Integration by World Bank Group Publications

EUROPE AND CENTRAL ASIA STUDIES

INTEGRATION World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

Muneeza M. Alam and Luis C. Blancas

Integration

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EUROPE AND CENTRAL ASIA STUDIES

Integration World-Class Trade Logistics Along the Trans-Caspian Transport Corridor Muneeza M. Alam and Luis C. Blancas

© 2026 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 29 28 27 26 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, links/footnotes, and other information shown in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. The citation of works authored by others does not mean The World Bank endorses the views expressed by those authors or the content of their works. Certain artificial intelligence (“AI”) tools may have been used in creating this work, as indicated in the work, but all transformative and creative effort expressed in the work was performed by The World Bank staff or external contributors. The World Bank is not responsible for any claims, including for errors or inaccurate information, generated by AI programs not controlled or owned by The World Bank. Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions

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Europe and Central Asia Studies The Europe and Central Asia Studies series features analytical reports on main challenges and opportunities faced by countries in the region, with the aim to inform a broad policy debate. Titles in this series undergo extensive internal and external review prior to publication. Previous Books in This Series 2025 TIDES of Change: Igniting Productivity Growth in Europe and Central Asia (2025), Leonardo Iacovone, Henry Aviomoh, Matias Belacin, Laurent Bossavie, Ana Cusolito, Rafael de Hoyos, Gianmarco Ottaviano, Fabian Scheifele, Iván Torre, and Yutaka Yoshino Greater Heights: Growing to High Income in Europe and Central Asia (2025), Leonardo Iacovone, Ivailo V. Izvorski, Christos Kostopoulos, Michael M. Lokshin, Richard Record, Iván Torre, Szilvia Doczi 2024 The Journey Ahead: Supporting Successful Migration in Europe and Central Asia (2024), Laurent Bossavie, Daniel Garrote Sánchez, Mattia Makovec 2018 Toward a New Social Contract: Taking on Distributional Tensions in Europe and Central Asia (2018), Maurizio Bussolo, Vito Peragine, Ramya Sundaram Critical Connections: Promoting Economic Growth and Resilience in Europe and Central Asia (2018), David Michael Gould 2017 Reaping Digital Dividends: Leveraging the Internet for Development in Europe and Central Asia (2017), Tim Kelly, Shawn W. Tan, Hernan Winkler Risks and Returns: Managing Financial Trade-Offs for Inclusive Growth in Europe and Central Asia (2017), David Michael Gould, Martin Melecky

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2015 Golden Aging: Prospects for Healthy, Active, and Prosperous Aging in Europe and Central Asia (2015), Maurizio Bussolo, Johannes Koettl 2014 Shared Prosperity: Paving the Way in Europe and Central Asia (2014), Maurizio Bussolo, Luis F. Lopez-Calva

All books in the Europe and Central Asia Studies series are available for free at https://hdl.handle.net/10986/2155.

Contents Foreword Acknowledgments About the Authors Main Messages Overview Abbreviations

xiii xv xvii xix xxv xli

Introduction: Purpose and Structure of the Report

1 Trans-Caspian Transport Corridor: Strategic Promise and Trade Transformation

Reference

Introduction Structural Reforms in TCTC Host Countries Trade Dynamics Shaping the TCTC Economic Aspirations and Development Goals of TCTC Host Countries Trade Outlook for the TCTC Economies Conclusions Note References

8 10 13 20 22 24 25 25

2 Trans-Caspian Transport Corridor Capacity Constraints and Operating Environment

3 Trans-Caspian Transport Corridor Freight and Economic Potential

Introduction Physical and Operational Bottlenecks Logistics Nodes and Network Integration Environmental and Climate Conditions Institutional and Policy Environment Notes References

Introduction Freight Markets and Segmentation along the TCTC

28 29 36 37 37 37 38

40 41 vii

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Freight Flows through the Gateways of the TCTC Strategic Role of Different TCTC Gateways Elasticity of Freight Flows through the TCTC Wider Economic Impacts: GDP, Jobs, and Trade Conclusions Notes

4 Trans-Caspian Transport Corridor Performance: Drivers, Volumes, and Investment Viability Implications Introduction Current Performance of the TCTC The TCTC’s Competitiveness Reach as a Eurasian Landbridge Expected Landbridge Volumes TCTC Branch- and Subbranch-Level Analysis for the Eurasian Landbridge Containerized Infrastructure Adequacy and Volume Projections In-Principle Viability of Investments in TCTC Infrastructure Notes Reference

5 From Transport Corridor to Economic Corridor: Broader Logistics Investments in the Trans-Caspian Transport Corridor

Introduction The Trans-Caspian Transit Corridor as an Economic Corridor Mapping Investment Opportunities in the TCTC by Country and Asset Category Notes References

