The Middle Corridor that connects Central Asia to Europe, has emerged as an alternative to the Northern Corridor, where Russia plays a key role as most of it runs through Russian territory, and the conventional sea route through the Indian Ocean фnd the route shaves weeks off transit times. If it takes 40 to 60 days to ship cargo from Europe to Asia through the Suez Canal or around Africa, and it takes more than 30 days to deliver cargo from China to Europe using the Northern Corridor, by using the Baku-Tbilisi-Kars railway that is a core part of the Middle Corridor, deliveries from Asia to Turkey via the South Caucasus takes only 15 days. And in 2023, Kazakh oil was carried along the Middle Corridor for the first time.
This route is also known as the Trans-Caspian International Transport Route (TITR). The main countries through which the Middle Corridor passes – Azerbaijan, China, Georgia, Kazakhstan, and Turkey – are hoping to benefit from the growing international interest in this alternative Eurasian trade route, which circumvents Russia.
Azerbaijan as a Middle Corridor node
In November 2023, the President of Azerbaijan Ilham Aliyev approved the “Action Plan for Increasing the Transit Potential of International Transport Corridors Passing Through the Territory of the Republic of Azerbaijan and Stimulating Transit Freight Transportation for 2024-2026.” The plan envisages implementing various measures to strengthen and develop the transport-logistics sector and the country’s transit potential.
Currently, Azerbaijan’s priority in this plan is the Middle Corridor, considered the most reliable, stable, and secure route for transcontinental logistics across Eurasia.
The Middle Corridor’s multi-modal transport infrastructure links the Caspian and Black Sea ferry terminals with the rail systems of China, Kazakhstan, Azerbaijan, Georgia, Turkey, Ukraine, and Poland. Trains operating along this corridor deliver cargo from China to Europe on an average in 20-25 days.
In early January, the first train of the year from Xi’an, China, arrived at the Baku port, completing the journey eleven days, though it could have been even faster if not for stormy conditions.
The opening of the Baku-Tbilisi-Kars (BTK) railway in 2017 was a significant step in implementing the Middle Corridor. Over the years, changing geopolitical conditions have significantly impacted the relevance of the BTK, prompting practical measures to expand its capacity, as well as other infrastructures.
Work on developing the Middle Corridor route is ongoing and the completion of several projects is expected in 2024 that will increase the capacity of the route and speed of delivery. All work on the BTK route should be completed in the first quarter of this year. After modernization and expansion, the BTK route is expected to handle up to 5mn tonnes of cargo.
The appeal of using Azerbaijan as a transit point is also increased by the Baku International Sea Trade Port – the largest port on the Caspian Sea. Currently, the development of the master plan for the construction of the port’s second phase is underway. Upon completion, the port’s capacity will increase from 15 to 25mn tonnes of cargo per year, and the TEU (Twenty-foot Equivalent Unit) trans-shipment capacity will reach 500,000 per year.
Azerbaijan has its own shipbuilding yard. Although the country possesses the largest trading fleet on the Caspian, the construction of new vessels – tankers and dry cargo ships – continues to increase the cargo turnover capabilities of the maritime segment of the multi-modal Middle Corridor. Plans include enhancing the capacities of the Baku shipyard, which will build up to 20 ships a year, considering the growing need for maritime cargo transportation.
Figures and Forecasts
The Trans-Caspian International Transport Route handled 2.8mn tonnes of cargo in 2023, an 86% increase over 2022. The target for 2024 is set at approximately 4mn tonnes. In the medium term, these volumes could rise to 10mn tonnes. Currently, a total of 25 railway, transport-logistics, port, and shipping companies from eleven countries operate on this route.
Investment cooperation with Azerbaijan will allow the completion of the Marabda-Turkey border section of the Baku-Tbilisi-Kars railway in Georgia soon. Additionally, logistic terminals will be constructed in Akhalkalaki and Kars, which will increase the cargo volumes of the Baku-Tbilisi-Kars railway.
In March-April, Georgia plans to lay the foundation for the deep-water port of Anaklia, designed to handle 100mn tonnes of cargo and one million TEUs annually. Last year, a Kazakh terminal in Xi’an, China, was opened, and construction began on a terminal in the Georgian port of Poti. These projects are expected to enhance the potential and attractiveness of the Trans-Caspian International Transport Route.
