A Georgian-Chinese railway: An opportunity or a fantasy
20 February, 2015
A Georgian-Chinese railway: An opportunity or a fantasy
A direct railway connection between Georgia and the Chinese province Xinjiang brings new prospects to Georgian transit potential on the historical Silk Road route, the Georgian government believes. Sector analysts are less optimistic.

“This is a beginning of a new, very important epoch in terms of increasing Georgia’s transit opportunities and new businesses development” – Giorgi Kvirikashvili, Vice Prime Minister of Georgia the arrival of the first cargo train from China to Georgia on February 10, 2015."

Compared to maritime
transportation, this direct railway link between Georgia and China takes five-times less (shipment by sea may take 40 – 45 days, while rail only requires about 9) to transport cargo from the Chinese peripheral province of Xinjiang (near the border of Kazakhstan) to Georgian Black Sea ports. This railway will increase the flow of goods to Europe, as well as to Mediterranean and Black Sea countries. This kindles big expectations in the Georgian government and the state-owned Georgian Railway JSC.

“At the first stage, this project will generate the bulk of about 50 – 60 thousand containers for Georgia’s ports. It is very important for ports as well as for development of small and medium business in Georgia. This is the part of the New Silk Road project that was successfully implemented with the direct participation of Georgian Railway, Kazakhstan Railway and Xinjiang, the province in question. In the future, after the completion of Baku – Tbilisi – Kars project, a jointly-built infrastructural lattice will cover the whole economic zone with Azerbaijan, Central Asian countries and Turkey. This will significantly increase Georgia’s economic role in the region,” Kvirikashvili elaborated.

According to GR, even one-way cargo turnover from Georgian ports and the railway will contribute an additional inflow of 100-120 million USD to the Georgian economy. In the future, after movement of cargo trains begins in both directions, with Turkey and Kazakhstan joining the traffic, this amount will double. Accordingly, the train schedule will become more regular.

“While the project is still in its pilot stage, a cargo train is scheduled to arrive once every two weeks. After the pilot period is over, the train is expected to become regular and arrive once per week,” Guram Guramishvili, Director of Infrastructure at GR, said to Georgian Journal. “I do not rule out that the train may even have a daily schedule if the route proves its value and more shipments are attracted. The cargo train will be available to all countries along the route.”
Two crucial things, which are the price of transportation and the immense distance between Georgia and China, may create problems for this new railway route’s success story.

Cargo turnover from Georgian ports and the railway will contribute an additional inflow of 100-120 million USD to the Georgian economy. In the future, after movement of cargo trains begins in both directions, with Turkey and Kazakhstan joining the traffic, this amount will double. Accordingly, the train Schedule will become more regular.

“I believe this new route will serve only for transporting a limited volume of cargo shipping from Xinjiang to Georgia. It seems very unlikely for this route to attract shipments from other, more industrially developed parts of China. China is too far away from Georgia and hauling freight through Georgia cannot be profitable for it,” says Irakli Iashvili, Chairperson of the Supervisory Council of East Gate Group affiliated with the French-based CMA CGM (the third largest container transportation company in the world), in his interview with Georgian Journal.

“Yes, transportation by rail between Georgian ports and the Xinjiang province is indeed five times faster, but this is true only for Xinjiang, which is located far from the south and the south-east parts of China, where the key Chinese ports are located. I have very active business contacts in China and thus know that it mainly ships its cargo by sea. As a matter of fact, the maritime transportation costs are far cheaper than their land counterparts. Chinese manufacturing and production centers as well as free industrial zones are located mainly in its south and south-east part, near the Shanghai port, and sending cargo to Europe via Xinjiang-Georgia railway will most likely be way too pricey for them,” Iashvili claims.

Guramishvili counters that the new railway is not intended for Xinjiang province alone and is expected to attract shipments from the rest of China. He explains that all parties interested in the route are currently working on introducing a unified transit tariff in order to make it more attractive.

“The unified tariff is the absolute best thing we can do for this route. It will guarantee traffic along it. All participating sides, which include Georgian, Kazakh and Azeri railways, are negotiating this issue and we expect to have a unified tariff by this spring,” Guramaishvili said.

Yet Iashvili argues that the unified tariff is no guarantee of a big cargo turnover on the said route. He believes this route will mainly serve as a supply line for the big Chinese trade center that is currently under construction in Tbilisi’s district of Varketili.

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