GREEN LOGISTICS

Amid geopolitical instability, traditional trade routes linking Europe and Asia are gradually becoming less significant. In this context, the Middle Corridor is gaining prominence as an optimal route in terms of both time and security, facilitating access to the markets of Türkiye, the Middle East, and Europe. Azerbaijan, due to its strategically advantageous geographical location, plays a pivotal role in the development of this corridor. The increasing importance of railway transport worldwide is driven not only by its efficiency but also by its environmental sustainability, aligning with the current global priorities.

The Path to Global Integration

It is well understood that one railway carriage can replace up to four trucks, and a goods train can substitute for dozens of large-capacity vehicles. The minimal negative environmental impact is why the agenda for the COP29 climate conference in Baku included discussions on establishing a sustainable and digitalized Middle Corridor, along with initiatives for its further enhancement.

Statistical data supports the effectiveness of this route. Talgat Lastayev, Vice-Minister of Transport of Kazakhstan, reported that in the first ten months of this year, freight traffic on this corridor reached 3.8 million tonnes, representing a 68% increase compared to the same period last year. Container traffic amounted to 46.3 thousand TEU, nearly tripling last year's figures. Notably, 27.6 thousand TEU were attributed to routes connecting China and Europe, which reflects a remarkable 25-fold increase. "Additionally, we are attracting more cargo volumes and have agreed to increase the number of container trains from China to 600 annually," Lastayev stated.

Rashad Nabiyev, Azerbaijan's Minister of Digital Development and Transport, shared equally optimistic forecasts. He indicated plans to increase the number of block trains traversing the Middle Corridor to 600 next year and eventually to 1,000 annually. "This year, more than 300 block trains will transit through Azerbaijan, with an average transit time of 10 days to Azerbaijani ports and 12 days to Georgian ports," the Minister noted.

The diversification and enhancement of the Middle Corridor is a key objective that Azerbaijan Railways CJSC (ADY) is actively pursuing. Strengthening connections with Central Asian countries, new infrastructure projects such as the China-Kyrgyzstan-Uzbekistan railway line, and rising interest from European nations in overland routes present new opportunities for expanding this strategic transport corridor.

For instance, the newly established China-Kyrgyzstan-Uzbekistan railway line runs along the Kashgar-Torugart-Makmal-Jalalabad-Andijan route and has the capacity to transport up to 15 million tonnes of cargo annually. Furthermore, the delivery time for goods to end consumers will be shortened to seven days. The project also includes plans for developing modern transit and logistics infrastructure—warehouses, terminals, and associated facilities—which will facilitate freight transport between Central Asia and China while also opening new opportunities for neighbouring countries such as Tajikistan, Turkmenistan, Afghanistan, and Pakistan.

Currently, on the eastern side of the Caspian Sea, cargo is transported by road from China's Kashgar region via Kyrgyzstan, connecting to the railway in Andijan. Simultaneously, China, Kyrgyzstan, and Uzbekistan have agreed to construct a comprehensive railway line, with completion expected in the coming years. This project will enable increased cargo transportation along the Middle Corridor by an estimated 7 to 10 million tonnes per year.

Georgian Minister of Economy and Sustainable Development Levan Davitashvili discussed the potential for developing containerized transport between Azerbaijan and Georgia. He noted that this format combines the advantages of both railway and road transport, leading to reduced fuel consumption, lower emissions, and enhanced road safety. A preliminary study on developing container transport is currently being finalized, with approval anticipated early next year.

The Minister emphasised the significance of multimodal hubs and logistics centres that facilitate efficient interaction among various modes of transport while supporting sustainable supply chains. "Our priority is to enhance the sustainability and reliability of the Middle Corridor through infrastructure modernisation. Georgia is focusing on two key railway projects: upgrading the main railway line and improving the Baku-Tbilisi-Kars line. These initiatives significantly boost the competitiveness of railway transport, which is among the most environmentally friendly options," Davitashvili added.

The upgrade of Georgia's main railway is nearing completion; afterward, its capacity will be increased from 27 million tonnes to 48 million tonnes per year, while operational efficiency will also see improvements.

Integration and Digitalisation

Azerbaijan is already playing a vital role in the Middle Corridor as a reliable transit hub for Central Asian nations. For the first time in trade relations with China, export cargoes from Azerbaijan have been delivered via rail: the inaugural block train Baku-Xi'an, featuring 62 containers, travelled by multimodal route through Kazakhstan to Xi'an, one of China's largest dry ports. By year's end, it is planned to transport 15,000 tonnes (600 containers) of export cargo along this route. Azerbaijani entrepreneurs can now directly send goods to China via the Middle Corridor, replacing previous routes through Georgia's Black Sea ports.

