerning multimodal transport in Vietnam
In order to develop any business, the legal basis is very important. It requires
government to identify the condition of each country to establish a legal system that is
suitable with the country’s real situation. If the legal system is good, enterprises will
have a chance to have a fairer and healthier competition.
17
The legal basis in Vietnam on multimodal transport firstly introduced was the decree
125/2003 ND-CP about multimodal transport, and circular 10/2004/TT-BGTVT for
introduction of the above decree.
In addition, Vietnam has issued circular 125/2004/TT-BTC introducing customs
procedures for international multimodal transport and a condition about multimodal
transport contracts in clause 119 of the Vietnamese Maritime Code. All aspects
involving sea, inland waterways, rail, road and air are regulated by Codes such as the
Vietnamese Maritime Code, Road Transport Law, Inland Waterway Law, Rail Transport
Law and Civil Aviation Law.
However of the above laws, the Vietnamese Maritime Code is the only one mentioning
“international multimodal transport”, but the main content of this Code only prescribes
the relationship and liability limitation of multimodal operators and shippers.
Furthermore, decree number 125/2003/ND-CP expresses the open minded policy and
integration between countries: both Vietnamese and foreigners can join in multimodal
transport business.
In terms of finance, foreign services providers must have professional liability insurance
in multimodal transport or a bank guarantee to cover the liability of the multimodal
transport entrepreneur for loss and damage, slow delivery and other risks, having
minimum assets of 80.000 SDR or an equivalent guarantee.
However, this decree still has some shortcomings and inadequacies, especially the
procedure to apply for a “multimodal transport license” (for Vietnamese enterprises) and
“investment license in multimodal transport aspect” (for foreign enterprises). There are
many opinions agreeing that this decree has discriminatory treatment and is not
compatible with “foreign investment law” in Vietnam because the ASEAN countries
signed the framework on multimodal transport within ASEAN, and other countries have
18
signed bilateral agreements with Vietnam regarding multimodal transport and for
providing multimodal transport services in Vietnam. They just need to show a
“multimodal transport business registration certificate” issued in accordance with the
country’s jurisdiction and the legal representative in Vietnam, which is the transport
enterprise or Vietnamese transport agent.
Circular number 10/2004/TT-BGTVT prescribes that 100% foreign equity and joint
venture companies are allowed to provide multimodal transport services. Therefore
Vietnamese law has not yet allowed branches and representative offices to provide
multimodal transport services.
In addition, there is Circular number 08/2004/TTLT-BTM-BTC-BGTVT issued by three
ministries, Commerce, Finance and Transport, guiding container transshipment service
implementation at Vietnamese ports. This circular is suited to market demand and meets
the expectations of enterprises who want to deliver multimodal transport services. The
circular applies to ports, organizations and individuals. Any enterprise, organization or
individual with sufficient conditions are allowed to register to do business involving
container transshipment at ports without asking permission.
3.1.2 Introducing Vietnamese multimodal transport operation enterprises
Vietnamese enterprises only registered their business according to decree number
10/2001/ND-CP (19-March-2000) of the Government concerning marine services
businesses, including agencies, brokering, provisioning, tallying, towage, repairing,
cleaning and handling cargo. These types of services employ about sixty seven thousand
people on an annual basis.
But during this period, only two enterprises registered for multimodal transport services,
eleven enterprises registered for logistics services and four enterprises implemented
container transshipment at ports such as Ben Nghe, Hai Phong, Sai Gon and New port.
19
In general, the multimodal transport system in Vietnam at this time was very poor and
showed many drawbacks, for example under-quality infrastructure, there was no legal
basis concerning multimodal transport, enterprises were not confident to serve
multimodal transport services.
After decree number 125/2003/ND-CP entered into force, container transshipment
services were regulated by circular number 08/LB TC-TM-GTVT, dated December 17th
,
2003 of the Ministry of Commerce, Ministry of Finance and Ministry of Transport and
were guided on how to transit containers at Vietnamese ports. Only four state enterprises
participated in this business.
This was the first period of establishing and developing container transshipment services
at ports. There were many shipping lines demanding this service, but the demand was
not met at that time, because they were unable to supply this service before this circular
was established.
Being aware of that problem, multimodal transport service was regulated by the
Government Decree number 125/2003/ND-CP, dated October 29th, 2003. In practice,
this business was not provided by many enterprises. The slow development of these
types of business was partly due to the shortage of future vision, and partly because they
had not adapted to the requirements of market economy concerning container
transshipment services and multimodal transport. On the other hand, since the
government had not completed a uniform legal framework of special legislation related
to transport, it was very difficult for enterprises to provide these services.
20
National Laws Establishing Governing Enabling Environment
Figure 3.1: Proposed regulatory Framework for multimodal transport
Source: Vietnam multimodal transport regulatory review, 2006
Modal Laws
Vietnam Civil Code 2005
Competition Law 2005
Common Investment Law 2005
Unified Enterprise Law 2005
Commercial Law 2005
Business licensing for logistics service
providers
Customs Law 2005
Implementing regulations for logistics services should reference licensing
and liability provisions of modal laws
Vietnam
Maritime
Code
2005
Vietnam Road
Transport Law 2001
(proposed to be
revised)
Vietnam Inland
Waterway
Transport
Law 2004
Vietnam Railways
Law
2005
Vietnam Civil
Aviation
Law 2005
Implementing regulations should reference new Decree
on Multimodal Transport for multimodal licensing and
liability matters
ASEAN Framework
Agreement on International
Multimodal Transport
GMS Framework
Agreement on CrossBorder Transport
New Decree on
Multimodal
Transport
Bilateral Border Transport
Agreements with Laos, China and
Cambodia
Laws with implementing
regulations yet to be issued
Laws/regulations referring to
MTOs or equivalent
21
The figure above shows the combination of many different Codes involved in transport
such as Maritime Code, Road Transport Law, Inland Waterway, Railways and Civil
Aviation law as references to implement regulations on Multimodal transport. It is
complicated to connect these laws with each other, and it needs to sub-sector law be
improved to be suitable with multimodal transport and enhance the role and
responsibility of involved person needs to be enhanced effectively to implement
multimodal transport in general and each link of door to door service in particular.
3.2 Multimodal transport infrastructure and multimodal transport operation
situation of Vietnamese enterprises
3.2.1 The real situation of transport infrastructure (each modes of transport:
road, rail, sea, inland water way and air) in Vietnam as a link of multimodal
transport
Road transport it is said that road transport is the flexible mode of transport because
loading and unloading is possible at any destination. However, in Vietnam the
infrastructure for road transport is poor. Although the government has made an effort to
improve the quality and capacity of the road system, the cost of using road increases
remarkably due to delays and changes in delivery schedules happening frequently. There
is a lack of high quality services and a lack of connection between policy and
implementation. The Government has to enforce some other restrictions on speed and
operating time, for example a container truck cannot enter into Ho Chi Minh City from
6a.m. to 21p.m. according to decision number 121/2007/QĐ-UBND dated Dec 19th,
2007 of Ho Chi Minh city’s People committee.
Moreover, Vietnam has a total road network of 223,290 km; about 17,300 km are
national roads and about one quarter of the whole network has two lanes or more. After
the Project Management Unit eighteen scandal in which the Projects Management
Committee had misused USD 1.8 million, sponsored by the World Bank, Japan and
22
some European countries to develop the transport network in Vietnam, by betting on
football matches, the Vietnam Express Corporation was established with the purpose of
developing the transnational connection and multimodal transport financed by three
alternatives: 100% finance from the Government, local Build – Operate – Transfer and
foreign Public Private Partnership arrangements.
Besides the problem of PMU 18, the Government has taken many experiences and tried
to do their job better to recover what happened in 2006. Therefore, in 2010 the $400
million project of the 56km Cau Gie – Ninh Binh expressway was implemented. The
Noi Bai – Lao Cai highway mostly depends on Asian Development Bank (ADB) loans
and the Ho Chi Minh – Long Thanh – Dau Giay expressway project was supported by
loans from ODA (Official Development Helpance) and ADB. (Phước Hà, 2007)
The Ministry of Planning and Investment (MPI) and the Ministry of Transport (MOT)
will take the responsibility for national roads, investment finance, and implementation of
these national road network projects, while the Vietnam Roads Authority (VRA) will
undertake maintenance. Road traffic is focused on national roads, especially between
and around the major urban centres. Traffic jams and the density of motorbikes are
challenges to road transport and planners as well as policy-makers. Besides, serious
accidents have increased significantly in recent years.
Inland waterway transport is a low cost service. For some shippers who have low value
and less time-sensitive cargoes, inland waterway is the suitable choice. The
infrastructure seems to be improved in terms of handling facilities, frequent maintenance
and more reliable navigational aids. Although inland waterway vessels have become
more efficient and larger, the role of this type of transport is still limited and there is a
lack of competitiveness compared to road transport. Vietnam has 41,900 km of rivers,
about 8,000 km of which are inland waterway navigable.
23
However, only 6,200 km are managed by the central government, the remainder being
managed by local government. Inland waterways mainly transport cargo and earn
freight. There are two large natural rivers in the North: the Red and Thai Binh rivers
play an important role in the inland waterway network. In the South, the density of rivers
is very dense. There are some main routes: Ho Chi Minh – Can Tho, which runs on the
Nha Be river and Soai Rap river, and Ho Chi Minh – Phnom Penh.
On the other hand, there are still some bottlenecks in the development of inland
waterways. They are poorly managed, lack data and information on facilities, conditions,
navigational aids and port facilities. Besides, the services do not meet the requirements
and passages are quite small and low draft. The vessels which are operating in the North
of Vietnam have capacity from 100 to 400 tonnes. In the north, important transport
services are managed by the State. While in the south private operators get the
responsibility for managing the inland waterways. Because of the development of the
private sector, the inland waterway has improved remarkably well.
Railways: The total length of the railway network in Vietnam is around 2600 km
including seven main lines and several branch lines. The former Ministry of Transport
was divided into a series of State Owned Enterprises (SOEs) covering three area
companies, infrastructures for 20 enterprises and the repair and construction of other
aspects involved in rail transport services. In 2003, the Railway Authority was
established to take the responsibility for policy build up, regulation and safety matters.
In addition, the Vietnam Railway Corp. (VR) was given the responsibility for the rail
operations. The railways in Vietnam are not as efficient and effective as in other
ASEAN countries. The railways were operated to connect residential areas to the centres
of culture, agriculture and industry: Vietnam – China, Vietnam – Cambodia, Vietnam –
Laos, Thailand, Malaysia and Singapore. In 2010, there were nearly 280 train stations
with VR operating six main lines with 13.4 million passengers and 8.9 million tons of
freight.
24
Nowadays, the Vietnam Railway has to come with some problems. It is developing very
slowly in terms of speed improvement, investment capital amount and the role of rail
transport is decreasing in both capacity and volume. The railways network can increase,
however, as a result of recent changes in financing and policy by establishing a close
relationship among commercial operators and the government. Besides, Vietnam should
open for investors and multimodal transport operators who are interested in expanding
multimodal transport services.
The other problem of railway transport is that the operators are not concerned about
environmental aspects. They just want to get as much benefit as they can.
Maritime transport: There are many operators doing business in this aspect such as
state-owned companies, local government-owned companies, joint ventures and private
companies. The Dead Weight Tonnage (DWT) of Vietnamese cargo ships is over 1
million, of which 20% are domestic coastal shipping and the rest are engaged in ocean
shipping. The average vessel size is about 8.000 DWT for ocean going ships. There are
some Vietnamese shipping companies providing international services. Vietnamese
seaports are connected with ASEAN hub ports, and a lot of feeder vessels operate on
these routes. Ho Chi Minh City holds a market share of about 50% with 26 feeder
container ships per week. Vietnamese shipping companies keep 21% of the total foreign
trade. It is a relatively small figure, because Vietnamese fleets still have many
drawbacks and suffer from strong competition from strong foreign fleets.
Domestic shipping mainly transports agricultural, mining and industrial products, but
nowadays containers are becoming more and more important.
Air transport The Civil Aviation Administration of Vietnam (CAAV) manages civil
aviation and government takes responsibility for indirect control. In Vietnam, the total
number of airports is 135 civil, military and police airports used within the country, in
18 of which air navigation services are under the management of CAAV. The number of
25
passengers transported in 2010 was about 12 million. Noi Bai airport in Hanoi and Tan
Son Nhat in Ho Chi Minh City are the two biggest airports in Vietnam. In terms of
transporting cargo: the amount of cargo transported abroad from Vietnam was 340.000
tonnes and customers’ demand was expected to increase in 2010. However, air
transportation in Vietnam is still below international standards leading to a low share of
the overall transportation market, so improving the infrastructure as well as the quality
of service are very important.
Ports Some ports in central Vietnam are managed by the Vietnam Maritime
Administration (VINAMARINE), but all ports are under the jurisdiction of the Ministry
of Transport through the Vietnam National Maritime Bureau. Although State owned
ports hold almost the entire market, there are some national shipping lines which operate
in Haiphong, Saigon, Danang and Cantho, and other State owned enterprises of local
governments and ministries other than the Ministry of Transport. The big disadvantages
of Vietnamese ports are shallow water depth, poor infrastructure and poor cargo
handling equipment, but Vietnamese ports are improving in both port efficiency and
amount of cargo handled. Port efficiency depends very much on the conditions of ports
and port fees nowadays can compete with other neighboring countries. The
improvement in customs service procedures, reduction in paper work and investment in
IT systems are contributing to the development in the port system of Vietnam, but
congestion is a big problem hampering the connection of ports with the hinterland,
leading to increase in operating costs. Besides, the ports of Singapore and Hong Kong
are very strong because they have deep seawater. Vietnamese ports can’t compete
because the draft is not sufficient to be called by mother vessels. So, a big amount of
cargoes require trans-shipment in bigger ports to come to other countries. The Ministry
of Transport is trying to build a deep sea port in Cai Mep, which belongs to the fifth port
cluster planning and hopefully this port can receive larger ships in the near future.
26
Logistics In Vietnam nowadays, there are more and more companies supplying logistics
services and they are trying their best to reduce cost and providing the customers with
reasonable freight. Multimodal transport contributes much for logistics activity, and it
creates a lot of revenue for enterprises. In multimodal transport the connections between
modes of transport are very important, but in Vietnam some constraints happen because
of lacking guaranteed service schedules. For example, delivery times of shipments are
not easy to follow, information systems are not good and fast enough, in addition to poor
facilities of custom procedures leading to inefficient handling of cargoes.
3.2.2 The strengths and weaknesses of multimodal transport business of
Vietnamese enterprises
Multimodal transport is applied popularly all over the world. Global commerce
combines information technology in transporting containers leading to the emergence of
multimodal transport. The requirements in trading globally are higher and higher,
containers express their advantages in transport, cargo handling and easy to implement
door to door service. Multimodal transport promotes new business to reduce storage
time and cumbersome procedures, enhancing safety and security. Besides, multimodal
transport assures that door to door services are faster and more effective with the
