2. REGIONAL LOGISTICS CORRIDOR
IN
TRANS-CAUCASIAN ROUTE
• Latent gateway between Europe and Central Asia
• Around 80% of port cargo and 60% of freight rail are transits
TRANSPORT INFRASTRUCTURE
• Rapidly developing road infrastructure
IN GEO
• Ports are cost-compe ve vs. alterna ve routes
• FDI inflows in the logis cs sector have primarily targeted
transport infrastructure
OPPORTUNITIES
• Deep-sea port with PanaMax vessel
• Containeriza on and logis cal centers
• Direct connec on with European and Central Asian
railway networks
www.inves ngeorgia.org 1
3. www.inves ngeorgia.org 2
GEORGIA’S TRANSPORT INFRASTRUCTURE
MODE OF TRANSPORT EXISTING INFRASTRUCTURE UPGRADES
AND FLOWS
VEST
RAIL RAIL
• 1,500 km (90% electrified) • BTK connec on to Turkey
Road/Rail
• ~7,000 rolling stock, 180 locos • Moderniza on
ROAD • Tbilisi bypass
• 1,500 km interna onal road • ~2500 new rolling stock
+ 20,000 km internal and local roads ROAD
• East-West highway upgrade
POTI SEAPORT POTI SEAPORT
ORGIA
RGIA
• 13 berths, 8-10m depth • New container berth (2014)
• Container and bulk (210k TEU)
• Owned/operated by Maersk/RAKIA DEEP-SEA PORT
Mari me
BATUMI SEAPORT • Min. 2 berth of 20m depth
• 5 berths, 1 offshore mooring, 11m depth (PanaMax)
• 90% petroleum/oil, 10% containers (44k • First phase: Dry bulk (10m tons)
TEU) and containers (200k TEU)
• Operated by JSC KazTransOil • USD 200 mn investment
KUHLEVI SEAPORT volume
• Crude oil, petroleum, and lubricants
• Owned/operated by State Oil Company
Azerbaijan
TBILISI INTERNATIONAL AIRPORT KUTAISI INTERNATIONAL
AIRPORT
Air
• ~1 mn passengers (capacity: 3 mn)
• Serving 28 des na ons • Passenger, incl. low-cost
BATUMI INTERNATIONAL AIRPORT airlines
• 100,000 passengers • Currently under construc on
4. OVERVIEW OF GEORGIA’S LOGISTICS SECTOR
IN
• Logis cs accounts for around 7% of GDP and ~ 3% of employment,
Value genera on through contribu ng to 19% of all exports and 9% of all imports
transit service provision
• Strategic loca on: It serves as an entry gate to the Caucasus and
Georgia is in a highly Central Asia as well as a stepping stone to the region
strategic loca on for
transshipment • Leveraging its loca on, Georgia’s transport economy can benefit
from large addressable transit flows, growing economies and
landlocked resources
IN GEO
• Georgia is already largely transshipment oriented, with
transshipment values amoun ng to ~3x its GDP
• Latent demand for transport infrastructure
There is latent – The current capacity compared to poten al flows on the East-West
demand for transport corridor present a latent opportunity to Georgia as a transshipment
infrastructure in Georgia economy
–However, current infrastructure not sufficient
• Strategic loca on and latent demand for infrastructure offer
Upgrading infra-structure poten ally huge economic opportunity/ geostrategic stake for
offers huge economic and Georgia (direct GDP impact, economic integra on, connec on of the
geo-strategic poten al economy)
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5. www.inves ngeorgia.org 4
