Regional Logistics Corridor

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Regional Logistics Corridor

  1. 1. REGIONAL LOGISTICS CORRIDOR Georgian National Investment Agency 2013
  2. 2. REGIONAL LOGISTICS CORRIDOR INTRANS-CAUCASIAN ROUTE• Latent gateway between Europe and Central Asia• Around 80% of port cargo and 60% of freight rail are transitsTRANSPORT INFRASTRUCTURE• Rapidly developing road infrastructure IN GEO• Ports are cost-compe ve vs. alterna ve routes• FDI inflows in the logis cs sector have primarily targeted transport infrastructureOPPORTUNITIES• Deep-sea port with PanaMax vessel• Containeriza on and logis cal centers• Direct connec on with European and Central Asian railway networks www.inves ngeorgia.org 1
  3. 3. www.inves ngeorgia.org 2 GEORGIA’S TRANSPORT INFRASTRUCTURE MODE OF TRANSPORT EXISTING INFRASTRUCTURE UPGRADES AND FLOWS VEST RAIL RAIL • 1,500 km (90% electrified) • BTK connec on to Turkey Road/Rail • ~7,000 rolling stock, 180 locos • Moderniza on ROAD • Tbilisi bypass • 1,500 km interna onal road • ~2500 new rolling stock + 20,000 km internal and local roads ROAD • East-West highway upgrade POTI SEAPORT POTI SEAPORTORGIA RGIA • 13 berths, 8-10m depth • New container berth (2014) • Container and bulk (210k TEU) • Owned/operated by Maersk/RAKIA DEEP-SEA PORT Mari me BATUMI SEAPORT • Min. 2 berth of 20m depth • 5 berths, 1 offshore mooring, 11m depth (PanaMax) • 90% petroleum/oil, 10% containers (44k • First phase: Dry bulk (10m tons) TEU) and containers (200k TEU) • Operated by JSC KazTransOil • USD 200 mn investment KUHLEVI SEAPORT volume • Crude oil, petroleum, and lubricants • Owned/operated by State Oil Company Azerbaijan TBILISI INTERNATIONAL AIRPORT KUTAISI INTERNATIONAL AIRPORT Air • ~1 mn passengers (capacity: 3 mn) • Serving 28 des na ons • Passenger, incl. low-cost BATUMI INTERNATIONAL AIRPORT airlines • 100,000 passengers • Currently under construc on
  4. 4. OVERVIEW OF GEORGIA’S LOGISTICS SECTOR IN • Logis cs accounts for around 7% of GDP and ~ 3% of employment, Value genera on through contribu ng to 19% of all exports and 9% of all imports transit service provision • Strategic loca on: It serves as an entry gate to the Caucasus and Georgia is in a highly Central Asia as well as a stepping stone to the region strategic loca on for transshipment • Leveraging its loca on, Georgia’s transport economy can benefit from large addressable transit flows, growing economies and landlocked resources IN GEO • Georgia is already largely transshipment oriented, with transshipment values amoun ng to ~3x its GDP • Latent demand for transport infrastructure There is latent – The current capacity compared to poten al flows on the East-West demand for transport corridor present a latent opportunity to Georgia as a transshipment infrastructure in Georgia economy –However, current infrastructure not sufficient • Strategic loca on and latent demand for infrastructure offer Upgrading infra-structure poten ally huge economic opportunity/ geostrategic stake for offers huge economic and Georgia (direct GDP impact, economic integra on, connec on of the geo-strategic poten al economy)www.inves ngeorgia.org 3
  5. 5. www.inves ngeorgia.org 4 GEORGIA SERVES AS THE ENTRY GATE TO A LANDLOCKED REGION BOOSTING SIGNIFICANT RESOURCE RESERVES VESTORGIA RG FOR COMPARISON: REGION REPRESENTS ONLY ~1.6% OF GLOBAL POPULATION
  6. 6. GEORGIA IS IN A HIGHLY STRATEGIC LOCATION: IT SERVES ASAN ENTRY GATE TO THE CAUCASUS AND CENTRAL ASIA ASWELL AS A STEPPING STONE TO THE REGION IN GDP IN GEO N mn1 USD bn1 Ukraine Kazakhstan Moldova Georgia 4.5 14 4 Caucasus 17 88 1 Uzbekistan Land locked 121 356 Georgia countries Armenia Azerbaijan 2 TurkmenistanStepping 1 Russia 23 154 Turkeystone South2 3 2 Turkey 74 773 Syria Cyprus 3 Iran 75 331 Iraq Iran 4 EU 504 17,3301 Popula on and GDP, numbers cumula ve (apart from stepping stone countries)2 Includes Russia’s Southern Federal District and North Caucasian Federal District www.inves ngeorgia.org 5