cheapest price.
When Vietnam accepted foreign investors, economic integration in the region and
internationally, this has brought both opportunities and challenges to Vietnam in terms
of taking the advantages as a nation. Multimodal transport is considered as a strategy in
implementing “industrialization – modernization” in Vietnam because development of
the transportation network is one of the ways to do that for each country. In the 20th
century the world witnessed the development of sea, inland waterway and rail transport,
but now air, road and pipe transport are growing more and more.
27
In contemporary days, Asia holds about 50% of the container volumes in the world and
nine of the ten busiest ports in the world are in Asia (Olsen, 2010). In terms of shipping,
according to UK Port and Logistics Ltd., 10 Asian container shipping lines belong to the
top 20 global container shipping lines. The development of Asian transportation in
general, and maritime aspect in particular, is an advantage to promote the development
of Vietnamese transportation.
It is said that where there is trade, there is transport. In recent years Vietnam is growing
with high speed, more and more commodities are produced and transport demand is
increasing remarkably. The establishment of industrial zones will help transport services
show their ability in connecting producers and customers. Total export turnover of
Vietnam reached USD 71.7 billion in 2010, an increase of 25.5% compared to 2009,
while the increase percentage in the value of export cargoes was 14.5%. Manufacturing
industries have a tendency to increase. The proportion of the goods processing industry
rose slightly from 63.7% to 67.9%. The total of import turnover in 2010 was USD 84
billions, rising 20% compared to 2009, but the value also rose by USD 14 billion.
3.2.2.1 The facilities for multimodal transport
Infrastructure in Vietnam is improving day by day. However, lack of capital investment
leads to non-synchronization in transport networks causing difficulty in connecting
modes of transport for moving passengers and cargoes. Nowadays, Vietnamese
infrastructure is still poor and substandard, including a cumbersome legal system. The
biggest problem, however, is capital: shipping, aviation, railways and roads need capital
to develop as an urgent need nowadays. Ngo Thinh Duc – Deputy Minister of Transport
said that in 2011, in order to prepare well for the plan of economic and social
development and in the five years from 2011 to 2015, the Ministry of Transport will
make an effort to increase cargo transport volume by at least 8-10% and passenger
transport numbers by 9-10% in parallel with reducing accidents and congestion. Besides,
the Ministry will try their best to build new and upgrade as well as renovate more than
28
800km of road, to construct about 10.000m land bridge, to renovate 40km railroad and
build 36.000m2
airport terminals and 600m of runway.
Caimep port of Vietnam is considered to have a potential to become a hub port in the
ASEAN region because of the good geographic location and long sea shore. However,
so as to become deep seaports to receive big vessels, the government needs a big amount
of money to invest in infrastructure and dredging. In addition, the Government has to
attract more international shipping lines and port operators. The other imperatives are
reducing corruption and enhancing the transparency in policy.
However, as mentioned before the complex and restrictive legal environment and the
long payback time caused the hesitation of private investors in investing in infrastructure
development.
The combination of modes of transport in Vietnam, the importance of multimodal
transport is well known, but with the small capital and lack of competent human
resources, enterprises can only be agents, brokers, or other intermediaries. If they want
to have a bigger role in trade, they have to connect with each other. Vinalines and VNR
(Vietnam railways) can be taken as an example; they signed a cooperation agreement on
26th of October 2007 to invest in Inland Clearance Depots (ICD) in key economic zones
of the country and to utilise the railway network to transport cargo to these ICDs. In
addition, in order to connect sea transport and the railway network with Vinalines’s
ports in Cai Mep – Thi Vai, Hiep Phuoc, Van Phong, Ba Ngoi, Hai Phong, Dinh Vu and
Cai Lan, both parties will combine to make decisions to invest in these railways.
Besides, developing Electronic Data Interchange (EDI) systems are also important
nowadays, especially applying to implementing multimodal transport. In Vietnam, EDI
is used effectively in Haiphong port, which constructed an EDI program according to the
standard of Electronic Data Interchange for Administration, Commerce and Transport
(EDIFACT). This system combines container management data in a Management
29
Information System (MIS) to give reports in electronic form to carriers and shipping
agents. The problems are that the awareness of Vietnamese enterprises about ecommerce standards is not high. Only about 45% of agencies and companies confirmed
that they knew them. Even the number of experts knowing these standards is small,
Government has supported enterprises in more training in e-commerce, but this has still
been concentrated on business skills and not on competent human resources. Moreover,
the legal system for EDI systems is not comprehensive enough, lacking of guidance for
applying EDI systems in enterprises. And the last obstacle stems from enterprises’
traditional transaction habits as they still see EDI as a new method and are not familiar
with it.
3.2.2.2 Legal framework
In Vietnam, multimodal transport is regulated in articles 87 and 88 of the Vietnamese
maritime Law in force from 01-Jan-91.
Article eighty seven states the definition about “combined transport”. “Combined
transport” is transport of cargoes by road, inland water way, or air. Although there is no
law similar to international convention, it still started a period for developing
multimodal transport in Vietnam. Article 87 also regulates the responsibility of carriers
when signing a through Bill of Lading.
The law mentions different modes of transport joining in the period of transport, but it
does not regulate clearly about contracts of carriage such as international conventions,
both parties can negotiate and conduct following the international custom or foreign law.
The aviation law regulates the contract in articles fifty nine through article sixty four.
Article 59 indicates that the carrier has to transport the cargoes agreed in the contract to
the place of delivery to the consignee. An Airway bill is the receipt for cargo transported
to destination and is proof of the signed contract. The law also regulates the civil
responsibility of the carrier from article seventy two to article eighty one. The common
30
principle of aviation law allows applying international treaties that Vietnam is a party to.
Besides that, enterprises can negotiate and sign transport contracts, provided they do not
offend mandatory law and Vietnamese custom.
Clearly, maritime and aviation law do not meet the requirements of international trade,
but they are the main legal basis for implementing multimodal transport in Vietnam
nowadays. In terms of road transport, railway transport and inland waterway transport,
the Ministry of Transport has issued the relevant documents and enterprises have to
abide by these documents when doing multimodal transport business.
The establishment of the draft Government Decree on multimodal transport business
will create a more detailed, more sufficient legal basis for multimodal transport services.
This decree contains eight chapters.
3.2.2.3 Enterprises doing multimodal transport business in Vietnam
There are some well-established companies involved in transportation such as
Vietfracht, Vietrans, Transimex, Gemadept, Vosa. However they only do some parts of
the multimodal transport process for example, using multimodal transport documents or
hire means of transport.
Vietfracht has provided combined transport for a long time, especially when foreigners
invested in Vietnam and customer’s demand increased. After the UN Convention on
International multimodal Transport of Good was adopted in 1980, Vietfracht opened the
first export routes from Ho Chi Minh to Paris in 1982, mainly transporting containers in
45 days from:
Ho Chi Minh – Black Sea route, where cargoes were transported by Lash of Interlighter.
This was the first route applying multimodal transport in Vietnam. Because of the
scope’s limitation, Vietfracht could not find enough cargoes to transport. Besides, the
freight rate was very high in the European routes.
31
Black Sea – Regensburg (Germany) route, where cargoes were transported by tugboats
or barges and Regensburg – Paris, transporting cargo by train. The second route of
Vietfracht applying multimodal transport was set up in 1988 transporting asphalt by sea
from Singapore to Danang and by truck from Danang to Savanakhet
Vietfracht signed the combined transport contract from Singapore to Savanakhet for the
shippers, the Swedish International Development Agency (SIDA) in Singapore. For the
route from Singapore to Danang, some ships of Vosco and Donasco were used, but from
Danang to Lao, Vietfracht hired trucks from the Quang Nam – Da Nang road transport
and No. 6 road transport enterprises. However, this route was soon abolished because
the relationship between Thailand and Laos was improved and Laos returned to
transporting cargoes to Bangkok. It was a reasonable decision, because the route
between Vietnam and Laos was not good enough, easy to be interrupted when it rained
and the procedures and customs formalities were cumbersome.
In recent years, Vietfracht has done business on some routes by using multimodal
transports network, but they focus on agent activities for container ships, bulk cargo,
general cargo, reefer, roro, tanker and passenger ships for some well-known shipping
lines. (Vietfracht, 2010)
Vietrans is another enterprise doing multimodal transport business. This company
mainly transported by air, sea and truck. In the first period, Vietrans accepted to be
agents for foreign shipping lines in forwarding cargoes in seaports and airports, and
delivered cargoes to the final customers. In recent years, some shipping lines have
allowed Vietrans to use their combined B/L in consolidating and transporting cargo to
hub ports or other intermediate ports.
In the year 1982, Vietrans boldly operated the first multimodal transport route from
Vietnam to Budapest, choosing Heychevsk as trans-shipment point and Zosuvnestrans as
32
through B/L for the cargo. Although the time for transport was very long, Vietrans was
quite successful on this route.
After that, Vietrans signed a contract as agent for Dynamic Service belonging to the
Jardine Matheson group in Singapore and Militzer Munch in Western Germany.
The strong points of Vietrans were the acumen with demands and expectations of
foreigners and the application of information technology in multimodal transport. It
means they know what their customers need and provide service immediately. They also
had high quality staff, a large warehouse system in ports and hundreds of effective
trucks. They act as agency for some foreign transport companies such as IBF in Hong
Kong, Singapore, Bangkok and DFS Singapore. (Vietrans, 2011)
Vietnam Muti-modal Transport Company (Vietranstimex) In 1976, the company only
acted as transport agent in Da Nang. In 2003, the Minister of MOT issued decision
number 3097/QD-BGTVT changing the name of the company from Transport Service
No. 2 to Multimodal Transport Company belonging to the Ministry of Transport and
operating in a “Mother company – Subsidiary” mode. Most recently, in 2010, the
company received the decision number 1454/QD-BGTVT about approving the plan to
equitize from a “Mother – Subsidiary” company to a “Multimodal Joint Stock
Corporation”.
Nowadays, the company is operating in most regions of Vietnam with four subsidiary
companies, one joint venture with foreigners and four other branches. The company has
around 200 special axles type G7 vehicles utilized in transportation of oversize and
overweight cargoes and more than 100 units of transport as well as stevedoring facilities
of many kinds, enabling them to carry out many jobs at the same time with a whole
dimension up to 3,000 tons in weight. The company is always a first company in
investing in advanced technology combining it with high quality human resource. They
want to become the top transport corporation in dimension/oversize cargoes in the
33
ASEAN region. Multimodal transport is the strategy of the company in expanding the
operational aspects of the company.
Other companies including VOSA, VICONSHIP and GEMADEPT, are implementing
multimodal transport on behalf of joint-venture shipping lines and foreign companies.
In Vietnam, enterprises clearly identified the importance of multimodal transport.
However, they did not have enough capital and lacked human resources so in the past
most enterprises did business as brokers, agents or other intermediaries.
Nowadays, these problems are considerably reduced and Vietnam is setting up
multimodal transport in the same way as global companies. Specifically, two big
transport companies – VINALINES and VNR signed a cooperation contract on 26
October, 2007. They are developing Inland Clearance Depots (ICDs) in some key
economic zones in the north, in the centre and in the south by building railway networks
to transport cargoes to these zones. In the first period, they joined in the project to invest
in ICD Lao Cai. In addition, the railway network connects with the ports of Vinalines in
Cai Mep – Thi Vai, Hiep Phuoc (HCMC), Van Phong (Khanh Hoa), Hai Phong (Lach
Huyen), Dinh Vu (Hai Phong) and Cai Lan (Quang Ninh). Each project requires
cooperation and detailed planning. In terms of multimodal transport, the two companies
will develop the cooperation based on the strong points of each partner. Vinalines will
focus on the big ocean ports and ICDs in key economic zones. However, other transport
networks such as road, rail and inland waterway must be closely coordinated. VNR can
take the advantages of the big amount of cargoes transported, low freight and follow the
time in schedule. In the future the cooperation between Vinalines and VNR will be
promoted effectively.
34
3.2.3 Comment on multimodal transport business in Vietnam
In legal aspect: Vietnam lacks a specific regulatory system on multimodal transport in
the Vietnamese maritime code, road code, inland waterway code, rail code and aviation
code. It is very difficult to identify the responsibility or to connect transportation types
together in a multimodal transport service.
Infrastructure: Most transport networks, such as road, rail, inland waterway, maritime
and air cannot meet the requirements for international multimodal transport demand.
Information technology support for multimodal transport is deficient, despite being more
and more improved.
Enterprises doing multimodal transport business: enterprises are not trained and do not
have much knowledge about transport law, lack experience and find it difficult to
compete with foreign enterprises joining in this type of service in Vietnam.
3.3 Development strategy for multimodal transport system in Vietnam according
to port development planning and Sustainable Development of Transport
System (VITRANSS2) of Prime Minister (Prime Minister, 2009)
3.3.1 The goals and trend to develop multimodal transport system in Vietnam
from now to the year 2020
Multimodal transport brings great advantage and benefit for the economy. The
Vietnamese government is trying its best to develop multimodal transport in the near
future, in particular, they set forth a plan from now until 2020 and the vision for 2030. If
Vietnam can implement this plan well, we will have modern infrastructure meeting the
requirements of domestic transport in general and multimodal transport in particular.
Transportation is an important part of economic – social infrastructure. Investment in
transportation should be one of the first priorities with high speed and sustainability.
Transportation is a prerequisite for developing social, economic and military aspects and
especially for support to the industrialization and modernization contents in Vietnam.
35
Vietnam should take advantage of the geographic location and natural resources of the
country, such as the long coastline and inland waterways to develop transportation
networks suitably leading to reduction social cost.
In order to take advantage of the geographical situation, government and other
organizations should develop transport infrastructure in a synchronized way to set up a
good, continuous network of transport modes between urban and suburban regions in
national scope. Besides, the existing transport network must be maintained and operated
efficiently and effectively.
On the other hand, Government must focus more on development of modern, high
quality transport, suitable cost of transport, assuring safety, limiting environmental
pollution and saving energy, applying information technology, especially multimodal
transport and logistics.
In addition, connecting new investment and innovation, upgrading, taking advantages of
the existing transport industry, modern technology, especially building vessels,
automobiles and wagons used domestically and for export is also very important. It is
necessary to develop a global transportation system in connection with the national
transportation system to cooperate, integrate regionally and globally.
Another thing to do is developing fast, big capacity modes of transport, for example
railway transport in big cities like Ha Noi and Ho Chi Minh. Developing transportation
in the big cities by using public transport to assure safety and convenience is important.
Besides, controlling the increase in personal transport, reducing traffic jams and assuring
safe and order by traffic need to be done immediately.
Moreover, Government is trying to develop local transport to meet the requirements of
industrialization and modernization in agriculture, connecting local transport with
36
national transport networks to create smooth and continuous flow of goods with suitable
cost.
Another problem are resources, Government has to mobilize maximum resources,
increasing domestic resources to invest in transportation. Government should set up
