A couple of weeks back, a truck hauling from China drove into the depths of central Asia as it journeyed West, traveling through Kazakhstan and Russia to enter Europe through Belarus and finally unloading its freight in Poland.
The whole journey took just 13 days, which is nearly twice as fast as railroad transport between the two destinations, and with a door-to-door cost that is half that of air freight.
But it couldn’t have happened without China’s entry into the World Road Transport Organization (IRU) TIR system, an agreement that shaves off numerous border control checks and red-tape regulations.
The idea behind TIR was simple: enable effortless trade transactions would induce economic growth, a development that in theory would also help sustain peace.
This made TIR a prudent choice for customs departments as well as for transport operators, who found this system inexpensive when considering the alternative of getting a bank guarantee for every border crossing.
TIR has gotten countries to trade and talk to each other after World War II, and there has been peace in Europe thanks to this. Now, we want to make sure that all the other regions benefit from this as well.
Following on China’s heels, India and Pakistan have also joined the TIR initiative, thus opening up 40% of the world’s population to seamless cross-border trading.
With manufacturing giant China in the picture, TIR would make commodities coming out of the country cheaper, while providing leverage for Chinese businesses to trade seamlessly beyond its borders.
This is huge, as expediting freight hauling would help large businesses save millions in inventory costs.
One example is Royal Dutch Philips, which made an assessment a few years back saying it would save $50 million globally for every one day it can reduce its stock-holding time on goods that are held up.
The system wants to interconnect every village in Central Asia or Africa to the major world economies, and help them get their products to the markets.
Benzinga / ABC Flash Point News 2019.