5 th international black and caspian sea transport

5 th international black and caspian sea transport Hub georgia Transport Corridor Research Center forum Dr. Paata tsagareishvili Cargo flows that bypass the Trans-Caspian International Transport Route (TITR) 11 -12 june 2018

Volume of turnover in Georgian ports 2012 -2017 Total Batumi Kulevi Poti 17. 9 17. 8 17 M tons 15 -12% 13. 5 11. 6 7. 9 7. 5 2012 8. 3 7. 4 2. 1 2013 -56% 8. 6 6. 3 2. 1 2014 5. 7 6. 8 2. 5 2015 5. 6 1. 6 2016 6. 3 3. 4 1. 6 -36% -35% 2017 Port of Kulevi has an opportunity to turnover 10 M tons, but uses only 16% of it’s potential. Port of Poti has an opportunity to turnover 12 M tons, but uses only 55% of it’s potential. Port of Batumi has an opportunity to turnover 15 M tons, but uses only 23% of it’s potential.

Georgian railway Freight transportation volume 2012 Total 20. 1 -2017 18. 2 Liquid cargos 16. 7 dry cargos 14. 1 9. 5 10. 6 2012 11. 9 9. 1 2013 7. 5 2014 9. 2 6. 7 7. 4 2015 10. 7 5. 5 2016 M tons 6. 4 4. 3 2017 Georgian railway Freight transportation volume in total has decreased by 47%, liquid cargo which consists of crude oil and oil products by 55%, dry cargos by 40%. Georgian railway couldn’t provide replacing liquid cargos with dry cargos after

Georgian railway freight volumes by transportation modes 2012 2013 2014 2015 2016 M tons 2017 % Transit 12. 1 11. 2 9. 5 8. 0 6. 2 5. 0 -59% Transit liquid cargos 8. 2 7. 9 6. 3 5. 4 4. 0 3. 2 -61% Transit dry cargos 3. 9 3. 3 3. 2 2. 6 2. 2 1. 8 -53% Export 1. 7 1. 8 1. 6 1. 1 1. 0 1. 1 -35% Import 3. 3 2. 8 3. 0 2. 7 -18% Local 3. 0 2. 5 2. 4 2. 0 1. 9 -37% Georgian railway freight volumes have been decreased in export by 35%, import – 18%, local 37% For functioning the transport corridor it is vital to have high results in transit, in our case total transit has decreased by 59%, transit liquid cargos by 61% and transit dry cargos by 53%

Georgian railway liquid cargo transportation volume 2012 -2017 Liquid cargo 9. 5 M tons 9. 1 7. 5 4. 8 4. 7 6. 7 5. 8 5. 1 Oil products Crude oil 5. 9 5. 5 4 4. 3 3. 7 1. 8 1. 7 0. 8 2012 2013 2014 3. 7 2015 0. 6 2017 Georgian railway oil products transportation volume has decreased by 23%, crude oil 87%.

The reasons of crude oil being decreased in transport corridor years 1 T crude oil transportation tariff with georgian railways in $ Crude oil price in international market (Barrel) Volume of crude oil transported by georgian railway(M ton) 2011 6. 2 90 -110 5. 0 2012 8. 5 120 -140 4. 7 2013 10. 6 100 -120 4. 0 2015 10. 6 50 -60 0. 8 2017 10. 6 40 -50 0. 6 Crude oil has changed the way of transportation and moved to pipelines from railway One of the reasons of losing crude oil via transport corridor is, that railways could not decrease the tariff, while crude oil dramatically changed it’s price

Georgian railway dry cargo transportation volume 2012 -2017 M tons 2012 2013 2014 2015 2016 2017 % Dry cargos 10. 60 9. 16 7. 39 6. 32 -40% Ores 2. 17 1. 96 1. 82 1. 46 1. 45 1. 25 -42% Grain and grain products 1. 42 0. 95 0. 86 0. 72 0. 45 0. 30 -79% Ferrous metals and scrap 1. 10 0. 93 1. 06 0. 89 0. 66 0. 70 -36% Sugar 0. 70 0. 61 0. 62 0. 46 0. 50 0. 38 -46% Chemicals and fertilizers 0. 51 0. 48 0. 51 0. 43 0. 56 +10% Construction materials 1. 59 1. 41 1. 79 1. 42 1. 06 1. 1 -31% Other 3. 11 2. 76 2. 50 2. 27 1. 83 2. 03 -35% Decrease of dry cargo transportation can be noticed in every type of product

