Transit and Logistics along the Great Silk Road: From Theory to Practice

International Road Transport Union (IRU) and Coordinating Transport

Conference of the CIS Public-Private Partnership in the Development of Transit and Logistics along the Great Silk Road: From Theory to Practice

Moscow, 20-21 February 2007

Martin Marmy
IRU Secretary General

[Slide 1]
Distinguished guests, dear colleagues, dear friends:

Yes, the world is changing and we must change with it

Before 1989, the world was divided mainly into two blocs: western countries with market economies and eastern countries, including China, with planned economies. There was therefore no global economic policy.

Since the fall of the Berlin wall, economic development has been driven by globalisation and we have a global view of the future. If the main effect of globalisation in a liberalised economy is to undertake research, to produce the best products and to trade under the best possible social, economic and fiscal conditions, we should also recognise that the market is global for everyone and that the economic driving force will also seek optimal localisation for its business activities.

[Slide 2]
Today, as a result of the liberalised economy and globalisation, the collapse of communism in the former Soviet Union and China’s and India’s shift to market capitalism, roughly another 1.5 billion new workers entered the global economic labour force, almost doubling the number we would have had if China, India and the former Soviet empire had not joined the current globalisation process.

This dramatic increase in labour forces, coupled with the extremely high rate of capital creation, invested almost exclusively into productive instruments has, as a result, that the “Asian model” grows more than 3 times faster than the US or the EU.

However, despite this major change resulting from the “Asian model”, governments are not doing enough to put in place the necessary accompanying measures concerning the changing production processes, trade and above all, logistics chains. Therefore, it is vital for each of us and for each of our organisations, who are very much involved in trade and transport, to wake up and to monitor carefully the fundamental shift and the changes taking place in the way people are doing business.

This globalisation process – together with the enormous differences between all these liberalised national economies with regard to economic growth, knowledge, the availability of raw materials and social costs – will lead to a dramatic increase not only in trade and transport but also in specific customer demand and competition.

[Slide 3]
This slide demonstrates what is globalisation.

A demonstration of this is the fact that today, to have a simple cup of coffee at a café, requires the collaborative effort of 29 companies from 18 countries … to make a car requires 10,000 suppliers, each of which has suppliers!

Therefore, the truck is today no more a transport mode, but a production tool.

In such highly competitive market conditions, in the midst of difficulties, it is the task of every entrepreneur to seek and to seize the best opportunities. This is why, in this competitive market, the creation of added value – including in the supply chain – is becoming so complex that no single company, no single association, no single fleet operator, no single vocational training institute will be able to achieve this efficiently alone.

In addition, if big companies, due to dramatic increased competition, are obliged to act small in order to meet the increasing demand for customised service and product added value in specific tasks, small enterprises or organisations, such as the IRU or the IRU Academy, thanks to their worldwide network of dedicated and experienced Members and partners, will be able to act big thus permitting each of their Members’ members to act really big – to act globally.

[Slide 4]
The world containerisation started in the 1970s with a high number of ports linked with a high number of small container vessels.

[Slide 5]
Paradoxically, we should not forget that since 1970, global trade is becoming extremely concentrated in the ports. The evolution of containers in the ports at ten-year intervals, is even more explicit. New York and Rotterdam ports are emerging.

[Slide 6]
In fact, since 1990 three quarters of world trade is currently transported port to port by sea, including by sea containers, through only a handful of main ports. This slide also shows a huge growth in Asian trade and through the Pacific route.

[Slide 7]
Since 2000, due to globalisation, this trend continues. This concentration of trade is causing not only saturation of all those ports, but also bottlenecks, additional costs and long delivery delays.

[Slide 8]
Today, as a consequence, this huge growth and concentration of most of world trade in only a few ports is generating not only bottlenecks, congestion, delays and costs, but also a vast desertification and delocalisation of the trade in all the hinterland region.

