EPI Report: Transport and Logistics Time Motion and Cost Study

This document is the final report on the Transport and Logistics Time Motion and Cost Study prepared for Deloitte Consulting LLP in the framework of USAID Economic Prosperity Initiative (EPI) by ACT Research.

Transport and logistics is one of the strategic sectors of Georgia. It can be pivotal and catalytic to a broad segment of the economy. In order to fully understand its potential impact on the economy, it was critical to make an assessment of the transportation and logistics sector, which has been identified as a crosscutting sector that the EPI will focus on.

In order to condcut a deep assessment of transport and logistics value chains and develop a strategy work plan in this sector it is critical to obtain baseline data using statistically relevant methodology. Unfortunately, there was no such recorded data in this sector until recently. Taking these considerations into account the research was arranged, planned, and then implemented from April till July, 2011.

The main purpose of ACT’s research was to design and develop statistically relevant methodology for a baseline measurement of transport and logistics-related factors between specific transport nodes within Georgia and then conduct a baseline survey according to the developed methodology.

The main objectives of the baseline survey were to study the timing, costs, availability, quality, and reliability of transportation and logistics in Georgia.

For this purpose ACT Research has developed an optimal research approach, which include the following main components: (a) Desk Research (in order to obtain and analyze secondary data pertaining to the nodes that are to be studied in the scope of this project), (b) Surveys of Transport and Logistics (Warehousing and Distribution) Companies (all transport and warehousing companies were studied) and (c) Tracking the Actual Transportation Process using GPS Tracking Devices.

Besides these main components, ACT has also developed a visual map, in which all transportation and logistics companies operating in Georgia are represented.

According the survey results a major part of the transport, cargo-handling and distribution is located in three main region/cities of Georgia. These are Tbilisi, Samegrelo-Zemo Svaneti (with Poti as its center), and Adjara region (with Batumi as its center).

Different types of transportation service are available in Georgia (truck/road, rail, sea, and air). The average amount of goods/freight transported during one year by companies is 18,800 tons. The cost of transporting goods one kilometer with one truck within the territory of Georgia is USD 1.88 on average, and similarly the cost of transporting freight for one kilometer with one freight car (rail) within the territory of Georgia is USD 2.56 on average.

The average time (measured by GPS) needed for trucks to move to several destinations is: 17.8 hours – (Poti-Sadakhlo), 12.5 hours – (Tbilisi-Poti/Poti – Tbilisi), 13.8 hours (TbilisiBatumi)

Warehousing companies operating in Georgia use various types of storage (dry, cold-frozen, bulk) for keeping goods. The average price of storing goods is USD 2.30 (1 ton/day) in dry storages, USD 6.70 (1 ton/day) for cold-frozen storages and USD 0.40 (1 m3/day) for bulk storage. Based on the survey results the full-potential capacity of all warehousing companies in Georgia is 1,477,690 tons. The average capacity of a company is 3,307 tons (the average number does not include data for the Poti sea port).

Port/airport-handling companies along with various services provide loading/unloading services. On average the loading/unloading time for one truck is two hours and the cost for liquid, bulk, and general cargo is USD 13, USD 9, and USD 12, respectively.