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Digital Transport Corridors: One Way to Grow Further is to Grow Closer




As the world becomes more interconnected day by day, with each country vying for development, the establishment of international transport corridors (ITCs) have become increasingly common. They are essentially routes such as air, sea, rail and road, for the transport of passengers and goods across countries and are designed to ensure predictable and transparent routes for all stakeholders in the global logistics markets. Such corridors are essential to the sheer size of the global logistics industry which, as of 2020, ranged from $8 trillion to $12 trillion annually. However, there is still room for improvement. Experts have noted that when navigating ITCs, a lack of standardization between logistics systems and legal frameworks in different countries and the heavy reliance on paperwork, have not only created technical barriers which prevent the instant transfer of logistics information, but also lead to increased logistics costs and delays in the transport of goods and services. The solution to this is to digitalize ITCs and the transportation process! Enter the Digital Transport Corridors, which is defined by the European Union as “a set of data-related services across physical cross-country transport corridors for end-to-end information exchange at all stages of transportation – air, road, rail and sea.” This includes services and applications such as information submission to government authorities, visibility services, booking and ordering services etc. Ideally, this would aid all stakeholders involved in the purchase and transport of goods, from vendors, to customs authorities, to logistics providers and even consumers. DTCs increase the interconnectivity of countries and their dependency on their trade partners but Countries and organizations are still beginning to see the importance of such corridors and how they could be potentially revolutionary to trade. The Eurasian Economic Union (EAEU) has even named the implementation of DTCs as “a priority initiative” for the establishment of its digital agenda.




Which Countries have implemented DTCs?


The EAEU, comprising of countries Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan, are aiming to implement an ecosystem of digital transport corridors from 2022, which they hope will increase efficiency and have a positive effect on the economic growth of member states. DTCs are being built as a distributed system of national transport logistics centers and there are plans to maximize existing or facilitate the development of new government platforms including: a system of customs authorities of the EAEU, financial and insurance services, commercial and logistic platforms and freight forwarding services etc. For example, the customs authorities of the EAEU are striving for an interconnected, efficient and secure DTC customs network that will essentially allow custom services to share data, turn paperwork digital, and prevent the repetition of customs procedures that have already been completed by other customs authorities. Consequently, customs will become more efficient as physical contact with goods are reduced, which allows them to reach consumers sooner. Additionally, different customs authorities can also exchange experiences and data about the implementation of new policies and safety measures. The EAEU is also working on a unified system for monitoring transit cargo transportation using electronic navigation seals to track the movement of goods. Initial tracking systems tested by Russia made it possible to monitor 146 freight traffic on five routes between Kazakhstan and Russia.


Similarly, The European Union has also been looking to develop a DTC between the Black and Baltic seas for many of the same reasons (increasing efficiency to save time and money). To facilitate this project the EU has adopted the Regulation on electronic freight transport information and continues to develop supporting acts to form a “decentralized federated network of platforms” and to enable governments “to acknowledge electronic data as legal.”




What are the advantages of DTCs?


A jointly developed digital corridor improves cargo & shipment visibility and cargo data flow throughout the stakeholder network, which streamlines information flow to all stakeholders. Using the straightforward concepts of data federation and trust, these hubs are able to connect numerous nations and could eventually connect an airport community in one nation to an airport community in another one, similar to a freight network. In this manner, the use of DTCs can increase connectivity and advance global trade. In economic terms, lower logistics costs would allow suppliers to expand their supply and lower their prices, increasing the consumption of goods and services, and thereby also boosting global trade.


Firstly, the efficiency and simplicity of conducting business are increased by the digitalization of numerous logistics services and governmental border procedures. Data flows make it easier for the numerous people and organizations involved in the trade logistics chain to share information, which lowers the cost of coordination for transferring commodities from production to consumption. Secondly, data flows lessen coordination and transaction costs, as well as information asymmetry. They make it simpler for companies or customers to get in touch with possible business partners, close deals, and learn about rules and standards as well as customer preferences. Increased information flows have greatly lowered the cost of entrance into the market, especially for SMEs (small and mid-sized enterprises), and enhanced access to knowledge about trade prospects.


Additionally, by lowering the costs of physical delivery, data flows, digitalization of services, particularly logistics and border control regulations, as well as advances in the digital economy, previously isolated places or small producers and purchasers can now engage in trade. They can facilitate the execution of the WTO Trade Facilitation Agreement and effective customs services across international borders. Behind the border, they can cut the cost of coordinating the myriad of support services—from insurance to transportation—that are required to make commerce possible.




What are the barriers to the implementation of digital trade corridors?


Firstly, Data Localization Barriers. These include outright bans on cross-border data flows, as well as pointless mandates that data be stored locally or that computing facilities be located there. Additionally, Technology Roadblocks, the need to adhere to onerous and pointless security standards as well as the disclosure of proprietary source code for encryption techniques, poses a significant barrier to implementing DTCs.


Furthermore, barriers to Internet services, including the improper application of outdated legislative frameworks to new business models and the unjustified restrictions placed on Internet platforms for user-generated content and activity liability that is unrelated to intellectual property. Other obstacles include problems with digital products, electronic payment systems, internet domain names, electronic authentication and signatures, and other discriminatory behaviors.




In conclusion, though DTCs require much work and effort to implement, they truly are the future of digital trade and have a plethora of advantages. Their implementation in the EAEU is testament to that and if given the chance, will revolutionize world trade. In today's world, striving for development on your own is a herculean task, and it is certainly easier to achieve with the help of trade partners. DTCs are one way to bring nations together and create ecosystems of efficiency, convenience and trust.





Article Written By: Bhavna Gopalan, Ivannah Jacob

Article Edited By: Tanuj Waghray






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