The increasing freight traffic along this route is attracting interest from global players. Italy aims to become a harbour for the Middle Corridor by facilitating the transit of goods from Central Asia and the Indo-Pacific region to Europe. Giovanni Donato, diplomatic adviser to Italy's Ministry of Infrastructure and Transport, made this statement during COP29.

Maja Bakran Marčić, Deputy Director General of the European Commission for Transport, also highlighted that in light of the Russian-Ukrainian war, sustainable routes are gaining relevance. The Middle Corridor currently offers a shorter and more efficient alternative compared to the Northern Corridor.

Plans are underway for complete digitalization of the route by 2027 to enhance efficiency and transparency along the corridor. According to a roadmap approved in 2023, real-time data exchange will be implemented according to UN standards. As UNECE Executive Secretary Tatiana Molchan noted, digitalization will help optimize processes, lower costs, and promote sustainable development within the transport system.

It is noteworthy that a single multimodal service has already been established throughout the entire route. The information systems of both Azerbaijan’s and Kazakhstan’s railways are integrated with the customs module of the DTC (Digital Trade Corridor) platform—Tez Customs—while similar initiatives are planned for Georgian railways.

In 2025, it is also anticipated that the Seamless Digital Corridor platform will launch, integrating document management, customs clearance, and cargo tracking into a unified ecosystem along the entire route.

The Innovation Centre has also been established with participation from Kazakhstan and China. Additionally, countries along the corridor are working toward integration into the international eTIR system that will facilitate real-time exchange and acceptance of TIR data. This development will shorten transit times while reducing risks associated with fraud and lowering data processing costs.

Forecasts suggest that by 2040, traffic volume along the Middle Corridor could reach 1.3 million TEU. Realizing this potential will require Central Asian countries to invest approximately €18.5 billion in infrastructure projects.

Considering that trade turnover between China and the EU amounts to $900 billion, even a modest 10% redistribution of cargo traffic through the Middle Corridor would yield substantial transit revenues for Azerbaijan while solidifying its role as a regional leader.

International Support and Investment

At COP29, international financial institutions underscored the importance of addressing two key areas: developing "hard" infrastructure (transport highways, ports, logistics centres) and bolstering "soft" connectivity (digitalization, standardization, and simplification of procedures).

Alkis Vrienios-Drakinos, Regional Director for the Caucasus at the European Bank for Reconstruction and Development (EBRD), stated that his organization is active across all nations within the Middle Corridor. "We seek opportunities for cooperation with leaderships, transport infrastructure operators, and cargo owners to align national and regional priorities into concrete projects," he explained.

Olivier Oudin, Investment Director at the Asian Infrastructure Investment Bank (AIIB), emphasized the importance of transforming the Middle Corridor into a green transport route. "Transforming this corridor into a green route aligns perfectly with AIIB's mandate. We are prepared to assist Azerbaijan in modernizing this transport route to ensure it serves as a key and reliable link between Asian and European markets," Uden said. He noted that AIIB is open to collaborating toward achieving this goal alongside other international development partners such as the Asian Development Bank (ADB), CAREC (Central Asia Regional Economic Cooperation), and the European Union.

Xiaohong Yang from ADB highlighted that investments in modernization, digital integration, and regional cooperation play crucial roles in alleviating bottlenecks along this route. "The Middle Corridor—also referred to as CAREC Corridor 2—is being developed under CAREC's framework. Since its inception in 2001, $51 billion has been invested in it, enabling implementation of 276 regional projects over the past 25 years," she pointed out. The transport sector received the largest share of these investments (67%), followed by energy at 25%. Conversely, projects aimed at trade facilitation and trade policy accounted for only 2.7%.

The CAREC program has already demonstrated its effectiveness in enhancing regional connectivity; however, further collaboration among participating countries, international organizations, and the private sector is essential for achieving global competitiveness and sustainable growth within the Middle Corridor.

It is worth recalling that in January 2024, the European Union hosted a Global Investor Forum focused on transport connectivity between the EU and Central Asia. One significant outcome was establishing a Coordination Platform for the Trans-Caspian Transport Corridor. Additionally, the EU pledged €10 billion toward developing sustainable transport connectivity in Central Asia. These funds aim to support improvements within the Trans-Caspian Transport Corridor through regional transport programs aimed at economic prosperity with an overall budget totalling €75.4 million. Furthermore, the EU plans to finance infrastructure projects via loan guarantees and resource pooling under its European Sustainable Development Fund Plus.

Consequently, the Middle Corridor linking Asia and Europe is evolving into a strategic alternative to both Northern and Southern routes while traversing multiple countries in the region—thereby opening up new possibilities for trade and transportation collaboration. The advancement of transport infrastructure—including railway systems—not only reinforces Azerbaijan's status as a critical link within this corridor but also contributes toward achieving pressing environmental objectives that are increasingly vital in today's world.