|1. Project Data:
ICR Review Date Posted:
|China Container Transport Project
Project Costs(US $M)
Loan/Credit (US $M)
Sector, Major Sect.:
|Ports waterways and shipping,
Cofinancing (US $M)
Board Approval (FY)
||Alain A. Barbu
|2. Project Objectives and Components:|
a. ObjectivesThe objectives of the project as stated in the Project Appraisal Document and the Loan Agreement are to:
(i) facilitate inland penetration of seaborne containers from gateway ports to inland cities, thus contributing to a reduction in economic disparity between coastal and inland areas; and
(ii) enhance the container handling capability of the port of Tianjin.
b. Components (or Key Conditions in the case of Adjustment Loans):A. Develop common user Inland Container Depots (ICD) with customs clearance function in two corridors (Original cost US$85 million, Actual cost US$49.4 million). This includes: (i) the construction of ICD facilities, (ii) the purchase of container handling equipment, and (iii) Technical Assistance (TA) for enhancing operational and managerial capability.
B. Upgrading container handling capacity at Tianjin Port (Original cost US$73 million, Actual cost US$24.3 million). This includes the purchase of gantry cranes and other container handling equipment and TA for enhancing berth productivity and for establishing "a level playing field" for the intra-port competition between two terminal operators and other investments.
During implementation, substantial savings were achieved in the procurement of equipment and US$15.48 million was cancelled. Annex 2 cost table shows an appraisal estimate of US$27.6 million for other investments. The actuals for other investment are listed as "nil". The ICR dose not provide any explanation.
c. Comments on Project Cost, Financing, Borrower Contribution, and DatesThe loan agreement was amended on September 18, 2000 and US$3.13 million was cancelled from the ICD component of the loan as shortly after the loan became effective, Hebei province decided not to proceed with the construction of a depot at Baoding city. The loan agreement was further amended on October 28, 2002 to cancel US$15.48 million from the Tianjin component as a result of savings achieved in the procurement of equipment. At loan closing, the undisbursed balance of US$3.13 million was canceled in September 2005.
|3. Relevance of Objectives & Design:|
The project was consistent with the government’s strategy of promoting greater economic development in the interior regions of China. The project objectives are also consistent with the Bank’s Country Assistance Strategy for China which focusses on improving the business environment and accelerate transition to a market economy. The project was the outcome of a study on transport logistics undertaken jointly by the Bank and the State Economic and Trade Commission (SETC) in 1994.
Overall, the project was largely well designed. However, in developing new business models for container handling and transportation and customs regime at an "off-port facility", the risks from the competition from alternative sources for obtaining the service were not fully factored in.
|4. Achievement of Objectives (Efficacy) :|
Facilitate inland penetration of seaborne containers from gateway ports to inland cities, thus contributing to a reduction in economic disparity between coastal and inland areas(Modestly Achieved).
There is no data in the ICR on regional disparities before and after the project--these are needed to judge whether the first objective was achieved or not.
Inland container depots (ICDs) were developed to handle containers in Hangzhou, Huzhou and Xiaoshan in Zhejiang Province; Handan, Cangzhou, Tangshan and Qinhuangdao in Hebei Province and Baotou in Inner Mongolia. Although the framework to facilitate the inland penetration of containers between gateway ports and inland cities has been put in place, the throughput of the ICDs was disappointingly low. In 2003, only 32,918 teus were handled compared with the forecast of 572,000 teus. Also, the expected increase in value of imports and exports from project cities did materialize but fell short of the target value -- the actual value of exports and imports in 2004 was US$31.7 billion compared to the target value of US$49.1 billion.
The failure of “off-port” clearance of import/export containers at the ICDs was mainly due to the availability of alternative sources for” off-port” clearance. Prior to loan approval, the provincial governments of Hebei, Inner Mongolia and Zhejiang had intended to designate the ICDs as Class 2 ports upon their completion. This entailed the stationing of Customs officers at the ICDs. However, the power of the provinces to designate ports was transferred to the Customs General Administration (CGA) in February2002. Consequently the provinces could not fully implement their plan and only Baotou, Hangzhou and Xiaoshan were able to persuade Customs to station officers at their ICDs. For the rest, Customs officers from the local Customs office were available to inspect and clear cargo at the ICDs upon request until such time as the volume of traffic handled at the ICDs justified stationing them full time at the ICDs. At the same time, “off-port” inspections and clearances of cargo were extended to enterprises located at export processing zones and large importers/exporters who met certain criteria. Customs clearance could also be undertaken at local Customs offices of the project cities.