tactics and strategies to attract more investment and take advantage of the country’s
available resources.
Last but not least, using land for transportation suitably, planning to use land for
transport, which requires concensus, close connection and synchronizing
implementation between ministries and local regions will create more conditions to
develop multimodal transport in Vietnam.
3.3.2 Strategy in developing transportation in Vietnam
Transport networks must meet a variety of transportation demand with fast growth and
assure high quality, suitable cost and reduce traffic accidents and limit pollution. In
general, the transportation network needs to be set up with a suitable transport system
between modes of transport, particularly for some commodities in large volumes.
Road transport: highways and roads must be improved and widened especially some
highways having high transport demand, for example 1A highway, 13th highway or
Hanoi highway and so on. Besides, subways are also focused on and capital for new
building and maintaining of subways also needs to be found.
Railway transport: innovation and upgrading existing railways to get the standard up to
120km/h. New high speed railways need to be built, particularly the North-South
railway with the speed of 350km/h. Railway transport can be used for carrying cargoes
as well as passengers as public transport, particularly in Hanoi and Ho Chi Minh City.
Maritime transport: develop the national ports system, including the Van Phong
transshipment port, international gateway ports and deep sea ports in the three key
37
economic clusters that are able to receive the current generation of container ships,
multipurpose ports, specialized ports, passenger ports to meet the economic – social
development and international integration requirement. Investing in and developing port
infrastructure, including berths, narrow passages, hinterland transport and other support
systems.
Inland waterway: upgrade main inland waterway routes, innovate some important
routes, increase length of river routes that are being operated. Upgrading and building
hub ports, cargo berths and passenger berths, especially in the Red river and Cuu Long
river are necessary.
Aviation: upgrade, enlarge and build new airports to international standard, invest in the
international airports in Hanoi and Ho Chi Minh City, research and invest in some new
airports with the same scale and quality as large airports in the region with operation
capacity increasing 3 to 3.5 times in 2020.
Urban transport: developing urban transport infrastructure and public transport,
increasing land used for urban transport from 16 to 26% in 2020. In some big cities
public transport is promoted, elevated railway and metro system in Hanoi and HCMC to
carry passengers to be increased from 35% to 45% in 2020.
Rural transport: the purpose of developing rural transport is to help motor vehicles
transport to villages. Inland waterways are a big advantage of Vietnam and should be
invested in more in the future to create the smooth flow of transport for the Mekong
region, and Cuu Long river delta.
Railway and aviation industry: building new and modern, convenient and varied
passenger wagons used domestically and for export, creating spare parts, components
and assembling modern locomotives.
38
In terms of aviation the strategies are increasing the ability in repairing and maintaining
air planes, aircraft engines and other equipments until 2020, broadening supporting
services to foreign airlines, cooperating in making some air plane components and spare
parts.
3.4 Suggesting methods to achieve those goals
3.4.1 Government has given some methods to support transportation
Firstly, encouraging all economic sectors to join in the transport business or supporting
transport services. Establish transport groups having state’s capital to support some
routes that have big demand such as North – South, public passenger transport and
transport supporting regional, remote areas and islands, even for other unexpected tasks
when necessary.
Secondly, Government should support public transport and transport serving regions,
remote areas and poor regions in many forms, for instance, preferential credits,
incentives after sales facilities, investment or subsidies.
Thirdly, encouraging enterprises to use domestically assembled means to carry
passengers in some forms such as deferred payment, instalment sale and incentive
policies in importing spare parts and equipment that Vietnam has not produced yet.
Fourthly, setting up suitable freight and fee systems between modes of transport in
which State plays a macro instrument role.
Lastly, developing a variety of forms of transport and transport support services in order
to assure safety, high quality, speed and convenience and to save cost is also important.
The Government especially emphasized that developing multimodal transport and
logistics services in transport cargo is very important.
39
3.4.2 Creating more capital to develop transport infrastructure
First of all, maximizing mobilization of all resources, focusing on internal resources and
creating conditions to attract more investment capital from economic sectors under many
forms to build transportation infrastructure, especially investment in some forms such as
Public Private Partnership, Build-Transfer-Operate, Build-Transfer and Build-OperateTransfer should be noted. In addition, Vietnam is applying the form that the State will
invest in building infrastructures and organizations or individuals will lease these
infrastructures to operate and have capital for maintenance or investing in other
constructions.
Second, setting up maintenance and investment funds to develop transport infrastructure
where the first priority is a road maintenance fund. This fund will help rural transport
develop.
Third, building modern urban infrastructure, focusing on public transport with big
number of passengers and static transportation system to solve the traffic jam problem as
well as limit pollution in big cities like Hanoi and Ho Chi Minh City.
Fourth, using suitable land for developing transport infrastructure, especially urban
transport infrastructure, should be considered. Besides, combining public land, metro
and elevated transport to use land effectively, and plan to redistribute urban space to
create more land for development of urban transportation.
Fifth, planning and building transport from communes to districts to assure that rural
transport develops in harmony and links with the national transport system. Besides,
strengthening institutions and improving the institutional management of rural roads.
Finally, innovating means of transport in quality to be suitable with requirements in
transporting cargoes and passengers is also a target to develop transportation.
Strengthening management, periodically checking the quality of transport modes quality
40
and service quality, especially in passenger transport are also important. Moreover,
developing organizations and associations to protect customer’s interest should be noted
carefully.
3.4.3 Developing transport industry policies
Encouraging transport enterprises to expand by forming joint-ventures, domestic and
abroad, in order to mobilize more capital, information technology transfer and
management experience exchange.
Besides, establishing financial leasing companies with State guarantees as a condition
for enterprises to approach or use finance sources. Beside, technologies and new
equipments should meet the requirements of customers.
3.4.4 International integration and competition policies
Develop external synchronization of the transport system and between modes of
transport together with handling equipment with technological standard comparable with
countries all over the world. Capital and resources are priorities to develop a modern
fleet of ships and airplanes. Furthermore quality and service standard must be enhanced
to assure international competitiveness.
Continue amendment of laws, institutions and policies that are suitable to WTO and
other international coordination organizations, which Vietnam is a member of.
3.4.5 Organization innovation, administration reform policy
Government should rearrange organization following a functional model and divide the
state management function of state owned companies between the production and
business function of enterprises.
In addition, innovating administration in transportation by applying information
technology and international standards issued by ISO and mobilizing transport plan
management are suitable to actual requirements.
41
3.4.6 Applying new technology and science policy
First of all, building and improving the standards, procedures, regulations and rules in
survey, design, construction, testing, maintenance, material and technologies used in
transportation. After that Government should encourage enterprises to apply new
technology and new materials.
Next, modernizing modes of transport, cargo handling and applying modern technology,
especially in multimodal transport and logistics services, will create the chance for
domestic enterprises to get more revenue and benefit. Enterprises should be always
encouraged to apply information technology in management, control, and operation.
Finally, enhancing the ability of research institutes and experiment centers involved in
transportation would help develop multimodal transport in the long term.
3.4.7 Resources development
The first step is broadening training, retraining, social training to enhance knowledge,
management skills of managers, servants, officials and workers.
Another way is applying salary and other incentives for workers in transport
employment conditions, especially in maintenance of transport infrastructure in regions,
remote, dangerous and hard working areas.
Furthermore, focusing on enhancing the ability and equipment of training centres,
especially supporting training for pilots, officers and seafarers to enhance qualified
human resources is also a good choice. Afterward, mobilizing the coordination and
connection between companies using human resources and training centres to meet the
requirement of actual demand and to use trained human resources are necessary.
42
CHAPTER 4: ASEAN AND THE MULTIMODAL TRANSPORT SYSTEM OF
ASEAN
4.1 Trading and transportation system of ASEAN
4.1.1 ASEAN trading
ASEAN was set up in 1967 with the purpose of promoting the development of
economies, keeping peace and stability and strengthening the cooperation among
members. Currently, there are ten countries in ASEAN but they are heterogeneous. In
the ten countries, there are seven countries connected physically with each other and
three countries (Indonesia, the Philippines and Brunei) are islands. Vietnam became the
7th member of ASEAN in 1995.
The differences in the economies of the member countries significantly hamper the
development of ASEAN. For example, Singapore is 80 times richer than Myanmar, the
population of Indonesia is 230 million compared to 4.7 million in Singapore and so on.
These diversities have restrained the progress of organization for the 40 years since its
establishment.
43
Figure 4.1: Map of countries in ASEAN
Source: Association of Southeast Asian Nations
Moreover, ASEAN is noted as a potential growth region in which members are
cooperating in three main aspects: economic, political and security and social – cultural.
There were several important events that lead to the establishment and development of
this region as listed in table 4.1 below:
44
Year Event
8-Aug-1967 Setting up the Association of Southeast Asian Nations
(ASEAN)
27-Nov-1971 Signing the Zone of Peace, Freedom and Neutrality
Declaration
24-Feb-1976 Signing the declaration of ASEAN Concord and the
Treaty of Amity and Cooperation in Southeast Asea
28-Jan-1992 Signing the agreement on the Common Effective
Preferential Tariff (CEPT) Scheme for the ASEAN
FTA
15-Dec-1995 Signing the Treaty on the Southeast Asia Nuclear
Weapon – Free Zone
15-Dec-1997 Adopting the “ASEAN Vision 2020” roadmap on the
occasion of the 30th Anniversary of ASEAN
13-Jan-2007 Signing the Cebu Declaration on the Acceleration of
the Establishment of an ASEAN community by 2015
1-Apr-2009 Adopting the Cha-am Hua Hin Declaration for the 2009
– 2015 roapmap for the ASEAN community
By 2015 ASEAN Economic Community to be fully
implemented
Table 4.1: Important events of ASEAN
Source: World Economic Forum (2010). Enabling Trade in Greater ASEAN region
Geneva: Margareta Drzeniek Hanouz and Thierry Geiger.
Each ASEAN country has its own language, own culture and the populations are also
very different from each other. The table below shows the differences in number of
people, GDP and share of export and import within the member States.
45
Table 4.2: Population, GDP per capita and share of total ASEAN trade (2009)
Source: Author, compiled from many sources.
As can be seen in the above table, Indonesia has the highest population with
229,965,000 people, while Singapore has only just more than 4.5 million. However, the
GDP per capital of Singapore is the highest expressed as $62,100/person per year
compared to the three least developed countries of Laos, Cambodia and Myanmar.
Vietnam is crowded with nearly 90 million people in the square of 331.212 km²; the
GDP/person per year is not high at USD 3,100 and its import and export share in the
region is ranked fifth of all the States.
Countries Population GDP per
capita
(PPP)
(USD/year)
Share of total ASEAN
trade (2009)
Export % Import %
Brunei
Myanmar
Cambodia
Laos
Indonesia
Malaysia
Philippines
Singapore
Thailand
Vietnam
400,000
55,390,000
13,995,904
6,320,000
229,965,000
28,310,000
91,983,000
4,553,009
62,713,941
87,375,000
51,600
1,197
2,100
2,500
4,200
14,700
3,500
62,100
8,700
3,100
0.88
0.78
0.62
0.15
14.38
19.36
4.73
33.29
18.82
6.99
0.33
0.53
0.54
0.24
13.33
16.98
6.27
33.84
18.42
9.53
ASEAN 581,005,854 100
46
The target of the region in the declaration of the ASEAN Economic Community
Blueprint is setting up an effective ASEAN Economic Community “into a region with
free movement of goods, services, investment, skilled labor and freer flow of capital”.
At the 18th ASEAN summit, the AEC set up certain regulatory issues in implementing
intra and extra ASEAN commitments and an Integration Monitoring Office (AIMO) to
support the process of the fast implementation of the AEC. This gives effort to make
ASEAN a single market and production base, a highly competitive economic region, a
region of equitable economic development and a region fully integrated into the global
economy. (ASEAN, ASEAN Economic Community Blueprint , 2008-2009)
Additionally, trade and services are anticipated as vital sources of ASEAN in developing
the economy. Member countries have implemented liberalized trade in services on
unilateral, regional and multilateral fronts. The Association has had its own unilateral
and multilateral liberalization framework agreement of services (AFAS) since 1995,
regionalism can act stably, politically, economically and financially. (ESCAP, ASEAN
and Trade integration, 2009)
Eventually, the ASEAN Free Trade Area (AFTA) has been virtually set up. By 1/1/2010
Thailand, Malaysia, Philippines, Indonesia, Singapore and Brunei (ASEAN – 6) had
eliminated import duties on products and the remaining countries will eliminate duties
by 1/1/2015. This event will create the chance for members to trade more with each
other as well as to enhance competition between the enterprises of each country.
4.1.2 Transport system between member countries
Transportation and communication infrastructure contribute significantly to develop
trade and attract investors, especially when there is an interconnection among countries
in a region like ASEAN. Thus it will support the broadening of business activities and
use the facilities and means of transport efficiently and effectively. Moreover, capital in
developing countries is not always available to invest in high technology which is
47
essential for transport and facilities such as roads, railways, ports, warehouses, container
freight stations and handling equipment. Another issue for multimodal transport is
procedures and documents, especially customs procedures, so cooperation will help the
member countries develop infrastructure homogeneously and reduce time and costs
when implementing multimodal transport for customers.
Figure 4.2: Organizational Structure of the ASEAN Strategic Transport Plan (ASTP)
Project and the List of Contributors Source: ERIA study Team
Source: ERIA study team.
In the ASEAN countries nowadays, there are good opportunities to develop multimodal
transport because of the containerization and upgrading of transportation infrastructure
48
as well as communication improvements. From 1999 to 2003, the ASEAN countries
focused on developing the trans-ASEAN transportation network, setting up policies,
agreements on facilitation and encouraging development studies and projects.
(Wisetruangrot, 2005)
Figure 4.3: ASEAN Infrastructure quality
Source: World Economic Forum, Executive Opinion Survey 2008, 2009
In this graph, it is easy to recognize that the infrastructure of Singapore, Malaysia and
Thailand is quite good compared to other countries such as Cambodia, Philippines and
Vietnam. Thus, it can be clearly seen that Singapore, Malaysia and Thailand have
important deep-sea ports as well as gateway ports in the South East Asia region. It is
important to emphasize that infrastructure is very important for countries to broaden
their commerce.
To do this successfully it is estimated that the required investment in infrastructure from
2006 to 2015 is about USD600 billion, of which transport will require about USD157
billion. Nearly 40% of this money will be used for maintaining the existing system, with
the remaining 60% to be used to build new infrastructures. In 2009, the ASEAN
49
members signed the Comprehensive Investment Agreement to attract more individual
investors through the open and free investment area. (M. D. Hanouz and T. Geiger,
2010)
Eventually, the ASEAN Transport Action Plan (ATAP) 2005-2010 that was adopted in
2003 to attract more private investors, established 48 actions to enhance the connection
of multimodal transport, encourage the seamless move of goods and people,
liberalization in the air and maritime transport services, improvement of transport
services and logistics system integration. Furthermore, there is the ASEAN Highway
Network Project signed in 1999 that aimed to upgrade a total of 38,400 kilometres of 23