43 48 53 56 60 61

64 66 74 77 82 87 89 96 97

100 100 105 109 109

6 Institutional and Regulatory Arrangements Shaping the Performance of Trans-Caspian Transport Corridor Transport State-Owned Enterprises

111

7 Transforming the Trans-Caspian Transport Corridor through Improved Trade Facilitation, Digitalization, and Integrated Operations: Toward a Single Transport, Transit, and Trade (T3) Document

133

Introduction SOEs Across TCTC Transport Modes: State Participation in Ports and Shipping Global Experience on Institutional Models for Railways Comparative Assessment of TCTC Railway SOEs Conclusions Notes References

Introduction Eurasian Containerized Landbridge The (Long) Documentation Trail Along the TCTC’s Eurasian Landbridge

112 115 119 124 129 131 131

134 136 139

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Negotiable Documents Digitalization Operational Efficiency Implications for the TCTC Notes References

145 146 156 157 161 161

8 Bridging the Collaboration Gap in the Trans-Caspian Transport Corridor

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Appendix A: Trans-Caspian Transport Corridor Network Exposure to Natural Hazards in Central Asia and the South Caucasus

173

Appendix B: Trade and Transport Model and Modeling Scenarios

187

Appendix C: Wider Economic Benefits Modeling Framework

197

Appendix D: Enabling Investments in the Trans-Caspian Transport Corridor through 2040

201

Appendix E: Examples of International Collaboration Entities Active in the Trans-Caspian Transport Corridor

211

Introduction Collaboration Achievements and Remaining Gaps in the TCTC TCTC Assessment and Response Structure Conclusions Notes References

164 165 169 171 172 172

Boxes I.1 2.1 3.1 3.2 3.3 4.1 4.2 4.3

Comparative analysis of headline freight flow findings in World Bank (2023) and this report Overview of TCTC railway infrastructure and rolling stock capacity Impact of Trans-Caspian Transport Corridor development on greenhouse gas emissions from transportation Role of the Trans-Caspian Transport Corridor in the movement of critical minerals Spillovers among Trans-Caspian Transport Corridor host countries: The case of Tajikistan Why premium logistics services matter in international logistics despite their relatively small market size Role of the China-Europe Railway Express in the East Asia-Europe containerized rail landbridge Role of the North American mini-landbridge in logistics between East Asia and the East Coast of North America

4 29 46 50 57 66 69 70

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4.4 4.5 4.6 5.1 6.1 6.2 7.1

7.2 7.3 7.4 7.5 8.1 A.1 A.2 A.3

Network effects of Trans-Caspian Transport Corridor branches Armenia’s connectivity and its changing role in the South Caucasus as a link between Asia and Europe Economic rationale for key World Bank–backed investments in the Trans-Caspian Transport Corridor The economic impact of transport corridors: Production of modern rolling stock in Türkiye The evolution of railways in the European Union Snapshot of core Trans-Caspian Transport Corridor railway state-owned enterprises Recent interventions to expand the Trans-Caspian Transport Corridor’s ability to serve the Eurasian containerized landbridge (and containers more generally) Rail freight consignment note regimes in Eurasia The cross-border logistics governance model of China-Europe Railway Express services Data standards and trusted digital identities A hub-based model for digitalizing the Trans-Caspian Transport Corridor Private sector perceptions of public-private collaboration in the Trans-Caspian Transport Corridor The three steps of the TCTC multihazard and criticality assessment methodology Heat exposure of Kazakhstan’s railway infrastructure Critical roads exposed to climate-related hazards that are relevant for the TCTC in Central Asia and the South Caucasus

82 84 92 104 122 125

137 139 142 147 154 168 174 178 183

Figures O.1 O.2 O.3 O.4

Baseline forecast change in trade value, by TCTC host countries, 2023–40 xxix Total commodity flows, millions of tons, by TCTC gateway, 2023 and 2040 xxx Commodity composition of TCTC gateway flows, 2023 and 2040 xxxi Priority economic activity–enabling investments in the TCTC through 2040, by host country xxxiii O.5 Private sector participation potential in priority TCTC economic activity–enabling investments through 2040 xxxiv O.6 Sequenced and time-bound actions xl BI.1.1 Freight flows across the Caspian Sea 5 1.1 Average GDP growth rates, 2014–24 10 1.2 Unemployment rates, 2014–24 11 1.3 Business environment and regulatory burdens in TCTC host countries 12 1.4 Top three exports and imports of TCTC host countries, share of total, by value, 2023 14 1.5 Trade costs in TCTC countries and comparator regions 15 1.6 TCTC host country imports and exports of select commodities, 2017 and 2023 17 1.7 Trade between TCTC host countries, 2017 and 2023 18