  7. 7. www.inves ngeorgia.org 6 CARGO TURNOVER TRANSIT FLOWS THROUGH THE CORRIDOR CENTRAL ASIA (MILLION TONS PER YEAR) Kazakhstan VEST Uzbekistan Tajikistan Kirgizstan Turkmenistan CAUCASUS: Azerbaijan Armenia APPROXIMATELY 80% ARE TRANSIT FLOWSORGIA Europe+Turkey Sender - 2.6 Destination - 4.1 Total - 6.7 Central Asia+Caucasus Sender - 9.6 Destination - 4.7 Total - 14.3
  8. 8. GEORGIA CAN UTILIZE ITS LOCATION TO ADDRESS SEVERALFLOWS ON THE MAJOR EUROPEAN-CENTRAL ASIANTRADING ROUTES IN N 2010 Caucasus – Europe1/RoW2 ~44 mn tons p.a. Central Asia – Europe1/RoW2 1 ~79 mn tons p.a. IN GEO O 2 3 Western China3 – Europe ~3 mn tons p.a. Total trade on all 3 routes (mn tons) ~1261 Including Eastern Europe, Balkans and Turkey2 Excluding Central Asia, Asia and Middle East3 Es mated using total export volume by provincewww.inves ngeorgia.org 7
  9. 9. www.inves ngeorgia.org 8 IN TOTAL, THE ADDRESSABLE FLOWS RELEVANT FOR TRANSIT THROUGH GEORGIA AMOUNT TO ~126 MILLION TONS Million tons, 2010 Destination Addressable flows Other flows VEST Caucasus Central Europe Western RoW Total ad- Origin Asia China dressable Caucasus 2 1 21 0 14 38 Central Asia 2 12 60 1 11 73ORGIA Europe 3 2 N/A 2 N/A 7 Western 0 1 1 N/A 4 1 China RoW 4 4 N/A 22 N/A 8 Total ad- dressable 11 7 82 2 25 126
  10. 10. LIQUID BULK – MOST RELEVANT ADDRESSABLE FLOWS AREBETWEEN CAUCASUS AND EUROPE AND CENTRAL ASIAAND EUROPE IN Million tons, 2010 Destination Addressable flows Other flows Origin Caucasus Central Europe Western RoW Total ad- Asia China dressable Caucasus 1 0 21 0 13 35 Central IN GEO Asia 0 4 55 1 6 61Liquidbulk N/A N/A 2 Europe 1 1 0 Western 0 0 0 0 N/A 0 China RoW 1 1 N/A 8 N/A 2 Total ad- 3 2 76 0 19 100 dressablewww.inves ngeorgia.org 9
  11. 11. www.inves ngeorgia.org 10 DRY BULK – MOST RELEVANT ADDRESSABLE FLOWS ARE BETWEEN CENTRAL ASIA AND EUROPE/ROW VEST Million tons, 2010 Destination Addressable flows Other flows Origin Caucasus Central Europe Western RoW Total ad- Asia China dressable Caucasus 0.5 0 1.0 0 0.5 2.0 CentralORGIA Asia 1.5 6.5 3.5 0.5 5.5 10.5 Dry bulk N/A 0.5 N/A 2.5 Europe 1.0 1.0 Western 0 0 0 0 N/A 1.0 China RoW 1.5 0.5 N/A 11.5 N/A 2.0 Total ad- 4.5 1.5 4.5 0.5 6.0 17.0 dressable
  12. 12. CONTAINER – MOST RELEVANT ADDRESSABLE FLOWS AREBETWEEN CENTRAL ASIA AND EUROPE/ROW IN Million tons, 2010 Destination Addressable flows Other flows Origin Caucasus Central Europe Western RoW Total ad- Asia China dressable Caucasus 0.1 0.0 0.2 0.0 0.2 0.5 Central IN GEO Asia 0.0 1.4 0.7 0.0 0.1 0.8 Europe 0.8 1.6 N/A 0.8 N/A 3.2Container Western 1.0 0.0 0.1 1.0 N/A 2.3 China RoW 1.5 1.5 N/A 1.6 N/A 3.0 Total ad- 2.4 3.1 1.9 0.8 0.3 8.5 dressablewww.inves ngeorgia.org 11
  13. 13. www.inves ngeorgia.org 12 ANSWERING THIS DEMAND, GEORGIA’S EXISTING TRANSPORT ECONOMY IS ALREADY TRANSSHIPMENT BASED – RAIL AND PORTS HAVE TRANSSHIPMENT RATIOS OF >70% VEST Mode of transport Transport volume by purpose Transshipment ratio and commodity Million tons flows Percent Transit Import Export 2.0 0.1 • ContainersORGIA RG Road 1.4 3.5 57% • Individual trade flows, such as manufactured goods, food • Oil (KZ) and oil products • Grain (Central Asia) Rail 12.6 3.0 1.6 17.2 73% • Metals and minerals (Central Asia) • Containers • Oil and oil products from KZ and AZ (Batumi, Kuhlevi, Supsa) Ports 17.5 3.0 1.6 22.1 79% • Containers (Po ) • Dry bulk (Po )
