Investment in hard infrastructure important if countries are to benefit from increased overland trade
Interview with Umberto De Pretto (International Road Transport Union)
The International Road Transport Union (IRU) is a federation representing trucks, buses and taxis in more than 100 countries and since its inception in 1948 has been helping nations to prosper by opening and maintaining international trade routes. Infrastructure Channel sat down with Umberto De Pretto, Secretary General of the organisation, to discuss challenges and opportunities of China’s One Belt, One Road initiative, the role of the UN TIR system, the impact of digital innovation and the initiatives aiming at a greener future for road transport.
1. Infrastructure Channel has been dedicating several articles to the New Silk Road initiative (aka OBOR, One Belt and One Road) and IRU has been working hard on initiatives aiming at reopening this ancient trade route: why road transport is still essential to the economic growth of the countries along the Silk Road?
With the increase in volumes of Euro-Asian and intra-regional trade, alternative transport routes – sea and more direct overland routes – are particularly sought after. For example, routes across Eurasia, Caucasus and Central Asia have significant transit potential as they not only connect Europe with China and other Asian countries, but the developing Asian markets among themselves.
There is potential for these newly activated routes to become the shortest and most competitive trade route in the region, which will help to promote an increase in trade turnover in the transit countries. Ideally it will also lead to the simplification of vehicle transit, job creation, and development in transport infrastructure.
2. One of the initiatives you have been focusing on to reactivate the ancient Silk Road route is the UN TIR system, which guarantees more seamless transportations through the different countries along the route: Pakistan, if I am not mistaken, is the last country to have joined. What are the next steps?
Most countries along the Belt and Road route have ratified the TIR Convention, and the system is operational in 60 of them. The implementation of TIR in China will foster opportunities for economic growth and development in China and in neighbouring transit countries. It will facilitate trade with Central Asian countries, Russia, Mongolia and the European Union, and stimulate China's transit and logistics services, as well as ultimately boost unimpeded trade.
With TIR now live in Pakistan, next steps might include the reactivation of the China-Pakistan Economic Corridor (CPEC). Offering overland North-western China, Eurasian countries, as well as Mongolia access to the sea, this route also connects China with the Middle East and Africa.
The use of the TIR system can streamline border procedures, cutting time and money for trade and transport operators. Customs procedures take place at origin and destination rather than at each frontier, using a single guarantee.
3. From Europe to the US, from China to India, infrastructure investments seem to be the order of the day: what challenges and what opportunities do you see in the nearest future?
Investment in “hard” transport infrastructure, such as multi-modal transport hubs, is important if countries are to fully benefit from the opportunities on offer from increased overland trade.
At IRU, however, we are concerned with -“soft” infrastructure – i.e. procedures at borders and the professionalisation of transport services – which is critical to increasing transport efficiency and travel times. In some regions, streamlining border procedures with TIR, for example, can save up to 57% time and 38% cost on intermodal and road transport operations.
4. In November Oman will host the next IRU World Congress, focusing on digital innovation: how can digital innovations make road transport more sustainable? And what challenges do we face when we talk about digital infrastructure?
Simply put, innovations in load matching, platooning, intelligent transport systems, eco-driving – all increase efficiency without reducing capacity. So as freight demand rises and fossil fuels dwindle, innovation offers a sustainable paradigm shift.
Innovation and digital services are re-shaping the world as we know it, but when it comes to mobility, despite considerable improvement over the years, the challenge is that the basics have remained the same. Too much of transport is paper based, and where data is available electronically, its sharing is highly limited. Sometimes, this is for good reason, such as data protection, but more often it is caused by a lack of interoperability.
In road transport, CMR consignment notes (“Convention relative au contrat de transport international de Marchandises par la Route”) are one of the key documents for cross-border operations, with some 150-200 million CMRs and other consignment notes used annually in Europe alone for international trips. Aside from the environmental implications of using paper, some 38%-44% time could be saved on administration regarding the filling in, formatting, printing, checking, signing, and cross-checking of CMR. The message is the same for customs transit systems like TIR and all other transport documents.
Electronic documents and data sharing will increase transparency, accuracy and speed of business processes. Today it is unfortunately not uncommon for payments to be delayed by days and sometimes weeks because transport operators need to show signed CMR papers. In a business that depends on profit margins in low single digits, cash flow is often an issue for daily survival.
5. Which initiatives in your view can help reduce the impact of the road industry on the environment?
The world economy depends heavily on efficient, reliable and cost effective transport. Road freight transport, in particular, is projected to increase by around 40% by 2030 and by little over 80% by 2050. This continuum must be balanced with the need to protect our air and our environment, while safeguarding our mobility.
We have already made progress: trucks emit up to 98% less toxic emissions than they did 20 years ago. But our challenge is now carbon and governments and business are working together to continue to reduce emissions.
At IRU we advocate an intelligent transition and an integrated approach, looking beyond CO2 standards but also to other important measures (such as EMS, platooning, ITS, eco-training, load optimisation, etc). Many of these are happening already and innovation is being led by industry. There should be an enabling legislative environment, particularly to ensure that there is not a shift away from them, and to help these measures develop further.
We also call for an integrated approach when it comes to pollutant and CO2 emissions (legislative measures to decarbonise the sector should address both) and we need to consider that the effects of CO2 standards will be felt across different legislations, such as those on road-user charging.