Key takeaways:
- The original Silk Road was in existence roughly between the 2nd century BC and the 18th century AD
- China launched the New Silk Road (the Belt and Road Initiative) in 2013
- The Belt and Road Initiative is projected to boost trade by $2.5 billion a year
- China’s new Silk Road involves 66 countries and includes nations in Europe, Asia, Africa, and South America
- The latest container and asset monitoring technology will be necessary to mitigate any disruption to existing supply chains caused by the Belt and Road Initiative
- Investments in Belt and Road Initiative projects totalled $19.3 billion in the first half of 2021, with a renewed green focus coming to the fore.
We live at a time where globalisation has made the world a smaller place than ever before. We can communicate with a family member in the US, order some shoes from China or make an investment in sub-Saharan Africa, all with the touch of a button. But this level of inter-connectedness is a relatively modern phenomenon, enabled by the rapid growth in digital technologies and political movements towards more liberal trade policies.
However, there is a much older precedent for the level of international trade that we enjoy today, albeit on a smaller scale. The Silk Road connected East and West from approximately the 2nd century BC to the 18th century AD, resulting in the sharing of goods, including glassware, textiles, and livestock, but also ideas. The original Silk Road had a profound impact on the cultural, religious, political, and economic development of the countries that it passed through. And now, it has returned.
The New Silk Road
Chinese President Xi Jinping responded to calls for his country to reopen its historic trade routes with the West when he formally announced China’s Belt and Road Initiative in 2013. Altogether, the additional trade facilitated by the project could be worth as much as $2.5 trillion annually within a decade.
Unlike the original Silk Road, which largely focused on land routes across Asia and Europe, the modern Silk Road has a much broader scope. In fact, some 66 countries are directly involved in infrastructure projects within the Belt and Road Initiative, including Belarus, South Africa, and Peru.
Some of the landmark projects to have already been announced as part of the Belt and Road Initiative include:
- The Addis Ababa–Djibouti Railway connecting Ethiopia and Djibouti. With more than 95% of Ethiopia’s trade passing through Djibouti, the railway is expected to have significant economic benefits in both countries. In 2019 the railway generated $40 million in passenger and cargo revenue.
- The Argentina-China Joint Hydropower project will result in the construction of two new dams across the Santa Cruz River in southern Argentina. It is estimated that the project will result in annual savings in imported fuel of up to $1.1 billion.
- The Jakarta–Bandung High Speed Rail will become Indonesia’s first high-speed rail connection. It will shorten the journey time between Jakarta and Bandung, the country’s two largest cities, from over three hours to just forty minutes.
- European projects: Despite some initial opposition, China has signed Memorandums of Understanding with heads of state in various European countries, including Austria, Italy, Portugal, and Greece. The first 10,000-mile freight trip along the Yiwu – London Railway Line was also completed in 2018.
Impact on global supply chains
One area where the impact of the Belt and Road Initiative is likely to differ markedly from that of the original Silk Road is in terms of global supply chains. Back when the historic Silk Road was in use, the supply chains connecting countries across Europe, Asia, and the rest of the world were either extremely limited or non-existent. Today, the connections that make up the global supply chain involve freight, shipping containers and air travel. In fact, the global supply chain market is predicted to be worth $37.41 billion by 2027.
As one of the largest infrastructure and logistics projects ever attempted, the Belt and Road Initiative will have a significant impact on supply chains around the world. It will not only inject new investment – funding for Belt and Road projects totalled $19.3 billion in the first half of 2021 – it will also change how infrastructure projects are carried out. Routes that would previously have been unfeasible may suddenly open up to businesses on either side. Others that once proved popular may find that suppliers and logistics firms are suddenly opting to use newer, more profitable routes. How these changes will be managed could have serious implications for manufacturers, transportation firms and customers.
How Nexxiot can help support the arrival of the New Silk Road
The substantial impact that the New Silk Road will have on existing global supply chains will require businesses to completely rethink how they manage the transportation of goods and services. Do they have the fleet management tools in place to facilitate logistics across the new routes that the Belt and Road Initiative will open up? Do they have access to supply chain tracking technology that will provide confidence for suppliers and buyers alike as they navigate profound changes to global networks?
Many of the infrastructure projects connected to the Belt and Road Initiative take in markets that have traditionally been underserved. This will create huge business opportunities but also new risks. For organisations that want to take advantage of the economic potential that will be unlocked by the Belt and Road Initiative, they will need to be able to guarantee the safe transit of their goods. End-to-end asset monitoring technology like gateways, diverse sensors and intelligent cloud solutions will help ensure this.
At Nexxiot, we understand the importance of managing mobile assets as well as the ever-changing nature of global supply chains. Our track and trace solutions enable you to manage your cargo fleet even as the Belt and Road Initiative opens up some trade routes and closes others.
Don’t get caught out by the disruption that could accompany the progression of China’s Belt and Road Initiative – make the most of the opportunities it creates instead. In order for the Belt and Road Initiative to meet its grand ambitions, it is estimated that an annual infrastructure investment of between $2.9 trillion and $6.3 trillion will be needed globally. If the project is to match the impact of the original Silk Road, it will also require innovations around the transportation of cargo – the kind that Nexxiot has the expertise and knowledge to facilitate.
Find out how our technology could boost the efficiency and affordability of supply chains as they weave their way across our changing world. Get in touch with us today.