GEORGIA SERVES AS THE ENTRY GATE TO A LANDLOCKED
REGION BOOSTING SIGNIFICANT RESOURCE RESERVES
VEST
ORGIA
RG
FOR
COMPARISON:
REGION REPRESENTS
ONLY ~1.6% OF
GLOBAL
POPULATION
6. GEORGIA IS IN A HIGHLY STRATEGIC LOCATION: IT SERVES AS
AN ENTRY GATE TO THE CAUCASUS AND CENTRAL ASIA AS
WELL AS A STEPPING STONE TO THE REGION
IN GDP
IN GEO
N
mn1 USD bn1 Ukraine
Kazakhstan
Moldova
Georgia 4.5 14
4
Caucasus 17 88
1 Uzbekistan
Land locked 121 356
Georgia
countries
Armenia
Azerbaijan
2 Turkmenistan
Stepping 1 Russia 23 154 Turkey
stone South2 3
2 Turkey 74 773 Syria
Cyprus
3 Iran 75 331 Iraq Iran
4 EU 504 17,330
1 Popula on and GDP, numbers cumula ve (apart from stepping stone countries)
2 Includes Russia’s Southern Federal District and North Caucasian Federal District
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7. www.inves ngeorgia.org 6
CARGO TURNOVER
TRANSIT FLOWS THROUGH THE CORRIDOR CENTRAL ASIA
(MILLION TONS PER YEAR) Kazakhstan
VEST
Uzbekistan
Tajikistan
Kirgizstan
Turkmenistan
CAUCASUS:
Azerbaijan
Armenia
APPROXIMATELY 80% ARE TRANSIT FLOWS
ORGIA Europe+Turkey
Sender - 2.6
Destination - 4.1
Total - 6.7
Central Asia+Caucasus
Sender - 9.6
Destination - 4.7
Total - 14.3
8. GEORGIA CAN UTILIZE ITS LOCATION TO ADDRESS SEVERAL
FLOWS ON THE MAJOR EUROPEAN-CENTRAL ASIAN
TRADING ROUTES
IN
N
2010
Caucasus – Europe1/RoW2
~44 mn tons p.a. Central Asia – Europe1/RoW2
1 ~79 mn tons p.a.
IN GEO
O
2
3
Western China3 – Europe
~3 mn tons p.a.
Total trade on all 3 routes (mn tons) ~126
1 Including Eastern Europe, Balkans and Turkey
2 Excluding Central Asia, Asia and Middle East
3 Es mated using total export volume by province
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9. www.inves ngeorgia.org 8
IN TOTAL, THE ADDRESSABLE FLOWS RELEVANT FOR TRANSIT
THROUGH GEORGIA AMOUNT TO ~126 MILLION TONS
Million tons, 2010 Destination Addressable flows Other flows
VEST
Caucasus Central Europe Western RoW Total ad-
Origin
Asia China dressable
Caucasus 2 1 21 0 14 38
Central Asia 2 12 60 1 11 73
ORGIA
Europe 3 2 N/A 2 N/A 7
Western
0 1 1 N/A 4 1
China
RoW 4 4 N/A 22 N/A 8
Total ad-
dressable 11 7 82 2 25 126
10. LIQUID BULK – MOST RELEVANT ADDRESSABLE FLOWS ARE
BETWEEN CAUCASUS AND EUROPE AND CENTRAL ASIA
AND EUROPE
IN
Million tons, 2010 Destination Addressable flows Other flows
Origin Caucasus Central Europe Western RoW Total ad-
Asia China dressable
Caucasus 1 0 21 0 13 35
Central
IN GEO
Asia 0 4 55 1 6 61
Liquid
bulk N/A N/A 2
Europe 1 1 0
Western 0
0 0 0 N/A 0
China
RoW 1 1 N/A 8 N/A 2
Total ad- 3 2 76 0 19 100
dressable
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11. www.inves ngeorgia.org 10
DRY BULK – MOST RELEVANT ADDRESSABLE FLOWS ARE
BETWEEN CENTRAL ASIA AND EUROPE/ROW
VEST
Million tons, 2010 Destination Addressable flows Other flows
Origin Caucasus Central Europe Western RoW Total ad-
Asia China dressable
Caucasus 0.5 0 1.0 0 0.5 2.0
Central
ORGIA
Asia 1.5 6.5 3.5 0.5 5.5 10.5
Dry
bulk N/A 0.5 N/A 2.5
Europe 1.0 1.0
Western 0
0 0 0 N/A 1.0
China
