Connect with us

Armenia

World Bank Presents Key Findings of Latest Study on Middle Corridor in Tbilisi

SHARE:

Published

on

The World Bank presented the key findings of its latest study on the Trans-Caspian International Transport Route (TITR), also known as the Middle Corridor.

The event gathered representatives of Armenia, Azerbaijan, Georgia, Kazakhstan, state-owned enterprises, the private sector, and other stakeholders to discuss how the countries can work together on a regional approach to making the corridor more efficient and addressing bottlenecks.

TITR is a multimodal corridor connecting China and Europe. It passes through Kazakhstan via a railway route through Dostyk or Khorgos/Altynkol, then a railway to the port of Aktau, stretches across the Caspian Sea to the port of Baku, crosses Azerbaijan and Georgia and further to Europe. 

The development of the route has been garnering growing attention, becoming increasingly vital to strengthen the region’s economic resilience and promote trade diversification. The development of the TITR also aligns with Kazakhstan’s goal to become a transport and logistics hub. 

According to data from the TITR International Association, the volume of transportation along this corridor increased by 86%, reaching 2.8 million tons, up from 1.5 million in 2022. This is a substantial increase compared to just 586,000 in 2021. 

In November 2022, Azerbaijan, Georgia, Kazakhstan, and Turkiye signed the so-called roadmap, which outlines the priority directions for investments and actions needed to improve the TITR. In June 2023, Azerbaijan, Georgia and Kazakhstan agreed to create a single logistics operator. 

In 2023, Kazakhstan first shipped oil via TITR, pumping it into the Baku-Tbilisi-Ceyhan pipeline under the agreement between KazMunayGas and Azerbaijan’s SOCAR oil and gas company. Nearly one million tons of Kazakh oil have been shipped by that route.

Advertisement

Key findings

The corridor can triple trade volumes by 2030 to 11 million tons as compared with 2021 levels and reduce travel time by half, said World Bank Regional Director for the South Caucasus Rolande Pryce.

“Beyond its utility as an Asia-Europe landbridge for containerized freight and a route to access international markets for all types of freight, the Middle Corridor’s significance lies in the potential benefits it can bring as an intra-regional trade corridor, that is trade among the countries of the region,” said Pryce.

Sharing recommendations from the study, Pryce noted that the first step is to reimagine the Middle Corridor as an economic rather than a transport corridor. 

“The base demand of the corridor is endogenously generated within the corridor countries. As such, the Middle Corridor has great potential to evolve as an economic corridor with synergies between connectivity improvements and inherent economic potential in the zones through which the corridor passes,” she said. 

However, this requires establishing a cross-border institutional framework that is equipped to efficiently develop and optimize the use of the corridor as a cohesive trade route and economic zone.

Without enhancements to the corridor, demand for transportation is forecasted to fall 35% short of the expected growth. 

Pryce also highlighted the importance of reforming and simplifying procedures, particularly border procedures. 

“Leverage the potential of digital data flows. Digitalization is key and it has multiple elements to it. There should be transparency and visibility. One should be able to trace and track. Digitalization also means that paperwork should become a thing of the past, paving the way for more sophistication and cost-effectiveness, consolidating smaller truckloads into larger and more efficient train loads,” she continued. 

She reaffirmed the World Bank’s readiness to support the governments in unlocking the full potential of the Middle Corridor. 

“But we know that governments and the World Bank alone cannot bring this to successful fruition. Bringing this big idea to reality requires the active participation of multiple actors, including the private sector and other development partners. To close the infrastructure gap and to improve service provision, we must mobilize private capital and expertise,” she said. 

Current challenges

Víctor Aragonés, a senior transport economist at the World Bank, shared the details of the study. “For the study, we really went to the fields, visited the ports, railways, different people, different stakeholders, we did the surveys, interviews,” he said. 

Previous research reveals that the Middle Corridor faces significant issues.

“There are some problems in terms of the prices. They [users of the corridor] feel that there is a lack of transparency, and the prices can be high and variable. The time to cross the corridor can also be highly variable. In some cases, it can go very fast, but for shippers, it is very important to have some predictability and reliability in terms of the crossing times,” said Aragonés. 

Another key finding is that these challenges stem not so much from infrastructure deficiencies but from a shortage of rolling stock and issues at the interface between railways and ports. 

“A lot of the problems are not about infrastructure or building new railways. I think there is a lot of potential to fix these bottlenecks by focusing on the operational efficiency of the corridor,” he added. 