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1.8

Intraregional exports as a share of total exports in TCTC and comparator regions 1.9 Baseline forecast change in trade value, by TCTC host countries, 2023–40 3.1 TCTC freight flows, millions of tons, by gateway and by scenario, 2023, 2030, and 2040 B3.1.1 Comparative analysis of GHG emissions from TCTC transportation activity by 2040, SQ versus TD scenario 3.2 TCTC freight flows, millions of tons, by gateway, commodity type, and scenario, 2023, 2030, and 2040 3.3 TCTC freight flows, millions of tons, by gateway, type of origin and destination, and scenario, 2023, 2030, and 2040 4.1 Chongqing-Budapest containerized market: Comparative service delivery benchmarks for the TCTC rail landbridge and the sea freight supply chain, 2023 4.2 Chongqing-Budapest containerized market: Comparative unitary logistics costs for the TCTC rail landbridge and the sea freight supply chain, by product value, 2023 4.3 TCTC Chongqing-Budapest containerized service delivery lead time yielding the same unitary door-to-door logistics costs as the sea freight supply chain, as a function of shipment value per container 4.4 Eurasian containerized rail landbridge: Chongqing-Budapest average delivery lead time, by scenario, 2023, 2030, and 2040 4.5 Eurasian containerized rail landbridge: Chongqing-Budapest average delivery lead time decomposition, by TCTC branch and scenario, 2023, 2030, and 2040 4.6 Eurasian containerized rail landbridge: Total volume by route and scenario, laden TEU, 2023, 2030, and 2040 4.7 Eurasian containerized rail landbridge: Key laden TEU market shares, by market segment and by scenario, 2023, 2030, and 2040 4.8 TCTC Eurasian containerized rail landbridge volumes, by branch and subbranch and by scenario, laden TEU, 2023, 2030, and 2040 4.9 Expected 2040 landbridge and nonlandbridge containerized freight flows across the Caspian Sea by scenario relative to expected maritime port and trans-Caspian vessel capacity 4.10 2040 share of Eurasian containerized rail landbridge freight in demand mix of key TCTC investment projects under TD scenario 5.1 Economic activity–enabling asset categories in the TCTC 5.2 Priority economic activity–enabling investments in the TCTC through 2040, by host country 5.3 Priority economic activity–enabling investments in the TCTC through 2040, by host country and investment category 5.4 Private sector participation potential in priority TCTC economic activity–enabling investments through 2040 7.1 TCTC: Trans-Caspian volumes, thousands of tons, by freight type and by scenario, 2023, 2030, and 2040 A.1 Estimated annual direct damage to the TCTC railway and road networks in Central Asia and the South Caucasus from multiple natural hazards

19 22 44 47 49 53

73 76

76 78 79 86

87 95 101 106 107 108 136 175

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A.2 A.3

A.4

Relative change (%) in road and rail risk for the TCTC in Central Asia and the South Caucasus by 2050, according to risk type and climate scenario Estimated indirect losses to households in Central Asia and the South Caucasus in 2030 due to 1-week disruptions of TCTC railway sections, grouped by destination Estimated daily losses to households in TCTC countries in Central Asia and the South Caucasus from a 5-day closure of the port of Aktau

177

181 182

Maps O.1 O.2 1.1 2.1 3.1 A.1

A.2

Main trade corridors connecting Asia and Europe Most critical rail and maritime port infrastructure investment needs of the TCTC today Main trade corridors connecting Asia and Europe TCTC rail and maritime port infrastructure capacity utilization, 2023 TCTC freight flows, 2023, and under the TD scenario, 2030 and 2040 Distribution of estimated annual direct damage to TCTC railway network in Central Asia and the South Caucasus at the provincial level under current climate conditions Criticality of TCTC railway links and relevant roads in Central Asia and the South Caucasus

xxvi xxxii 9 31 45

176 180

Tables O.1 3.1 3.2 3.3

Country-level GDP impacts from TCTC development Logistics cost-reduction effects on agrifood exports, millions of tons Country-level GDP impacts from investing in TCTC infrastructure Country-level export and import impacts of investing in TCTC infrastructure 4.1 Priority infrastructure investments in the TCTC under TD 2030 and 2040 scenarios 6.1 Comparison of railway sector operational models: Public and private approaches B6.1.1 Phases of the railway sector reforms in the European Union D.1 Uzbekistan D.2 Kazakhstan D.3 Turkmenistan D.4 Türkiye D.5 Georgia D.6 Tajikistan D.7 Azerbaijan D.8 Kyrgyz Republic E.1 Examples of International Collaboration Entities Active in the Trans-Caspian Transport Corridor