  14. 14. NEVERTHELESS, THE MARKET SHARE OF GEORGIA INADDRESSABLE FLOWS IS STILL QUITE LOW – PARTICULARLYIN CENTRAL ASIA INmn tons, 2010/11 Georgia & Transcaspian ... Market share Caucasus 53% 99.3 53.0 Liquid bulk IN GEO Addressable Transit flows Georgia Dry bulk 80% 21% 12.3 4.5 3.6 2.6 82% 7% 5.7 2.8 2.3 0.4 Containers Addressable Transit Addressable Transit flows1 Georgia flows1 Georgia1 No growth assump on www.inves ngeorgia.org 13
  15. 15. www.inves ngeorgia.org 14 THIS TRANSLATES INTO A LATENT DEMAND FOR Capacity TRANSIT AND LOGISTICSINFRASTRUCTURE IN GEORGIA, Current load PARTICULARLY IN DRY BULK AND CONTAINERS mn tons VES VEST EST Available infrastructure by mode of transportation Port (for inter- Addressable modal and RoRo) Pipeline RoRo ferry Pure rail3,4 Pure road3 transshipment flows1 + [ OR ] + + [ OR ] Suffi-cient capacity Pipeline to 99 ~100 terminal Latent need 6 Rail inter- for infra- Liquid 4 modal & RoRo 27 60 structure bulk 14 39 Addi onal capacity ■ Ports as on Kars-link to Road inter- 2010 20162ORGIA modal & RoRo capacity Pure Turkey and pipeline economic bottle-necks 8-20 TBD Dry 20-25 17 ■ Additional bulk 7 405 15 2 rail/road 5 2 1 2 2 capacity 2010 20162 may be Only includes needed Pure rail Pure road Black sea RoRo ■ Loading/ Con off-loading tainers s capacity 12-15 8 5 3 has to be extended 2010 20162 (e.g., Overseas/ Overseas Regional Regional Regional Regional terminals) Focus destination Sufficient capacity 1 Caucasus – Europe/Row; Central Asia – Europe/Row; Western China – Europe 2 Projec ons based on current growth trajectory 3 Transshipment only, not including /imports/exports 4 Rolling stock not included (might be addi onal bo leneck 5 Full capacity a er finaliza on of railway moderniza on project
  16. 16. THE OPPORTUNITY SPACE – GEORGIA NEEDS TO BUILD A DEEP-SEA GATEWAY TOITS ECONOMY AND TO ORGANIZE TRADE FLOWS OF ITS NATURAL HINTERLANDS IN Transcaspian Geographic Deep sea-gate Caucasus scope for GeorgiaFlow types Liquid Sufficient pipelines and train capacity available bulk I IN GEO Extension Con- Deep-sea port II Container tainer network Dry Organizing Extension III dry bulk bulk flows Extension RoRo Organizing IV RoRo flows Flagship projectswww.inves ngeorgia.org 15
  17. 17. www.inves ngeorgia.org 16 THE VISION FOR THE LOGISTICS CORRIDOR NEEDS TO BE BACKED BY SIZING THE ASPIRATION FOR ADDITIONAL FLOWS Transcaspian VEST Geographic Deep sea-gate Caucasus scope for Georgia I II Container Deep-sea port network Infrastruc- dry bulk ture vision III corridor RoRo IVORGIA corridor Scenario • Capacity of deep-sea port • Increase market share1 • Increase market share1 assumptions – 10 mn t dry bulk p.a. – 90% container (current: – 60% container 82%) (current: 7%) – and 200k TEU p.a. Sizing the • 10 t/TEU on average – 90% dry bulk (current: – 50% dry bulk 80%) (current: 21%) aspiration1 • 80% u liza on • Increase container/dry • Increase container/dry Additional • Increase Georgia’s trade bulk flow by 50%/30%1 bulk flow by 50%/30%1 flows in mn tons Dry bulk +8.0 mt +1.6 mt +5.4 mt Container +1.6 mt +1.5 mt +4.8 mt RoRo Included in above volumes
  18. 18. ASPIRATION NEEDS TO BE TRANSLATED INTO CONCRETEFLOWS TO JUSTIFY DEEP-SEA PORT AND TRANSPORT CORRIDORINFRASTRUCTURE INVESTMENTS IN II I Deep-sea port III Transportation corridors IV • Large dry bulk and/or container • Container: addi onal containeriza on ofPre- flows that exceed current port capacity goods on relevant routs IN GEOcondition/ • Sufficient interest for Panamax/ • Dry bulk: large flows to jus fyaspiration for capesize vessel traffic infrastructure investmentsflows • Ro-Ro: Capacity limits on current network • Involve current port owners to evaluate • Involve owners of commodity flows actual market demand for (container, bulk) in infrastructure investmentsPotential to secure baseload flowsways to – Increased capacitysecure – Improved port economicsrequired • Involve owners of commodity flowsflows (container, bulk) in superstructure investment to secure baseload flowswww.inves ngeorgia.org 17
