Regional Logistics Corridor - Armenia€¦ · Regional Logistics Corridor Georgian National Investment Agency (GNIA) 2012. ... Georgia (direct GDP impact, economic integration, connection

Regional Logistics Corridor

Georgian National Investment Agency(GNIA)

2012

Regional Logistics Corridor

www.investingeorgia.org 2

Trans-Caucasian route• Latent gateway between Europe and Central Asia• Around 80% of port cargo and 60% of freight rail are transits

Transport Infrastructure• Rapidly developing road infrastructure• Ports are cost-competitive vs. alternative routes• FDI inflows in the logistics sector have primarily targeted transport

infrastructure

Opportunities• Deep-sea port with PanaMax vessel• Baku-Tbilisi-Kars railway – direct connection between EU and Central

Asia• Logistical centers

Georgia’s transport infrastructure

Rail▪ 1,500 km (90% electrified)▪ ~7,000 rolling stock, 180 locos

Road▪ 1,500 km international highway + 20,000 km internal and

local roads

Rail▪ BTK connection to Turkey▪ Modernization▪ Tbilisi bypass▪ ~2500 new rolling stock

Road▪ East-West highway upgrade

Poti seaport▪ 13 berths, 8-10m draft▪ Container and bulk (210k TEU)▪ Owned/operated by Maersk/RAKIA

Batumi seaport▪ 5 berths, 1 offshore mooring, 11m draft▪ 90% petroleum/oil, 10% containers (44k TEU) ▪ Operated by JSC KazTransOil

Kuhlevi seaport▪ Crude oil, petroleum, and lubricants▪ Owned/operated by State Oil Company Azerbaijan

Poti seaport▪ New container berth (2014)

Deep-sea port▪ Min. 2 berth of 20m draft

(PanaMax)▪ First phase: Dry bulk (10m tons) and

containers (200k TEU)▪ USD 200 mn investment volume

Tbilisi international airport▪ ~1 mn passengers (capacity: 3 mn)▪ Serving 28 destinations

Batumi international airport▪ 100,000 passengers

Kutaisi international airport▪ Passenger, incl. low-cost airlines▪ Currently under construction

Poti international airport▪ Cargo airport, not yet commissioned

Mode of transport Existing infrastructure and flows Upgrades

Road

/Rai

lM

arit

ime

Air


Overview of Georgia's logistics sector


Value generation through transit service provision

▪ Logistics accounts for around 7% of GDP and ~ 3% of employment, contributing to 19% of all exports and 9% of all imports

Georgia is in a highly strategic location for transshipment

▪ Strategic location: It serves as an entry gate to the Caucasus and Central Asia as well as a stepping stone to the region

▪ Leveraging its location, Georgia’s transport economy can benefit from large addressable transit flows, growing economies and landlocked resources

▪ Georgia is already largely transshipment oriented, with transshipment values amounting to ~3x its GDP

There is latent demand for transport infrastructure in Georgia

▪ Latent demand for transport infrastructure– The current capacity compared to potential flows on the

East-West corridor present a latent opportunity to Georgia as a transshipment economy

– However, current infrastructure not sufficient

▪ Strategic location and latent demand for infrastructure offer potentially huge economic opportunity/ geostrategic stake for Georgia (direct GDP impact, economic integration, connection of the economy)

Upgrading infra-structure offers huge economic and geo-strategic potential

Georgia is in a highly strategic location: It serves as an entry gate to the Caucasus and Central Asia as well as a stepping stone to the region


1 Population and GDP, numbers cumulative (apart from stepping stone countries)2 Includes Russia’s Southern Federal District and North Caucasian Federal District

Georgia

ArmeniaAzerbaijan

Kazakhstan

Uzbekistan

Turkmenistan

IranIraq

Syria

Cyprus

Ukraine

Moldova

Turkey

2

3

4

1mn1

74Turkey

75Iran

504EU

4.5

17

121

Georgia

Caucasus

Land locked countries

23Stepping stone

GDPUSD bn1

773

331

14

88

356

17,330

154RussiaSouth2

1

2

3

4

Georgia serves as the entry gate to a landlocked region boosting significant resource reserves