designated routes into four-lane, asphalted highways.
The ASEAN members have the common idea of setting up important routes to promote
the transport of goods in the region. Moreover, new railroads are being established, road
quality is being upgraded, and procedures and custom barriers are being reduced or
simplified, all this step by step.
Equally important, two big projects are underway: the Singapore-Kunming (SKRL)
railroad and the ASEAN road (AHN). SKRL will run from Singapore via Malaysia,
Myanmar, Thailand, Laos, Cambodia, Vietnam and terminating at Kunming – China.
Malaysia is implementing some solutions to attract investment in SKRL through
conferences and exhibitions about the routes. AHN will try to build and upgrade the
transshipment route.
In December, 1999, the Transport Ministerial Agreement on the development of the
ASEAN road network at the ASEAN Transport Ministers (ATM) 5th Conference was
signed where ASEAN members agreed on the shape of the road network including
routes that each member was appointed to join. In addition, each of the countries should
repair and upgrade their national roads belonging to the ASEAN road network following
the standard and minimum technical requirements. The routes will transverse big cities
50
and potential regions, which can connect with ports, and will have a high technical
standard to meet the demands in moving transshipment and transnational goods. The
ASEAN road network system will be fully upgraded and completed in 2020.
The figure below shows the way cargoes are transported among member countries. As
shown in figure 4.4, maritime transport has developed remarkably in Singapore; this
country is the gateway port, or transshipment port, to transport cargoes to Europe and
America. In addition to maritime transport, road transport has also developed in the
seven countries having borders with each other,
Figure 4.4: ASEAN Port Network System
Source: ASEAN Maritime Transport Development Study (2002), Final Report Summary
2002, Manila: Association of South East Asian Nations.
51
In terms of multimodal transport, the ASEAN Framework Agreement on Multimodal
Transport was signed in 2005 at the ATM 11 conference to supply “door to door”
services throughout the ASEAN region by using different modes of transport and only
one document.
4.2 Transportation cooperation among ASEAN countries
4.2.1 Giving reasons and the need for transport cooperation among ASEAN
countries
Transport and communication development is a prerequisite to promote trade among
countries. At Manila on 15th of December 1987, leaders of 10 ASEAN members agreed
that “the existing transportation system shall be strengthened to ultimately form an
overall ASEAN transportation network”. ASEAN Manila Declaration (1987)
Table 4.3: ASEAN trade by region (2009)
Source: External trade ASEAN statistics
52
The ASEAN Plan of Action in Transport 1996-1998 was conducted successfully to
integrate the regional market and promote the coordination in transportation,
communication and infrastructure sectors. The ASEAN Transport Cooperation
Framework Plan was established to support and assure the implementation of the
“ASEAN vision 2020” and “the Hanoi Plan of Action”. From 1999 to 2004 there were
55 projects and activities focusing on five sectors: transport facilitation, air transport,
land transport, maritime transport and integrated transport development in the ASEAN
based on five strategies, which are the development of infrastructure, promotion of
competitive transport services, capacity building initiatives, improving transport safety
and environment and greater private sector participation.
The ASEAN also cooperates with other countries including the USA, Canada, Japan, EU
and Australia beside cooperation within the region. This strategy will help ASEAN
improve services with higher frequency and lower costs, while taking the advantage of
the natural resources available and low labor costs.
In particular, the ASEAN plan of action in transport and communication (1997) was
supported by technical Helpance and finance from many countries. Australia with a
study on “Open skies”, China and Belgium with the management of human resources
development in river transport and road traffic, Japan with safety of road and maritime
transport, intelligent transport systems and urban transport while the Republic of Korea
helped with highway construction and Germany planned for handling dangerous goods
in ports.
4.2.2 Legal basis and programmes to develop the multimodal transport system of
ASEAN
At the moment of writing (October, 2010), there is a United Nations Convention on
International Multimodal Transport of Goods, but this has not entered into force yet.
However, ASEAN has considered multimodal transport as the first priority in
53
transportation and traffic development. This was specified as one of seven action
programmes on transportation and communication in the ASEAN countries of the Senior
Transport Officials Meeting (STOM) in Thailand 1997. (UNCTAD Secretariat, 2001)
Also, the ASEAN Transport Ministers (ATM) and Senior Transport Officials Meeting
(STOM) had a lot of meetings to reach a Framework on Multimodal Transport including
10 chapters and 36 articles. The content of the Agreement was based on the United
Nations International Convention on Multimodal Transport 1980, the UNCTAD/ICC
Rules for Multimodal Transport Documents, the Cartagena Agreement of the ANDEAN
countries on Multimodal Transport (1993) and business practices in the ASEAN
countries.
Furthermore, at the end of October 2001, the 7th ASEAN Transport Ministers meeting
convened in Malaysia to sign the draft of the “ASEAN Framework on Multimodal
Transport”. This agreement has become a prerequisite for the cooperation of ASEAN on
multimodal transport and is a common legal basis that has created many opportunities
for developing multimodal transport in these countries.
The purposes of the agreement are to prescribe a common legal basis involved in
multimodal transport, and from that point it can promote the development of this service
thoroughly, economically and effectively. Developing multimodal transport helps
broaden mutual trade among countries as well as trade with other countries outside
ASEAN. The Agreement also creates a balance of interests between people who provide
and use international services in ASEAN. The framework includes 11 chapters and 42
articles.
From 1977 to 1994 cooperation activities involving transportation and communication
were directed by COTAC ASEAN (Cooperation in transport and communication). From
1997, there were about 100 projects set forth but the number completed was not great.
Cooperation was mainly in the fields of sea transport and ports, roads, civil aviation,
54
related services like post offices and communication. At that time there were four main
agreements signed: the Multilateral Agreement on Commercial Rights of NonScheduled Air Services among the Association of Southeast Asian Nations in 1971, the
Agreement for the Facilitation of Search of Aircraft in Distress and Rescue of Survivors
in Aircraft Accidents, 1972, Ship Search and Rescue Agreement, 1975 and the ASEAN
Framework Agreement on Recognition of Driving Licenses, 1995.
4.2.3 Road and rail transport
Road and rail transport are important elements of multimodal transport and must be
prioritized. The Governments have purpose of focusing on four aspects related to road
transport
 Transportation in big cities: cooperating in ASEAN in solving the problems that
have to be faced.
 Road safety: increasing the safety level through methods such as checking,
assuring the safety of roads, building new roads and transportation awareness.
 Human resource development: enhancing the knowledge and skills of managers
and staff to plan, manage and administrate road systems.
 Transportation planning and activities: improving and harmonizing the road
transport network in member countries and law standardization in making it easy
to move goods and people among the ASEAN countries.
55
Figure 4.5: Singapore – Kunming Rail Link
Source: ASEAN (1999). Mekong Railway Project. Retrieved June 5, 2011 from the
World Wide Web: https://monkessays.com/write-my-essay/cbre.com.kh/2010/09/mekong-railway-project/
The Singapore-Kunming rail project runs through Singapore, Malaysia, Thailand,
Cambodia, Vietnam, Laos, Myanmar and ends in China. It is estimated to be completed
in 2015 at a cost of around US$11 billion.
However, since there is a shortage of capital, which has lead to lower standards for
international truck facilities at border crossings, not many TIR (Transport International
56
Routier) agreements have been signed making it difficult for trucks to travel between
countries with transshipment goods.
With rail transport, a major problem is the shortage of wagons carrying more than 80
tonnes, and 50 foot wagons.
4.2.4 Sea transport and ports
The Agreement of ASEAN in 1980 on sea transport and commerce was a guideline for
the cooperation between countries in this respect. The purposes of this agreement were
setting up stable and reasonable freight rates as well as providing efficient and economic
sea transport services within the region or outside ASEAN. Some of the main activities
were to broaden and modernize ASEAN fleets, promoting the cooperation of
commercial vessels, minimizing the restraints in sea transport, encouraging the
establishment and upgrading of national information systems in transport goods
registration, setting up more ASEAN sea transport committees, increasing the role of
ASEAN Port Authorities Association and ASEAN Shipowners Association, and
establishing an advanced environment for the closer cooperation among ASEAN
government and private sectors including non-government organizations.
57
Figure 4.6: Container Shipping Services in South East Asia
Source: Najoan, J. E. & Sutomo, H. (2005). Short Sea Shipping As An Alternative For
ASEAN. Surabaya, Indonesia.
ASEAN countries have implemented some projects such as training, information
exchange, economic and technical research, providing sea transport services, safety at
sea and harbours as well as setting up a common stance of ASEAN concerning
international transportation matters.
In terms of safety at sea the target has been to enhance the safety of ships and sea
transport in the ASEAN sea region. Here member States have set up information in
electronic boards, which include an ASEAN vessels information system and a response
plan to deal with accidents at sea and pollution.
58
The weaknesses of sea transport are the links with other transport modes, poor
equipment for handling cargoes and the time to process customs procedures and transit
cargo.
4.2.5 Air transport and related services
Ensuring safety through cooperation within air transport and improving the air traffic
control system have been seen as priorities in air transport. The list below shows the
cooperation in terms of air transport services in the South East Asian region:
 Cooperation in policy: from the year 1990, annual meetings of the Chief
Executives and Senior Executives of ASEAN airlines have been organized, and
in 1992 the ASEAN International Airport Association was established.
 Cooperation in Economic and technical research.
 Cooperation in human resource development.
 Cooperation in professional and information exchange.
A Senior Economic Officials Meeting (SEOM) was first organized in 1994 at Jakarta
which set up a working team for the transport and communication sectors. This team
developed a program called “ASEAN activities planning on transport and
communication” and broadened “Open ASEAN sky policy”. In 1996, the Ministers of
Transport of the ASEAN countries signed an agreement to set up a transportation
cooperation mechanism and Senior Transport Officials Meetings. Ministers also defined
the goals for cooperation in the transportation sector:
 Setting up and developing a harmonized and unified transport system.
 Building up a close and flexible transport network among members and with other
regions.
 Promoting transport cooperation to reach the purposes of the ASEAN Free Trade
Area.
59
 Setting up a mechanism to supervise the implementation of projects and other
activities involving transportation.
With support from the ASEAN Secretariat, STOM is to cooperate in the following
aspects: urban transport, aviation, human resource development, setting up an ASEAN
railway centre and a human resource training centre for ASEAN’s inland waterway and
railway system. The last item is the coordination of sea traffic management tools that
still respect the testing procedures of the individual ASEAN members’ ports.
There are seven cooperation programmes:
 Developing multimodal transport and promoting trade.
 Enhancing the close connection among ASEAN members in terms of
communication, promoting the development of road, sea and air transport.
 Integrating the legal systems and transport rules in the ASEAN countries.
 Completing the aviation management system in the ASEAN.
 Developing human resources for transportation and communication.
 Implementing safety at sea and forecasting pollution caused by vessels.
 Developing the competition policy in aviation services to support the conduct of the
“Open ASEAN sky” policy.
Air transport in ASEAN countries needs to invest more in facilities such as cold storage,
handling equipment and dangerous goods stores.
4.3 The results reached after cooperation in multimodal transport
In order to maintain and develop the status of the ASEAN in the world, there is a need
for coherent policies at the regional and sub-regional levels (UNCTAD, 1989).
Trade cannot be conducted without transportation. Transport adds more value to the
goods. Transport becomes an integral element contributing to the production line and
60
meeting the requirement to reduce cost of storage and multiple handling through the
concept “Just in time”.
In 2010, the main ports in the ASEAN countries loaded and discharged nearly 62.6
million TEUs compared to 55.3 million TEUs in 2009. Singapore had the highest
number of throughput containers, Port Klang, Port Tanjung Pelepas (Malaysia) and
Laem Chanbang (Thailand) also received many large vessels and holds a big share in the
port market in South East Asia.
Ports 2008 2009 2010 Compared of 2010 to
2009
Bangkok 1.45 1.22 1.45 18.8
Laem Chabang 5.13 4.54 5.07 9.5
Ho Chi Minh (Cai Mep) 3.43 3.71 4.3 10.8
Manila 2.98 2.82 3.22 14.2
Port Klang 7.97 7.31 8.87 12.2
Port Tanjung Pelepas 5.6 6.02 6.53 8.5
Tanjung Priok 3.98 3.8 4.71 23.6
Singapore 29.9 25.9 28.4 9.7
Total 60.44 55.32 62.55
Table 4.4: Throughput comparison of main ports in the ASEAN (2008 to 2010) in
million TEUs
Source: Containerisation International, Solid foundation, 2011
Cargo handling equipments in some main ports are not enough and demands for new
terminals are appearing to meet the developments in the trading of goods.
61
The free trade agreement between China and the ASEAN bloc was fully implemented in
January, 2010. According to Dr Surin, Secretary General of the ASEAN group of
countries, “the ASEAN bloc has the capacity to be the supply chain for China’s booming
economy which has been further liberalised by the ASEAN-China FTA”. The trade
between ASEAN and China increased about 26% annually from 2003 to 2008. (Wellstacked, 2011)
Trade lane 2009
(TEUs)
2010
(TEUs)
% increase Forecast
2011
(TEUs)
Chinese exports to
ASEAN
2,659,074 3,251,589 19.5 3,887,104
Chinese imports from
ASEAN
1,674,388 1,858,249 1,5 1,885,256
Table 4.5: Cargo flow to/from China-South East Asia (in TEU)
Source: Containerisation International, China-ASEAN rate drop after FTA, p.14,
January 2011
The Free Trade Area wishes to increase over-land trading opportunities. Kerry Asia
Road Transport (KART) is going to run in ASEAN and China with the purpose of
connecting land/sea and land/air traffic. The table above shows that in 2010 the number
of TEUs exported to China from ASEAN countries increased by 19.5% compared to
2009, while the number of TEUs imported from China rose only 1.5%. China is always
the big market of South East Asian nations, both in terms of imports and exports.
62
The second biggest export market of ASEAN is the European Union. The share of total
EU imports in 2010 was about 5.8%. On the other hand the export share was nearly
4.5% of the total trade of ASEAN.
Table 4.6: EU’s trade balance with ASEAN
Source: EUROSTAT (Comext, Statistical regime 4)
Figure 4.7: ASEAN trade with EU (2007-2009)
Source: EUROSTAT (Comext, Statistical regime 4)
63
The value of imports from Europe is higher than the exported value to Europe. The
Association has recognized the importance of this market, so it has to try its best to keep
the market share and improve the trade balance between the two regions.
Another big market of ASEAN is North East Asia, the total trade between ASEAN and
North East Asia in 2010 also grew by 16.4% compared to 2009. However, the massive
Japanese earthquake (8.9 richter scale) and tsunami on 11th of March 2011 has
restrained the activities significantly. Mr. Wong, APL’s Vice President for the in-Asia,
Middle East and Australia trade, said another problem in the ASEAN countries is
outdated port infrastructure leading to the failure to meet the requirement in transporting
and handling cargo.
The Ministries of Transport of the ASEAN countries and Japan have reviewed 21
projects in which they have cooperated with each other and adopted an Action plan in
implementing these 21 projects in 2005 and 2006. Additionally, a logistics and
transportation improvement plan and a common plan for a new aviation system between
ASEAN and Japan will soon be implemented.
Direction/year 2006 2007 2008 2009
Southbound
Japan 1,928,809 2,323,708 2,560,764 2,393,624
South Korea 675,280 728,961 788,716 638,025
Northbound
Japan 1,777,401 1,987,541 1,937,457 2,273,612
South Korea 6,064,942 6,851,167 7,217,070 7,091,638
Table 4.7: ASEAN trade with North East Asia (2007-2009)
Source: Containerisation International, Head of the queue, p.50, April 2010
64
As shown in table 4.7, the two North East Asia countries, which have a large number of
containers exported and imported to ASEAN are Japan and Republic of South Korea.
Nonetheless, the crisis in 2008 led to the decrease in container trade between these
countries.
In addition, the United States is a good and large market for Southeast Asian nations. It
can be seen clearly in the table 4.8 below that the quantity of cargo transported
