4th Interactive Session: Olgun Hacialioglu

Olgun Hacialioglu
General Manager, Ulustrans, Turkey

Distinguished Guests, Dear Colleagues;

Before beginning my speech, I would like to extend my gratitude to IRU and China Road Transport Association for giving me the opportunity to address you at a very meaningful conference held in China, a country which has adopted an economic as well as political philosophy for benefiting from the remarkable growth it has achieved and demonstrated recently, neighboring the Eurasian land mass which we may even call a "new world" on the basis of what it promises to us through a vast economic potential.

Here, I would like to address you representing the international road freight transport industry in Turkey, a country which connects Trans-European Transport Networks and Asian Transport Networks and has been working seriously to increase the economic influence and trade performance in its region, where the total volume of trade with the countries of Euro-Asian region has already amounted to US$ 40 billion.

As I mentioned in the beginning of my speech, the latest outlook of the world trade demonstrates dramatic changes on the global transport and logistics map. Whereas, according to the WTO statistics for the year 2004, the total volume of the world merchandise trade has reached up to US$ 18 trillion. World merchandise trade rose by 9% in real terms in 2004, the best annual performance since 2000, and more than twice as fast as the world output in 2004.

Analysing the volumes of world merchandise exports and imports between 2001-2003, contrary to the global trade flows that have so far been generalised as "the flow of surplus production from the West to the East and of the raw materials from the East to the West", we now observe that Asia and Europe have been breaking even in terms of volumes of export and import, in particular starting from 2003, and the flow of goods betwen the two regions have been progressing in parallel. (For example in 2003 the value of merchandise trade from Asia to Western Europe amounted to US$ 319 billion (representing a 27,1 % increase from 2001 to 2003) and the value of merchandise trade from the Western Europe to Asia amounted to US$ 248 billion (representing a 26,5 % increase from 2001 to 2003). The Asian region recorded the highest volume of real merchandise export growth in 2004, at 14.5%. Asia's merchandise import growth rose by 14.5% in 2004.

All such developments may be explained through the fact that globalisation has been removing barriers to trade one by one as well as the fact that world economies are becoming more and more dependant on each other as a result of the improvements in information technology. In fact, technology moved the process of elimination of trade barriers to one step further and presented to us the "e-commerce"! Figures tell us that by 2006, the population of Internet users will reach up to over 1 billion and the value of B2C market will be US$ 2.5 trillion in EU, while the figure will be US$ 7.3 trillion globally.

What we may understand analysing such developments is that companies today are in a world of opportunities for producing and selling any kind of products, anywhere in the world. The globalisation of supply chains requires that product and service flows around the globe, i.e. the international trade should be very carefully coordinated. Therefore, the rapid and considerable increase in world trade does not mean anything without transportation. Companies still must deliver the right product, to the right place, on time and in good condition. In other words, virtual trade is possible but virtual transport is not!

Among all modes of transport, one may clearly see that freight transport by road has the lion's share. The reason why road transport stands out among other modes is the advantages it offers such as flexibility, speed and cost-efficiency; which are of very high importance with regard to global competition. Road freight transport is, for example, the backbone and key driver of the European economy and serves as a bridge between suppliers and end-users. At present and compared to rail and inland waterways transport, nearly 73 % of all goods produced, bought, sold and traded within the European Union are carried by road and this mode represents some 11 percent of total European GDP.

However, benefits and advantages offered by road transport which plays a vital role in the economic development of states unfortunately cannot bring out the real benefits due to certain physical problems caused by external reasons such as infrastructure deficiencies as well as certain non-physical problems such as time-consuming and complex border procedures, shortage of permit quotas compared to the rising volume of international trade, etc. It is obvious that, the trade volume grows rapidly but the transport infrastructure and border crossing procedures, supposed to serve this boom is hardly improved at the same pace.

Our industry has been facing an increasing demand, on the other hand is forced to struggle with more and more problems. This dilemma has been felt more sharply in Asia. The reason for this is the fact that the volume of regional trade grows more rapidly than the growth of global trade and at this point road transport undertakes lots of responsibilities. Whereas road transport is the heart of developing economies with its flexible characteristics at the intersection of different modes of goods transport.

Considering the figures in the EU, we may see that the share of road transport in international goods transport as well as investments made in this mode have been increasing rather than decreasing. This is a proof of the fact that the Single Market is functioning and the integration of new members is progressing while the railways lag far behind to fulfill the ever increasing demand for transport with its bottlenecks, old and insufficient infrastructure. For example in Italy there are 500.000 kms of roads in total, while the railway network is 18.000 kms and the figures are similar all around the EU. Indeed, the EU as a whole has a railway network of 350.000 kms and the length of the road network is 4 million kms.

The largest share in the EU's Structural Funds for the period between 2000-2006 was allocated to road, while the shares of sea transport and railways remained at 3 % and 5% respectively. The largest amount of loans granted by the European Investment Bank for 2002-2003 was for roads.

Then, what has Turkey been doing concerning development of road transport and Euro-Asian land corridors, as a country which is preparing to start negotiations with the EU for formal membership in October 2005 ?