Iron ore2%USD 4 bn

Other (bauxite, gold, nickel, PGMs)

Zinc5%USD 1 bn

Copper3%USD 3 bn

Oil3%USD 100 bn

Coal5%USD 28 bn

Gas14%USD 9 bn

For comparison:region represents

only ~1.6% of global population

1 Including Eastern Europe, Balkans and Turkey 2 Excluding Central Asia, Asia and Middle East 3 Estimated using total export volume by province4 Covering trade flows stated or convertible into tons only (excludes, e.g. electricity), equal to >80% of all flows in value

Georgia can utilize its location to address several flows on the major European-Central Asian trading routes

1

Caucasus – Europe1/RoW2

~44 mn tons p.a.Central Asia – Europe1/RoW2

~79 mn tons p.a.

Western China3 – Europe~3 mn tons p.a.

3

Total trade on all 3 routes▪ Total trade volume (mn tons)4

▪ Total trade value (bn USD)

~126

~100

North-South corridor Russia-Turkey

~35 mn tons p.a.

2

2010


In total, the addressable flows relevant for transit through Georgia amount to ~126 million tons

Million tons,2010

1 21 0 14

12 60 1 11

2 N/A 2 N/A

1 1 N/A 4

2

2

3

0

4 4 N/A 22 N/A

11 7 82 2 25

38

73

7

1

8

126

CaucasusCentral Asia Europe

WesternChina RoW

Destination

Total ad-dressableOrigin

Caucasus

Central Asia

Europe

WesternChina

RoW

Total ad-dressable

Addressable flows Other flows


Liquid bulk – Most relevant addressable flows are between Caucasus and Europe and Central Asia and Europe

Million tons, 2010Addressable flows Other flows

Liquid bulk

0 21 0

4 55 1 6

1 N/A 0 N/A

0 0 N/A 0

131

0

1

0

1 1 N/A 8 N/A

3 2 76 0 19

35

61

2

0

2


Western China RoW

Destination


Caucasus

Central Asia

Europe

WesternChina

RoW

100Total ad-dressable


Dry bulk – Most relevant addressable flows are between Central Asia and Europe/RoW

Million tons, 2010

0 1 0 1

1 N/A 12 N/A

6 2 5 1 7

3

32

1

7 4 1 62 12

1 N/A 1 N/A1 3

0 0 N/A 10 1


Western China RoW

Destination

Dry bulk


Caucasus

Central Asia

Europe

WesternChina

RoW

22Total ad-dressable



Million tons, 2010

Container – Most relevant addressable flows are between Central Asia and Europe/RoW


Western China RoW

Destination

Container


Caucasus

Central Asia

Europe

WesternChina

RoW

Total ad-dressable

0.0 0.2 0.0 0.2

1.4 0.7 0.0 0.0

1.6 N/A 0.8 N/A

0.1 1.0 N/A 2.3

0.1

0.0

0.8

0.0

1.5 1.5 N/A 1.6 N/A

2.4 3.1 1.9 0.8 0.2

0.5

0.7

3.2

1.0

3.0

8.4



Answering this demand, Georgia’s existing transport economy is already transshipment based – rail and ports have transshipment ratios of >70%

Mode of transport

22.117.5 3.0 1.6

17.212.6 3.0 1.6

3.52.0

1.4

0.1

Transport volume by purpose Million tons

Transshipment ratio and commodity flowsPercent

▪ Oil (KZ) and oil products

▪ Grain (Central Asia)

▪ Metals and minerals (Central Asia)

▪ Containers

▪ Oil and oil products from KZ and AZ (Batumi, Kuhlevi, Supsa)

▪ Containers (Poti)

▪ Dry bulk (Poti)

Transit Import Export

Road

Rail

Ports

▪ Containers

▪ Individual trade flows, such as manufactured goods, food

57%

73%

79%


Liquid bulk

Dry bulk

Containers

mn tons, 2010/11

Nevertheless, the market share of Georgia in addressable flows is still quite low – particularly in Central Asia

