ASTANA – A new report by the World Bank estimates that with the right investments and policies, the Middle Corridor linking Chinese and European markets via Central Asia and the Caucasus could triple trade volumes reaching 11 million tons by 2030, as presented during the roundtable on Nov. 27 in Astana.
The report titled “Middle Trade and Transport Corridor—Policies and Investments to Triple Freight Volumes and Halve Travel Time by 2030” focuses on Kazakhstan, Azerbaijan, and Georgia to identify priority measures that can transform this multimodal rail and maritime corridor into a vital and dependable trade route.
Increased trade between Azerbaijan, Georgia, Kazakhstan and Europe are the key drivers of demand: including a 37% increase in intra-region trade and a 28% increase in trade between the three countries and the European Union.
“The improvement of the middle corridor will undeniably allow the Central Asia and South Caucasus regions to capitalize on the trade development opportunities for the benefit of these countries, which are connected,” said Andrei Mikhnev, World Bank country manager for Kazakhstan, during the presentation.
According to Victor Aragones, senior transport economist at the World Bank, the Middle Corridor can both strengthen and diversify the trade between Azerbaijan, Kazakhstan and Georgia.
“We think that even if the Middle Corridor may not be the main corridor for the Europe-China transit trade, it has the potential to really improve the resilience of the logistics system in Central Asia but also to support the diversification of trade of the three countries: Kazakhstan, Azerbaijan and Georgia,” he said.
According to him, both soft and hard measures need to be taken in order to facilitate the cargo turnover.
“This means improving coordination among the different operators, improving transshipment of containers, enhancing or establishing the data platform that allows information exchange, acquiring rolling stock across the corridor and also the acquisition of maritime fleets across the Caspian Sea,” said Aragones.
There are several capacity limitations and operational bottlenecks along the Middle Corridor.
“There is still some need for an infrastructure investment,” said Aragones. “But you know, there is a need to look at the infrastructure investments on a corridor basis not only on a national arena or as a localized effect but how will improvement in one end of the corridor align with the performance at the other end.”
“Our findings say that most of the infrastructure is in places. There is a need to increase particular sections, but there is no need to build huge infrastructure, new railways or anything major, but it is more to add and to improve what is already in place,” added Aragones.
According to him, the majority of the bottlenecks are non-infrastructure.
“These are more about sharing information and the management of the corridor as a single entity. As you know, the corridor has three railways, three ports and customer services. So there are many, many players along the corridor. There is a need to simplify this complexity, finding a way to coordinate,” he said.
The lack of a single operating system also results in delays at border crossing points because while many stakeholders use modern information technology solutions, the systems are not uniformly used nor are they integrated.
Steps to unlock the potential of the Middle Corridor
One of the messages of the report is to reimagine the Middle Corridor as an economic corridor.
“This needs to be presented as an economic corridor. You need to go beyond transportation. We need to think about what policies really take advantage of increased volumes of cargo to promote economic development in each of these three countries,” said Aragones.
He also reiterated the need for a single operator that offers corridor-length logistics solutions along with simplification of processes and procedures throughout the Middle Corridor.
Talking about the immediate steps to improve the capacity of the Middle Corridor, Aragones mentioned the transparency and predictability in prices and digitalization of the Middle Corridor to enable traceability of cargo movements in real-time in information systems.
“This is an important aspect for shippers and establishing this capability in the Middle Corridor will improve operations. Also, for the different players along the corridor, it will be useful to know incoming cargo and prepare operations based on this,” he said.
Kazakhstan’s initiatives along the corridor
According to the report, all three countries along the Middle Corridor should ensure transparency and predictability of final transport prices, provide traceability of cargo movement and ensure a feasible transition to electronic documents applicable to both the railway and the Caspian Sea.
The report provides country-specific recommendations as well.
“In Kazakhstan, the main bottleneck in the port is the lack of equipment to maintain operations during windy days. So, [the recommendation is to] improve the equipment in the port of Aktau to remain open, to reduce the dwell time,” said Aragones.
“There is also the need to acquire more shipping capacity, especially as it relates to containers, and to provide more clarity in terms of shipping rates tariffs for containers in Kazakhstan,” he added.
Satzhan Ablaliyev, Vice-Minister of Transport of Kazakhstan highlighted the government’s initiatives that align with the World Bank recommendations.
“As the ministry, we are taking active steps to develop the capacity of corridors passing through our territory. In short, we are planning a number of activities, particularly 1,300 kilometers of railway lines and 4,800 kilometers of second railway lines will be built along with 11,000 kilometers of roads that will be either constructed or rehabilitated. Also, we envisage the development of terminal facilities in the ports of Aktau and Kuryk as well as dry ports in the territory of Kazakhstan,” said Ablaliyev.
“If we speak about the Middle Corridor, it is important to note that collective action from all countries participating in the corridor is necessary for further development of the transport corridor,” he said.
In particular, Ablaliyev mentioned the Roadmap for the development of the Middle Corridor for 2022-2027 signed between Kazakhstan, Azerbaijan, Georgia and Türkiye last year. This year, railway operators of Kazakhstan, Azerbaijan and Georgia inked an agreement to create a Middle Corridor Multimodal joint venture to develop multimodal service in the corridor.
“The goal of this joint logistics companies is to coordinate transportation along the entire corridor, provide services based on the single window principle and establish the throughput tariff,” said Ablaliyev.