xxviii 55 58 59 90 121 123 202 203 205 206 207 208 209 210 212

Foreword Transport corridors can be more than physical routes for moving freight. At their best, they are platforms for investment, job creation, trade diversification, and shared growth. Their cross-border nature also makes them drivers of international integration and collaboration, facilitating supply chain resilience, cross-border interoperability, and agreements in areas such as trade, technical cooperation, climate adaptation and resilience, and other global public goods. In short, well-performing transport corridors can boost shared prosperity while supporting a range of complementary development outcomes. Few transport corridors globally have the potential to generate these benefits at the scale of the Trans-Caspian Transport Corridor (TCTC). The TCTC spans two continents. It is hosted by nine countries across Central Asia, the South Caucasus, and Türkiye, including some of the world’s most important producers of energy, raw materials, and essential foodstuffs. And it serves many more countries at its eastern and western termini, including some of the world’s largest economies. Yet it is also a corridor that remains in development. Realizing the TCTC’s economic potential will require investments in basic infrastructure; complementary enabling investments in service delivery with private sector participation; and new approaches to trade facilitation, transport operations, and cross-border collaboration. Because of the corridor’s fragmentation given the number of countries, transport modes, operators, and government entities that comprise it, this report argues that these new approaches should be guided by integration, for example, integration of documentation, to facilitate crossborder commerce; integration between public and private sector stakeholders, to facilitate decision-making; and integration of operations, to facilitate end-toend service delivery. The report also argues that improving the performance of state-owned enterprises (SOEs) in transportation is directly correlated with corridorwide performance improvements. This is because SOEs play a lead role in the railway, maritime port, and shipping services that dominate TCTC operations across its length. The implication is that transforming the TCTC into a high-performance corridor—which the report concludes should be the shared goal of all host

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countries going forward, a goal that the report finds to be attainable with the right measures—will depend on public, private, and public-private initiatives alike. Given the importance of supporting the commercial and financial sustainability of SOEs, the task of strengthening these public entities entails critical roles for the private sector to play, such as through the provision of commercial financing to help SOEs become self-sufficient and self-sustaining. At the same time, SOE reforms depend on public sector actions that can help meet the requirements of commercial lenders and other private sector partners, such as adequate reporting, independent advisory boards, market-based pricing, transparent contracts, and state-of-the-art asset management systems and practices. By adopting measures such as these, the report finds that developing the TCTC from a transport corridor into an economic corridor can help lift long-term annual gross domestic product across host countries by an estimated 3.3 percent, equivalent to $58 billion at current levels of economic activity, as well as boost employment by 2.9 percent. A transport corridor moves freight; an economic corridor goes further— attracting investment, fostering productive economic activity, creating jobs, and linking businesses, workers, and markets through efficient logistics and reliable connectivity. Realizing this transition from a transport corridor to an economic corridor will require not only core transport infrastructure, but also complementary investments in logistics services, trade facilitation, industrial and logistics nodes, digital systems, and the institutions needed to support private sector participation. The report’s message to host governments, investors, and TCTC end users is this: the TCTC is an economic opportunity of a scale that justifies targeted investments and operational improvements to make Eurasian trade more resilient and competitive. But this opportunity will not be realized through infrastructure investments alone. It will require sustained cross-border collaboration, stronger service delivery, deeper integration across countries and modes, and a shared commitment to converting connectivity into investment, jobs, and long-term economic growth. The time to act is now. Antonella Bassani Regional Vice President Europe and Central Asia