Georgia & Caucasus

Transcaspian

53%

… Market share

2,8 2,3

Transit Georgia

Addressable flows1

82%

5,70,4

Transit Georgia

Addressable flows1

7%

4,5 3,6

80%

12,32,6

21%

1 No growth assumption

99,353,0

Transit Georgia

Addressable flows


7 5 605 ~ 15

~ 2

8-20

mn tons

This translates into a latent demand for transit and logisticsinfrastructure in Georgia, particularly in dry bulk and containers

Capacity

Current load

Available infrastructure by mode of transportation

1 Caucasus – Europe/Row; Central Asia – Europe/Row; Western China – Europe 2 Projections based on current growth trajectory 3 Transshipment only, not including /imports/exports4 Rolling stock not included (might be additional bottleneck 5 Full capacity after finalization of railway modernization project

Overseas/Regional

RegionalRegional

Dry bulk

Con-tainers

Liquid bulk

Addressable transshipment flows1

Focus destination

Sufficient capacity

2714

5 3

~ 2

TBD

~ 2

394

60

6

Pure rail3,4 Pure road3

Suffi-cientcapacity

Overseas

Latent need for infra-structure

▪ Ports as capacity and economic bottle-necks

▪ Additional rail/road capacity may be needed

▪ Loading/off-loading capacity has to be extended (e.g., terminals)

2010 20162

2010 20162

2010 20162

PipelinePort (for inter-modal and RoRo)

[ ]+ OR

RoRo ferry

+ OR[ ]+

1~2

Regional

Pure pipeline

99 ~100

17 20-25

9 12-15

Pure rail

Rail inter-modal & RoRo

Pure road

Road inter-modal & RoRo

Pipeline to terminal

Only includes Black sea RoRo

Additional capacity on Kars-link to Turkey


http://www.iconfinder.com/icondetails/9388/48/cross_delete_edit_exit_remove_x_x-sign_icon

http://www.iconfinder.com/icondetails/58687/128/check_symbol_icon

http://www.iconfinder.com/icondetails/47701/128/confusion_faq_question_icon


http://www.iconfinder.com/icondetails/67685/128/_icon

http://www.iconfinder.com/icondetails/65323/128/car_transport_truck_icon

http://www.iconfinder.com/icondetails/58687/128/check_symbol_icon





http://www.iconfinder.com/icondetails/41979/128/cruise_ship_ferry_ocean_sea_ship_icon




The opportunity space – Georgia needs to build a deep-sea gateway to its economy and to organize trade flows of its natural hinterlands

Organizing RoRo flows

Geographic scope

Flow types

Deep sea-gate for Georgia

CaucasusTranscaspian

Liquid bulk

Dry bulk

Con-tainer

RoRoExtension

Sufficient pipelines and train capacity available

Container network

IIExtension

Organizing dry bulk flows

Extension

Deep-sea portI

IV

III

Flagship projects


The vision for the logistics corridor needs to be backed by sizing the aspiration for additional flows

Sizing theaspiration1

Additionalflows in mn tons

Container networkDeep-sea port

Geographic scope

Deep sea-gate for Georgia

Caucasus Transcaspian

Infrastruc-turevision

I

Dry bulk corridor

III

II

RoRocorridor

IV

▪ Increase market share1

– 90% container (current: 82%)

– 90% dry bulk (current: 80%)

▪ Increase container/dry bulk flow by 50%/30%1

▪ Capacity of deep-sea port– 10 mn t dry bulk p.a.– and 200k TEU p.a.

▪ 10 t/TEU on average▪ 80% utilization▪ Increase Georgia’s trade

▪ Increase market share1

– 60% container (current: 7%)

– 50% dry bulk (current: 21%)

▪ Increase container/dry bulk flow by 50%/30%1

Dry bulk +8.0 mt +1.6 mt +5.4 mt

Container +1.6 mt +1.5 mt +4.8 mt

Scenarioassumptions

RoRo Included in above volumes


1

Aspiration needs to be translated into concrete flows to justify deep-sea port and transport corridor infrastructure investments

Pre-condition/aspiration for flows

Potential ways to secure required flows

Deep-sea portITransportation corridors

II

III

IV

▪ Large dry bulk and/or container flows that exceed current port capacity

▪ Sufficient interest for Panamax/capesize vessel traffic

▪ Container: additional containeriza-tionof goods on relevant routs

▪ Dry bulk: large flows to justify infrastructure investments

▪ RoRo: Capacity limits on current network

▪ Involve current port owners to evaluate actual market demand for – Increased capacity– Improved port economics