According to a trade model of the Middle Corridor developed by the International Bank for Reconstruction and Development (IBRD), a 30% increase in trade between China and the European Union is predicted by 2030, mainly due to flows through the Middle Corridor, expected to account for 62% of the total trade volume. Trade growth for Azerbaijan, Georgia, and Kazakhstan is expected to increase by 37%, with the total trade volume between these countries and the EU growing by 28%.
The World Bank forecasts that cargo volumes on the Middle Corridor could triple by 2030 compared to 2021, reaching 11mn tonnes. Container traffic is expected to reach 4.074mn tonnes (35.8% of the total freight flow) by 2030, 2.5 times higher than the 2021 figure. Oil and oil product transportation will amount to 3.553mn tonnes (31.2% of the total volume), 3.2 times higher than the 2021 figure.
To achieve these figures, several issues need to be addressed. Apart from bottlenecks on the BTK route in Georgia, there are also problems with rail transport in Turkey, where the capacity is very low — up to 700,000 tonnes per year – forcing cargo to be transferred to road transport, which increases delivery time and leads to additional costs. Constructing a railway from Ankara to the border with Georgia would make the Middle Corridor an indispensable route and the delivery time of goods through Turkey would be reduced from eight days to just two.
Projects and Finance
Kazakhstan, Azerbaijan, and Georgia have agreed on a five-year roadmap for the development of the Trans-Caspian International Transport Corridor until 2027. This marks the creation of the largest joint logistics company in the history of these countries. The new structure will focus on standardising tariffs and processing all goods transiting through the Middle Corridor.
The primary goal of the company is to facilitate cargo transportation between China and Europe. The participating countries are committed to significantly simplifying all processes and reducing cargo delivery times. Initially, the transit time along the Middle Corridor route was 53 days; it has now been reduced to 18-23 days, and the activities of the new company are expected to further decrease this to 18, and eventually to 10-15 days.
The “roadmap” adopted by the three countries aims to increase cargo transportation through the Middle Corridor to 10mn tonnes per year by 2025, up from 6mn tonnes.
China has shown great interest in implementing the Middle Corridor. Previously, the Chairman of the People’s Republic of China noted that China would participate in the creation of this route. Recently, a delegation from the Chinese port of Qingdao visited the Baku International Sea Trade Port, where they discussed collaboration in the development of port infrastructure and increasing the volume of cargo transported through Azerbaijan. Last year, a memorandum of understanding was signed between the Port of Baku and the Port of Qingdao.
It has recently been announced that European and international financial institutions plan to allocate €10bn for the development of transport communication in Central Asia. Valdis Dombrovskis, the Executive Vice-President of the European Commission (EC), stated that international partners are committed to providing €10bn in investments for the development of sustainable transport communication in Central Asia, including new commitments from the European Commission and the European Investment Bank amounting to €1.5bn. The EC press release highlights that investments in the Trans-Caspian International Transport Route are necessary to develop it into a “multimodal, modern, competitive, sustainable, predictable, smart, and high-speed route connecting Europe with Central Asia in 15 days or less.”
World Bank recommendations
In November last year, the World Bank issued a report titled “The Middle Trade and Transport Corridor” which highlights priority measures that could assist Kazakhstan, Azerbaijan, and Georgia in transforming this multimodal rail-maritime corridor into a significant and reliable transcontinental trade route.
The report identifies key strategic decisions and investments necessary to meet the demand for transport services and support economic development in Kazakhstan, Azerbaijan, and Georgia. These include: providing logistical solutions along the entire corridor to ensure smooth operation; reforming and simplifying processes and procedures; synchronising digital solutions; enhancing operational efficiency in transportation across the Caspian and Black Seas; and aligning a unified system of investment prioritisation.
The World Bank also identified five main factors limiting the capacity of the Middle Corridor and its bottlenecks. These are: coordination and management of the corridor, bottlenecks in ports and maritime services, on the railway, at border crossing points, all of which are related to issues in data and information exchange. According to World Bank experts, resolving these issues will require significant investment. However, it should be taken into account that improving efficiency can yield substantial and immediate benefits.
Well, it seems that the Middle Corridor has good prospects. As the World Bank notes, substantial and immediate benefits from the operation of the route depend on the diligence and perseverance of the countries in the region. To maintain interest in the Middle Corridor, it must be maximally efficient. And there is still work to be done on this.
Seymur Mammadov
