The world is suffering from huge logistical and supply chain issues after the corona pandemic; not only are ships hugely delayed, but shipping rates have also gone through the roof. A container that costs $8000 for moving from Pakistan to Turkey costs about $5000 by road.
Not only is trade through routes using trucks more cost-effective than through seafaring ships, but it is also much faster. Shipments that easily take more than three weeks to reach Istanbul from Pakistan by sea, arrive in 8-10 days by road, drastically reducing delivery times.
The National Logistics Cell (NLC) recently completed the first-ever commercial road movement under the TIR (Transports Internationaux Routiers) to Turkey and Azerbaijan through Iran.
Currently, NLC is one of the few companies that has been awarded Transports Internationaux Routiers (TIR) admission by the Pakistan National Authorization Committee of the International Transport Union for regional transport operations. Pakistan has become the 78th country to join TIR finally this year.
Admission of trucks under TIR has been a missing link for Pakistan to boost its regional trade. In a first, four vehicles completed a round trip road journey carrying goods from Islamabad through Taftan to Baku and Istanbul, the capital cities of Azerbaijan and Turkey, respectively.
Two of the vehicles reached Istanbul in ten days, covering a distance of almost 5,300 Km, while the others reached Baku in eight days, covering nearly 3,700 Km. The government has stated that the TIR and logistical facilitation is an essential pillar of its Strategic Trade Policy Framework (2020-25) and intends to facilitate road trade as an important strategy of growing exports. Today, trucks have become a crucial element in transport for economies worldwide.
They help link business markets and various transport modes, enabling complex supply and logistics chains to operate efficiently. However, these very complex international supply chains are laden with overlapping regulatory requirements and incoherent custom procedures preventing and impeding the quick movement of goods across borders.
According to studies, these factors account for more than 50 percent of the total transport time, making trade slower and expensive than it otherwise should be. This is where the TIR comes in, a multilateral treaty concluded in 1975 on the international transport of goods under cover of TIR carnet, aimed at simplifying and harmonizing administrative and custom formalities of international road transport.
Under the TIR system, trucks or any containerized shipments are sealed by customs at departure and unsealed by customs at the destination, without unnecessary or redundant checks at borders in between.
When cargo arrives at the border of a transit country, customs make sure the seals are intact and verify the cargo information using a unique transport document, the TIR carnet, before releasing the cargo.
TIR streamlines customs procedures for increased efficiency and cost-effectiveness along the supply chain, making trade easier and cheaper. Within Pakistan, a one-window operation is needed to simplify the documentation process, including insurance with multiple agencies.
Speaking to GVS, Mr. Razak Dawood, Advisor to the Prime Minister on Commerce & Investment, recognizing TIR as a “huge opportunity” for Pakistan stated that, the government was in talks with Afghanistan, Iran, and other regional partners, to formalize and integrate the customs departments at each end under the TIR.
He stressed how TIR provides a ready-made framework for Pakistan and other regional partner states to streamline their road trade. The operationalization and acceptance of this framework would provide a comprehensive end-to-end solution, connecting warehouses with warehouses under minimized custom formalities and shortening delivery times, considerably reducing the cost of trade.