Turning Georgia into Regional Logistics Hub
03 May, 2012

The first ever intermodal Tbilisi Logistics Center is scheduled to become operational by 2013 to enhance country’s logistic potential so as to turn Georgia into a regional logistic hub ultimately. 

 

Tbilisi Logistics Center (TLC) will be the first example of a fully equipped state-of-art logistics facility available in Georgia. Located at Avchala Railway Station in the outskirts of Tbilisi, the center will be developed by TransCare AG, a leading German consulting and project management company in the transportation and logistics field.

The project is supported by the USAID and its Economic Prosperity Initiative (EPI) in terms of expansion, investment facilitation and consulting.

The TLC project is evaluated at USD 36 million as total expense [including land price] and USD 26 million out of the figure will be pure investment. Due to its favorable geographic location TLC is expected to become a core for multimodal transport system in Caucasus and serve as a main city logistics for Tbilisi and East Georgia, Ralf Jahncke, Founder of TransCare AG said at the project presentation event on April 24, 2012.

TLC project falls in line with Georgian governmental strategy. To enjoy benefits of the much trumpeted favorable geographic location of Georgia as much as possible Georgian government set out transforming Georgia into logistics hub  among its top six key priorities recently. That Georgia is the shortest route between Asia and Europe is a common truth confirmed by century experience depicting Georgia as a part and parcel of the historical Silk Road route forwarding Asian cargos to Europe and vice versa. The already implemented three pipeline projects transporting Caspian gas and oil from Azerbaijan to Europe through Georgia and Turkey have already proved reliability of this route in our time.

Georgian freight forwarders believe Georgia connecting two important gates like the Caspian Sea connecting with central Asian countries craving for EU markets and the Black Sea acting as the west-gate toward the Europe put Georgia as a natural transit hub in the region for all terrain transport [including the railway and vehicle] as well as marine shipping.  The already operational direct railway connection from Batumi and Poti [the Black Sea outlets of Georgia] to neighboring Azerbaijan and Armenia, as well as upcoming historical project of Baku- Akhalkalaki-Karsi railway expected to connect Asia with Europe directly make attractive Georgia’s transit potential.

But to disclose this potential completely Georgia lacks due modern sophisticated logistic infrastructure able to store big quantities of all kinds of goods for long period and provide with all due service [even packing goods]. Big companies operating in Georgia face storage problems and some had no other way than invest in construction of due storage facilities. Others have to use storage facilities developed at customs terminals mainly but none of them perform the state-of-the-art service necessary for logistic infrastructure.

“There are similar infrastructures developed by private companies like pharmaceutical Aversi but storage and terminal facility integrated together does not exist in Georgia and this is the ginger of this project,” Giorgi Doborjginidze, Senior Representative Caucasus of TransCare, said. “Generally the Georgian specific was that all big companies had to invest in storage facilities since there was no such infrastructure here.  But in the west this is completely different business, logistics company handle with this business that performs service to retailers and wholesalers alike and we strive to adopt this practice. Couple of big companies operating in the Caucasus region have already expressed their will to contract us.”

Planned on an area of about 9 hectares TLC will consist of 25 thousand square meter storage facilities with 7.800 m2 extension possibility and 16 thousand m2 integrated two-story office-area, a container terminal with rail and road access with a starting capacity of 26.500 TEU (twenty-foot equivalent unit) per year. TLC includes 56 inbound and outbound truck gates and provides 30 thousand pallet locations. Annual total capacity of the warehouse will be 450 thousand pallets that equal 270 thousand tons.

According to Doborjginidze, TLC will be organized by joint venture of TransCare AG and TLC Property Management (TLCPM) the land owner and the co-investor of the TLC. Shares of the joint venture are redistributed as following:  45% is of TLCPM, TransCare holds 5% and 50% remains still open to attract investors. Negotiations are already on to both potential investors as well as customers, Doborjginidze told Georgia Journal. McDonalds is the first contractor of the TLC in terms of shipment and storage.

Zurab Shengelia, Head of Association of Freight Forwarders of Georgia, approves the upcoming TLC project and expects it to facilitate trade as logistics development is a core part of trade and hopes more similar project to come to deploy other potential hubs in Georgia.

“Georgia is the hub of the regional transport corridor in general not only Tbilisi, I never rule out that Akhalkalaki may become a hub in southern part of Georgia in prospect after Baku-Akhalkalaki-Karsi railway start operations, let alone Poti and Batumi that already are important to this end, may be Khashuri that is located on a big crossroad [connecting east-west and south-north of Georgia] can undertake hub functions. Logistics hub countries include several knots of logistics in the west as a rule,” he said.

Shengelia hopes that Georgia will enjoy befits of logistics center from other points of view:  to attract certain cargos to reprocess them here and export the final product to the region.

“Just look, the Caucasus is a market of 20 million population, through Caucasus we can reach Central Asia- more than 60 million population, it is a huge market, let’s be optimistic and include the south part of Russia from service point of view in ideal version,” he said. “All this can be available through developed logistic centers.”

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