▪ Involve owners of commodity flows (container, bulk) in superstructure investment to secure baseload flows

▪ Involve owners of commodity flows (container, bulk) in infrastructure investments to secure baseload flows


The vision – a deep-sea port1 Required infrastructure

The infrastructure vision – A deep-sea port opens up a gate for Georgia’s and the corridor’s trade flows

Required infrastructure▪ Deep sea port

– Min. 2 berths for PanaMax size

– 20 m depths2

▪ Handling capacity/equipment

– Dry bulk terminals, storage, and handling equipment for 10 million tons

– Container terminals, storage, and handling equipment for 200k TEU

▪ Railway connection (only ~17 km to main railway line)

▪ Potential extension by a liquid terminal3

USD200-250 mn

1 New location (earmarked) or alternatively extension of existing port 2 Can also serve Capesize 3 Not included in investment size estimation

▪ Adds capacity to existing ports

▪ Changes port economics


Deep-sea port will add significant capacity to current ports …

Current port capacity New deep-sea port

Container

Dry bulk

Liquid bulk

Ownership

DepthPoti

4.55.62.0

8-10 m

Total capacity

52

Dry bulk

~10

Container

~2

Liquid bulk

~27

Dry bulk

~8

Container

~5

Existing capacity Deep-sea port

Kulevi oil terminal

4.0

Million tons

Container

Dry bulk

Liquid bulk

Ownership

Depth

Supsa oil terminal

6.3

Batumi0.92.015.0

11 m

Deep-sea port2.0

10.0

20 m(≈200 k TEU)

?

Main advantages▪ Economics (able to

accept larger vessels)▪ Strategic location▪ Geology (20 m depths

very close to shore)


… and can change the economics of transportation, reducing the cost of trade and benefiting the economy of Georgia


1 Assumptions: Total imports through ports 3.0 mn tons; total exports through ports 1.6 mn tons (current volumes); 70% bulk/30% containers; average travel distance 2000 miles; current port capacity for Handymax ships, deep-sea port for Capesize

Total cost of marine shipmentUSD mn

Exports

Deep-sea port reduces cost of trade

230115-140 -40-50%

With deep-sea port1

Current

Total cost of marine shipmentUSD mn

12060-70 -40-50%

With deep-sea port1

Current

Imports

ILLUSTRATIVE

ILLUSTRATIVE

Increase purchasing power by decreasing prices of everyday consumer goods

Stimulate investmentby decreasing cost of investment goods

Improve balance of payments and decrease FX outflows

Increase competitiveness of Georgian exporters

Improve balance of payments and decrease FX outflows

Benefits to Georgia’s economy

The infrastructure vision – Organizing container flows requires the buildup of a network of terminals

1 Not included in investment size estimation

The vision – a terminal network Required infrastructure for terminals

▪ Sea ports & port operations

– Existing (see I)

▪ Network of 3-5 container terminal platforms to handle ~1 mn TEU including– Terminal land and construction– Railway connections and shunting yards– Motorways connections– Rail rolling stock upgrade

▪ Extension of network into other countries of the corridor1

USD 500-1,000 mn

+ extension throughout corridor


Organizing the container corridor could provide additional opportunities for investors to engage

Organize reverse flows or containers redistribution

Shipment company/ freight forwarder

Infra-structure operators

Logistic service providers

Inter-national shipping

Port RailInland terminals

Road transit

Ware-housing

Distri-bution

Containertransportflow

Opportunity for investors to engage into corridor development & coordination


GEORGIAN NATIONAL INVESTMENT AGENCY

8, Rustaveli avenue, 0118 Tbilisi, Georgia

Tel: (+995 32) 2 281 196

E-mail: [email protected]

www.investingeorgia.org

mailto:[email protected]?subject=Invest in Georgia Enquiry

http://www.investingeorgia.org/

Documents

Regional Logistics Corridor - Armenia€¦ · Regional Logistics Corridor Georgian National Investment Agency (GNIA) 2012. ... Georgia (direct GDP impact, economic integration, connection