Acknowledgments The Integration report was prepared by a team led by Muneeza M. Alam, Luis C. Blancas, and Winnie Wang, under the overall guidance of Shomik Raj Mehndiratta (Regional Transport Practice Manager), Charles Joseph Cormier (Regional Practice Director, Infrastructure), and Antonella Bassani (Regional Vice President, Europe and Central Asia). Ivailo V. Izvorski (World Bank Chief Economist for Europe and Central Asia) and Sajjad Shah (World Bank Director of Strategy and Operations for Europe and Central Asia) provided invaluable advice and insights throughout the preparation and finalization of the report. The report is a core product of a regional analytics initiative on the Trans-Caspian Transport Corridor funded by the World Bank. Muneeza M. Alam and Luis C. Blancas are the report’s lead authors, supported by a core team consisting of Winnie Wang, Eduardo Espitia, Andre Pierre Marie Merrien, Joshua Alexander Paternina Blanco, Lucie Johanna Wuester, and Blanca Maria Domine Chust. Several chapters benefited from contributions by World Bank Group staff, including Rima Aloulou, Víctor Aragonés, Cindy Audiguier, Saroj Ayush, Yevhen Bulakh, Mansur Bustoni, Mariam Dolidze, Ragub Garazade, Murad Gurmeric, Andrea Guzman Galvez, He He, Orkun Kacar, Elif Karakas, Abdul Hameed Khalili, Irina Li, Davide Luzzati, André Merrien, Sudeshna Mitra, Antonio Nunez, Maria Claudia Pachón, Remi Polan, Aleksandr Prodan, Daniel Pulido, Julie Rozenberg, Satya Prasad Sahu, Himmat Singh Sandhu, Nijat Valiyev, and Christina Wiederer. Pavel Chistyakov and Ekaterina Kozyreva of the InfraEconomy Group provided trade and transport network modeling support, and Sumathi Lalapet Chakravarthy and Badri Narayanan Gopalakrishnan of InfiniteSum provided economic modeling support. Elco Koks and Sadhana Nirandjan of Vrije Universiteit Amsterdam and Célian Colon of the International Institute for Applied Systems Analysis provided modeling support on infrastructure resilience and supply chain criticality analysis. The report’s discussion of economic activity–enabling investments was informed, in part, by a corridor mapping study conducted by the International Finance Corporation (IFC). As World Bank Group peer reviewers, Patrick Alexander Avato, Ana Paula Cusolito, Grégoire F. Gauthier, Charles Kunaka, Martha Lawrence, Carolina

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Monsalve, Francisco Moraes Leitao, Müge Sandal, Harris Selod, and Marième Travaly provided expert comments and suggestions that improved the report and guided early manuscripts. Thanks also go to external advisors who gave of their time and knowledge to sharpen key sections of the report or provide feedback on its recommendations, including Yanying Li (United Nations Commission on International Trade Law Secretariat [UNICITRAL]); Céleste Laporte and Gregory Lecomte (Organisation for Economic Co-operation and Development [OECD]); Elena Boutrimova, Adelina Harunjen, and Mariya Usatenko (International Trade Center [ITC]); and Asset Assavbayev (former Secretary General, Permanent Secretariat of the Intergovernmental Commission, Transport Corridor Europe-Caucasus-Asia [TRACECA]). Devika Seecharran Levy was the associate publishing officer. Mary Fisk of the World Bank Group’s Publishing Unit was the production editor. Editorial services were provided by Kathie Porta Baker, Ann O’Malley was the proofreader, and Yaneisy Martinez oversaw printing and electronic conversion. Visibility and launch of the report were led by Zarina Nurmukhambetova and supported by Zakiya Abdurazakova, Jennifer Bisping, Tunya Celasin, Jyldyz Djakypova, Nicole Frost, Irma Gegechkori, Mirzobek Ibragimov, Shynar Jetpissova, Christine Louise Lynch, Sona Panajyan, Hasmik Soghomonyan, Christopher Walsh, Kymbat Ybyshova, and Dilafruz Zoirova. Finally, the team acknowledges the generous support of the Public-Private Infrastructure Advisory Facility (PPIAF) and the Global Facility to Decarbonize Transport (GFDT).

About the Authors Muneeza M. Alam is Senior Infrastructure Economist at the World Bank, with extensive experience across the Europe and Central Asia; Middle East and North Africa, Afghanistan, and Pakistan; and South Asia regions. She joined the World Bank in 2015 and has since worked at the intersection of transport economics, policy reform, and operations, helping countries translate analytics into meaningful investments and reforms. Her work spans economic corridors and regional connectivity, railways and logistics, inclusive urban mobility, genderresponsive transport, and low-carbon transport transitions. She has co-led major lending operations—including large-scale railway and economic corridor programs—and has played a central role in shaping national transport strategies, regulatory reforms, and cross-border connectivity agendas. A consistent theme of her work is understanding how transport investments can more effectively support jobs, productivity, and inclusion. She is also an active contributor to the World Bank’s global knowledge agenda. She has led and authored flagship analytical and research outputs on regional railways, transport corridors, and gender and mobility, and she regularly engages in multipartner initiatives and cross-practice collaboration to advance integrated development solutions. Before joining the World Bank, she worked in economic consulting in Washington, DC. She holds a PhD in economics from Yale University. Luis C. Blancas is Senior Transport and Logistics Specialist at the World Bank. He has led numerous World Bank lending operations, advisory engagements, and sectoral publications in transport and freight logistics in countries across the East Asia and Pacific and Europe and Central Asia regions. His work primarily covers logistics corridors, provision of multimodal logistics services, transport and logistics infrastructure development, public-private partnerships in the transport infrastructure and logistics space, and public policy in the transportation sector. Before joining the World Bank in 2009, he was an Associate at MergeGlobal Capital Advisors, a fiscal policy analyst at the International Monetary Fund, and a management consultant with Deloitte Consulting’s Mexico and Central America practice. He holds an MS in management science and engineering from Stanford University and a BA in economics from Mexico’s Tecnológico de Monterrey, Campus Monterrey.

