Contrary to popular perceptions, most of Middle Corridor trade takes place on an intra-regional basis. Such trade becomes more difficult due to some of the corridor’s geographical features, but there are possibilities to cushion those obstacles. This is where an overlooked missing piece of the ‘Middle Corridor puzzle’ could contribute to scaling capacity along the route.
The Middle Corridor was never an easy project. Sending your freight through Russia, where you can cover many thousands of kilometres on a single rail network without natural barriers, is clearly more convenient than crossing mountains, deserts, seas, at least four borders and going through gauge changes to cover approximately the same distance.
For European companies looking to avoid Russia and for countries engaging in regional trade, the Middle Corridor nonetheless remains an interesting trade corridor. Though, its geographical challenges limit capacity. Discussions on growing it frequently focus on terminal infrastructure, new railways and optimisations at border crossings. An overlooked piece of the puzzle, according to Lasha Amashukeli, a Georgian Senior Executive in Logistics & Business Development and Deputy CEO of Royal Express, is warehousing.
More space in the right places
Warehouses can help absorb the corridor’s natural breaks in the Caspian, at gauge transfer locations and ports, says Amashukeli. “This is already one of the key bottlenecks”, he says.
Volumes have grown from around one million tonnes in 2019 to over 5 million today (out of which 80% is intra-regional trade!), but storage capacity has not kept pace with the fivehold volume growth.
“As a result, we are seeing congestion at Caspian ports, longer dwell times, rising costs and operational unpredictability. Without sufficient warehousing, growth turns into congestion”, adds Amashukeli. The Middle Corridor clearly works, but it does not function well under pressure.
The solution is unfortunately not as simple as ‘build more warehouses’. According to Amashukeli, warehouses need to be treated as core infrastructure and not as support functions. This involves building them at intermodal nodes, places where friction happens: ports, rail junctions and inland hubs.
Finding a balance
Warehouses also need rail and road connectivity, integrated customs and bonded operations as well as digital synchronisation between warehouses across the corridor.
“If warehouses are positioned correctly, they don’t slow the corridor, they actually make it faster. The goal is simple: eliminate idle time between transport legs.”
Secondly, some countries are clearly ahead of others when it comes to warehousing capacity. Take for example the Georgian capital city Tbilisi, which has around 920,000 m² of warehousing spaces. This exceeds all of Uzbekistan with its 600,000 m² of warehousing. Azerbaijan and Kazakhstan hover in between. The imbalance has a real impact on the efficiency of freight flows along the Middle Corridor, says Amashukeli.
Bulk now, containers later?
The Georgian logistics executive also points to functionality and interoperability. “Modern facilities must handle containers, temperature-sensitive cargo, high-value goods, e-commerce, and hazardous materials.” Moreover, warehouses need shared systems and visibility, otherwise they remain isolated nodes.
Emil Mammadov, board member of the Middle Corridor Multimodal joint venture between the Georgian, Azerbaijani, Kazakh and Chinese railway companies, seems to concur that more warehousing capacity is needed, but also points to the importance of traditional freight: “At this stage of the Middle Corridor development, increased capacity of warehousing is required for bulk cargo”, he says.
“Considering the fact that the future of the corridor development is containerised cargo, future warehousing capacities for 3PL & 4PL services will be required as well.”
Returning to the views of Amashukeli, he says that the Middle Corridor will not be defined by transit speed alone, but rather by the depth of its logistics ecosystem. “We’ve already seen strong growth to 5.2 million tonnes, but scaling toward 10 million tonnes or more will require better balance across countries, stronger private sector involvement, infrastructure that supports multi-directional trade, not just transit. A corridor without warehousing is not a supply chain, it is just a route.”