Implementing electronic procedures throughout the entire supply chain from China to Europe could save up to four days in transit times for vehicles crossing borders, says Alexander Zabojev, head of the Integration Research Center of the Eurasian Development Bank (EDB), during the EDB conference on "Promoting Sustainable Development in Central Asia." The event took place in Almaty on December 6, 2024, as reported by a correspondent from the Kapital.kz business information center. The speaker reminded that all five Central Asian countries are landlocked, and Uzbekistan is surrounded by other landlocked nations.
"We are witnessing rapid growth along the Middle Corridor (Trans-Caspian International Transport Route or TMTM – Ed.). According to various estimates, the number of container shipments has increased by more than 20 times over the past 9-10 months, including a 10.5 times rise in transit shipments through this corridor," Alexander Zabojev shared.
Discussing the construction project of the 270 km Ayagoz-Bakhty railway line and the third railway crossing at the Kazakhstan-China border, the speaker mentioned that there are debates about the necessity of this third crossing. "In my opinion, not only is a third crossing needed, but also a fourth one, to ensure seamless container and cargo transportation between Central Asian countries and China," he noted.
The EDB emphasizes the importance of establishing various connections that would complement traditional "East-West" routes with "East-South" directions. "Therefore, projects that extend south towards the Indian Ocean are very important. According to the International Trade Centre, the unrealized trade potential between India and Central Asian countries is three times greater. This means that if the infrastructure allowed for transporting goods to South Asia, the volume of cargo flow would be three times higher than the current level," Alexander Zabojev reported.
The speaker pointed out the need for updating rolling stock. "Currently, Central Asia has an aging fleet. The Caspian Sea requires an update of vessels, which would significantly boost transport in the 'West-East' and 'North-South' directions. Road transport also needs renewal as Central Asian carriers travel to Turkey and Europe – these trips require vehicles of high environmental standards," explained the head of the EDB Integration Research Center.
The Eurasian Development Bank highlights three elements of "soft" infrastructure: harmonization, coordination, and digitalization. "We believe that harmonization should be based on fundamental international agreements, UN conventions, and multilateral regional agreements. There is currently a significant discussion about mutual recognition of economic operators," remarked Alexander Zabojev.
On Transport Across the Caspian Sea
"As you know, in November last year, Turkmenistan became the 14th country to join TRACECA (Transport Corridor Europe-Caucasus-Asia – Ed.), and currently, it is a full-fledged participant in the program," reminded Asset Asavbaev, Secretary General of the Permanent Secretariat of the TRACECA Intergovernmental Commission.
According to him, periodic monitoring by TRACECA shows that there are still traffic jams at borders, leading to increased delivery times. "It is particularly important to note the restrictions arising from the mismatch in the capacity of transport infrastructure at borders," the speaker pointed out.
He explained that the port infrastructure of the Caspian states was built based on the parameters of vessels using the Volga-Don Canal, which significantly limits their cargo capacity today and, consequently, raises transportation costs.
"Therefore, last year a concept for a vessel with greater capacity was developed. According to our calculations, transportation costs could be reduced by almost half. Now we need to implement the second phase of the design, focusing on the hydraulic engineering structures of the ports, particularly the ability to handle larger vessels. We have been seeking funding for this work for almost a year," says Asset Asavbaev.
On the Shortage of Truck Drivers
It is projected that by 2028, the global shortage of truck drivers will double, stated Vadim Zakharенко, head of the International Road Transport Union (IRU) Permanent Representation in Eurasia. "Moreover, over 50% of operators will struggle to find qualified drivers. To attract new talent, especially women and youth, we need to lower the barriers to entering the profession and improve working conditions. For instance, building more safe and reliable parking areas and updating training programs," he believes.
First and foremost, according to the speaker, drivers should receive recognition for the significant and irreplaceable role they play in society and the economy. "They deserve priority treatment not only when crossing borders but also when obtaining visas," asserts Vadim Zakharенко.
On Central Asia
"The future of transport infrastructure in Central Asia focuses on three important aspects. Firstly, there is volatility related to climate change and extreme weather events. Economic changes are the second aspect. Especially after the pandemic, we see that recovery is extremely important, and all of this requires infrastructure projects," explains Runze Yu, senior investment officer in the client relations department for the public sector in the Asia Infrastructure Investment Bank (AIIB) covering East and Central Asia, Europe, the Middle East, Africa, and America. The third important aspect the speaker mentioned is digitalization .
"Despite the progress, we still face key 'bottlenecks.' Firstly, there are infrastructure gaps, particularly concerning the ports of the Caspian Sea. There are also institutional barriers related to various customs regulations and regulatory norms," adds Runze Yu.
On the Middle Corridor
Senior Economist at the Asian Development Bank (ADB) Roman Mogilevsky elaborated on the Middle Corridor (Trans-Caspian International Transport Route or TMTM – Ed.). "Transit between China and Europe is very important, but even more crucial are the transport flows connected to the countries in the region: their exports, imports, and mutual transit," he said.
Secondly, according to the speaker, this corridor has strategic significance specifically for the countries in the region, as they have almost no alternatives.
"Thirdly, transport costs along this corridor are quite high. It is important and necessary, but it is not very competitive in terms of cost. This is due to multimodality and the need to cross so many borders. Business processes are not streamlined, and logistics falter in many places – all of this leads to increased costs, which is a very important factor," emphasizes Roman Mogilevsky.
He concludes that addressing these issues requires significant infrastructure investments. "Moreover, even more investments are needed to streamline logistics, in the 'soft' infrastructure that has been discussed today, and in other development factors," the speaker specifies. All of this hinges on regional cooperation, without which it will not be possible to achieve success, believes the senior economist of ADB.
"It turned out that the functioning of this corridor is very much tied to how pricing occurs on ocean routes. When prices are high there, flows through TMTM and the Northern Corridor increase. When ocean prices drop, the demand for these services decreases," notes Roman Mogilevsky.
This year, volumes along the Middle Corridor have significantly increased, he concludes. "Moreover, they are growing, as far as can be judged, not so much due to infrastructure improvements, including in 'soft' infrastructure, but mainly due to improvements in logistics. A logistics center was built in the city of Xi'an in China with Kazakhstan's participation – cargo consolidation has improved, and there is more to transport along this corridor," the speaker summarized.
The senior economist at the Asian Development Bank asserts that much of the development of this corridor is "tied" to China's policy, which is currently subsidizing transportation both along TMTM and the Northern Corridor.