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Main Messages The Trans-Caspian Transport Corridor (TCTC), also known as the Middle Corridor, is an emerging international trade corridor unique in length, complexity, and fragmentation. The TCTC is a multimodal freight network linking two continents. It is also in development. Its routes, traversing Central Asia, East Asia, the South Caucasus, Türkiye, and the rest of Europe, can be more than 10,000 kilometers in length. Its multimodal nature, involving railway, trucking, and short sea shipping links, as well as maritime and inland port interfaces, increases operational complexity compared with single-mode options. Depending on routing, a door-to-door itinerary on the TCTC will cross multiple borders from origin to destination (four to five border crossings per itinerary is typical), change rail gauge twice, undertake rail-to-vessel transshipments up to four times, and enter or exit customs transit regimes up to 10 times. A high level of fragmentation along the corridor makes it challenging to manage this complexity, with multiple railway undertakings, shipping lines, port authorities, customs authorities in countries across the income and economic integration spectrum, and national and supranational decisionmaking and coordination entities involved. Making this system work efficiently is among the most daunting development challenges in global logistics. Yet the potential rewards from developing the TCTC are equally remarkable. The TCTC offers a differentiated—and invariably strategic—value proposition to the countries that comprise it. For the five nations of Central Asia, the TCTC is a lifeline connection to global markets for all freight, as well as an enabler, in conjunction with complementary policies beyond transportation and logistics alone, of long-term economic diversification. For Türkiye and the nations of the South Caucasus, the TCTC is a more direct connection to Central and East Asian markets for all freight. For East Asia and the European Union, the TCTC is a discretionary connection for containerized freight that can strengthen supply chain resilience, deepen regional integration, and elevate logistics performance corridorwide. And for all these countries, the TCTC is a vector of economic activity and a potential catalyst of private investment, job creation, and crossborder collaboration, thus offering the opportunity to transform it from a transport corridor into a high-performing economic corridor, including through the creation of new jobs in logistics, transport services, and corridor-linked

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industries. Over time, the TCTC can support economic diversification by enabling new sectors—such as agro-processing, mining and extractives and minerals processing, light manufacturing, and digital logistics—likely to emerge around key nodes and trade flows. The TCTC’s potential is attainable with the right combination of interventions. Developing the TCTC will require, as an initial step, investments in infrastructure to expand, upgrade, and modernize railway and highway links, maritime ports, border crossing points, and inland ports across its length in a highly prioritized and coordinated manner. That is because the majority—92 percent—of the freight currently transported across the Caspian Sea is made up of trade in bulk commodities, such as grain, fertilizer, construction materials, and fuels, for which transport capacity availability at the lowest possible out-of-pocket transportation costs is paramount. Given the corridor’s emerging status, most infrastructure investments are required in the immediate term—for example, through 2030—to address known bottlenecks already at hand; still, additional investments will need to be considered over the medium term—in the 2030s—to address operational constraints expected to become relevant by then. However, as TCTC host countries diversify their economic output, and as shippers in the TCTC terminus countries of East Asia and Europe increasingly turn to the corridor to reach markets for trade in high-value-added or time-sensitive goods, infrastructure provision alone will not deliver the gains in logistics performance needed to attract—and retain—these shippers. Capturing the corridor’s full freight and economic potential will require, in addition, improvements in cross-border collaboration, trade facilitation, and service delivery. Although the reforms and new approaches needed to bring about these latter improvements are urgently needed and should be conceptualized and carried out in the immediate term, their transformational nature suggests they are long term in nature and likely to play out over the next 10 to 15 years, subject to trial and error, sharing of lessons learned, international coordination, and the honing of course-correction decision-making mechanisms. The TCTC is on its way to becoming a viable trade corridor for bulk commodity supply chains. In the face of increasing barriers to Eurasian trade, the TCTC has received increasing policy attention in recent years. This has been accompanied by significant infrastructure investment initiatives by the corridor’s host countries, often with the support of development partners, including international financial institutions such as the World Bank Group. As identified in this report, of the 16 most urgent or consequential infrastructure investments facing the TCTC at present, with an aggregate value of $25.1 billion, 75 percent are either ongoing or expected to launch in the near term. As evidenced by analysis presented in this report, these needed

