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16 Mar, 2012

Road Transport Penalties, Bureaucracy Drag Down Global Economies


Adapted from a statement delivered at the UN Economic & Social Commission for Asia and the Pacific Ministerial Conference on Transport, Bangkok, 15 March 2012

This historic UNESCAP Transport Ministerial Conference will adopt the Bangkok Declaration together with the Regional Action Programme for Transport Development in Asia and Pacific, Phase II (2012-2016) and the Regional Strategic Framework for the Facilitation of International Road Transport.

These documents will by nature define the UNESCAP priorities in the field of road transport facilitation for 2012-2016, which include, among others, implementation of key UN Conventions on transport and trade facilitation, including accession to and implementation of the TIR System, as well as facilitation of visas for professional drivers,  support for development of sub-regional multilateral permit systems, promotion of joint border controls and development of professional training of road transport managers and drivers.

Today, as a result of globalization and the advent of maritime container transport, 80% of world trade is carried out through some 30 increasingly saturated ports, entailing bottlenecks, delays and ultimately higher costs all along the supply chain to the end consumer as well as socio-economic desertification inside the continents.

Today, on the other hand, road transport, of which 95% are SMEs, is a production and distribution tool, which is vital to succeed economic growth as it can interconnect door-to-door all companies to every market the world over, drives trade, creates employment, ensures a better distribution of weunites inks the sociology-economically deserted countries between each other and to the world markets.

For the above reason, any penalty on road transport is actually an even greater penalty for the economy as a whole.

However, procedures, particularly at the borders, constitute major barriers to trade, tourism and road transport and require targeted measures in order to maximize the use of scarce political, financial and administrative resources.

While road transport vehicles and employees waste time at borders, consumers and society, ultimately, pay the bill for such barriers that reduce efficiency of the global economy and delay much-needed economic development in less favoured regions of the world.

The WTO statistics inform that exports of merchandise trade in 2010 amounted to $4.690 billions in Asia, which represents 30% of the world level equalling to $15.237 billions.

According to an independent research in 2007, one day of delay at the borders result to a nearly 1% decrease in merchandise exports volume of the source country. This impact is seven times bigger for the trade of time sensitive goods.

Keeping these in mind, allow me to recall that the IRU’s New Eurasian Land Transport Initiative (NELTI) Project, which monitored actual commercial cargo deliveries by road between Asia and Europe, revealed in 2010 that the downtime at the borders along Northern, Central and Southern Routes accounts for upto 40% of all journey time while red tape makes up as much as 30% of all journey costs except the diesel.

According to the NELTI study, a typical journey between Bishkek and Istanbul or Tashkent and Ulm in Germany, takes 12 to 15 days.

In this context it is possible to estimate that trucks waste as much as 6 days at the borders between China and Europe.

If the UNESCAP would target halving these delays by 2016, a typical journey time would be lessened by 3 days between Asia and Europe.

Next to the savings on the account of the consumers and society as a whole, this could mean 3% inrease in Asian exports of merchandise trade, which should be equal to nearly $140 billions according to WTO figures.

This potential trade capacity is a little more than actual exports volume of Turkey, for instance, being 17th largest economy of the world or it is nearly 100 times bigger than the smallest annual exports volume among the UNESCAP Member States.

Another important indicator of success for efficient road transport facilitation relates to the weight of intra-regional merchandise trade in total merchandise trade of a region.

According to the WTO statistics, this ratio is 71% in the EU whereas it is 19% in the CIS region and, according to its Secretariat, it is only 6% in the ECO region!

Therefore, it could also be ideal for the UNESCAP to watch the changes on this parameter as an indicator of the regional efficiency in the field of road transport facilitation by 2016.

As concluding remarks, the IRU fully supports your invaluable work and is ready to give necessary support to the UNESCAP and its interested Member States, including but not limited with:-

1) providing assistance ans support for accession to and implementation of the key UN transport conventions. In this respect, notably we are already working for re-activating TIR system in Afghanistan and preparing Pakistan for joining the TIR Convention. This said we are also ready for developing together with the UNESCAP sub-regional pilot projects for implementation of the TIR System in East Asia,

2) working for early introduction of the International Vehicle Weight Certificate in Asia under Annex 8 to the UN International Agreement on Harmonization of Frontier Controls of Goods,

3) undertaking joint actions for development of a UNESCAP multilateral regional permit system based upon sub-regional experiences and aimed at conrolled integration of the Asian international road transport market,

4) building national capacities for the professional training of road transport managers and drivers with international recognition but also serving sub-regional needs and priorities,

5) conducting new Phases of NELTI Project, where required, and finally,

6) contributing to the necessary feasibility studies on chosen sections of the Asian Highway network by applying the IRU Model Highway Initiative.

Thank you for your attention.