Chinese Freight Forwarder’s Thinking and Opportunity for the Belt and Road Initiative

The Second Belt and Road Forum for International Cooperation (BRF) was held recently in Beijing. Significant achievements have been made with the long list of deliverables, including 283 concrete results in six categories, namely, initiatives proposed or launched by the Chinese side, bilateral and multilateral documents signed during or immediately before the second BRF, multilateral cooperation mechanisms under the BRF framework, investment projects and project lists, financing projects, and projects by local authorities and enterprises. Among them, Twings selects the most relevant items of the freight forwarding industry as below and comments afterward.

I. Initiatives Proposed or Launched by the Chinese Side

11．China Customs established a Belt and Road customs information sharing platform and achieved certificate of origin electronic data networking with Chile, Pakistan, Singapore and Georgia.

II. Bilateral and Multilateral Documents Signed during or Immediately before the Second BRF

5．The Chinese government signed transport cooperation documents with the governments of Pakistan, Liberia, Nepal, Georgia, Belarus, Armenia, Saudi Arabia, Laos, and Kazakhstan.
12．The National Development and Reform Commission of China issued the Joint Statement on the Study of China-EU Railway-based Integrated Transport Channels with the European Commission.
16．The seven national railways of China, Belarus, Germany, Kazakhstan, Mongolia, Poland and Russia signed the Rules of Procedures for the Joint Working Group for Transport of China-Europe Container Trains.
17．The Ministry of Transport of China signed the MOU on Cooperation for Promoting the Effective Implementation of Maritime Labor Convention, 2006 through the 21st Century Maritime Silk Road Initiative with the International Labor Organization. The State Post Bureau of China signed the MOUs on Strengthening Cooperation in the Postal and Express Delivery Services in Response to the Belt and Road Initiative with the National Post Company of Iran, the Ministry of National Development of Hungary and the Pakistan Post.
28．China Customs signed customs and inspection and quarantine cooperation documents with UNIDO and the General Department of Customs and Excise of Cambodia,and signed relevant AEO mutual recognition cooperation documents with the Federal Customs Service of Russia, the State Revenue Committee of the Ministry of Finance of Kazakhstan, the State Customs Committee of Belarus and the Customs General Administration of Mongolia.
40．The Chinese side further developed the Maritime Silk Road Index by releasing the CHINA-CEEC Trade Index (CCTI) and Ningbo Port Index (NPI).
41．China and Russia piloted the “one-unit” financial settlement financing rules for international rail transport.

III. Multilateral Cooperation Mechanisms under the BRF Framework

1．China, together with 33 representatives from government transportation and customs departments, key port enterprises, port authorities and terminal operators from 13 countries, including Egypt, Sri Lanka, UAE, Latvia, Slovenia, Belgium, Spain, Fiji, Italy, the Netherlands, Denmark, Romania and Singapore, jointly set up the Maritime Silk Road Port Cooperation Mechanism and released the Ningbo Initiative on the Maritime Silk Road Port Cooperation.
13．China Customs initiated a “Customs-Train Operators Partnership for Secure and Expedited Clearance of CR Express Carried Goods (C-TOP).

Twings’ view:

I. Strategic layout of the Chinese government

All the achievements, like initiatives, framework, and agreement, from the point view of Twings a Chinese freight forwarder, is to build a good ecological platform for the trade of products and services between China and the Belt and Road countries and regions. Through the list, we can see the layout of the Chinese government in the following aspects.

1. Build a new logistics channel
   Considering that the Belt and Road countries are mostly inland, the traditional multimode of marine and road truck transporting would waste much time for their export to China. More importantly, many Central Asian countries (such as the former Soviet Union’s several republics) used to rely on Iranian ports for transit, but it is well known that the current US sanctions against Iran make this path full of risks.

As an alternative, many countries along the Belt and Road and China are vigorously promoting the mode of railway transportation. The railway model will significantly reduce transportation time and is safer than shipping. As an ancient means of transportation, the railway has been built in various countries along the Belt and Road. The Chinese government can use the integrated resources to link the railway stations of several countries on the line, and then further develop into a network based on this. This will facilitate logistics traffic in many landlocked countries.

2. Build a relatively smooth customs clearance environment
   In addition to transportation, another relatively significant factor affecting the speed of goods arriving at the port of destination is the efficiency of customs clearance. The traditional customs clearance mode, plus most of the Belt and Road countries are underdeveloped countries and regions, leads to relatively low efficiency. Through some tariff agreements with these countries, China has vigorously promoted free trade agreements or preferential agreements, giving tariff reductions and exemptions for certain products of many underdeveloped countries. All of these measures aim at building a relatively efficient customs clearance environment so that the products of the Belt and Road countries can be quickly and easily cleared to China. At the same time, China’s products can also enjoy efficient and convenient customs clearance services and more efficient delivery to the countries along the Belt and Road.

3. Promote RMB internationalization
   The internationalization of RMB is mainly to solve the settlement problem of international trade. With RMB becoming the settlement currency, the suppression of the US dollar can be eliminated, risk and fluctuation reduced, creating a more stable environment for importer and exporters, and exchange rate fluctuations under proper control. It is the core issue. Only by doing an excellent job of internationalization of RMB can our Chinese enterprises have the opportunity to speak and display in the field of international finance.

II. Enlightenment and business opportunities for Chinese freight forwarders

The Belt and Road Initiative is a national strategy, and its importance is self-evident. Therefore, as a freight forwarder in China, we must spend the leading energy to study the national policy and combine the industry situation to find the right business opportunities. Specific work includes:

1. Provide customers with FCL or LCL service for railway transportation.
2. Familiarize Chinese importers with import tariff policies for products from various countries and regions. Help customers reduce tariffs using certificate of origin and help customers design appropriate transportation methods.
3. Take the initiative, through our advantage of being familiar with Chinese products and markets, to develop suitable customers in the countries and regions of the Belt and Road.