Wednesday 29th Mar 2017 - Logistics & Supply Chain

Big wins on the New Silk Road

The World Economic Forum got underway in Davos this week in a political environment that appears to have turned away from the WEF vision of expanding globalisation based on public-private cooperation.

Malory Davies FCILT, Editor.

Malory Davies FCILT, Editor.

Brexit in the UK, and the election of the US president that wants to build a wall along the border with Mexico, are just the two most obvious examples of this. It’s not surprising that WEF founder Klaus Schwab has been exhorting the great and the good of business and politics to up their game.

But I was struck by some work that the WEF has produced on the development of the New Silk Road. This supply chain development is also known as “One Belt/One Road”.

The report, “How Technology Can Unlock the Growth Potential along the New Silk Road” has been produced in collaboration with Bain & Co. It argues that as the global economy continues to slow and the world searches for new growth engines, the Silk Road Economic Belt and the 21st Century Maritime Silk Road offers a major development framework and opportunity for connectivity, international trade, and economic development.

And it calculates that small and medium-sized enterprises along the New Silk Road could boost the GDP of their countries by four per cent to seven per cent as a result of increased market access.

By focusing on the adoption and implementation of new technologies that improve infrastructure efficiency, companies could achieve real-time supply chain visibility, eliminate inconsistencies in customs clearance procedures, reduce overall operating costs and increase the speed of goods transported along routes between Europe, Asia and beyond, it says.

The reports recommendations include:

* Facilitating direct access to markets for SMEs with online platforms designed to connect them with distant customers

* Creating improved market intelligence reports for SMEs that could enable much better understanding of product supply/demand dynamics, more agile adjustments to production plans and improved tracking of prices and their trends

* Standardise clearance procedures and transforming human decision-making into machine intelligence with lower risk of corruption in customs clearance processes

Clearly, these are big wins and there is work going on to achieve this. China has invested over $51 billion and more than 100 countries have signed up with free trade, collaboration agreements or other partnerships in a project that involves more than 12,000 engineering contracts.

Nevertheless, political headwinds in the new world order present a significant challenge. Let’s hope that this project really can achieve its full potential.

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