1. EURASIA BUSINESS PLATFORM
Chamber of Commerce
of the United States of America

2. Eurasia Business Platform
Shaping U.S. economic policy in Central Asia, the Caucasus, Ukraine, and Turkey
Creating and maintaining dialogue, access and interaction with Eurasia’s key government and business decision-makers
Who is the EBP?
Group of leading U.S. Chamber member companies
Affiliated American Chambers of Commerce (AmChams) in the region
U.S. Chamber staff in Washington, D.C. and our regional offices in Athens, Brussels and Moscow.

3. EBP Objectives
Create an awareness of the value of Eurasian regional integration among policy-makers in Eurasia, Europe and the USA
Shape perceptions and policies towards Eurasia and Turkey
Develop cross cutting policy recommendations in areas which would have a positive impact on regional development
Strengthen the AmCham network and coordinate its lobbying efforts on issues of regional impact

4. Overarching Objective
Foster regional cooperation and integration with the goal of creating a transparent and profitable commercial and investment climate while contributing to the positive development of a strategically important part of the world

5. Key Activities
Commissioned Commercial Feasibility Study: Land Transport Options Between Europe & Asia
Briefed U.S. government officials from the U.S. Departments of State, Commerce, Treasury, the National Security Council, and members of Congress
Developed relations with U.S., European, and key international organizations
Istanbul roundtable
Moscow roundtable

7. Main Findings
Ocean transport: cheap and reliable, but long transit times
Air transport: expensive but fast
Rail: More expensive than ocean transport, transit times unpredictable
Road: Costs are 3-4 times that of ocean transport and roughly 1 week shorter—huge potential for shortening transit times even further —a transit of 1 week shorter for trucking than for ocean transport can level the difference in costs
The overall conclusion of the study was that while there aren’t really any goods being transported by road or rail through the vast Eurasia landmass right now, it could make commercial sense to do so for certain high-value, time-sensitive goods.

8. Modal Split: Full Load Containers Between China & Europe
We’ll start with a breakdown of how containers are currently moving between China and Europe. Note: Container means a 40 ft. standard container unit. Such a 40 ft. container equals 2 TEU (20 ft. equivalent unit).
Ocean transport currently dominates inter-continental trade, including cargo shipped between Asia and Europe. The number of containers leaving China with a European destination keeps growing with an estimated yearly growth rate of 10% for 2006 and beyond.
One key feature that needs to be mentioned is: imbalance: signficantly more than 50% of the containers on both the Asia-Pacific line and the Asia-Europe line going back to Asia empty.
This particular chart does not show air transport. However, on a world-wide basis air cargo traffic is expected to increase by 5.9% per year until 2023.

9. China to Western Europe A Broad Comparison
The main results reveal that sea transport is clearly the cheapest option (US$3,000) measured by freight rate but also has the longest transit time (28 days). At the other extreme, air transport is the most expensive (US$25,000-45,000 and has a very short transit time (less than a week). Trucking lies between these 2 extremes for both cost (US$11,000 – 13,000) and transit time (18 days using the fastest option). The rail line options revealed a very broad range of cost ($4,000-10,000) and transit times (14-45 days). The rates for rail should be viewed with caution and are probably not precise enough for direct comparison.

10. The land link between Asia and Europe, one of the oldest trade routes in the world, is not used today for any large-scale inter-continental commercial trade of containerized cargo. The current land transport connections do exist, but they have no viable share of the commercial market for containerized cargo. Land transportation, by road or by rail, has only been used to a limited extent for the purpose of intercontinental transport between Asia and Europe primarily for bulk goods and commodities such as coal, agriculture products, iron and oil.
Although the volume of commercial trade is very limited and there are no exact statistics for this trade it is estimated that in 2005 approximately .2 million tons of cargo passed the border on trucks. One particular challenge is that foreign trucks are not allowed to operate in China at this stage and the loaded containers therefore, have to change vehicle/operator at the Kazakh/Chinese border (with the main location being Khorgos).
The trucking business in Kazakhstan, through its national association, KAZATO, has been promoting proposals that can establish viable international trucking operations linking China and Europe. They believe that there is a potential volume for transit operations of 0.3 million tons a year (about 15,000 trips) without additional capital investments and upgrading of customs facilities. Their 5-year ambition is for the transit of 5 million tons of cargo, corresponding to 250,000 yearly trips and requiring a build-up of 10,000 trucks to engage in the trade.
This slide shows one route as proposed by the Kazakh trucking association.

11. The Trans-Eurasian Land Bridge Trucking Estimates
This slide gives a snapshot estimate of the cost for a 40 foot container and the time in days for it to cross from Shanghai to Hamburg, Istanbul, Novorossiysk, and Riga. As you can imagine, a number of assumptions had to be made. The rates used to come to these conclusions are a combination of 2 legs: from Shanghai to the Kazak border (4,800 km costing $5,400 and taking 8 days by a Chinese operator) and from the border to western Europe (6,200 km costing $5,600 and taking from 9-12 days by a central asian trucking company). The overall distance is about 11,000 km making it $1.10 per km for a central asian operator and $1.25 for a european operator. I should note that these findings are quite optimistic compared to other estimates. An Asian Development Bank analysis finds it to be $6,000-7,000 and from days average from 2 central asian republics to Western Europe.
It will, of course, depend on whether future expectations can be met to see if the 19 (or fewer) days can be achieved.

12. This slide shows a more precise breakdown of the estimated times between points along 1 suggested route. The estimate allows for 2 days customs clearance at the China-Kazakh border.

13. Developing Eurasian Land Transport Options
Time matters
Predictability and reliability are key
Border crossing and other facilitation issues must be adequately addressed
Increased regional cooperation is a necessity
Some researchers have estimated that each day in travel is worth an average of 0.8% of the value of a product for US trade in manufactured products. For a transit time of 20 days, this translates into a ‘tariff’ of 16%. The daily depreciation rate for some high value goods, such as consumer electronics, can be as high as 2.5%. So, time matters.
Looking at combined transport and inventory costs: road transport could compete with the dominant mode of sea transportation for high value goods with high time sensitivity. However, to exploit the benefits of this premium transport option based on faster road transit times, road transport operators will have to be able to demonstrate, over a period of time, that they are predictable and reliable. They will need this in order to get leading shippers to sign up to their services.
Facilitation issues must be adequately addressed and increased regional cooperation is a necessity.

14. Istanbul Roundtable
Eurasia has the potential to be a large and lucrative market beyond only the energy sector
Regional cooperation and integration is necessary:
Transport and trade facilitation measures
Environment and water resource management
Development of human capital
Rule of law issues and corporate governance programs
Protection of Intellectual Property Rights (IPR) and combating trade in counterfeit and other illicit goods
Energy security and diversification of the economies
Reducing red tape, corruption and increasing transparency

15. Moscow Roundtable IP Protection and Anti-Counterfeiting
Best practices from region
Customs training
Scorecard
Transport Development & Trade Facilitation
Georgia-customs timing project
UN Transport Conventions
Working Group
First annual Eurasia Forum in Washington, D.C. – Fall 2007

16. Meeting the Challenge
As long as the countries in the region do not address, in a meaningful way, market and economic policy fragmentation, most companies will not make the region a priority.