MUSCAT, JULY 10 – As Oman is hosting the IRU World Conference 2018, the organisation sheds light on the importance of the TIR Customs Transit System, which may play a key role in the country emerging as one of the important logistics hub of the world.
In an exclusive interview to the Observer, Boris Blanche, managing director, IRU, said, “IRU is extremely pleased to be working together with Asyad and the Omani government to bring the IRU World Congress to Muscat. Our organisations share a common vision for the role of transport and trade in building prosperity, and we support Oman’s ambitions to become a world-class leader in logistics.”
He added, “The visible investment into road infrastructure, public transport services and sea ports all highlight Oman’s promising capability.
Through the 2020 and 2040 logistics plans, there is also a strong commitment to the country’s soft infrastructure, particularly the regulatory environment, support mechanisms, and institutions.”
Blanche said that Oman’s strategic centralised location in the region makes it ideal for conversion into a major transhipment hub for East-West trade routes. Sitting at the heart of the Gulf Cooperation Council (GCC), it is a major player in the Middle East.“Its regional significance to our own work is also highly relevant — as it is to wider geopolitical relationships.”
Asyad is an associate member of IRU and have been working closely on Oman’s accession to the TIR customs transit system and other global conventions.
According to Blanche, “TIR enables goods to transit from a country of origin to a country of destination in sealed load compartments that are controlled by customs via a multilateral, mutually recognised system. This system secures customs duties and taxes and provides a robust guarantee mechanism, reducing trade transaction costs and minimising time spent waiting at borders.”
He added, “We recorded a five-day saving in time when using TIR along an intermodal trade corridor linking Europe to the Middle East.
Another study estimated that the use of TIR along an intermodal corridor between Serbia and Azerbaijan would reduce transit and slack times by 92 hours; and increase container use by an estimated 33 per cent, as the same container can be used to transport goods more times in a given year.
Blanche highlighted that the bilateral trade between Arab countries is currently below 10 per cent. “The GCC has collectively committed to join the TIR system, with Kuwait, Qatar and the UAE already signatories, and Bahrain and Oman set to join soon.
TIR’s guarantee for the payment of customs duties and taxes, makes border crossings faster, more secure and more efficient, reduces transport costs, and boosts trade and development.”
Adopting the global standard sends a strong signal to investors, who would have more confidence in the attractiveness of investment opportunities relating to transit and trade, he said.
Blanche admitted that a common GCC customs tariff is a big step towards higher regional economic integration.“We must remember that back in 1947, TIR played a crucial role in supporting post-war Europe’s economic integration, where harmonised customs and trade mechanisms were needed to move goods fast and enable the continent’s reconstruction.
This was followed by a continental FTA, the customs union and later a common market for goods and services.
The implementation of TIR, combined with other facilitation measures (like consignment notes — or CMR — drivers’ visas etc.) will certainly help reach the goal of more effective GCC trade integration.
He said that, the real issue for IRU has been not of countries deciding not to join TIR, but the lack of awareness of the system, and its applicability in a particular region.“Only recently that the UN and IRU have taken on the mandate to proactively raise awareness of the benefits of TIR in other regions that may not already neighbour existing TIR countries — for example across the Middle East, South and South East Asia, Latin America and Africa.
These efforts have been extremely productive. China, India and Pakistan are just some of the latest signatories.
He added, “We are currently seeing a very positive dynamic for TIR accession in the Middle East.
Only this year, three countries from the region (Saudi Arabia, Qatar and Palestine) joined the TIR Convention, and other countries, including Egypt, Sudan and Iraq have initiated concrete steps to join.”
Challenges facing the shipment through land borders across the world, Blanche said, can result from many causes, but they impact on the cost of doing business in a particular economy, and therefore on its competitiveness in global markets.
Some of the key causes for these delays, costs and lack of predictability include — the cost of customs bonds, particularly when a different national bond is required in each country; the impact on business’ cash flow caused by these bond systems, and particularly the time it can take to acquit a bond when it is no longer being used; customs, immigration and other agency processes can be slow and uncoordinated, leading to excessive delays at the border; and border infrastructure is sometimes insufficient to deal with the volume of traffic, leading to significant queues.
These latter two issues both lead to a conducive environment for corruption, but also for crime, public health concerns, and environmental damage.
In addition, lack of harmonisation of technical regulations might mean that trucks that are allowed in one country are not allowed in the neighbouring country (e.g. because of axle weights).
Moreover, labour, immigration and transport rules might mean that the driver and/or the truck are simply not allowed to cross the border. These two issues would require some form of transhipment, which adds time and cost to the overall journey.