Eastbound increased while the cargo transported Westbound decreased from more than
1.5 million in 2008 to nearly 1.3 million in 2009.
Direction/year 2006 2007 2008 2009
Westbound 1,363,398 1,524,524 1,514,920 1,279,356
Eastbound 785,918 801,771 821,262 896,211
Table 4.8: ASEAN trade with the USA (2007-2009)
Source: Containerisation International, Head of the queue, p.50, April 2010
Most ASEAN countries are identified as regional short-sea and feeder operators. Only
some ports in this region can be called at by large vessels and belong to the global
service networks.
Land transport: the purpose of cooperation among ASEAN members in land transport is
to create efficient, economical and safe corridors to connect the 10 members through the
ASEAN Highway Network project, which is mostly located in Myanmar. However, in
order to develop land transport, the infrastructure of these countries needs to be
improved. The Singapore-Kunming Rail Link is another project that started in 1995 and
is expected to be completed in 2015. This route will be Singapore-Malaysia-ThailandCambodia-Vietnam-Thailand.
65
Inland waterways: the big advantage of inland waterways is saving costs. The cost is
very low, especially in the ASEAN, because there are many rivers in the ASEAN
countries, totalling over 51,000km in length. However, the ASEAN member states have
not taken this advantage, which is proven by the fact that the infrastructures, like the port
facilities are very poor and difficult to link with other countries. River ports should be
improved in terms of infrastructure as well as rules and regulations to connect with each
other more easily and to contribute to maritime transport.
Maritime transport: maritime transport is the strong point of almost all ASEAN
countries except one land-locked country, Laos PDR. However, according to the liner
shipping connectivity index issued by UNCTAD, the situation could be better.
Country
2008 2009 2010
Index
Brunei 3.68 3.94 5.12
Cambodia 3.47 4.67 4.52
Laos
Indonesia 24.85 25.68 25.6
Malaysia 77.6 81.21 88.14
Myanmar 3.63 3.79 3.68
Philippine 30.26 15.9 15.19
Singapore 94.47 99.47 103.76
Thailand 36.48 36.78 43.76
Vietnam 18.73 26.39 31.36
Table 4.9: UNCTAD liner shipping connectivity index 2008-2010
Source: UNCTAD, calculated from data of Containerization International Online,
www.ci-online.co.uk.
66
According to Professor Lauri Ojala “The liner shipping connectivity index (LSCI)
measures the connectivity of container shipping connectivity of countries based on
number of container ships, container capacity of ships, maximum vessel size, number of
services and number of carriers sailing from and to a country’s ports” (Ojala, 2011) . In
addition, it shows the accessibility to international trade. The high value of the index
means that this country can access to the global maritime freight transport system easily.
As can be clearly seen in the table 4.9, most of the countries in ASEAN, except
Singapore and Malaysia, do not have a high connectivity index. It is necessary for all
members to attract more investment to achieve deep integration within ASEAN.
Air transport: facilities are important to develop air transport, especially runways and
warehouses. The big problem in ASEAN countries is the shortage of warehouses,
although member nations are trying their best to improve facilities. For example,
ASEAN has developed passenger and freight air services, based on the Skytrax ranking
indicator to rank the air services performance of South East Asian countries from 1 star
to 5 stars.
67
CHAPTER 5: THE RELATIONSHIP OF THE MULTIMODAL TRANSPORT
SYSTEM OF VIETNAM WITH THE MULTIMODAL TRANSPORT SYSTEM
OF ASEAN COUNTRIES.
5.1 Transportation and logistics service of ASEAN countries
5.1.1 Introduction
Today, the trade with other ASEAN countries consists of 25% of the total import- export
turnover of Vietnam. ASEAN plays an important role in developing the Vietnamese
economy and ASEAN is a big market for developing logistics service. When Vietnam
promotes the integration process in logistics, it will help Vietnam become a logistics
centre that provides logistics services for all the nations in ASEAN and creates a chance
to acquire experience from the top logistics service providers in the region.
There is not always cooperation among ASEAN countries, as there are still some areas
of conflict and competition. Examples of these competitions among countries are the
movement from Singapore to Malaysia in 2000 of the Maersk hub port and when the
APL round the world service chose Thailand’s Laem Chabang port as a hub port instead
of Singapore.
68
Rail Road Sea Air Inland
waterway
Speed Low High Very low Very high Very low
Cost saving High Low Very high Very low Very high
Reliability Very high Very high High High High
Safety Very high High High Very high Very high
Flexibility Low Very high Very low Low Low
Availability Low Very high Low High Very low
Environment
friendly
Good Very poor Very good Good Very good
Infrastructure
cost
Very heavy Heavy Heavy Heavy Various
Infrastructure
maintenance
cost
High High Low Low Various
Vehicle size <3000T <40T >3000T <100T <5000T
Door to door
potential
Low Very high Very low Low Very low
Suitable cargo All General
cargo
All General
cargo
All
Economical
distance
Long Short Long/very
long
Long/very
long
Long
Table 5.1: Comparison of Major Transport Modes
Source: Ma, S. (2011). Logistics. Unpublished lecture handout, World Maritime
University, Malmo, Sweden.
69
As can be seen clearly in the above table, sea and inland waterways seem to be the most
economic, safe and environmental. In addtion, cargoes are usually transported over long
distances. While air transport is more reliable and flexible, saving time is the biggest
advantage of transporting by air, however, the air freight is expensive and it is only
suitable for high value and perishable cargo. Rail and road are good choices between sea
and air transport with suitable freight and the time is flexible. It all depends on what kind
of cargo and the priorities of companies and shippers in the transportation of the goods.
Port Airport Railway Road
Cambodia Poor Fair Poor Poor
Indonesia Poor Fair Good Fair
Laos Not applicable Poor Not applicable Fair
Malaysia Good Good Good Good
Philliphines Fair Fair Poor Fair
Singapore Good Good Good Good
Thailand Good Good Good Good
Vietnam Fair Fair Fair Fair
Burma Poor Poor Poor Fair
Table 5.2: Logistics Infrastructure of Countries in ASEAN
Source: www.Business-in-Asia.com, 2006-2007
5.1.2 Some main ports in ASEAN countries.
Port Klang is a transit hub port for cargoes mainly from Australia and New Zealand to
Europe and South-East Asia and cargoes from West India and the Gulf for South-East
and East Asia and the US Pacific coast. (ESCAP, Regional Shipping and Port
70
Development Strategies, 2001). Port Klang is expected to handle 9.6 million
20”containers in 2011. In ASEAN, Port Klang is one of the busiest ports with 54 berths
and with a total berth length of 11.7 thousand meters. It can handle vessels up to 130,000
DWT (only 12 berths). (World Port Source, 2011)
Singapore is always the best choice transshipment port in ASEAN. The cargoes from
and to ASEAN countries, which are transited in Singapore, hold about 70% of the
market share. Singapore is the logistics centre in Asia, where there are enough facilities
to serve large vessels as well as being able to connect with other ports as transshipment
ports. The Port of Singapore may be the best port in ASEAN and it is the hub port for all
the countries in the region. It receives around 140,000 vessels, which carry 30 million
containers, 500 million tons of cargo and a million cruise passengers each year. (World
Port Source, 2011)
Tanjung Pelapas: in the future, the port of Tanjung Pelepas (PTP) has the potential to
become a big hub port to compete with Singapore to attract South East Asian countries.
It is estimated that 86% of cargoes will come to PTP from ASEAN during 2011.
(ESCAP, Regional Shipping and Port Development Strategies, 2001). The port of
Tanjung Pelapas lies in the centre for both local transport as well as international and it
can compete with the Port of Singapore to become the big hub for ASEAN ports. There
are currently 6 berths in the Port of Tanjung Pelapas and the deepest has a draft of 15
meters. (World Port Source, 2011)
Cambodia: Cambodia has two ports, Phnom Penh port is a river port in the capital of
Cambodia and the international port, Shihanoukville, which is 240km away from Phnom
Penh.
Philippines: there are three main container terminals in Manila. Manila International
Container Terminal (MICT) has five berths, aquay length of 1300 meters, a depth of
10.5-14 meters and 10 quay cranes, 7 of which are post panamax. The North Habour has
71
a low draft of 5.5 meters while the South Habour has a draft of 12m and is equipped
with 7 gantry cranes.
Thailand: maritime transport in Thailand carries about 86% of the country’s total freight
volume. There are two ports in Thailand, Laem Chabang and Bangkok. Laem Chabang
can be seen as a hub port for the East-West trade. Airports in Thailand include
Suvanabhumi, Chiang Mai, Chiang Rai, Hat Yai and Phuket. The railway network
connects Malaysia through Padang Besar and Sungai Kolok. The other railway network
is the connection between Laem Chabang and Lat Krabang Inland container depot. The
Road network includes the Asian network that connects Thailand with other
neighbouring countries such as Myanmar, Laos, Cambodia and Malaysia.
The facilities of Laos: Laos is the only land-locked country in ASEAN. There are two
airports, one is Vientinne and the other is Luang Prabang, however the demand is very
low and they do not have enough facilities to handle cargoes nor to keep cargoes. The
strong point of Laos is its road network which includes 2,298km of the Asian highway.
A railway network is not developed. (K.I.Asia, 2010)
Moreover, many countries are chosen as the transshipment places through crossing
border nowadays. Neighboring countries encourage trade and create many opportunities
to help import and export cargo entering each other countries easily and quickly.
Vietnam Cambodia Laos Thailand Singapore
Rank in trading across border
cost in the world
67 122 165 10 1
Procedure of exporting
Document preparation 115 220 120 270 105
Custom clearance and
technical control
100 262 10 50 31
Port and terminal handling 369 100 130 85 180
Procedure of importing
Prepare for document 70 210 120 300 88
Custom clearance 100 265 20 75 31
Handling charge 431 217 300 200 180
72
Table 5.3: Country level costs of trading across border (USD)
Source: International Finance Corporation (IFC), “Doing Business 2008” database.
5.2 Intermodal transport optimization model
This part of the dissertation focuses on analysing and finding the optimum cost and
freight for a 20 foot container from Laos to Singapore via Thailand or Vietnam and from
Bangkok to Vietnam via Phnom Penh using the Zero-one goal programming model
combined with integer linear programming and the Analytic Hierarchy Process.
5.2.1 Choosing deviation variable factors and weighting each factor
Questionnaires were used to survey what factors logistics providers and shippers
consider when choosing the mode or modes of multimodal transport to carry cargoes
from the origins to the destinations. Respondents have ranked the required level of each
factor in 4 classes: 1: very necessary, 2: necessary, 3: quite necessary and 4:
unnecessary. And there are also 4 main factors that affect the choices of customers:
cargo related factors, service related factors, company’s strategy and other factors.
Based on 51 questionnaire interviews with logistics providers, carriers and shippers in
Vietnam, the results are expressed in the following tables:
73
RANK
1 2 3 4
I. Cargo related factors
Value 27 15 8 1
Percentage (%) 52.94 29.41 15.69 1.96
Volume and measurement 22 18 9 2
Percentage (%) 43.14 35.29 17.65 3.92
Weight 19 21 8 3
Percentage (%) 37.25 41.18 15.69 5.88
Weight/measurement 11 23 16 1
Percentage (%) 21.57 45.1 31.37 1.96
Packing 5 26 14 6
Percentage (%) 9.8 50.98 27.45 11.76
Specialized goods :dangerous, fragile, perishable 23 18 4 6
Percentage (%) 45.1 35.29 7.84 11.76
RANK
II. Service related factors 1 2 3 4
Transit time 18 27 5 1
74
Percentage (%) 35.29 52.94 9.8 1.96
Cost 26 21 1 3
Percentage (%) 50.98 41.18 1.96 5.88
Reliability and punctuality 23 22 3 3
Percentage (%) 45.1 43.14 5.88 5.88
Customer relationship 5 30 11 5
Percentage (%) 9.8 58.82 21.57 9.8
Frequency 7 17 19 8
Percentage (%) 13.73 33.33 37.25 15.69
Global coverage 16 22 13 0
Percentage (%) 31.37 43.14 25.49 0
Procedure processing time 12 27 12 0
Percentage (%) 23.53 52.94 23.53 0
Handling equipment arrangement 11 25 15 0
Percentage (%) 21.57 49.02 29.41 0
Legal documentation 26 19 5 1
Percentage (%) 50.98 37.25 9.8 1.96
Secure of product 24 19 5 3
75
RANK
II. Service related factors 1 2 3 4
Percentage (%) 47.06 37.25 9.8 5.88
Electronic Data Interchange 10 25 11 5
Percentage (%) 19.61 49.02 21.57 9.8
Flexibility of modes of transport 7 26 17 1
Percentage (%) 13.73 50.98 33.33 1.96
RANK
III. Company’s strategy 1 2 3 4
Marketing strategy 13 29 5 4
Percentage (%) 25.49 56.86 9.8 7.84
System of modal Assessment 12 25 10 4
Percentage (%) 23.53 49.02 19.61 7.84
Management structure 6 22 17 6
Percentage (%) 11.76 43.14 33.33 11.76
The size of company 2 13 20 16
Percentage (%) 3.92 25.49 39.22 31.37
Capital of company 7 19 19 6
76
Percentage (%) 13.73 37.25 37.25 11.76
Investment policy 12 21 13 5
Percentage (%) 23.53 41.18 25.49 9.8
RANK
IV. Other factors 1 2 3 4
Transport distance 15 17 16 3
Percentage (%) 29.41 33.33 31.37 5.88
Destination area 9 26 13 3
Percentage (%) 17.65 50.98 25.49 5.88
Delivery terms in contract 13 24 12 2
Percentage (%) 25.49 47.06 23.53 3.92
Environmental issues 6 24 18 3
Percentage (%) 11.76 47.06 35.29 5.88
Infrastructure of Vietnam 24 17 7 3
Percentage (%) 47.06 33.33 13.73 5.88
Regulation of Vietnam and other countries 20 20 9 2
Percentage (%) 39.22 39.22 17.65 3.92
77
IV. Other factors 1 2 3 4
Facilities and ability of shipper’s warehouse
12 26 12 1
Percentage (%) 23.53 50.98 23.53 1.96
Communication and information 15 30 5 1
Percentage (%) 29.41 58.82 9.8 1.96
Table 5.4: Shippers’ and logistics providers ranking of carrier performance
Source: Author calculated based on the result of questionnaires
78
Out of the four main factors, the second main factor was taken to choose variables
for a zero-one goal program modelling. However, there are many sub factors in the
second main factor, the three most important sub factors in the second main factor
had to be calculated and decided based on Analytic Hierarchy Process (AHP).
Figure 5.1: Analytic Hierarchy Process applying to multimodal transport
Source: Author’s drawing based on the AHP model set up by many previous authors
In order to choose what the variables will be, the calculation was conducted
according to the formula:
G = ∗1+ ∗2+ ∗3+ ∗4
51
In the formula, A is the number of votes for rank 1 of each sub factor, B is the
number of votes for rank 2, C is number of votes for rank 3 and D is number of votes
for rank 4, and 51 is the number of people that were interviewed.
For example:
Gcost =
26∗1+21∗2+1∗3+3∗4
51
= 1.627451
Cost Transit Time Transit time variable
Route no. 1 Route no.2 Route no.3 Route no.n
Factors
79
Service related factors
Rank
G
1 2 3 4
· Cost 26 21 1 3 1.627451
· Legal documentation
26 19 5 1 1.627451
· Reliability and punctuality
23 22 3 3 1.72549
· Security of product 24 19 5 3 1.745098
· Transit time 18 27 5 1 1.784314
· Global coverage 16 22 13 0 1.941176
· Procedure processing time
12 27 12 0 2
· Handling equipment
arrangement 11 25 15 0 2.078431
· Electronic Data
Interchange 10 25 11 5 2.215686
· Flexibility of modes of
transport 7 26 17 1 2.235294
· Customer relationship 5 30 11 5 2.313725
· Frequency 7 17 19 8 2.54902
Table 5.5: Ranking service related factors
Source: Author calculated based on AHP model
80
After calculation, the results express:
 The smaller the value of G is, the more necessary the sub factor is.
 The most necessary is the cost that shippers have to pay and it is the first
variable.
 The second most necessary factor is legal documentation or exact documents,
but this factor is very difficult to measure and convert to quantity.
 The third factor is service’s reliability and punctuality, which can be
translated to transit time variability. The transit time has a wide range so it is
more necessary to specify the distribution than just finding the average of
transit time (C. Chen, E. v. Zwet, P. Varaiya, A. Skabardonis, 2002). This
factor is a little bit difficult to quantify, but it can be figured out by using the
mean and standard deviation of freight and time quoted by several carriers in
these routes. The optimization of multimodal transport is the trade off
between cost and quality of service supplied, so the transit time variability is
also a very important factor that needs to be considered when choosing mode
of transport in multimodal transport.
 The fourth factor is security of product that is difficult to quantify so the
author chose the fifth factor, which is transit time to become a third variable
to apply the zero-one goal program modeling.
5.2.2 Weighting main factors
The optimization of shippers is minimizing the cost, minimizing the transit time and
minimizing the transit time variable.
However, it is very difficult to identify which one is the most important, cost or
transit time or transit time variable, because it depends on each enterprise with its’
own strategy and its own available resources. This is the reason why the method
“questionnaires” was chosen to ask Vietnamese enterprises to decide what the
variables are, and the Analytic Hierarchy Process (AHP) method was used to specify
the weight of each factor.
81
This model uses the judgment of the author combined with questionnaires to
determine the ranking of criteria. (R.r Haas and O. Meixner, 2005). The rank will be
arranged from 1 to 9 in which 1 is less important, 3 is moderate important, 5 is
strongly important, 7 is very strongly important and 9 is extremely important, and 2,
4, 6, 8 are the compromises between the above.
Based on the result of the questionnaire, the cost is the most important factor, and it
is three times as important as the transit time variable, and the transit time variable is
twice as important as transit time, the cost is fourth times as important as transit time.
After that, pairwise comparisons were used to set up a matrix as follows:

