The old route was an original highway of ideas. But a fresh initiative is expected to further liberalise trade and promote innovation.
Let’s journey back in time to a period between 500 and 800 C.E. Eurasia is the capital of the world. And the Silk Road – a motley aggregation of trade routes over land and sea linking Europe with Asia – is in full swing. Metals, spices, medicines, glass, leather goods and paper are all moving on horse, camel and donkey-back to destinations across the world. While many caravans only ply circular routes barely a few hundred miles across, some trickle across continents.
And thanks to this slow trickle of goods, ideas and knowledge, the human race advances. Because of the Silk Road, paper became the primary material for writing. The ability to jot down facts and record history easily had perhaps more of an impact on the human race than any other.
The original Silk Road was a way to accelerate ideas, technologies and artistic influences. It became a virtual highway that scholars, religious practitioners and linguistics used to spread ideas. In its own way, it was the world’s most powerful social media network of its time.
A Silk Road reborn
Fast forward to 2016 in the current millennium. The G20 Summit – a high-powered meeting of leaders from the world’s 20 largest economies – has recently been held in China for the first time. As the original nexus of the ancient Silk Road, it’s only fitting that the country is involved yet again in an agenda of trade liberalisation.
China has launched an ambitious project to once again link Eurasia with Europe and Asia across land and sea – under the slogan One Belt, One Road (OBOR). The Belt goes across land, linking China with Russia and Iran, while passing through Central Asia. It starts from China’s Xian province, and its furthest tip is Rotterdam in the Netherlands. The return journey is via the sea, from Rotterdam to Venice in Italy. From there, goods journey to Greece’s Athens, Nairobi in North Africa, Colombo in Sri Lanka, Kolkata in India, Jakarta in Indonesia, Kuala Lumpur in Malaysia and back to Zhanjiang city in China’s Guangdong province.
Benefits that exceed geographies
The old Silk Road combined land and sea. So does the new one. The old branched out through countries, faiths and bodies of knowledge. So does the new.
The new Silk Road has one other massively tangible benefit – speed. The route massively reduces the time needed for a container to reach Europe from Asia. By sea, the average time span is 42 days. By train over land, it takes around 13 days.
While transport costs over land are higher than by sea this overhead is negligible for high-value, time sensitive goods such as new phones, computers, medicines and FMCG.
DP World is a key part of this new Silk Route. Not only do we operate joint venture ports in China such as Tianjin and Yantai – but are also involved as consultants with Eurasian countries such as Kazakhstan helping to upgrade infrastructure capacity.
We are proud to have advised on Kazakhstan’s new dry port, the logistics and industrial zone at Khorgos and the expansion of the port of Aktau, the country’s main cargo and bulk terminal on the Caspian Sea.
And our experience and expertise is being recognised and we’ve developed into ‘knowledge exporters’, sharing our industry know-how with governments around the world.
Trade needs collaboration
After this year’s 11th G20 Summit, it’s important to emphasise yet again that investment in trade benefits everyone. Corridors of commerce create values for all global economies and the hubs that link them. I favour trade liberalisation because we’ve seen first-hand the benefits of empowering businesses to trade freely in the UAE. In fact, DP World enables trade in over half the world’s economy today, making it an experienced partner in developing new corridors of opportunity.
OBOR and the UAE are compatible partners. The UAE has long been a part of global trade, and Dubai was a key point in the original Silk Road when moving goods from Asia and Europe to Africa. The UAE’s investment in maritime routes isn’t under threat. With their speed and higher costs, overland routes give businesses and consumers more choice. Everyone wins when goods flow faster and cheaper.
Collaboration and investment
The New Silk Road is a very exciting idea. But it needs commitment. Yes, the Silk Road will embrace an area that houses 70% of the world’s population, produces around 55% of global GDP and hosts about 75% of the world’s energy reserves. Investment opportunities in the New Silk Road connect three continents and 65 countries.
But the project also needs significant funding to reach its full potential. It is estimated that the total investment bill could come to USD 8 trillion between 2010 and 2020 alone. And at DP World, our experience also shows that New Silk Road countries need to develop trade-centric solutions and bring on board all the intermodal ingredients to encourage the easy movement of goods.
Take the GCC for instance. Our inter-country trade works due to standardised documentation, bills of import, and other paperwork that is being converted to the digital age through smart applications. If the countries involved in the New Silk Road can’t standardise documentation – or better yet go paperless – the speed of the trains will be let down by human bureaucracy.
Other experts believe that OBOR countries may need at least another USD 5 trillion in infrastructural development between 2016 and 2020. They also need to find new ways to work together while developing compatible financial markets and mitigating the overheads of red tape, enabling seamless trade across borders.
The New Silk Road offers immense trading and development opportunities. The project will create the world’s largest economic corridor, one that could reach 4.4 billion people and build close to USD 21 trillion in value. But to reach its potential, the OBOR project needs collaboration, cooperation and adherence to the ideals of free trade.