  19. 19. www.inves ngeorgia.org 18 THE INFRASTRUCTURE VISION – A DEEP-SEA PORT OPENS UP A GATE FOR GEORGIA’S AND THE CORRIDOR’S TRADE FLOWS V T VEST The vision – a deep-sea port1 Required infrastructure • Deep sea port – Min. 2 berths for PanaMax size – 20 m depths2 • Handling capacity/equipmentORGIA RGIA – Dry bulk terminals, storage, and handling equipment for 10 million tons – Container terminals, storage, and handling equipment for 200k TEU • Railway connec on (only ~17 km to main railway line) • Poten al extension by a liquid terminal3 USD ■ Adds capacity to existing ports 200-250 mn ■ Changes port economics 1 New location (earmarked) or alternatively extension of existing port 2 Can also serve Capesize 3 Not included in investment size estimation
  20. 20. DEEP-SEA PORT WILL ADD SIGNIFICANT CAPACITY TOCURRENT PORTS …Million tons IN Current port capacity New deep-sea port Depth Depth Poti 8-10 m Container Container 4.5 Dry bulk Dry bulk 5.6 Liquid bulk Liquid bulk 2.0 Ownership Ownership Deep-sea port Main advantages • Economics (able to acceptKulievioilKulevi oil Supsa oil Supsa oil Batumi 2.0 2.0 larger vessels) 0.9 11 m (≈200 k TEU) • Strategic loca onterminalterminal terminal twrminal 2.0 ? • Geology (20 m depths very IN GEO 4.0 6.3 10.0 15.0 close to shore) 10 52 27 2 8 5 Container Dry bulk Liquid bulk Container Dry bulk Total Existing capacity Deep-sea port capacity www.inves ngeorgia.org 19
  21. 21. www.inves ngeorgia.org 20 … AND CAN CHANGE THE ECONOMICS OF TRANSPORTATION, REDUCING THE COST OF TRADE AND BENEFITING THE ECONOMY OF GEORGIA VEST Deep-sea port reduces cost of trade p p Benefits to Georgia’s economy Imports Increase purchasing power by decreasing prices of everyday Total cost of marine shipment ILLUSTRATIVE consumer goods USD mn S mulate investmentby 115-140 -40-50% decreasing cost of investment goods Current With Improve balance of paymentsORGIA deep-sea and decrease FX ou lows port1 Exports Total cost of marine shipment ILLUSTRATIVE USD mn Increase compe veness of 120 Georgian exporters 60-70 -40-50% Improve balance of payments Current With and decrease FX ou lows deep-sea port1 1 Assump ons: 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
  22. 22. THE INFRASTRUCTURE VISION – ORGANIZING CONTAINER FLOWS REQUIRES THE BUILDUP OF A NETWORK OF TERMINALS IN The vision – a terminal network Required infrastructure for terminals + extension throughout • Sea ports & port opera ons corridor – Exis ng (see I) • Network of 3-5 container terminal pla orms to handle ~1 mn TEU including – Terminal land and construc on IN GEO – Railway connec ons and shun ng yards – Motorways connec ons – Rail rolling stock upgrade • Extension of network into other countries of the corridor1 USD 500- 1,000 mn1 Not included in investment size estimation www.inves ngeorgia.org 21
  23. 23. www.inves ngeorgia.org 22 ORGANIZING THE CONTAINER CORRIDOR COULD PROVIDE ADDITIONAL OPPORTUNITIES FOR INVESTORS TO ENGAGE VEST E EST Container Inter- transport Inland Road Ware- Distri- national Port Rail terminals transit housing bution flow shipping Organize reverse flows or containers redistribution ShipmentORGIA GIA company/ freight forwarder Infra- structure operators Logistic service providers Opportunity for investors to engage into corridor development & coordination
  24. 24. INVESTIN GEORGIA GEORGIAN NATIONAL INVESTMENT AGENCY www.investingeorgia.org E-mail: enquiry@investingeorgia.org Portfolio Manager: Mamuka Chikhladze E-mail: mchikhladze@investingeorgia.org

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