1 3 4
1/3 1 2
1/4 1/2 1

1 3 4
1
3
1 2
1
4
1
2
1

1 3 4
1
3
1 2
1
4
1
2
1
=
2.9999 7 14
1.1666 2.9999 5.3332
0.66665 1.75 3

2.9999 + 7 + 14
1.1666 + 2.9999 + 5.3332
0.66665 + 1.75 + 3
=
23.9999
9.4997
5.41665
Sum = 38.91625
82
Normalizing the result:

23.9999
38.91625
9.4997
38.91625
5.41665
38.91625

=
0.6167
0.2441
0.1392

Continuing:

2.9999 7 14
1.1666 2.9999 5.3332
0.66665 1.75 3

2.9999 7 14
1.1666 2.9999 5.3332
0.66665 1.75 3

=
26.4987 66.4986 121.331
10.55474 26.4987 48.33107
6.041383 15.16638 27.6662

26.4987 + 66.4986 + 121.331
10.55474 + 26.4987 + 48.33107
6.041383 + 15.16638 + 27.6662
=
214.3283
85.38451
48.87396

Sum 348.5868
Normalize the result:

214.3283
348.5868
85.38451
348.5868
48.87396
348.5868

=
0.6148
0.2449
0.1402

As can be seen clearly that:
0.6167
0.2441
0.1392
−
0.6148
0.2449
0.1402
=
0.0019
−0.0008
−0.0010
there is not much
difference between the two, so the author chose the weight for the factors as follow:
83
Wcost = 0.6148 = W1
WTransit time variable = 0.2449 = W2
WTransit time = 0.1402 = W3
5.2.3 Scenario when applying zero-one goal programming model combining
with integer liner programming
The purpose of applying this model was to find the most optimal route to transport
one 20” container from Bangkok (Thailand) to Ho Chi Minh City (Vietnam). The
optimal route is defined as a route with minimum total costs, minimum total transit
time and minimum transit time variability.
There are still limitations, but the author has tried to convert some quality factors to
make it more reasonable. For example, congestion in port, safety of cargoes,
scheduling obstacles and other problems were considered as transit time variability.
Goal
F = W1 d1 + W2 d2 + W3 d3  min (1)
Constraints:
∈ ∈ ∈ Cmnl xmnl = d1 (2)
∈ ∈ ∈ Vmnl xmnl = d2 (3)
∈ ∈ ∈ Tmnl xmnl = d3 (4)
∈ ∈ xmnl = 1 (m ∈ O) (5)
84
∈ ∈ xmnl = 1 (n ∈ D) (6)
xmhk = ∈ ∈ xhnt (h ≠ m ≠ n, h ∈ N – O) (7)
Explanation:
The goal is achieved when the sum of costs, transit time and transit time variability is
minimized. This means finding three deviational variables that make the goal
minimize.
 xmnl is a binary variable, if link (m, n) carried by mode l is chosen then x = 1,
if not, x will be 0.
 xmnl is an integer variable
 d1: deviational variable of total costs (USD)
 d2: deviational variable of transit time variability (hours)
 d3: deviational variable of transit time (hours)
 m: start nodes
 n: end nodes
 l: modes of transport
 O: origin node
 D: destination nodes
 OL nodes directly linked with the origin
 LD: nodes directly linked with the destination.
Parameters:
 W1: weight of cost factor
 W2: weight of transit time variablility
 W3: weight of transit time
 Cmnl: cost that shippers have to pay from m to n by mode l
 Vmnl: transit time variable from m to n by mode l
 Tmnl: transit time from m to n by mode l
85
Constraints:
Formula (2): total cost is minimized
Formula (3): total transit time is minimized
Formula (4): total transit time variability is minimized
Formula (5): to ensure that the origin has only one outflow
Formula (6): to ensure that the destinations have only one inflow
Formula (7): to ensure that the inflows equal to the outflows for all connection
nodes excepting the origin node and destination nodes.
Each program has its own drawback:
 The cost including freight, handling cost, customs procedure, inventory and
insurance fee.
 There are a lot of land transport carriers that have a wide range, so the second
assumption is that different carriers have the same price and service.
 The third assumption is the economic factor that has the same effect on the
freight from the time data collected until this moment.
 Because cost, time and time variability are not in the same units, it was
necessary to convert to another common unit by dividing each value with the
max value in each column.
5.2.4 Cases of choosing modes and routes to transport cargoes
At 26th of November 1999, the agreement between and among the Governments of
the Lao People’s Democratic Republic, the Kingdom of Thailand, and the Socialist
Republic of Vietnam for “Facilitation of Cross-border Transport of Goods and
People” was signed. In the agreement the parties reduced time used for customs
procedures such as exempting cargoes in international transit from routine customs
86
physical inspection at the border, customs escorts in the national territory and the
deposit of a bond as a guarantee for the customs duties. (Vietnam, Laos, Thai, 1999)
According to the Agreement, the operators of each country can enter into the other
two to deliver and pick up cargoes. Cargoes are transported from Thailand to
Vietnam by road along the East West Economic Corridor, from Thailand via
Savannakhet – Laos to Danang or Quy Nhon – Vietnam. This agreement will help
reduce transport costs, and increase the amount of cargo imports and exports between
the countries. At first there were 1200 vehicles, 400 from each country, licensed to
enter the two neighbouring countries, and with some types of cargo that have low
risk, they are allowed to clear fast at the border crossing. (Vovnews, 2009)
Vietnamese cargoes are holding a big market share of Cambodia, Cambodia is also a
big market for Vietnam to transport to 3rd countries. The Cambodians really like
cargoes from Vietnam, and they have many policies to attract more investment and
promote import and export from and to Vietnam. In 2009, the import and export
value had significantly grown at the Tinh Bien (An Giang) border. (Nguyễn, 2010)
87
Figure 5.2: Route Vietnam – Laos – Thailand
Source: Jetro Logistics Network Map.
For example: the cooperation among the three countries Thailand-Laos-Vietnam in
transportation is the route Bangkok-Savanakhet-Ha Noi the distance, time for
carrying cargoes and time at berth as well as cost are displayed in the table below:
88
Route Distance (km) Time (hours) Remark
Bangkok – Mukdahan (road) 700 26
Custom procedure at border
point
3 1 hour for
waiting at
custom office
Savannakhet – Den Savan 250
Transshipment 24
Custom procedure at border
point
1
LaoBao – Ha noi 700 27
Total 1650 81
Table 5.6: Total distance and time from Bangkok to Ha Noi (Vietnam)
Source: Author, synthesized from many sources
Route Freight (per
TEU)USD
Cost Custom
Clearance
charge
(USD)
Bangkok – Mukdahan
 Mukdahan
700
200
Savanakhet – Den Savan
 Document fee
 Transshipment fee
 Custom clearance
250
200
100
200
Lao Bao – Hanoi
 Custom clearance
700
200
Total 2550
Table 5.7: Freight, cost and custom clearance charge when three countries cross
borders of each other.
Source: Author, compiled from many sources.
The route between Bangkok and Hanoi has some advantages, but many
disadvantages still exist. Laos is a land-locked country, so there is no way to take the
advantages of water transport in terms of saving money and reducing cost used for
89
investing in infrastructure. The way to transport cargo depends much on the
infrastructure system in Laos and neighbouring countries. However, the national road
NH1 has high population where inter-city traffic and local traffic are mixed with
each other. This leads to the limitation in speed when transporting cargo from the
origin to other places to about 25km/h for vans and trucks.
Another obstacle on this route is the loss of time for formalities and procedures,
complicated documents and limitations in operating hours at border gates. In spite of
applying the “Facilitation of Cross-border Transport of Goods and People”, carriers
still need to present the original documents, which leads to loosing time and money.
5.4 Route number 1: from Laos to Singapore via Bangkok – Thailand or Quy
Nhon – Vietnam.
Transport cost includes some elements:
Freight, in order to quote the freight for the customer, each company has to consider
many costs related to their quotation such as fuel, crew cost, administration cost,
charter rate, port charges, agency fee and other fees. The freight rate depends on the
length of route, the time of economy, and the balance between demand and supply.
This thesis is based on the freight rates of some carriers that hold big market shares
on these routes.
According to “intermodal transportation cost modelling” and “modelling shipper
costs”, there are four types of cost: inventory costs (including: shipper inventoryholding cost, in-transit inventory holding cost, recipient inventory holding cost and
safety stock), shipment holding costs, facility (warehouse and terminal) cost and
indirect costs (administration, clerical, marketing and claims). (Higginson, 1993)
The storage cost, or perhaps better named, the inventory-holding cost, depends on
where the warehouses are located. This is calculated as the product of the inventory
holding cost parameters, the value of each item shipped and the transportation time.
(Higginson, 1993)
90
The handling cost, depends on the ports that a vessel calls at. For example: Terminal
handling charge (THC) of PSA is 182 SGD for a 20” container and 270 SGD for a
40” container. Phnom Penh and Sihanoukville apply THC of 70USD for a 20”
container. Bangkok port charges THCM at the fee of 2600 baht for a 20” container.
In addition, the tariff, documentation fees and other charges of 21 ports in 17
countries in Asia and the Pacific region including Vietnam were investigated by the
Economic and Social Commission for Asia and the Pacific (ESCAP).
Transit time variable includes the delay time in port because of strikes or bad
weather and so on.
Transit time depends on the characteristics of each route, for example the means of
transport used, the distance between nodes and so on. It includes the loading,
unloading and waiting time at the port. The estimated transit time is compiled in the
following table:
 Vientiane – Quy Nhon – Singapore (Road – Sea)
Route Distance (km) Time (hours)
Vientiane (Laos) – Savannakhet
(Laos)
469 24
Savannakhet (Laos) – Lao Bao
(cross border point)
264 26
Lao Bao – Quy Nhon (Vietnam) 330 24
Quy Nhon – Singapore
(including 24 hours feeder
connection)
1910 120
Total 2973 194
Table 5.8: Route, distance and transport time in the route Vientiane – Quy Nhon –
Singapore (Road – Sea)
Source: Author, compiled from many sources
91
Route Freight (per
TEU)USD
Cost USD Custom
Clearance
charge
(USD)
Vientiane (Laos) –
Savannakhet (Laos) – Quy
Nhon (Vietnam)
1100 50 100
Quy Nhon – Singapore
(including 24 hours feeder
connection)
 Other charges
400 60
600
Other cost
 THC in Singapore
 Other costs
146
100
Total 2556
Table 5.9: Route, freight, cost and custom clearance charge in the route Vientiane –
Quy Nhon – Singapore (Road – Sea)