10% 41392 76025 35913 55781 44302 54695 11% 329805 GR 405830 Batumi 264823 Poti 320604 325121 379816 49554 61980 48244 Total 12% 11% 12% 72123 56174 73095 16% TEU 384992 446972 331324 403447 284559 357654 Container cargo volumes in ports and a railway 2012 2013 2014 2015 2016 2017 The quantity of containers in total has increased by 13%, in Poti – by 16%, in Batumi – by 4%, but in railway it has decreased by -26% Containers transported with railway was 10% of the total volume in 2017, which means that Georgian railway is not focused on multimodal transportations In Europe, containers transported with railway from and to ports is more than 40 -50%

Initiation of China “One belt one road” includes six economic corridors None of those corridors go thru Trans-Caspian International Transport Route (TITR), but why? • Economic growth is low, 35% • There are no logistic centers • We are very close to the end of the list according to the logistic index

2012 2013 2014 2015 2016 1274 3673 2399 1702 1130 572 308 280 28 2011 EC-China 815 550 265 80 80 0 China-EC 42 42 0 China-EC-China 17 17 0 Railway transportation china-europechina 2011 -2017 block train 2017 Railway transportations has significantly grown step by step, comparing 2017 to 2016 the result has increased by 2. 2 times. Nowadays 76% of China-Europe-China goods is transported via Kazakhstan railway Loaded block trains from China to Europe has reached the recording number in 2017, which is 72% Railway transportation of China-Europe-China is only 0. 5 -1% of the total, while everything else is maritime, that’s why it is hard to compete with marine corridors despite the short duration of railway transportation.

2011 2012 2013 2014 2015 105930 212000 8394 97400 105794 21770 47132 68902 2266 23804 EC-China 0 26070 China-EC 6960 0 3674 0 1404 China-EC-China 317930 Railway transportation China. Europe-China 2011 -2017 TEU 2016 2017 In order to attract China’s goods for Trans-Caspian International Transport Route we need to complete the following steps • To replace, update an old Ukrainian railway ferries • To search for the financially strong logistic operator, who will have an obligation to attract cargos

The Trans-Caspian International Transport Route starts from Southeast Asia and China, runs through Kazakhstan, the Caspian sea, Azerbaijan, Georgia and further to European countries In order to increase the flow of goods to the Trans. Caspian International Transport Route, in 2014, the Coordination Committee for the Development of the Trans-Caspian International Transport Route (TITR) was established In 2017, the International Association "Trans-Caspian International Transport Route" has started its activities.

Regular members, associate members and partners of Trans-Caspian International Transport Route (TITR) The reason why this project will be profitable is that, commercial structures are involved, so it is easier to coordinate in tariff

Azerbaijan’s crude oil transportation routes 28 $/T 36. 2 -56% Baku 15. 9 ev i k i/K m Ba tu Ba ku - ov o -N Ba ku ul ro ss iy s Su ps a ku Ba Ba ku - C ey ha n 10. 7 • There are 4 routes for transporting crude oil from Azerbaijan, three are pipelines • Baku-Novorossiysk route is more competitive than Baku-Batumi/Kulevi railway route by 56%

Turkmenistan’s crude oil transportation routes $/T -35% Ekerem/Alaja. Ceyhan Ekerem/Alaja- Ekerem/Alaj a-Neka Makhachkala. Novorossiysk Ekerem/Alaja • Out of four of Turkmenistan’s routes, two are pipelines. • Ekerem/Alaja-Makhachkala-Novorossiysk route is more competitive than Ekerem/Alaja-Baku. Batumi railway route by 35%

Kazakhstan’s crude oil transportation routes 65 49. 6 -24% $/T 41. 5 37. 7 Aktau-Baku. Batumi/Kule Makhachkala. Novorossiysk vi Aktau. Bako. Ceyhan Aktau. Neka CPC Aktau 38. 4 CPC • Out of five of Kazakhstan’s routes, three are pipelines. • Aktau-Makhachkala- Novorossiysk route is more competitive than Aktau-Baku-Batumi/Kulevi railway route by 24%

Additional cargo attraction prospects Condensed air 100 000 Tons annually. Tengizchervoil (ТШО) is planning to transport Kazakhtstan’s condensed air to Batumi. It is logical to attract this cargo if tariff of Azerbaijan and Georgia are reduced. Carbamit Turkemistan’s carbamit transportation via Caspian port. It is possible to transport 1 -1. 5 M Tons of carbamit from Bendash to Batumi, it will be necessary to have a special wagon park. Oil АИ 92 it is possible to transport 50 000 Tons of oil via Volga-Don channel from Turkmenistan to Armenia. Sulfur transportation from Tengiz and Kashagan mines, mainly it goes to Ustluga and Chernomorsk. It is possible to attract additional 100 000 tons in Batumi port. Kazakhstan’s heavy fuel oil attracting additional heavy fuel oil from Chimkent factory.

Thank you for the attention Hub georgia Transport Corridor Research Center Dr. Paata tsagareishvili [email protected]. com