RoW 1.5 0.5 N/A 11.5 N/A 2.0
Total ad- 4.5 1.5 4.5 0.5 6.0 17.0
dressable
12. CONTAINER – MOST RELEVANT ADDRESSABLE FLOWS ARE
BETWEEN CENTRAL ASIA AND EUROPE/ROW
IN
Million tons, 2010 Destination Addressable flows Other flows
Origin Caucasus Central Europe Western RoW Total ad-
Asia China dressable
Caucasus 0.1 0.0 0.2 0.0 0.2 0.5
Central
IN GEO
Asia 0.0 1.4 0.7 0.0 0.1 0.8
Europe 0.8 1.6 N/A 0.8 N/A 3.2
Container
Western 1.0
0.0 0.1 1.0 N/A 2.3
China
RoW 1.5 1.5 N/A 1.6 N/A 3.0
Total ad- 2.4 3.1 1.9 0.8 0.3 8.5
dressable
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13. www.inves ngeorgia.org 12
ANSWERING THIS DEMAND, GEORGIA’S EXISTING TRANSPORT
ECONOMY IS ALREADY TRANSSHIPMENT BASED – RAIL AND
PORTS HAVE TRANSSHIPMENT RATIOS OF >70%
VEST
Mode of transport Transport volume by purpose Transshipment ratio and commodity
Million tons flows
Percent
Transit Import Export
2.0 0.1 • Containers
ORGIA
RG
Road 1.4 3.5 57% • Individual trade flows,
such as manufactured
goods, food
• Oil (KZ) and oil products
• Grain (Central Asia)
Rail 12.6 3.0 1.6 17.2 73% • Metals and minerals
(Central Asia)
• Containers
• Oil and oil products
from KZ and AZ (Batumi,
Kuhlevi, Supsa)
Ports 17.5 3.0 1.6 22.1 79%
• Containers (Po )
• Dry bulk (Po )
14. NEVERTHELESS, THE MARKET SHARE OF GEORGIA IN
ADDRESSABLE FLOWS IS STILL QUITE LOW – PARTICULARLY
IN CENTRAL ASIA
IN
mn tons, 2010/11 Georgia &
Transcaspian ... Market share
Caucasus
53%
99.3
53.0
Liquid bulk
IN GEO
Addressable Transit
flows Georgia
Dry bulk 80% 21%
12.3
4.5 3.6 2.6
82% 7%
5.7
2.8 2.3 0.4
Containers
Addressable Transit Addressable Transit
flows1 Georgia flows1 Georgia
1 No growth assump on
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15. www.inves ngeorgia.org 14
THIS TRANSLATES INTO A LATENT DEMAND FOR Capacity
TRANSIT AND LOGISTICSINFRASTRUCTURE IN GEORGIA, Current load
PARTICULARLY IN DRY BULK AND CONTAINERS mn tons
VES
VEST
EST
Available infrastructure by mode of transportation
Port (for inter-
Addressable modal and RoRo) Pipeline RoRo ferry Pure rail3,4 Pure road3
transshipment
flows1 + [ OR ] + + [ OR ] Suffi-cient
capacity
Pipeline to
99 ~100
terminal
Latent need
6 Rail inter- for infra-
Liquid 4 modal & RoRo
27 60 structure
bulk 14 39
Addi onal capacity ■ Ports as
on Kars-link to Road inter-
2010 20162
ORGIA
modal & RoRo capacity
Pure Turkey
and
pipeline economic
bottle-necks
8-20 TBD
Dry 20-25
17 ■ Additional
bulk 7 405 15 2
rail/road
5 2 1
2 2 capacity
2010 20162 may be
Only includes needed
Pure rail Pure road
Black sea RoRo
■ Loading/
Con off-loading
tainers
s capacity
12-15
8 5 3 has to be
extended
2010 20162 (e.g.,
Overseas/
Overseas Regional Regional Regional Regional terminals)
Focus destination
Sufficient capacity
1 Caucasus – Europe/Row; Central Asia – Europe/Row; Western China – Europe 2 Projec ons based on current growth trajectory
3 Transshipment only, not including /imports/exports 4 Rolling stock not included (might be addi onal bo leneck
5 Full capacity a er finaliza on of railway moderniza on project
