Issue link: http://digital.nexsitepublishing.com/i/42918
Tool Box 11 one of the country's leading imports or exports. The rankings do not include ocean freight rates. Not surprisingly, Singapore and Hong Kong rank first and second for both overall ease of doing and in the trade category. Singapore has a huge edge in the trade category because there is no inland transportation to speak of; most of its container business is transshipment cargo. The same is largely true of Hong Kong. While there is relatively little manufacturing in Hong Kong these days, most of its traffic is trucked a short distance across the border from nearby factories in mainland China, and both sides have worked together to simplify border crossings. Also, ports in both Singapore are highly efficient. The United States ranks 5th in costs in the U.S. "The inland transportation cost for the average 40-ft container to Rotterdam today is about the same as the ocean rate," said Klaus Schnede, marine procurement manager for Eastman Chemical Co., based in Kingsport, Tenn. "Ocean rates to China are lower than inland costs," Schnede added. A shipper with a major importer said its inland costs were "almost as high as its ocean costs. Not as much, but pretty close," the shipper said, referring to transport from deconsolidation points to the company's regional distribution centers. The trade category also lists the documents required for exports and imports. The costs listed in the report are based on surveys of freight forwarders, customs brokers, lawyers, consultants, shipping executives, port officials, bankers and accountants. Obviously, the experiences of individual participants vary widely, and may be hugely different from those of individual shippers. "China ranks 50th in the overall ease of doing business, but 20th in trading across borders." overall ease of doing business, but only 20th in the trade category, primarily because of relatively high costs for inland transportation and port and terminal handling — $400 in each of those two categories. China's overall ranking is a rather dismal 79, down a notch from the 2010 report. It placed 50th in the trading across borders category; however, that was down from 47th the 2010 report. The low rating is mainly due to the time it takes for document preparation: 14 days for exports and 15 days for imports. But as the table shows, China fares very favorably in cost comparisons with the U.S., other nations in East Asia, and the average for the 34 mostly developed nations comprising the Organization for Economic Cooperation and Development. The overall cost for exporting a container from China, according to the report, is just $500, compared with $1,050 from the United States. The overall import cost in China is $545, compared with $1,315 in the United States. The differences are due almost entirely to the much greater terminal handling and inland transportation Several caveats are in order. Most importa nt, th e surveys are based on relatively small samples. Only six individuals contributed to the trade category for the U.S. The report does not identify any of them, although it does list contributors for each of the overall country reports who are willing to be identified. Most of those willing to be identified in the U.S. report are attorneys, primarily from the firm Cleary Gottlieb Steen and Hamilton. Most likely, the attorneys specialize in one or more of the eight other categories in the overall compilation: starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, enforcing contracts, and closing a business. Moreover, none of the contributors willing to be identified in the U.S. report were shippers. However, there are more contributors who did not wish to be identified. Organizations with offices that contributed to the survey on a global basis include Panalpina and SDV International, two of the world's largest freight forwarders. Regional participants include Maersk Line and APL. Altogether, more than 8,200 lawyers, accountants, judges, businesspeople and public officials in 183 economies participated in the most recent survey. The number of contributors varies by economy and topic. Another caveat is that the information in the survey is somewhat dated. The 2011 report, published last November, was based on surveys submitted by June 1, 2010. Many of the costs and other factors may have changed significantly over the past year, although it is unlikely that they have fluctuated nearly as much as ocean freight rates — particularly spot rates. Nonetheless, the rankings provide a useful benchmark, especially for companies that may be new to international trade or that are looking to enter new markets. In addition, for some countries, it includes breakdowns on individual cities. In the case of China, it's 30 cities. The first Doing Business report, published in 2003, covered five indicator sets and 133 economies. The report allows readers to compare a country's performance for as many as eight years, depending on when they were added to the list of economies included in the survey. Another feature of Doing Business is a section on business reforms. In addition, it provides links to research on individual economies and topics. www.cargobusinessnews.com September 2011 T