Source: Author, compiled from many sources
 Vientiane – Bangkok – Singapore (Road – Sea)
Route Distance (km) Time (hours)
Vientiane (Laos) – Nong Khai
(Thailand)
20 8.5
Nong Khai (Thailand) – Bangkok
Port (Thailand)
650 16
Bangkok Port – Singapore 1542 110
Total 2212 134.5
Table 5.10: Route, distance and transport time in the route Vientiane – Bangkok –
Singapore
Source: Author, compiled from many sources
92
Route Freight (per
TEU)USD
Cost
USD
Custom
Clearance
charge (USD)
Vientiane (Laos) – Nong Khai
(Thailand)
 Document fee
 Transit fee
 Custom (Laos)
 Custom (Thailand)
100
55
70
13
13
Nong Khai (Thailand) – Bangkok
Port (Thailand)
 THC
350
86
Bangkok Port – Singapore
 THC
 Other charges
230
146
150
Total 1213
Table 5.11: Route, freight, cost and custom clearance charge in the route Vientiane –
Bangkok – Singapore
Source: Author, compiled from many sources
 Vientiane –Laem Chabang – Singapore (Road – Sea)
Route Distance (km) Time (hours)
Vientiane (Laos) – Thanaleng (Thailand) 13 1
Thanaleng – Laem Chabang Port 719 24
Laem Chabang port
 Handling cargo
 Feeder connection
24
24
Laem Chabang Port – Singapore 1470 96
Total 2202 169
Table 5.12: Route, distance and transport time in the route Vientiane – Laem
Chabang – Singapore
Source: Author, compiled from many sources
93
Route Freight (per
TEU)USD
Cost Custom
Clearance
charge (USD)
Vientiane (Laos) – Thanaleng
(Thailand)
55
Thanaleng – Laem Chabang
Port
 Document fee
 Laos
 Thai
365
55
13
13
Laem Chabang port
 Handling cargo
 Other charges
86
150
Laem Chabang Port –
Singapore
 THC
 Other charges
200
146
150
Total 1233
Table 5.13: Route, freight, cost and custom clearance charge in the route Vientiane –
Laem Chabang – Singapore
Source: Author, compiled from many sources
 Vientiane – Lat Krabang – Port Klang – Singapore (Road – Rail – Road)
Route Distance (km) Time (hours)
Vientiane (Laos) – Thanaleng
(Thailand)
13 1
Thanelang– Lat Krabang 580 45
Lat Krabang – Port Klang 1180 100
Port Klang – Singapore 407 34
Total 2180 180
Table 5.14: Route, distance and transport time in the route Vientiane – Lat Krabang –
Port Klang
Source: Author, compiled from many sources
94
Route Freight (per
TEU)USD
Cost Custom
Clearance
charge (USD)
Vientiane (Laos) – Thanaleng
(Thailand)
55
Thanaleng – Lat Krabang
 Document fee
 Laos
 Thai
 Transfer mode
400
55
100
13
13
Lat Krabang – Port Klang
 At Lat Krabang
350
200
Port Klang – Singapore
 Transfer mode at
Singapore
 Other charges
200
100
150
Total 1636
Table 5.15: Route, freight, cost and custom clearance charge in the route Vientiane –
Lat Krabang – Port Klang
Source: Author, compiled from many sources
Start node End node Mode Cost Transit
time
Transit
time
variable
Vientiane Thanelang Road 55 1 0.166667
Vientiane Nongkhai Road 251 28.5 9
Thanelang Laemchabang Road 682 72 14
Thanelang Lat Krabang Rail 581 45 10
Nongkhai Bangkok Road 436 16 4
Bangkok Singapore Sea 526 120 17
Laeam
Chabang
Singapore Sea 496 96 15
Lat Krabang Port Klang Rail 550 100 17
Pork Klang Singapore Road 450 34 9
Vientiane Quy Nhon Road 1250 74 14
Quy Nhon Singapore Sea 1306 110 16.3333
Table 5.16: Cost, transit time and transit time variable of routes Vientiane-Singapore
Source: Author, collected from various industrial sources.
95
Start node End node Mode Normalized
Cost
Normalized
Time
(hours)
Normalized
Transit time
variablility
Vientiane Thanelang Road 0.042113323 0.008333333 0.009803941
Vientiane Nongkhai Road 0.192189893 0.2375 0.529411765
Thanelang Laemchabang Road 0.522205207 0.6 0.823529412
Thanelang Lat Krabang Rail 0.444869832 0.375 0.588235294
Nongkhai Bangkok Road 0.333843798 0.133333333 0.235294118
Bangkok Singapore 0.402756508 1 1
Laeam
Chabang
Singapore Sea 0.379785605 0.8 0.882352941
Lat
Krabang
Port Klang Rail 0.421133231 0.833333333 1
Pork Klang Singapore Road 0.344563553 0.283333333 0.529411765
Vientiane Quy Nhon Road 0.95712098 0.616666667 0.823529412
Quy Nhon Singapore Sea 1 0.916666667 0.960782353
Table 5.17: Normalized cost, transit time and transit time variable of routes
Vientiane – Singapore
Source: Author’s calculations.
96
Using solver 2007 in excel, the scene was:
After solving by using excel, the best route is Vientiane- Thanelang-Laem ChabangSingapore (Road – Road – Sea) with the total cost being 1233 USD/container 20” of
dry cargo, the total transit time variable is 29.16666 hours and the total transit time is
169 hours.
97
Number Route Cost
(USD)
Time
(hours)
Variable
time
Target
1 Vientiane – Quy Nhon
– Singapore (Road –
Sea)
2556 30.3333 184 1.855189263
2 Vientiane – Bangkok –
Singapore (Road –
Sea)
1273 30 164.5 1.223632541
3 Vientiane –Laem
Chabang – Singapore
(Road – Sea)
1233 29.16666 169 1.19806
4 Vientiane – Lat
Krabang – Port Klang
– Singapore (Road –
Rail – Road)
1636 36.16667 180 1.501460376
Table 5.18: Comparing four routes from Vientiane to Singapore
Source: author calculated
Comparing the cost, transit time and transit time variability, Thailand is more
competitive than Vietnam, although at the Thanaleng border between Thailand, and
Laos, the time used for custom clearance can be long and at the custom house
pilferage can occur when the customs officers check the goods.
Route number 4 has a high cost, longer transit time and lower reliability because the
ICD at Lat Krabang is the major ICD in Thailand, and always has traffic jams
because the cargoes from and to Laem Chabang are loaded and discharged there up
to 40%. Another reason is that Laeam Chabang wishes to save costs and due to the
direct transport from Bangkok to Laem Chabang this causes traffic jams so Lat
Krabang is chosen to reduce this. (State Railway of Thailand)
When transporting cargoes across Vietnam, the infrastructure is the biggest
disadvantage since the main road on this route is under-qualified. Although the
98
freight is not a big problem in either road or sea transport compared to transport via
other ports in Thailand, the cost paid for a container in transit in Quy Nhon is twice
as high as in Bangkok. In addition, 6% of the total inland transport cost is spent at the
border between Laos and Quy Nhon. The reliability of this route is very low,
shippers sometimes have to wait for a long time before cargoes are loaded on to the
vessel and transported to Singapore. Moreover, the Single Stop Service (SSS) and
Single Window Service (SWS) are not fully implemented. The number of officials
affects the time and cost of cargo trasitting.
According to Prof. Banomyong, the other charges that are indirectly involved in
transportation represent nearly 50% of total cost that shippers have to pay. In order to
reduce these costs, the cooperation between Laos and Vietnam should be promoted
to a higher level, the imbalance in trade between the two be limited and more
attention paid to “Green Logistics”.
According to Salakham (2007), “Laem Chabang’s main objective to cater to domestic
transportation requirement. Although Danang has the advantage of strategic location
and shorter route, Laem Chabang is more competitive in terms of modern
infrastructures, convenient domestic transportation systems and efficient port
facilities. In 2006, only 37,000 TEU containers passed through Danang compared to
Laem Chabang’s volume of 4.1 million TEU containers. It will take a lot of capital
and time before Vietnam, Laos and Burma can catch up” said Chalermkeat
Salakham, Director General of Laem Chabang Port. (กองบรรณาธิการ, 2007)
Time is the difficult thing which needs to be reduced by implementing SWS and SSS
quickly and homogenously, as well as applying more advanced technology in
checking and monitoring cargoes.
Vietnam should care more for the human resources, by enhancing employees skills in
logistics to reduce costs and attract more customers. Also, enterprises should use
modern equipment to handle cargoes and encourage more investment in the
infrastructure.
99
5.5 The case of transport cargoes in route Vietnam – Cambodia – Thailand
The case choice of routes between Thailand-Cambodia- Vietnam: applied to a 20”
container.
Data collection:
There are not many carriers operating in this trade, but each carrier transports in
different time and with different freight. The inland waterway freights of some main
enterprises operating on the Phnom Penh-Ho Chi Minh City (HCMC) route are:
Name Freight (cont 20”) Time (hours)
Gemadept 270 36
Hai Minh 240 40
Tan Cang Cypress 250 48
Average 253.333 40.333
Standard deviation 15.275 7.5055
Table 5.19: some shipping lines are operating in the route PhnomPenh- HCMC
Source: author complies from enterprises
Name Freight (cont
20”)
Cost/cont Time (hours) for
tranportation
Total time
K”Line 300 600 72 90
Vosco 300 600 73 95
Vinaline 320 620 73 95
NYK 300 600 72 92
Bien Dong 280 580 74 96
Average 300 600 72.8 93.6
Standard
deviation
14.1421 12.65 0.8367 2.50998
Table 5.20: ocean freight, cost, transport time and total time from Bangkok to
Vietnam
Source: author complies from enterprises
100
Number Start nodes End nodes Mode Cost Time Variable
1 Bangkok Phnom Penh Road 690 28 2
2 Bangkok Phnom Penh Rail 725 24 3
3 Bangkok Sihanoukville Sea 800 45 3
4 Bangkok HCM Sea 600 93.6 2.50998
5 Bangkok HCM Air 7500 4 0.5
6 Sihanoukville Phnom Penh Road 210 5 0.451
7 Sihanoukville HCM Sea 1000 48 3
8 Phnom Penh HCM Road 600 27 5
9 Phnom Penh HCM
Inland
wtw 253 40.333 7.5055
10 Phnom Penh Sihanoukville Road 210 5 0.451
Table 5.21: Cost, transit time and transit time variability of some routes between
Bangkok and HCMC
Source: author complied from many industrial sources.
Number Start nodes End nodes Mode Cost Time Variable
1 Bangkok Phnom Penh Road 0.092
0.2991453 0.266471
2 Bangkok Phnom Penh Rail
0.0966667 0.25641026 0.399707
3 Bangkok Sihanoukville Sea
0.1066667 0.48076923 0.399707
101
4 Bangkok HCM Sea
0.08 1 0.334419
5 Bangkok HCM Air
1 0.04273504 0.066618
6 Sihanoukville Phnom Penh Road
0.028 0.0534188 0.060089
7 Sihanoukville HCM Sea
0.1333333 0.51282051 0.399707
8 Phnom Penh HCM Road
0.08 0.288462 0.666178
9 Phnom Penh HCM
Inland
wtw
0.0337333 0.43090812 1
10 Phnom Penh Sihanoukville Road
0.028 0.0534188 0.060089
Table 5.22: normalized cost, transit time and transit time variable.
Source: author calculated based on table 5.21
Data was entered into an excel file and solver was used to find the best choice of
route.
102
Route number 4 from Bangkok to Ho Chi Minh City by sea was seen to be the best
route with the normalized target is 0.34097, d1= 0.08, d2=1 and d3=0.334419.
Number Route Cost
(USD)
Time
(hours)
Variable
time
Target
1 Bangkok
Phnom Penh
Phnom Penh
Ho Chi
Minh city
1290 51.94171 6 0.353726
2 Bangkok
Phnom Penh
Phnom Penh

