Student Policy Seminar Series: Impacts of Baku-Tbilisi-Kars railroad on Poti Sea Port
Friday, 24 November, 2017

On November 22, ISET started a policy seminar series provided by the second-year students of ISET’s MA program. The first presentation was delivered by Tamari Tetvadze & Gunash Kamzaevi, under the supervision of Eric Livny, president of ISET and ISET-PI, and Giorgi Mzhavanadze, Senior Researcher at the Macroeconomic Policy Research Center(MPRC) of ISET-PI. The students gave a presentation entitled “Impacts of Baku-Tbilisi-Kars Railroad on Poti Sea Port” during which they overviewed different issues related to the railroad.

According to the students, transport and distribution are key considerations when planning for international trade. Development in trade is mirrored in the development of international transport. Choosing the right mode of transport is essential to ensure import or export operations are efficient and cost-effective. Different types of transport available – such as road, rail, air, and maritime options – were all discussed during the presentation. The students highlighted that despite being comparatively slow compared to other methods, modern sea transport is a highly effective method of transporting large quantities of non-perishable goods.

The presenters also covered the strategic link on the original “Silk Road”. Georgia serves as a trade and transit hub for the Southern Caucasus and the Black Sea Region, and is the only point of access to the Black Sea for the Caucasus, Georgia’s seaports have boomed since 2000. Strategically located, the Poti Sea Port is the largest port in the Republic of Georgia handling liquid and dry bulk, transport ferries as well as containers and tankers. The port currently serves as the European gateway for international trade in Georgia, Armenia, and Azerbaijan. It has the potential to increase its cargo-handling capacity and attract and handle up to 25 million tons of cargo per annum. Cargoes carried in wagons on these sea lines are mainly destined to Georgia and Armenia (especially to Armenia for BMF) and to a smaller extent to Azerbaijan. There is practically no transit cargo to/from Central Asia.

The Advantages and Potential of Poti Sea Port:

● The port is currently the only gateway between the Caucasus and European countries

● Due to its geological position, it is shorter than Trans-Siberian Railway

● It is the biggest commercial port in Georgia

● It has a cargo capacity of up to 25 million tones/year

Disadvantages (Realities) of Poti Sea Port:

● Poor logistics services

● Long and unpredictable transit-times

● Overly expensive tariffs

● Limited storage facilities

● Boats that enter the port are small

● Volga-Don Complex becomes the main route for the Europe-Asia transition line during the river navigation period. (April-November).

The Baku-Tbilisi-Kars Railway is a new corridor that will connect Azerbaijani, Georgian and Turkish railways. The modern Silk Road Railway aims to carry goods between Beijing and London. As one of the land routes in the scope of China's One Belt One Road initiative passes through Turkey, Kazakhstan, Azerbaijan, and Georgia, the railway projects being launched in the scope of the "Iron Silk Road" have gained significance as they are connecting the regions. Initially, the railway is expected to carry nearly 1 million passengers and 6.5 million tons of freight annually before unlocking the freight transportation potential of up to 17 million tons per year.

The BTK will enable goods to be transported across the Eurasian landmass in just 15 days – twice as fast as sea routes, and at half the cost of air. The BTK project is built to create an energy corridor by rail mainly supplied by Azerbaijan. In addition to that, the current traffic from Turkey to CIS countries will shift to this line. Since current traffic via Iran is facing long delays in Van Lake and Saraks, the opening of this line may cause a shift to the railway. The line is expected to have an annual volume of 6,5 million at the beginning. The target is 17 million to/year in the long term.

Comparing BTK with Poti Sea Port

➢ Official tariffs have not been announced yet on the Baku-Tbilisi-Kars railway, but are expected to be less than this price.

➢ The transit time between İstanbul and Poti is 5-6 days. The transit time of the Baku-Tbilisi-Kars railway is not clear yet, but it seems hard to be less than 10 days.

➢ There is only one weekly container vessel service from Istanbul to Poti. If trains depart every day, this will be a significant advantage for the Baku-Tbilisi-Kars railway.

➢ The main disadvantage of transfers via the Poti Sea Port is the transshipment of containers from boats to other means of transport. However, there are no such problems with the Baku-Tbilisi-Kars railroad.

The presentation was followed by questions and a discussion and is just one of eight such seminars that will be held in the 2017/18 academic year.