• 2022 November 10

    New southern corridors

     
    Image source: Google Maps

    The peak growth of transportation rates was seen in 2020 when shipping rates surged 5-6 times, air and road transportation rates – 2-3 times versus those of 2019. The problems of the transport industry aggravated in the post-pandemic period with the escalation of the situation in Ukraine in February 2022. Sanctions imposed on Russia significantly affected export/import transportation of southern republics’ cargoes. Khakim Matchanov, Chairman of Uzbek International Forwarders Association (UIFA), tells about the development of new logistics corridors. 

    Image source: Association of International Forwarders

    Two important documents were approved at the Meeting of the Ministers in charge of Transport of the Organization of Turkic States held in Tashkent in October 2022: “Agreement on International Combined Freight Transport among the Governments of the Member States of the Organization of Turkic States” initiated by Uzbekistan and “Transport Connectivity Program of the Organization of Turkic States” developed by the Ministry of Transport of Uzbekistan. Those documents are aimed at systematization of transport corridors across the territory of Turkic States, assistance in boosting the traffic, strengthening the appeal of the transport corridors, encouraging the development of the States’ transport infrastructure.

    “It is essential to ensure the access via the Central Asia to the key global markets including China, India, Pakistan and other Asian countries as well as via Azerbaijan and Turkey to the European markets,” said Shavkat Mirziyoyev, President of the Republic of Uzbekistan, when speaking at the informal summit of the Turkic Council in March 2021

    Transcaucasian corridor

    Uzbek carriers have redirected their cargo southwards, primarily via the Transcaucasian corridor - Transport Corridor Europe-Caucasus-Asia (TRACECA) linking the ports of the Black Sea with the Middle Asia states, as well as with the transit territories for road transportation to Europe. This route has already seen the growth of import/export cargo flows to/from Uzbekistan, From the beginning of 2022, the cargo flows from Uzbekistan to the Black Sea ports of Georgia (Batumi and Poti) almost doubled year-on-year due to cargoes previously shipped to Europe across the territory of the Russian Federation. Besides, an increase was registered in the volumes of cargo bound for Iran, Turkey and Afghanistan. 

    Moreover, the development of transport corridor China - Kyrgyzstan - Uzbekistan - Afghanistan was facilitated through joint efforts of the parties this September with the test launching of a container train on the new transit route Kashgar - Osh - Andijan - Heyratan.

    Termez - Heyraton - Kabul - Peshawar - Karachi corridor

    Following the talks on 15 July 2022, Uzbekistan and Pakistan signed a joint declaration on establishment of a strategic partnership. The meeting and the agreement gave a strong impetus to boosting the transit cargo transportation via the seaports of Pakistan (Karachi, Gwadar, Qasim) in the Indian Ocean. 

    Port of Karachi. Capture of YouTube video

    From the beginning of 2022, multimodal transportation of cargo from the ports of India, Malaysia and Singapore were organized involving the new transport corridor Termez - Heyraton - Kabul - Peshawar - Karachi and back. 

    As some neighboring countries of Uzbekistan introduce restrictions on export of food products transport companies have shifted the focus on supplies of food products from the South-East Asia, Pakistan and India. 

    For example, more than 200 thousand tonnes of sugar, 180 thousand tonnes of rice and other products was transported by this corridor from India. In the opposite direction, about 200 thousand tonnes of legume crops and about 300 thousand tonnes of chemicals and fertilizers was carried from Uzbekistan and neighboring republics. By the end of this year, the total traffic on this transport corridor is expected to reach about 1 million tonnes.

    Railway routes Termez - Mazari-Sharif - Kabul - Peshawar and China - Kyrgyzstan - Uzbekistan

    Today, almost 97% of the total trade between India and Pakistan on the one side and the EU countries and China on the other side is performed by sea. In this context, it is highly significant to facilitate implementation of the projects on construction of Termez - Mazari-Sharif - Kabul - Peshawar and China - Kyrgyzstan - Uzbekistan railways. Before the construction is completed it is essential to adjust operation of the transport corridors through organization of multimodal transportation. 

    The above-mentioned projects are aimed at enhancing the efficiency of the current international transport corridors and at creation of new international routes. That will let the Central Asia states diversify their cargo flows, expand their geographic footprint and attract additional volumes of transit cargo having ensured the entry to the markets.

    Results of Turkic initiatives

    From the beginning of 2022, new transport corridor Termez - Mazari-Sharif - Kabul - Peshawar - Karachi has been used for multimodal cargo transportation (palm oil) from the Indonesian island of Belitung via the port of Singapore. It took 15 days to transport the cargo by sea transport to the port of Karachi (Pakistan). Cargo handling in the port and cargo delivery by road transport to Tashkent took additional 11 days. Thus, total time of cargo transportation was 26 days.

    Port of Singapore. Image source: PSA

    Transportation of another batch of cargo was organized from the port of Singapore. The cargo was delivered by sea to Karachi (Pakistan) and then by road transport to Tashkent. In total it took 23 days. 

    As of today, the Transcaucasian corridor is being actively used by exporters and importers of Uzbekistan but new transport corridor Termez - Heyraton - Kabul - Peshawar - Karachi with the entry to the Indian Ocean has proved to be faster and more economically efficient as compared with other routes. It is the most promising one in terms of delivery time and cost of transportation for the countries of the Central Asia, Kazakhstan and for the Ural (Siberian) regions of the Russian Federation. Among the drawbacks of this corridor is its safety system but the problem can be solved by cargo insurance.

    Over the pandemic years, transport industry faced a number of unprecedented restrictions being currently followed by the growth of transportation rates, the closure of some routes and the withdrawal of foreign companies from the Russian market or suspension of their activities, as well as restriction imposed on some import/export goods, increase of domestic prices and decline in the purchasing power of the population which cannot afford buying goods with a high transport component in their cost. Therefore, southern republics are striving to develop new logistics routes contributing to stabilization of prices for food products. 

    Khakim Matchanov, D.Sc. Economics, Chairman of Uzbek International Forwarders Association

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