Main Messages

investments are well targeted and therefore have robust economic viability underpinnings. Although additional investments beyond these 16 highestpriority projects will either be needed or become enabling investment opportunities for host countries to consider, the most relevant of which are also identified in this report, the corridor’s infrastructure investment momentum suggests that the main constraint to the TCTC going forward is unlikely to be a lack of infrastructure. Rather, the corridor’s main constraint going forward is likely to be a lack of performance. The most pressing, yet by its nature long-term, priority for the TCTC is to become a competitive, resilient option for containerized trade; this will require transformational changes to boost corridor performance. Serving containerized markets requires scheduled, time-definite services, with a high degree of reliability, built-in visibility, responsive exceptions management, and secure digitalization. It also requires a rethinking of the transport, transit, and trade processes that govern the corridor’s transit logistics system and the cross-border collaboration mechanisms that necessarily underpin it. In a word, it requires a new paradigm of integration: integration of data, documents, decision-making, investments, and services. Although the TCTC lacks this level of integration at present, international experience with trade corridors elsewhere shows that attaining it is within reach, through targeted action, concerted collaboration, and a long-term outlook with short-term urgency. The report’s main findings and recommendations are as follows: 1. Modeling projections show that with targeted, time-bound, and coordinated infrastructure investments, the TCTC can

• Increase total volumes by 3.6 times and nonoil volumes by 4.5 times by 2040 compared with 2023, enabling regional trade diversification and cutting travel times by half in the process, and

• Uplift gross domestic product by 3.3 percent and increase employment by 2.9 percent across TCTC host countries.

2. Robust infrastructure is the basic entry requirement for any well‑performing corridor, but on its own it is not sufficient to achieve competitiveness in containerized or other forms of time-sensitive or complex logistics. Bulk cargo, the export mainstay of most TCTC host countries, has been sufficient to justify the economic viability of major investments in the TCTC to date. However, viability is not the same as competitiveness.

• To compete for containerized trade, the TCTC must become significantly

faster, more reliable, and competitive in logistics costs, not just physically upgraded.

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• Capturing higher-value containerized freight—which is an important

source of revenue for the railway undertakings and shipping lines of TCTC host countries—is essential for the corridor to become financially sustainable. Achieving this will require operational and regulatory reforms in addition to ongoing infrastructure development.

• Containerized trade entails economic diversification, a major policy goal of all TCTC host countries.

3. Modeling projections show that if, in addition to infrastructure investments, improvements in cross-border collaboration, trade facilitation, and service delivery are attained, by 2040 the TCTC can

• More than double its volume of containers traded between East Asia and

Europe and captured in the Eurasian containerized rail landbridge, the most performance-dependent market segment served by the TCTC, compared with pursuing infrastructure-focused improvements alone, and

• Reduce travel times in the landbridge market by two-thirds compared with a business-as-usual benchmark, sufficient to be competitive in Eurasian containerized rail landbridge logistics, with corridorwide performance implications.

4. To strengthen the TCTC and enable it to function both as a viable corridor for bulk commodity trade and a competitive corridor for containerized trade, host countries should consider championing the following initiatives in the immediate term and for the next 10–15 years:

• Support transport state-owned enterprises (SOEs), particularly railway

SOEs, to strengthen their governance and financial viability, through improved management practices, cost‑to-serve reflective tariffs, clearer public contract frameworks linked to performance and with a built-in ability to course-correct and adapt over time, and greater reliance on private capital and commercial financing, so they can operate more efficiently and sustain long‑term investment. Strengthened SOEs will deliver better services over time and ensure they can maintain and upgrade the TCTC in a sustainable, future‑proof manner.

• Reimagine the corridor’s cross-border logistics governance model by

consolidating the numerous transport and customs transit documents currently needed to move freight from origin to destination into a single, negotiable transport, transit, and trade document or data entry in digital form.

• Pursue a TCTC digitalization strategy based on a federated, “hub-of-hubs”

approach that balances public and private participation, preserves national data sovereignty, and facilitates innovation by private sector service providers or developers with authorized access to the hub-of-hubs platform.

Main Messages

• Establish a joint venture, non-asset-based, fully operationally integrated

railway and trans-Caspian shipping operator for TCTC containerized shipments, owned by the lead asset-based railway undertakings and transCaspian shipping lines in the corridor’s host countries, to provide tailored transportation services, and pursue close collaboration agreements on operations with lead asset-based railway undertakings of the TCTC terminus countries and TCTC Black Sea and Caspian Sea maritime ports.