16. THE OPPORTUNITY SPACE – GEORGIA NEEDS TO BUILD A DEEP-SEA GATEWAY TO
ITS ECONOMY AND TO ORGANIZE TRADE FLOWS OF ITS NATURAL HINTERLANDS
IN
Transcaspian
Geographic Deep sea-gate Caucasus
scope for Georgia
Flow types
Liquid Sufficient pipelines and train capacity available
bulk
I
IN GEO
Extension
Con- Deep-sea port II Container
tainer network
Dry Organizing Extension
III dry bulk
bulk flows
Extension
RoRo Organizing
IV RoRo flows
Flagship projects
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17. www.inves ngeorgia.org 16
THE VISION FOR THE LOGISTICS CORRIDOR NEEDS TO BE
BACKED BY SIZING THE ASPIRATION FOR ADDITIONAL FLOWS
Transcaspian
VEST
Geographic Deep sea-gate Caucasus
scope for Georgia
I
II Container
Deep-sea port network
Infrastruc-
dry bulk
ture vision III
corridor
RoRo
IV
ORGIA
corridor
Scenario • Capacity of deep-sea port • Increase market share1 • Increase market share1
assumptions
– 10 mn t dry bulk p.a. – 90% container (current: – 60% container
82%) (current: 7%)
– and 200k TEU p.a.
Sizing the • 10 t/TEU on average
– 90% dry bulk (current: – 50% dry bulk
80%) (current: 21%)
aspiration1 • 80% u liza on
• Increase container/dry • Increase container/dry
Additional • Increase Georgia’s trade bulk flow by 50%/30%1 bulk flow by 50%/30%1
flows in
mn tons
Dry bulk +8.0 mt +1.6 mt +5.4 mt
Container +1.6 mt +1.5 mt +4.8 mt
RoRo Included in above volumes
18. ASPIRATION NEEDS TO BE TRANSLATED INTO CONCRETE
FLOWS TO JUSTIFY DEEP-SEA PORT AND TRANSPORT CORRIDOR
INFRASTRUCTURE INVESTMENTS
IN
II
I Deep-sea port III
Transportation
corridors
IV
• Large dry bulk and/or container • Container: addi onal containeriza on of
Pre- flows that exceed current port capacity goods on relevant routs
IN GEO
condition/ • Sufficient interest for Panamax/ • Dry bulk: large flows to jus fy
aspiration for capesize vessel traffic infrastructure investments
flows
• Ro-Ro: Capacity limits on current network
• Involve current port owners to evaluate • Involve owners of commodity flows
actual market demand for (container, bulk) in infrastructure investments
Potential
to secure baseload flows
ways to – Increased capacity
secure – Improved port economics
required
• Involve owners of commodity flows
flows
(container, bulk) in superstructure
investment to secure baseload flows
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19. www.inves ngeorgia.org 18
THE INFRASTRUCTURE VISION – A DEEP-SEA PORT OPENS UP
A GATE FOR GEORGIA’S AND THE CORRIDOR’S TRADE FLOWS
V T
VEST
The vision – a deep-sea port1 Required infrastructure
• Deep sea port
– Min. 2 berths for PanaMax size
– 20 m depths2
• Handling capacity/equipment
ORGIA
RGIA
– Dry bulk terminals, storage, and handling
equipment for 10 million tons
– Container terminals, storage, and handling
equipment for 200k TEU
• Railway connec on (only ~17 km to main railway line)
• Poten al extension by a liquid terminal3
USD
■ Adds capacity to existing ports
200-250 mn
■ Changes port economics
1 New location (earmarked) or alternatively extension of existing port 2 Can also serve Capesize 3 Not included in investment size estimation
