EPI Study: Georgian Trade and Transit Analysis

The aim of this study is to determine the export potential of Georgia by identifying the most prevalent export products and export destinations and analyzing the potential of such export products. The study also analyzed transit flows from 2005 to 2010 through Georgia to better understand the opportunities in Georgian economy with regards to cargo flows and requirements for logistics centers.

The study indicates the following key opportunities:

  • There has been a continuous annual growth of transit flows
    • Explosive growth by weight in the transit of commodities (i.e., coal and petroleum with over 300 percent increase on average for the period 2005-2010; agricultural products, meat, and poultry), with expected rising numbers over the next few years
    • Top cargo includes coal, petroleum, iron and iron ores, wheat and meslin, various meats and poultry, cane and beet sugar, and various chemicals
  • There are potential opportunities for Georgia from transit cargo flows
    • Investment into specific types of logistics infrastructure to meet cargo requirements, such as agricultural and food product logistics centers
    • Opportunities for additional processing to increase value added
  • The study allows for targeted promotion of Georgia as a corridor for cargo with origin and destination countries
    • Major countries of origin for goods transiting Georgia include the US, Turkey, Armenia, Ukraine, Russia.
    • Major countries of destination for goods transiting Georgia include Armenia, Azerbaijan, Turkey, Russia and Central Asian countries.

The re-export of used motor vehicles is a growing export sector. The liberal import and transit procedures allowed Georgia to establish a used vehicle market and then re-export vehicles to Azerbaijan, Armenia and Central Asia. A similar model of consolidation could be applied for other products, such as furniture, washing materials, automotive spare parts, meat, or sugar. While significant investment would be needed to establish a relevant
logistics and consolidation center, a better understanding of trade and cargo flows is one step into that direction.

Other transport and logistics opportunities are emerging in the near future, such as the railway connection from Azerbaijan to Turkey through Georgia. A new transmission line for electricity will not only allow for export of electricity as new hydro power plants are being constructed, but the lower-cost electricity can also be consumed by logistical and goods processing centers.

The study has analyzed the export and import statistics per different commodity value and weight, and country origin and country destination. In addition, the study elaborates top transit products by weight for the last years, top 30 country origins and country destinations for the transit cargo, top five transit goods and their transportation modes.

The total amount of trade and cargo data information is too large to be analyzed in one study alone. EPI recommends that the transport and logistics industry and other relevant stakeholders continue to analyze available data to identify opportunities for their businesses; for example, the specific demand in destination country, available transportation modes, better understanding what is processed by the ports, what is delivered by the ferries, and where improvement of the infrastructure to better handle the cargo flows, such as cold storage facilities or specifically designated warehouses (for example, for cotton), is necessary.

This study’s source of data is statistics from GEOSTAT and the Revenue Service. The data quality, however, has significant issues which have been identified and presented to the two entities. EPI believes, and it has been confirmed by the Revenue Service, that some of the value figures may have been miscoded as cargo enters the country. The data for 2008 is especially problematic as it indicates that some of the cargo value has increased ten-fold. The upcoming EPI-supported activity with establishing the trade facilitation system will assist, among other significant trade efficiency enhancements, in also improving the quality of trade and cargo data.