[Slide 9]
On the other hand, when the main ports remain increasingly saturated, road transport is always everywhere, at the disposal of everyone. In addition, road transport is also the only mode to provide door to door service. This is why road transport is the only mode capable not only of delivering goods from the Far East to the main markets, such as the US market via the Black Sea or to the very promising Middle East market, or to the EU or the CIS, but also, and above all, of interconnecting all the businesses along all of this new major trade route.

In the current ever-changing world, the best association, the best training institute or the best transport company is not the biggest one, but will be the one which is able to cooperate most at national and international level. Indeed, due to the size and increasing requirements of the global market, only high quality door to door transport services and efficient partnerships can allow such new business opportunities to be seized.

[Slide 10]
The 3rd IRU Euro-Asian Conference in Beijing in September 2005, which was coupled with a joint Ministerial Conference organised with the full cooperation of the Chinese Government, was held in the presence of 900 participants from 45 countries and 20 Ministers and high-level personalities.

This conference, which also featured the departure of the first Beijing-Brussels truck caravan, is proof that the IRU has the right vision and undertakes the right actions to adapt the road transport industry to the changing world.

[Slide 11]
In fact, the reopening of the Silk Road – which is an old IRU dream – is also the result of the willingness and commitment of several IRU member associations from the EU, Russia, Kazakhstan and China to cooperate not only to link Beijing with Brussels, but above all to irrigate and interconnect all the countries and businesses along the 12,000 kilometres of the reopened Silk Road. These IRU Associations and fleet operators are true pioneers, with a successful spirit of cooperation.

In fact, their pioneering spirit demonstrates clearly that road transport is always at the disposal of everyone everywhere, to unite people and to better distribute wealth and consequently, that it needs to be facilitated.

With the Silk Road project, as is the case in the IRU’s daily activities, the IRU objective is very clear. The IRU’s objectives are to improve knowledge, to share experience, to implement – in cooperation with its Member Associations – the numerous UN and ECMT multilateral facilitation agreements, conventions and other regional legal instruments developed in cooperation with the IRU in the last 58 years.

We need to work together with governments to facilitate road transport and trade everywhere, including between the main world markets, by interconnecting all the businesses of all these regions, because any penalty on road transport is an even bigger penalty on economic development.

Louis Pasteur, a French scientist, once said that “fortune favours the prepared mind”. Therefore, to be fortunate today and moreover tomorrow, we need to be able to share with governments, citizens and the business community and the pioneering IRU Members and partners, all the advantages of the IRU’s global vision, activities and international network of experienced Members to improve facilitation and therefore the productivity of road transport.

This is why we need to be ready to cooperate, we need to be ready to learn to learn, we need to be ready to adapt, we need to prepare our strategy and action day after day in a coordinated manner to effectively face the new challenges ahead of us and better seize the new opportunities.

With the commitment of the IRU Members to work together with governments, with their pioneering spirit and with the dedication of the IRU Secretariat, the IRU – as with the reopening of the Silk Road – is well equipped to transform the challenges faced by the road transport industry into new success stories.

But to realise our common economic, social and environmental goals, top priority must be given to the creation of new, true and efficient public-private partnership and top priority must also be given to improving the political perception of the road transport industry’s activities and irreplaceable role in driving progress. Recognition of road transport’s role would guide governments to effectively address the key challenges facing the road transport industry today by:

• Adapting legislation and road infrastructure to meet the increasing demand being created by the globalisation of trade, by facilitating rather than hampering road transport on which the mobility of people and goods is dependent.
• Abolishing politically misguided and economically punitive policies that increasingly restrict the movement of commercial vehicles and their drivers, which increase transport and therefore production or travel costs that create serious competitive disadvantages and unemployment in today’s global economy.
• Streamlining administrative procedures and requirements to facilitate ever increasing cross-border traffic due to the effects of globalisation on changing production and logistics through UN and ECMT trade facilitation instruments, and by giving professional road transport drivers the same professional multi-entry visas as seafarers.

[Slide 12]
These challenges can be met, but only through a genuine public-private partnership, where all parties are guided by the IRU’s slogan “working together for a better future!

I count on you…you can count on me.

Thank you for your attention.

Martin Marmy's powerpoint presentation

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