One critical area identified for improvement is corridor coordination, which, Aragonés noted, is “more complex” due to the involvement of several railways, ports, a shipping line, and customs agencies from each country. This complexity highlights the urgent need for enhanced coordination among the various stakeholders involved.

Another important area is the digitalization of the Middle Corridor. 

“A big problem in the corridor is that the level of digital development along the corridor is different. In some cases, some operators are using paper. Others use the latest platform. There needs to be an effort to really take advantage of information technologies to promote the movement of information from end to end,” he said. 

Besides addressing operational efficiency, there is a need for substantial investments. In its recent study, the European Bank for Reconstruction and Development (EBRD) concluded that investments of nearly 18.5 billion euros (US$20 billion) are needed for the development of TITR. 

Trade component

Compared to previous studies conducted by international institutions, the World Bank study includes a trade component, said Aragonés.

“This is a nice feature because it doesn’t only allow you to identify the transport bottlenecks. (…) Including trade allows us to see how the improvement of the corridor will impact the local economy and how it will diversify the trade dynamics of the countries. So this is important because it allows you to really go beyond transportation and more to regional development,” he said. 

According to the study, from 2021 to 2022, trade along the corridor grew by 10% in volume largely stemming from changes in regional and intercontinental trade patterns. 

In 2021, trade from Kazakhstan, Georgia, and Azerbaijan made up approximately two-thirds of the volume along the Middle Corridor. This trade volume doubled in 2022 because of the war in Ukraine, which resulted in increasing trade flows, particularly in energy and technology goods, as sanctions imposed on Russia led to the diversification of some of this trade.  

“Trade turnover rose by around 45% in Kazakhstan and Georgia and 72% in Azerbaijan in 2022 compared to 2019-21. The EU accounted for more than half of the increase in exports from the region,” reads the study. 

Middle Corridor development strategy 

Addressing the gathering virtually, Sapar Bektassov, the director of the Department of Transport Policy, Ministry of Transport of Kazakhstan, echoed his colleagues, underlining the need to reduce the delivery time along the corridor, boost digital technologies, and establish stable tariffs by creating a single service.

According to the Kazakh Ministry of Transport, the processing and transportation times along the route have been reduced from 38-53 days to 19-23 days. The goal is to reduce delivery times to 14-18 days, of which the transit time across Kazakhstan is planned to be reduced to five days.

He suggested the development of the Middle Corridor strategy until 2040. 

“At the state level, we set five-year plans based on market demands and problems. Considering the high transport potential of connecting Central Asia and the Black Sea countries through the Caucasian region with access to Europe, we need to undertake simultaneous and interrelated measures between the countries,” said the deputy minister. 

He emphasized transport corridors are an important factor in global competitiveness. 

“We consider it necessary to develop standards for TITR that would serve as a quality guarantee for all users of the corridor. These standards could focus on fixed transit times for goods through the territory of each country along the corridor, ensure the safety and preservation of cargo, a single service, and competitive tariffs,” said Bektassov. 

Vision of Azerbaijan

Azerbaijan’s Deputy Minister of Digital Development and Transport Rahman Hummatov said 13 block trains had been sent along TITR from China over the past two months.

“Because of the measures taken, the time for these containers to go to Georgian ports was only 12 days. Just for information, before it would take approximately 40-50 days,” he added. 

He noted the TITR has “gained new momentum evolving into a strategic artery that serves not only economic interests but also peace and prosperity in the region.”

“We have strong intention and robust political will to support the development of the corridor to maximize its potential and serve as a reliable link in Eurasia. Our integrated plans include enhancement of international transit corridors, the harmonization of border crossing procedures, the synchronization of processes, ensuring efficiency in maritime operations, application of unified global transit documents, and, of course, digitalization,” he said. 

Further studies

Aragonés said the World Bank will also study another branch that goes through Uzbekistan and Turkmenistan, reaching the Turkemnbashii port to cross the Caspian Sea and reach Baku.

“We will also look at Turkiye. At the moment, we only cover what we consider to be the core of the Middle Corridor, which is Azerbaijan, Georgia and Kazakhstan. But the next phase is going to expand the geographical coverage to include Turkiye, which is becoming an important player as well,” said Aragonés.

The World Bank recently announced it will launch a detailed study of the Caspian Sea levels, which also impacts the operation of the ports along the Middle Corridor. 

Share this article:

EU Reporter publishes articles from a variety of outside sources which express a wide range of viewpoints. The positions taken in these articles are not necessarily those of EU Reporter.

Trending