The proposed project seeks to improve the condition of the logistics network and services within Chongqing Municipality in the People''s Republic of China (PRC) to create an integrated and multimodal logistics system. It will focus on developing logistics parks and related infrastructure to accelerate the development of the logistics industry in Chongqing. It will also improve and upgrade the logistics services and logistics information system.
A TA in the amount of $600,000 will be provided to assist the EA and the IA in preparing the project for ADB financing. The TA will (i) produce a mutually agreeable project design and scope, schedule, and implementation plan that is justified by the project's expected merits, (ii) ensure that the project's benefits are commensurate with its costs to clarify the rationale for ADB's intervention, (iii) provide the EA and the IA access to high level international expertise on logistics development and ensure capacity to successfully implement the project, (iv) ensure that the project supports the PRC's development strategies and ADB's PRC country partnership strategy (2011-2015), and (v) ensure that the EA and the IA adhere to ADB's Safeguard Policy Statement (2009).
|Project Rationale and Linkage to Country/Regional Strategy
In the PRC, the logistics sector, while stronger than many Asian countries, trails behind several developed nations. According to the World Bank's logistics performance index, PRC has a global ranking of 26 (1 is the best and 155 is the worst). PRC's ranking indicates a significant potential for improvement. On 11 June 2014, the State Council approved a plan to develop the logistics industry. This reaffirms the government's continued emphasis on improving and reforming the logistics sector. It is expected that the reforms of the logistics sector will continue during the 13th Five-Year Plan of the PRC.
Chongqing is a major city along the upper reaches of the Yangtze River in southwest PRC, and one of the five national central cities. Covering a total area of 82,400 square kilometers and with a population of 30 million, it is the largest directly administered municipality, and comprises 19 districts, 15 counties, and 4 autonomous counties. It is an important industrial and commercial center and transport and logistics hub, with a railway network of 1,450 kilometers (km) which includes five trunk lines and two branch lines, an expressway network of 1,900 km with two ring roads and eight trunk expressways, and an inland waterway network with a freight traffic throughput of 145 million tons annually. Further development of the city as a regional transport and logistics hub will facilitate further economic growth in the central and western region of the PRC, which remains relatively under-developed compared to eastern PRC.
Presently, 20 of the logistics terminals in Chongqing are located within the inner city region and ring road. This has resulted in heavy freight traffic, mostly large trucks, moving on the inner city roads and causing traffic congestion and air pollution. Since April 2014, the government has restricted the movement of big trucks in parts of the inner city area during certain times of the day. It is expected that these restrictions will need to be further tightened in the future to cope with growing traffic congestion in the inner city. To provide a lasting solution to the congestion problem, the logistics facilities need to be moved to areas beyond the inner ring road. There is also a need to expand and improve the infrastructure of logistics terminals in Chongqing to enable more efficient logistics services. Many of these terminals cannot provide all the required logistics services in one location resulting in unnecessary freight movements.
A number of new developments that will increase the freight traffic to and from Chongqing will require additional logistics infrastructure support. The new developments include the creation of the Liangjiang New Area. This is expected to attract many new manufacturing and service industries to Chongqing. Another new development is the establishment of the Chongqing-Xinjiang-Europe International Railway Corridor which offers a faster way to transport freight from the PRC to Europe than transport by sea, and in only a fraction of the cost of air transport. This provides an attractive option for shippers of high value cargo or moderately perishable cargo that cannot tolerate 40 days transit time by sea or cannot afford the high cost of air transport. This corridor, with a total length of 11,200 km, takes 16 days from Chongqing to Duisburg, Germany through Kazakhstan, Russia, Belarus, and Poland. This new route is called the New Silk Road, and is expected to become a major freight carrier in the future. The growing demand for this route needs to be supported by providing matching logistics infrastructure to handle trans-shipment and related processes such as sorting, packaging, storage etc.
Logistics processes are becoming ever more complex, while demands for flexibility are constantly increasing. This needs real time and updated information which can be shared with all the logistics service providers. Current information systems which rely on bilateral information exchange cannot cater to this requirement. There is a need for creating a common cloud-based information system which can be used by all the logistics nodes and service providers. The limitation in information sharing creates a bottleneck for logistics, and results in higher costs and delays. There is thus a need to integrate the logistics information services in the design and construction of infrastructure, and ensure that services and utilization of infrastructure are maximized.
The proposed project will address many of the challenges highlighted above. The project is consistent with the PRC government''s plans to develop the logistics sector, and is also in line with the expected directions of the 13th Five-Year Plan. The project's focus on logistics development is in line with the Sustainable Transport Initiative which highlights logistics improvements as an important opportunity for sustainable transport operations. This project will also draw on the recommendations of the previous ADB study on logistics development in the PRC.