China joins UN trucking treaty, stepping onto new Silk Road

[kscarbel2]

Reuters  /  July 26, 2016

China has taken a major step towards establishing a speedy new "Silk Road" to Europe by signing up to a U.N. trucking treaty.

Fifteen years after joining the World Trade Organization (WTO), China is hoping a revival of its ancient trading corridor to the west will help boost its slowing economy.

Becoming a member of TIR, an international guarantee scheme that will enable Chinese freight containers to travel all the way to Ireland without being opened up for time-consuming customs checks, is a first step towards putting the legal framework of the plan into action.

"It's a key element ...for the Chinese government... If you had to stop a container at every border from China to Europe it would add substantial costs," said Christian Friis Bach, executive secretary of the U.N. Economic Commission for Europe, which oversees the TIR convention.

China's new Silk Road to Europe includes countries in Central Asia as well as Russia and Turkey, and potential maritime links to the Gulf and East Africa.

President Xi Jinping said in March 2015 that he hoped annual trade with the countries involved in the plan would surpass $2.5 trillion in a decade. Last year it amounted to $1 trillion.

Less than 10 percent of Chinese exports to the European Union go by road, with most transported by sea or air.

The International Road Transport Union (IRU), which administers TIR, hopes accredited trucks will soon be able to zoom from China through Central Asia to Europe - albeit while still subject to random checks by border guards.

Expanded road transport with less red tape would offer faster trade than by sea for large shipments of time-sensitive goods, such as smartphones or fashion items.

"By truck you can go from western China to Europe in 8-12 days," IRU Secretary-General Umberto de Pretto said.

"It costs more than going by ship but the time savings you have are enormous... Waiting times at the border will be one hour instead of 3-4 days."

The impact of China joining TIR could end up being significant, especially if partners in Asia and Africa also join, and if China uses it for shipping and rail routes as well.

Pakistan recently joined and India and several East African and Gulf countries have expressed interest.

China spent a decade considering membership of the international goods transport convention before joining, and will become the 70th TIR member next January.

"They have done their homework and they understand it," said Friis Bach.

[kscarbel2]

FYI - The TIR Convention

The Convention on International Transport of Goods Under Cover of TIR Carnets (TIR Convention) is a multilateral treaty that was concluded at Geneva on 14 November 1975 to simplify and harmonise the administrative formalities of international road transport.

TIR stands for "Transports Internationaux Routiers" or "International Road Transports".

The 1975 convention replaced the TIR Convention of 1959, which itself replaced the 1949 TIR Agreement between a number of European countries.

The conventions were adopted under the auspices of the United Nations Economic Commission for Europe (UNECE).

As of July 2016, there are 70 parties to the Convention, including 69 states and the European Union.

The TIR Convention establishes an international customs transit system with maximum facility to move goods:

• in sealed vehicles or containers;
• from a customs office of departure in one country to a customs office of destination in another country;
• without requiring extensive and time-consuming border checks at intermediate borders;
• while, at the same time, providing customs authorities with the required security and guarantees.

The TIR system not only covers customs transit by road but a combination is possible with other modes of transport (e.g., rail, inland waterway, and even maritime transport), as long as at least one part of the total transport is made by road.

To date, more than 40,000 international transport operators had been authorised (by their respective competent national authorities) to access the TIR system, using more than 3.2 million TIR carnets per year.

In light of the expected increase in world trade, further enlargement of its geographical scope and the forthcoming introduction of an electronic TIR system (so-called "eTIR-system"), it is expected that the TIR system will continue to remain the only truly global customs transit system.

Due to the large blue-and-white TIR plates carried by vehicles using the TIR convention, the word "TIR" entered many languages such as Turkish as a neologism, becoming the default generic name of a large truck.

TIR Procedures

Truckers making use of the TIR procedure must first obtain an internationally harmonised customs document, referred to as a TIR carnet. TIR carnets are issued by national road transport associations. This customs document is valid internationally and as well as describing the goods, their shipper and their destination, represents a financial guarantee.

When a truck arrives at a border customs post it need not pay import duties and taxes on goods at that time. Instead the payments are suspended. If the vehicle transits the country without delivering any goods, no taxes are due. If it fails to leave the country with all the goods, then the taxes are billed to the importer and the financial guarantee backstops the importer's obligation to pay the taxes.

TIR transits are carried out in bond, i.e. the lorry must be sealed as well as bearing the carnet. The security payment system is administered by the International Road Transport Union (IRU).

The TIR procedure is mostly used with Eastern European countries that are not in the EU (e.g. Russia and Ukraine), Turkey, and parts of the Near East.

Since the formation of the European single market, the TIR procedure has become unnecessary for intra-EU goods transport.

[BC Mack]

even with TIR there are still borders that take three days to get through with 30km line-ups... (mostly in the Stans and Turkey east)... the sheer volume and the "one at a time" attitude of border guards and collecting the new fees imposed for using their roads as a thoroughfare with no other benefit to them.

with a boat there are ports to deal with, but that's it.

the old "gold run" from europe to the Arabian Gulf was a reaction from shippers to move freight overland due to port congestion and overload during the influx of wealth to the region in the early 70's, even with crap roads and difficult borders the truck always beat the container... until they got the port finished and a rapid clearing of the dock to inland customs zones.

ksc... were there any comparisons made for containers by train? gets very economical when double decked.

I'm waiting for another shot at the "road bridge to Alaska" story from a few years ago..!!!

BC Mack

[kscarbel2]

Why on earth you would truck it, versus rail, is beyond me.

Since 2008, there's a container train between Beijing and Hamburg. Travel distance/time is 10,000km kilometres (6,210 miles) / 15 days.

Chongqing to Duisburg, Germany via Alashankou crossing, Kazakhstan, Russia, Belarus, and Poland. 10,300 km (6,400 mi) / 16 days.

French National Railways (SNCF) rail freight subsidiary Fret SNCF is running a new China - France container service since April 21, from Wuhan to their Saint-Priest terminal in Venissieux south of Lyon. 11,300km / 15 days, operating via Kazakhstan, Russia, Belarus, Poland, and Germany.

Another container train is running between Dongguan in China's southern Guangdong province and Duisburg, Germany. 13,000km / 19 days.