Georgia’s strategic location, its Black Sea ports, the petroleum pipelines threading through the country and its railway system connecting the former Soviet Union provide the foundations for Georgia to become an integral player in regional and global trade. The Government of Georgia has long desired to develop this ‘transit corridor’ and take advantage of its geographic location of being a land bridge, making it an integral part of the shortest route between Europe and Asia. Transport-related industries aided the significant growth of Georgia’s transport and logistics industry. Over 20% of all FDI into Georgia in 2009 was directed into transportation-related industries, thereby demonstrating the sector’s potential for expansion and its key links throughout the economy.
The Transport and Logistics Analysis conducted by EPI’s transportation and logistics team uncovered a number of potential opportunities that, if seized, would bring tangible economic impact to Georgia’s economy. The team also uncovered several roadblocks and potential issues that may hinder this growth, unless there is active intervention soon. The research focused on supporting the selected value chains currently being studied in the EPI program as well as how Georgia could develop its potential to become a world class transport corridor for shipments through Central Asia, Black Sea, Europe, the Middle East and beyond.
Georgia’s logistics and transportation sector is poised for growth in the coming years. With the right strategy and resources, this growth can be expeditious and significant. Improvements in the competitiveness of some of the agriculture and non-agricultural value chains targeted by EPI will require a robust transportation and logistics sector. This is required in order to improve access to critical supply chains, raw materials and improved access to regional and global markets. The Action Plan laid out in this report is designed to be a catalyst for growth for these value chains and for the transport and logistics sector as a whole. The logistics industry also has the potential to create significant employment if Georgia develops competitive regional transportation niches and takes advantage of the complementary and ancillary business.
This Action Plan was designed under the premise that Georgia also has the potential to become the most important trade outlet for the landlocked countries of the Caucasus and Central Asia. Georgia’s liberalized economy and corruption-free transit offers a smooth state-of-the-art logistics and transportation corridor to and from the Black Sea for all of these countries. This corridor will also be an alternative to other, often more difficult transit routes, mainly those through Russia, China and Iran.
The Action Plan is focused around two complementary perspectives:
- The Pan Caucasus-Central Asian perspective is focused on developing Georgia as a globally significant transport corridor, and
- Linking Logistics and Transportation into the Georgian Value Chains, which is a more localized perspective, focused on how logistics and transportation will support the Georgian Value Chains and the initiatives planned by EPI.
The Transport and Logistics Action Plan implementation supports these two strategic perspectives. The implementation builds the roadmap to address policy and regulatory improvements, infrastructure development, workforce enhancement, logistics standards establishment and improvements, market access, partnerships and logistics product and services development. An additional theme that applies to all of the supply chain actors is transportation and logistics technology awareness, establishment of supply chain visibility tools and market communications.
Finally, this Action Plan is designed to be largely market driven. It can only be implemented if there is sufficient market demand for the emergent freight transport requirements in the region while supporting Georgia’s domestic value chains. Many of these value chains are poised to expand internationally.
The Action Plan is a multi-year vision for the implementation of a Caucasus Transport Corridor (CTC) and logistical support for the development of critical domestic value chains. Each component of the plan in this document includes a description with:
- A detailed description of each component,
- The objective of each component, and
- The roadmap action required to deliver the component
There are immediate Action Plan components that must begin upon approval of the Action Plan. These activities will serve as the foundation on which to build lasting momentum for growth. Also included is a discussion of the longer term Action Plan components, which will leverage initial results and will support the fulfillment of the vision.