The need for better railways and highways has been going on for years and remains a critical infrastructure challenge that must be addressed. That said, there have been improvements in this area in recent years.
In particular, Kazakhstan has been leading the efforts in this direction by having invested around 30 billion USD over the past decade in its transport and logistics sector, and constructing over 2,500 new railway lines.
Likewise, Caucasian countries along the Middle Corridor are also undertaking efforts to upgrade their rail and road infrastructure.
For instance, in December 2023, it was announced that the cross-country railway connecting Azerbaijan’s city of Baku to the western border with Georgia had been entirely reconstructed to improve the speed of freight transportation, which is said to have resulted in a significant rise in train speeds on the Baku-Tbilisi-Kars (BTK) railroad, now reaching 120 km per hour, up from the previous range of 50-60 km per hour.
Over US$ 100 million has been allocated for the enhancement of the Georgian segment of the BTK route, with the objective of increasing its cargo capacity from 1 million to a maximum of 5 million tons in a relatively short timeframe. Overall, though, the railway systems in the South Caucasus continue to be largely underfunded and outdated, even after the introduction of the BTK railway.
Similarly, extensive efforts are being made to improve road connectivity throughout the region. For instance, in October 2023, a major segment of Georgia’s East-West highway, particularly the Ubisa-Shorapani section, was inaugurated with the support of loans from the European Investment Bank (EIB), amounting to around 1 billion EUR, along with EU grants that surpassed 42 million EUR in total.
The successful completion of this highway segment significantly enhances connectivity across Georgia as well as strengthens its links with neighbouring countries, aligning with the broader framework of the Trans-European Transport Network (TEN-T).
Besides, the EU Commission also pledged 16 million EUR for safety upgrades on the highway and is further assisting multiple national connectivity efforts with annual grants totaling 85 million EUR.
Apparently, these efforts to enhance road connectivity in the region have resulted in the improved movement of goods along certain sections of the Middle Corridor. For instance, George Makhatadze, the general manager of Gianti Logistics, based in Tbilisi, Georgia, was cited as saying in Breakbulk Magazine’s November 2024 issue that road upgrades in the region have enabled his company to move much heavier and larger loads, with an increasing focus on project cargo.
In particular, Makhatadze talked about the Georgia and Azerbaijan sections of the strategically important E60 motorway of the extended Trans-European Transport Network (TEN-T), also known as the European Route 60, noting that these sections are nearing completion and will increase the capability of the route.
Also, according to Victoria Lunga, sales manager at S&D Logistics, a Tbilisi-based freight forwarder, the cost of road freight along the Middle Corridor is approaching that of sea freight while also offering shorter transit times.
“Road freight is becoming almost the same for costs, just a little more expensive, but the transit time is impressively smaller,” Lunga was cited as saying by Breakbulk Magazine in its November 2024 issue.
That said, these same business executives at the time, had also pointed several issues that continue to plague the Middle Corridor’s viability as a transit route such as shortage of ships and locomotives as well as issues with border crossings due to the complex nature of transit and trade procedures.
For instance, Lunga, while saying that the costs of road freight along the Middle Corridor are becoming almost the same as sea freight, also points out how the inflated prices of Out of gauge cargo (OOG) permits in some countries is hindering S&D Logistics ability to attract more business opportunities.
“They (S&D customers) need short transit time and clear tracking. They can accept a higher rate, but only in the case of perfect service. We try to provide all of that but without sustainable partners and governmental support, it won’t work. I mean, for example, the OOG permits should be at normal, not inflated, prices,” said Lunga.
“The Georgian permit is the most expensive – US$2,600 – when Azerbaijan, Turkish and Armenian permits are around $500-1,000. Such a cost doesn’t allow us to get as many projects as we want to,” she continued.
In a similar vein, Makhatadze of Gianti Logistics, while pointing out that the rail connections along the Middle Corridor are functioning well in the Commonwealth of Independent States (CIS), also raises concerns about the lack of locomotives and rail wagons, indicating that countries like Azerbaijan and Georgia are actively working to tackle this challenge.
“It’s just that it’s a really long way. There is a shortage of locomotives and rail wagons. Azerbaijan has started to buy more; Geroge was buying from Russia but now cannot [due to sanctions],” said Makhatadze.
He also talked about the issues with border crossing. “Sometimes we lose three or four days at the border [between Georgia and Azerbaijan], because of the queues. Every day we see 1,000 trucks waiting in the queue for one border crossing and up to 400 at the other. Many of these trucks previously went from Kazakhstan to Russia, then Georgia; now it’s Kazakhstan, ferry, Azerbaijan, Georgia.”
And then, he further pointed out the problems due to the shortage of ferries across the Caspian Sea: “We are often waiting two weeks. If there is stormy weather, the wait gets even worse.”
Also, improving the physical infrastructure alone will not suffice to increase the Middle Corridor’s efficiency. What is also needed, is the standardization of customs fees and a notable development in this respect is the trilateral agreement reached by Azerbaijan, Kazakhstan, and Georgia, to create a joint logistics operator to deal with issues of uniform tariff policy, streamline cargo regulations, and simplify customs procedures along this route.
The EBRD has also recommended that the regional countries should ratify and implement the e-CMR electronic consignment note for road transport, which has become operational in the EU from August 2024, together with the e-TIR system.
While the Caucasian countries have successfully completed their integration into the e-TIR systems, other countries are yet to follow suit. For example, Central Asian countries have begun efforts to adopt the e-CMR, however, none of them have implemented it to date. Prior to implementing e-CMR, all countries are required to conduct a legal assessment to determine their preparedness for this software solution.
Azerbaijan is the only country in the region that has completed the necessary procedures and is prepared to adopt the e-CMR and e-TIR systems.
Now, to provide a complete picture of infrastructure bottlenecks plaguing the Middle Corridor as well as the efforts being taken by the countries along this route to address these bottlenecks is not within the scope of this article.
The objective of this section is to highlight the active participation of Central Asian and Caucasian countries in efforts aimed at elevating the quality and conditions of transportation routes within the Middle Corridor, and how these efforts are indeed delivering tangible results, while also pointing out that the path ahead is still very long.
Prospects For The Middle Corridor
The ports and terminals along the Middle Corridor have much larger capacities than the volumes that are being currently transported via this route, so the route is basically constrained at present by several factors that have been discussed in the previous section.
To overcome these problems huge investments are needed, which will only happen if there are volumes to justify them, and the volumes will only be generated by Asia-Europe trade streams, because the goods from countries along the Middle Corridor are generally low in quantity and value.
Therefore, one of the ways to gauge the prospects of the Middle Corridor is to examine the level of engagement of Europe, China, and other East Asian countries like Japan and South Korea, with the countries that this route traverses.