20. DEEP-SEA PORT WILL ADD SIGNIFICANT CAPACITY TO
CURRENT PORTS …
Million tons
IN
Current port capacity New deep-sea port
Depth Depth
Poti 8-10 m Container Container
4.5 Dry bulk
Dry bulk
5.6
Liquid bulk Liquid bulk
2.0
Ownership Ownership
Deep-sea port Main advantages
• Economics (able to accept
Kulievioil
Kulevi oil Supsa oil
Supsa oil Batumi 2.0 2.0 larger vessels)
0.9 11 m (≈200 k TEU) • Strategic loca on
terminal
terminal terminal
twrminal
2.0 ? • Geology (20 m depths very
IN GEO
4.0 6.3 10.0
15.0 close to shore)
10 52
27 2
8
5
Container Dry bulk Liquid bulk Container Dry bulk Total
Existing capacity Deep-sea port capacity
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21. www.inves ngeorgia.org 20
… AND CAN CHANGE THE ECONOMICS OF
TRANSPORTATION, REDUCING THE COST OF TRADE
AND BENEFITING THE ECONOMY OF GEORGIA
VEST
Deep-sea port reduces cost of trade
p p Benefits to Georgia’s economy
Imports Increase purchasing power by
decreasing prices of everyday
Total cost of marine shipment ILLUSTRATIVE
consumer goods
USD mn
S mulate investmentby
115-140 -40-50% decreasing cost of
investment goods
Current With
Improve balance of payments
ORGIA
deep-sea
and decrease FX ou lows
port1
Exports
Total cost of marine shipment ILLUSTRATIVE
USD mn Increase compe veness of
120 Georgian exporters
60-70 -40-50%
Improve balance of payments
Current With and decrease FX ou lows
deep-sea
port1
1 Assump ons: Total imports through ports 3.0 mn tons; total exports through ports 1.6 mn tons (current volumes); 70% bulk/30% containers;
average travel distance 2000 miles; current port capacity for Handymax ships, deep-sea port for Capesize
22. THE INFRASTRUCTURE VISION – ORGANIZING CONTAINER
FLOWS REQUIRES THE BUILDUP OF A NETWORK OF TERMINALS
IN
The vision – a terminal network Required infrastructure for terminals
+ extension
throughout • Sea ports & port opera ons
corridor – Exis ng (see I)
• Network of 3-5 container terminal pla orms to handle
~1 mn TEU including
– Terminal land and construc on
IN GEO
– Railway connec ons and shun ng yards
– Motorways connec ons
– Rail rolling stock upgrade
• Extension of network into other countries of the
corridor1
USD 500-
1,000 mn
1 Not included in investment size estimation
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23. www.inves ngeorgia.org 22
ORGANIZING THE CONTAINER CORRIDOR COULD PROVIDE
ADDITIONAL OPPORTUNITIES FOR INVESTORS TO ENGAGE
VEST
E
EST
Container Inter-
transport Inland Road Ware- Distri-
national Port Rail
terminals transit housing bution
flow shipping
Organize reverse flows or containers redistribution
Shipment
ORGIA
GIA
company/
freight
forwarder
Infra-
structure
operators
Logistic
service
providers
Opportunity for investors to engage into
corridor development & coordination
24. INVEST
IN GEORGIA
GEORGIAN NATIONAL
INVESTMENT AGENCY
www.investingeorgia.org
E-mail: enquiry@investingeorgia.org
Portfolio Manager: Mamuka Chikhladze
E-mail: mchikhladze@investingeorgia.org