Training was provided to key personnel from the nine project entities. Training programs included techniques, policy, rules and regulations in container yard/port management as well as regulations and method of environmental protection compliance.
Enhance the container handling capability of the port of Tianjin (Substantially Achieved).
Total throughput at the Tianjin Harbor Container Company (THCC) tripled between 1996 and 2004 from some 0.5 million teus to 1.5 million teus, exceeding the appraisal target of 1.3 million teus. Productivity gains in container handling at berth exceeded 300% from 18 teus per vessel hour in 1996 to 83.3 teus in 2004. Productivity gains came about mainly as a result of the equipment provided under the project.
The ex-post Economic Rate of Return (ERR) of the project is estimated at 25% compared to the appraisal estimate of 39%.
Component-wise, the Tianjin Port component has an ex-post ERR of 51% compared to the appraisal estimate of 44%. The higher ex-post ERR may be due to: (a) the lower project cost (about 30 percent lower than the appraisal estimate), and (b) the higher container traffic demand (about 60 percent higher than the appraisal estimate).
The ex-post ERR of the ICD component is estimated at 11%, much lower than the appraisal estimate of 33% mainly because of lower container traffic demand, despite cost savings.
|6. M&E Design, Implementation, & Utilization:|
At appraisal, five output/performance monitoring indicators were selected. These include: (i) the value of imports and exports to and from project cities; (ii) the number of containers handled at project ICDs located at the ends of the pilot corridors; (iii) the number of containers handled at Tianjin Harbor Container Company (THCC); (iv) number of boxes per vessel hour THCC; and (v) average container cycle time between gateway ports and selected ICDs. The baseline data for the indicators was included in the appraisal report. These performance monitoring indicators were appropriate, data was collected on them, M&E implementation was adequate and key output/performance monitoring indicators were included in the ICR.
|7. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):|
According to the Appraisal report, the cleaning and sterilizing services were expected to generate wastewater, which will require treatment prior to discharge to the environment. Also, Tianjin and Baotou were expected to handle some hazardous and dangerous cargo, which will require careful handling and management. No other environmental impacts were identified and no resettlement was expected. The project was assigned Environment Category "B".
The ICR does not provide any detailed information on safeguard implementation. It just mentions that at the Tianjin Port, the Provincial environmental protection department monitored construction to ensure that environmental requirements were met.
Reason for Disagreement/Comments
|Satisfactory||Moderately Satisfactory||IEG rates a project as moderately satisfactory ( a rating which does not yet exist under the ICR's four point scale) when it is expected to achieve only some of its major objectives. The first objective of facilitating inland penetration of seaborne containers from gateway ports to inland cities was modestly achieved because of failure of “off-port” clearance of import/export containers at the ICDs. The expected increase in value of imports and exports from project cities did materialize but fell short of the target value|
Quality of ICR:
- When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, 2006.
- ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.
The project experience shows that in linking the development of a business enterprise (container handling and transportation) to a reform in government policy (Customs regime), the project design did not foresee that a change of such significance might apply to the trade in general rather than just the project enterprises. The business model of the ICD enterprise, which relied heavily on the availability of “off-port” clearance of containers, did not take into account the competition that could come about when alternative sources for obtaining the service became available. The poor performance of the ICD Development component highlights the importance of technical assistance and the need for measures to mitigate risks when a new business is embarked upon by an enterprise with no prior experience.
|10. Assessment Recommended? No|
|11. Comments on Quality of ICR:|
Overall, the quality of the ICR is satisfactory. However, there are few shortcomings: (i) there is no data in the ICR on regional disparities before and after the project--these are needed to judge whether the first objective was achieved or not; (ii) there is discrepancy in cost tables; and (iii) the ICR does not provide any detailed information on safeguard implementation; and (iv) the ICR does not explain the much lower government contribution, actual US$26 million compared to appraisal estimate of US$89 million.