The European Bank for Reconstruction and Development (EBRD) is conducting a study on sustainable transport connections between Central Asia and Europe, funded by the European Commission. The study, which should be completed by summer 2023, aims to identify the most sustainable transport connections between Central Asian economies and the extended Trans-European Transport Network (TEN-T).
It has two objectives: to identify the most sustainable transport corridors connecting the five Central Asian countries with the European Union’s TEN-T, including the Caucasus, and to propose actions for their development, including actual infrastructure investments and the necessary enabling environment.
Recently the EBRD presented interim findings of the study:
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Until recently, the main route linking northeast Asia with Europe was the Eurasian Northern Corridor. It used the Trans-Siberian railway from Russia’s Far East, with branches through Kazakhstan and Mongolia. In 2021, it was responsible for transporting around 1.5 million 20-foot equivalent units (TEUs) of cargo or containers. The corridor is operated by the UTLC Eurasian Rail Alliance, owned by Russia, Belarus and Kazakhstan.
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The Middle or Trans-Caspian Corridor through Kazakhstan is generally considered the second-best overland option. In Q1 2022, close to 20,000 TEUs travelled through Kazakhstan to the Caspian ports of Aktau and Kuryk. Assuming that demand will continue to rise, the annual volume of freight cargo through the Middle Corridor in 2022 may reach 80,000 TEUs. This is not far from its maximum throughput capacity of 100,000-120,000 TEUs, constrained by a limited number of vessels in the Caspian Sea and non-regular shipment schedules. Should this corridor become the preferred new route for freight companies, existing Caspian Sea infrastructure may become a real bottleneck. A diversion of transit cargo exceeding 10 per cent of the Northern Corridor’s tonnage will require large investment across the entire corridor and its economic efficiency is yet to be assessed. The EBRD estimates immediate investment needs for Middle Corridor infrastructure upgrades to be in the region of €3.5 billion.
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Uzbekistan is currently pursuing multimodal transportation (road and rail) from China, through the Kyrgyz Republic by road, then onwards through the Trans-Afghan route or through Turkmenistan and Iran by road. Other options include the use of Kazakhstan’s Middle Corridor or the Turkmen port of Turkmenbashi.
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The route through the port of Turkmenbashi, then onwards through the Caspian Sea to the port of Poti in Georgia has the highest transit tariff and is barely economically viable. The port is highly inefficient and operates a very limited number of feeder vessels, thus presenting even a bigger bottleneck than the Kazakh ports. Moreover, Turkmenistan is not party to international agreements and this will require additional bilateral arrangements.
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The route through Turkmenistan and Iran may eventually become an interesting transportation solution, but there are currently a number of serious limitations. Turkmenistan has complicated sanitary and logistical requirements, on which the country is not willing to negotiate. Neither country is party to international agreements, so arrangements have to be made through bilateral agreements, a lengthy process. Iran is a sanctioned country and it is difficult for European operators to work there unless they have regional subsidiaries that can overcome bottlenecks.
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Kazakhstan already has a developed network with two seaports and two railway border crossing points with China. Even so, several large-scale projects are in the pipeline to facilitate east-west trade and transport links, including the rehabilitation and electrification of railway segments, the construction of new railway lines and the expansion of port infrastructure.
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Uzbekistan is actively developing transport links with all of its neighbours, but as a landlocked country, it will have to rely on transit routes through other countries to present itself as viable transit option. Uzbekistan railways, the country’s main freight carrier, needs to be reformed to improve efficiency. Significant investment will be required to electrify sections of railway in the Fergana Valley, between the key cities of Bukhara and Khiva and elsewhere. The same goes for the rehabilitation of roads across the country. In parallel, Uzbekistan should modernise its rolling stock and improve its customs services to ensure smooth transit and transport.
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The route through Kazakhstan to its ports on the Caspian Sea seems to be most stable option for cargo travelling through Uzbekistan, but there are multiple inefficiencies at border crossing points between the two countries and bottlenecks in the ports of Aktau and Kuryk. What is more, the Caspian Sea is not always navigable, so the Uzbek authorities are keen to explore alternatives. Alternative transport connections may incentivise Kazakhstan to improve the quality of commercial services and border management.
Eventually, the success of the Middle Corridor will depend on the ability of all countries along the route, including Kazakhstan, to work seamlessly, eliminate trade barriers and set up regular and reliable freight schedules. If the Middle Corridor is to become a viable transportation alternative, it must offer a predictable and reliable environment for all parties involved.