HCMC
943 65.27471 8.5055 0.406969
3 Bangkok
Sihanoukville
Sihanoukville
HCMC
1800 93 6 0.50296
4 Bangkok
Sihanouville
Sihanouville
Phnom
Penh
Phnompenh
HCMC
1263 90.333 10.9565 0.544548
5 Bangkok
HCMC
7500 4 0.55 0.634606
103
6 Bangkok
Ho Chi Minh
City 600 93.6 2.50998 0.34097
7 Bangkok
Phnom Penh
Phnom Penh
Ho Chi
Minh City
1325 51 8 0.391491
8 Bangkok
Sihanouville
Sihanouville
Phnom
Penh
Phnompenh
HCMC
1610 77 8.451 0.491306
9 Bangkok
Phnom Penh
Phnom Penh

HCMC
978 64.333 10.5055 0.444733
10 Bangkok
Phnom Penh
Phnom Penh
Sihanoukville
Sihanouville
HCMC
1935 77 6.451 0.480588
11 Bangkok
Phnom Penh
Phnom Penh
Sihanoukville
Sihanouville
HCMC
1900 77.94171 4.451 0.442823
Table 5.23: Comparing routes between Bangkok and Ho Chi Minh City
Source: author calculated
There are many choices of routes and combinations of modes when transporting
cargo from one node to another. With the developments in high technology and
104
information collected by shippers, excel with solver program can easily run and give
results in just a few seconds. This program can be applied for more complex routes
with many origin nodes and destinations as well as intermediate nodes.
The route from Bangkok to Ho Chi Minh City by sea was seen to be the best choice
because it saves time and costs compared to other routes. In addition, the link
between the two large markets makes it easy to have frequent services.
However, if there is the requirement to transit in Cambodia, route number 6, number
1 and number 7 will be the other good alternatives.
Route number 1 from Bangkok to Phnom Penh and from Phnom Penh to Ho Chi
Minh City by road covers a total distance of nearly 950 km. However, the time for
transport and transit at the border takes nearly as long as transporting by sea and the
cost is more than twice as high. Most roads on this route are urban, so it is easy to be
delayed by traffic jams in rush hours. One more bottleneck is the customs clearance,
which takes too much time at the border and requires the unity of 3 countries to
allow the trucks of each country to enter others without checking.
Route number 2 is a potential route because cargoes can follow the river in the South
of Vietnam to Phnom Penh with little difficulty except the bottleneck at Cho Gao
channel, which is narrow and where traffic jams occur regularly.
105
Figure 5.3: route from Ho Chi Minh City to Phnom Penh by inland waterway
Source: Gemadept corporation
Due to the limitation in draft of the route, the maximum size of vessel is 100 TEUS.
Consequently, the capacity is not high enough to meet the requirements of the
customers.
The other routes do not seem to be significantly operated because of the high cost,
long transit time and low quality infrastructure to make the transportation process
smooth.
In the future, if the missing link between Phnom Penh and Ho Chi Minh City is
completed the transport time from Bangkok to Ho Chi Minh City can be reduced
106
significantly. However, it is said that this link will be difficult to be completed, since
there is no incentive to build it and a lack of investment.
107
CHAPTER 6: CONCLUSION AND RECOMMENDATIONS
This chapter has the purpose of summarizing all the tasks that the author has done. In
addition, the author mentions the limitations of this dissertation. Furthermore some
recommendations to improve these limitations are given. At the end of the chapter,
some comments and recommendations for further research in the future are included.
6.1 Conclusion
Nowadays, logistics is becoming more and more popular. One way that helps this
business succeed is paying attention to multimodal transport. However, choosing the
best way to transport cargoes by using more than one means of transport is very
complicated and requires Multimodal Transport Operators to consider many factors
such as cost, time, route and so on. This research focuses on following matters:
There are many ways to choose the important elements affecting the choice of
carriers. There are some studies that have researched this. However, different
countries and different enterprises have different criteria. Therefore, in order to find
the best criteria, it is necessary for this thesis to implement a survey that asks the
people who are giving multimodal transport services in the country that the author
wishes to analysis. The result of the survey has revealed that for Vietnamese
enterprises, the cost, transit time, security of cargo and reliability are the most
important aspects.
From that result, the thesis continues with the decision of which method to use to
find the best means of transport to carry cargoes from one origin to the expected
destination. The author chose to the methods of linear programming and non-linear
108
programming that were used by some authors in selecting modes for transporting
cargoes. Consequently, the linear program with zero-one goal modeling was chosen
in which the targets are based on the expectations of Vietnamese shippers. They are
minimizing cost, transit time and transit time variables.
Two routes from Laos to Singapore via Vietnam or via Bangkok and from Bangkok
to Ho Chi Minh City via Phnom Penh are chosen to illustrate how the model works.
When the outcomes are known with the help of a solver program in Microsoft Excel,
the thesis can answer these questions:
 Which modes of transport are selected?
 Which routes should multimodal transport operators choose?
 What are the potential alternative modes and routes?
Therefore, if the data of other routes are available even with more data and large
samples, the zero-one goal modeling combined with the Analytic Hierarchy Process
and solver program in Excel can be applied to choose the optimal solution to
transport cargoes in as short time as possible.
This thesis also analyses the cooperation in multimodal transport among ASEAN
countries. From that point of view, the benefits and the limitations of this cooperation
can be recognized in some of the following aspects:
 ASEAN countries are located on the significant position that international
maritime transport passes. The Port of Singapore, Port of Tanjung Pelapas and
potential port of Cai Mep (Vietnam) are the deep sea ports where mother
vessels can call and serve for the Asian market.
 ASEAN is a flexible region; the growth rates of member countries are high.
They are reviewed as potential regions, and the cargoes transported from and to
ASEAN are estimated to increase year by year.
 The differences of culture, economy and politics are important obstacles for
cooperation among the member countries.
109
 The infrastructure of member countries is asynchronously developed. Some
governments do not pay attention to, or do not invest in, infrastructure
appropriately. Consequently, it is difficult to coordinate transport systems
among the member countries.
 The ASEAN Framework Agreement on Multimodal Transport has been signed.
However, the law systems of each country are totally different. There are some
places where the procedures related to transporting cargoes among countries
are very complicated. Shippers have to wait a long time to make cargo
clearances and even the other cumbersome procedures are evident.
Although Vietnam has Cai Mep port and Van Phong port with deep drafts. However,
in a research of Mr Nguyen Dang Ben (Vietnam) in recent years has estimated that
cargo throughput of Vietnamese transshipment ports in 2015 are 10.946.253TEU
(Cai Mep) and 2.100.000TEU (Van Phong) and in 2020 are 14.208.156TEU (Cai
Mep) and 4.500.000TEU (Van Phong), it is still be very difficult for Vietnam to
become a hub port in the future because of the fast development of Hong Kong port
and Singapore port. (Nguyen, 2009). Therefore, in long term Vietnam needs more
time and more investment in infrastructure and human resources as well as suitable
strategy to develop logistics service. Moreover, the close relationship with ASEAN
member states will help Vietnam have good trade within region together with other
regions in the world.
110
Countries 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Brunei 639.5 774.8 684.2 632.9 865 1529 1887.3 2149.5 1,972.9 1229.3
Cambodia 76 72.6 91.9 101.5 80.2 144.5 235.4 251.4 310.6 644.6
Indonesia 10883.7 9507.1 9933.5 10725.4 12994.3 15823.7 18483.1 22291.2 27,170.8 24623.9
Laos – – – 102.2 89.6 147.6 289.8 257.4 724.4 997.4
Malaysia 24408.6 21024.2 22127.1 26036.2 31737.2 36633.7 40979.6 45295.6 50,401.4 40365.1
Myanmar 393.5 951.3 1221.3 3060.2 996.8 1559.7 2149.7 3427.7 3,853.4 3196.7
Philippinnes 5982.6 4986 5529.7 6581.7 6837.9 7149.9 8192.2 8031.9 7,081.7 5838.4
Singapore 37784 32815.4 33962.6 51777.8 62494.4 71976.4 83801.6 95003.5 101,477.3 81646.5
Thailand 13312.2 12549.4 13156.4 16583 21710 23867 26944.2 32894.2 39,487.0 32490.6
Vietnam – – – – 3850.9 5039.9 6214 7730.8 10,017.8 8554.8
Table 6.1: Intra ASEAN Export
Source: Author, compiled from ASEAN statistics
Countries 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Brunei 534.4 544.8 627.5 616.9 644.5 738.5 745.8 1043.3 1,571.4 1242.8
Cambodia 549.1 1091.7 598 1694.9 673.5 1026.8 991.2 1283 1,599.3 1453.3
Indonesia 6781.2 5726.8 6995.5 8030.3 11686 17329.5 19379.2 23792.1 40,991.7 27742.4
Laos – – – 252.7 365.1 362.4 500.7 576.5 1,490.9 1480.8
Malaysia 15934.8 15254.3 17245.2 21003.1 26191.1 29164 32290.7 37315.9 34,675.3 31700.2
Myanmar 1113.3 1319.2 1190.8 967.8 951.1 896.6 1174.7 1413.1 1,728.2 2065.7
Philippinnes 4955.4 4664.8 5542 6398.1 8355.9 8874.3 10218.3 12875.1 14,316.7 11561.1
Singapore 33291.3 28991 30441.4 39550.5 47184.2 52148.6 62300.4 65850.2 69,878.1 59047.6
Thailand 10306.4 10047 10561.7 12616.3 15834.6 21552.4 23539.8 24992.5 29,888.2 26759.5
Vietnam – – – – 7695.3 8937.7 12453.7 15444.5 19,476.8 13566.7
Table 6.2: Intra ASEAN Import
Source: Author, compiled from ASEAN statistics
111
Limitation of the thesis
The survey is limited in the number of people, only 51 logistic providers, forwarders
and shippers have been interviewed, while there are hundreds of enterprises involved
in multimodal transport services.
In addition, it does not exactly reflect the real situation if just only cost, time and
time variables are chosen to weigh and analyze the selected routes. There are still
many factors that need to be considered, for example customer relationship, the level
of global coverage of service, procedure processing time and so on.
The data collected are not sufficient because there are many carriers operating on
these routes. The transit time and transit time variability is based on some main
carriers due to the lack of information, and it is difficult to collect the data from all
carriers.
Another limitation of the research is the choice of routes to analyze from Laos to
Singapore and from Bangkok to Vietnam. These are short trips and they are not
significantly affected by pirates, bad weather or other factors that a long trip can
easily meet when navigating. As a result, the general scenario cannot be expressed
clearly and it is difficult to apply to longer routes.
Another limitation of this thesis is that it only concentrated on the economic aspect.
However, the environmental aspect and the influence of many other factors were not
mentioned while in the world today, besides the purpose of enterprises is maximizing
the profit, the environmental and welfare are also very important and should be
concerned.
Finally, the methods which are used to calculate the weight of factors and solver
program, especially establishing the constraints of each route in chapter 5 are
complicated, difficult and take much time. The users need to use excel frequently and
proficiency
112
6.2 Recommendation
Further research can be implemented for other routes which have a longer distance
and take a longer time, not only transporting via Vietnam but also via other member
States of the Association of Southeast Nations.
Other research can be conducted but in a larger scale, for example, choosing modes
to transport cargo from one ASEAN country via deep sea ports such as Cai Mep Port
(Vietnam) or the Port of Singapore to other continents like Europe, the Americas or
Africa.
When implementing different research, the matter that should be concerned is that
each type of transport will be suitable for specific type of cargo in terms of volume
and value. Moreover, each type of mode is also suitable to each type of service and
the distance of transportation. The table below gives a suggestion of the good mode
to choose for the carriers as well as shippers.
113
Mode Value Volume Service Distance
Truck Moderate
to high
Loads of less than
50,000 lbs.
On-time
performance
above 90%.
Driver can go 500
miles per day. 2/3
of tonnage
carried over less
than 100 miles.
Rail Moderate
to low
Multiple car loads.
No weight
restrictions.
4 to 7 days
delivery time. 60
to 85% on-time
performance.
Average haul
length between
600 and 800
miles.
Intermodal Moderate
to high
No weight
restrictions.
3 days for cross
country. On-time
performance
between truck and
rail.
Average haul
between 700 and
1,500 miles.
Air High Small. Most loads
less than 100 lbs.
Normally
overnight or
second day.
More than 1,300
miles.
Inland Water Moderate
to low Bulk shipments.
Varies according
to segment.
Competitive with
rail.
Between 250 and
1,600 miles.
Coastal
Water
Moderate
to low
Containers,
general freight and
bulk shipments.
Function of
distance. Between
2 to 5 days.
Between 500 and
2,000 miles.
International
Water
High to
low
Mainly containers
and bulk
shipments.
7 to 10 days
trans-Atlantic and
trans-Pacific
routes.
More than 2,600
miles.
Pipeline Low Bulk shipment of
liquids and gazes.
According to
demand. 0 to 20
mph.
825 miles
average distance
for crude oil.
Table 6.3: the relationship between mode and cargo, distance and service
Source: US-DOT, FHA (1998) US Freight: Economy in motion.
http://ntl.bts.gov/data/freightus98.pdf
114
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119
Appendix 1 – Questionnaire
QUESTIONAIRE TO MULTIMODAL TRANSPORT
Could you please to anticipate the necessary level of following factors when choosing modes of transport in
multimodal transport in Vietnam?
Please ranking by typing “x” in the cell that you choose.
The scale of factors is ranked from 1 to 4:
1: very necessary
2: fairy necessary
3: quite necessary
4: unnecessary
RANK
1 2 3 4
I. Cargo related factors
Value
Volume and measurement
Weight
120
Weight/measurement
Packing
Specialized goods :dangerous, fragile, perishable
RANK
II. Service related factors 1 2 3 4
Transit time
Cost
Reliability and punctuality
Customer relationship
Frequency
Global coverage
Procedure processing time
Handling equipment arrangement
Legal documentation
Secure of product
121
Electronic Data Interchange
Flexibility of modes of transport
RANK
III. Company’s strategy 1 2 3 4
Marketing strategy
System of modal Assessment
Management structure
The size of company
Capital of company 7 19 19 6
Investment policy 12 21 13 5
RANK
IV. Other factors 1 2 3 4
Transport distance
Destination area
Delivery terms in contract
122
Environmental issues
Infrastructure of Vietnam
Regulation of Vietnam and other countries
RANK
IV. Other factors 1 2 3 4
Facilities and ability of shipper’s warehouse
Communication and information
Yes No
Do you suggest any more factor? (Bạn có đề nghị thêm yếu tố nào nữa không?)
What is it?
Thank You Very Much For Helping Me Finish My
Dissertation
123
Appendix 2 – ASEAN highway network map
Figure 4.5: ASEAN highway route number (mainland)
Figure 4.6: ASEAN highway route number (Island)

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