The International Transporters' Association UND, which represents the Turkish international road transport industry has determined a strategic target to make Turkey a logistics hub by 2010. The logistics industry in Turkey is expected to bring a total revenue amounting to US$ 45 billion and policies support this ambition. Thinking of the present volumes of international trade in particular the trade flow on the East-West axis, this figure represents a very modest calculation indeed. Due to its strategic position in its region, Turkey connects the Trans-European Networks to the Middle East and Asia through Pan-European corridors, providing for the creation of the shortest and smoothest transport network on these routes. This gives Turkey a huge potential to become a precious logistics hub of its region, supported by the fact that being on the eve of full membership to the EU, Turkey is hosting any kind of trade and transport among the Central Asia, Middle East and Caucasus as well as between this region and international markets.

The international road freight transport industry carries 53 % of the total exports of Turkey, which is expected to reach up to US$ 75 billion by the end of 2005. The Turkish international road freight transport fleet composed of 30.000 trucks, is one of the largest fleets in Europe and investments are increasing year by year.

Towards realising her ambition to become a regional, even global logistics hub Turkey has been supporting work on international corridors especially the ones aimed at development and improvement of land bridges between Europe and Asia. For this purpose Turkey has been actively participating projects and studies related to corridor development, facilitation of border crossing and visa procedures, harmonisation of transit fees and legislation and driver training.

For rapid implementation of such projects, priority was given to the infrastructure improvements on corridors and there are rehabilitation and harmonisation projects underway for establishment of an advanced transport network. It is a well-recognized fact that Turkey is situtated at the most important point on a possible land bridge reaching from Europe to China. Modernisation of border crossing points is underway. In 2003 renovation and construction of facilities at one of the eastern border crossing points was completed and this border gate represents an intersection point between the International North-South Transport Corridor and the TRACECA routes, "the most modernised border gate of Europe opening to the East".

The ever increasing trade in the Asian region necessitates improvement and implementation of international transport corridors in the region. The commercial succes of Asia is expected to increase following the total elimination of tariff barriers thanks to global re-adjustments in trade regulations. However this would not itself guarantee the success of the region in world trade.

There are also non-tariff barriers to overcome and transport is at the top of such concerns. The fact that transport choices are very limited and costly as well as the complexity of border crossing procedures stand as serious impediments in front of the growth of intra-Asian and Euro-Asian trade.

The lack of convenient transport connections between Europe and Asia, Asia and Africa represents a contrast to the globalisation process. Except certain developed Asian countries, transport conditions and procedures in certain Asian countries are far from being satisfactory. The deficiencies observed in many Asian countries are not limited to infrastructure but they also involve legislation, procedures, institutional capacities, security and environmental concerns. Roads, especially located at border regions are poor and insufficient and inter-regional transport connections are less developed than intra-regional ones. Moreover, the lack of coordination between neighboring countries, the low level of participation to bilateral or multilateral conventions regulating transport operations and traffic flows pose real restrictions and problems despite the increase in intra and inter-regional trade flows. All these problems ultimately increase the transport costs by nearly 50 %.

The expectations and possibilities concerning the increase in trade between Asia and Europe are enormous and such expectations would be confirmed and would increase with the existence of a well-integrated and well-connected land bridge.

However to realise this Asian governments should fulfill certain tasks:

• A regional trade and transport policy needs to be developed.

• Roads connecting Europe and Asia should be immediately improved, missing links should be completed and bottlenecks should be removed.

• Simplification of complex and time-consuming formalities; improvements in basic border crossing infrastructures; provision of adequate roadside and border facilities such as those for customs clearance, sanitary facilities, catering services, parking areas, fuel and maintenance-repair stations are also required.

• Asian countries should become a party to international conventions regulating the international road transport, in particular the TIR Convention. Thus, the transport operations carried on the territories of the relevant countries will be relieved, trade and transport standards will be harmonised, common and transparent transit fees will be in force, transport times and costs will decrease, appropriate traffic control systems will be launched and ultimately this would pave the for the volume of Euro-Asian trade to grow further.

• Sustainable development of transport- in a larger perspective- involves appropriate traffic control systems and measures, implementation of advanced technology such as IT systems for monitoring and collection of data on border crossings, professional driver training, measures aimed at protection of environment and increasing security on roads.

• For the smooth performance of transport activities in the Euro-Asian region cooperation between governmental institutions is not sufficient. There is also need for cooperation between professional associations representing transport and logistics industries for the solution of common problems. Information exchanges, benchmarking activities between transport companies in the region and establishment of joint undertakings or companies would improve both intra-regional trade as well as the whole Euro-Asian trade, ultimately supporting and driving the sustainable development of the cuntries in the region.

In case all these initiatives are taken by relevant parties and with better coordination and collaboration of the international road transport community, we may create many Silk Roads where modern and environment-friendly roads would tie the old and the new, supply and demand from Rotterdam to Xi'an, linking the East to the West ...

See his Powerpoint Presentation

In partnership with the China Road Transport Association (CRTA)

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