• Empower the joint venture operator, as a non-asset-based logistics service provider, to achieve world-class performance in shipment origination and value creation for third-party logistics service providers and beneficial cargo owners, with strong integration with other non-asset-based operators active in Eurasian logistics, particularly those domiciled in TCTC terminus countries.

• Change the trajectory of cross-border collaboration in the TCTC by

adopting a three-pronged approach, which this report refers to as the TCTC Assessment and Response Structure (TARS). The objective of TARS is to fill gaps in collaboration that persist in the TCTC despite numerous existing entities partially or fully devoted to this purpose. TARS has three mutually reinforcing components: (1) a verifiable measurement function to establish a single version of the truth about what goes on in the corridor; (2) a Private Sector Advisory Committee that goes beyond current efforts in public-private collaboration by more meaningfully involving private entities in the planning and decision-making process through the hands-on exchange of insight, data, and information, with commitment on both sides to follow up over time, thereby closing the feedback loop; and (3) a periodic intergovernmental policy dialogue platform, where TCTC host countries or groups of countries, or entities belonging to those countries, propose actions at the level of heads of state or equivalent and hold each other accountable for carrying them out.

Looking forward, further strengthening the analytical foundations of the TCTC can support more informed decision-making and help align investments, policies, and operational improvements. Although the report provides a comprehensive assessment of the TCTC’s freight and economic potential based on current data and modeling tools, further analytical work— such as deeper firm-level analysis, more granular performance diagnostics, and expanded resilience assessments—could help refine the collective understanding of mechanisms through which corridor improvements translate into economic outcomes. Such efforts would benefit from contributions across a wider set of stakeholders, including governments, corridor institutions, the private sector, and development partners, given the data requirements and cross-border nature of the corridor.

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Overview Introduction The Trans-Caspian Transport Corridor (TCTC), also known as the Middle Corridor, is a multimodal trade corridor connecting Central Asia, East Asia, the South Caucasus, Türkiye, and the rest of Europe (map O.1). It is made up of railway networks, road links, maritime shipping across the Caspian and Black Seas, inland logistics nodes, and border crossing points, all operating across multiple jurisdictions and institutional systems. The corridor’s geographic reach, modal diversity, and operational fragmentation make it one of the most complex trade corridors globally. At the same time, these characteristics underpin its strategic importance, because the TCTC spans regions that are central to evolving global trade patterns and supply chain reconfiguration. This report examines the corridor’s freight and economic potential, assesses its constraints, and proposes a pathway to transform it from a fragmented, emerging transport corridor into a high-performing economic corridor. The TCTC’s strategic value rests on two interrelated dimensions. First, it provides resilience through redundancy in Eurasian trade. In an environment marked by geopolitical uncertainty, climate risks, and supply chain disruptions, the corridor offers additional routing options that can help diversify transport pathways and reduce exposure to shocks. Although volumes remain modest relative to more established routes, the option value of the TCTC is increasing, particularly for countries seeking to broaden connectivity, enhance reliability, and strengthen the resilience of their trade linkages. Second, the corridor

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MAP O.1 Main trade corridors connecting Asia and Europe

Duisburg

ASTANA VIENNA

Karaganda

Shalkar Odessa

Ayagoz

Beineu Aktau

Anaklia

Constanta

Kuryk

Poti TBILISI

Istanbul ANKARA

Batumi

BAKU

Kars

Piraeus

Shymkent

Turkmenbashi Bukhara

Baku

TASHKENT

Khorgos Almaty

TCTC TCTC extensions Sea ports

Turkmenabat

Mersin

Bakhty

Dostyk

Serakhs

Planned sea port

Haifa

Al Faw Jabal Ali

Mundra

Mumbai

Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

generates differentiated benefits across subregions. For Central Asian economies, it serves as a critical connection to global markets, particularly given their landlocked geography. For the South Caucasus and Türkiye, it offers a more direct link to Asian markets and potential gains in transit activity and trade integration. For external partners, including China and the European Union, the TCTC represents a discretionary route for containerized trade, with potential to enhance supply chain flexibility, provided performance improves. Realizing these benefits, however, is conditional on addressing both physical and nonphysical constraints along the corridor, including infrastructure bottlenecks, regulatory fragmentation, and weak operational coordination. The TCTC’s freight system is organized around three main operational segments—the Eastern gateway, the Caspian crossing, and the Western gateway—each performing a distinct role within the broader network. The Eastern gateway, located along the interface between Central Asia and East Asia, acts as the primary entry and exit point for long-distance transit flows and handle a relatively diverse mix of commodities. The Caspian crossing forms the backbone of the corridor, linking ports on the eastern and western shores of the Caspian Sea and facilitating both intraregional trade and flows to global markets,

Overview

albeit with a continued dominance of bulk cargo. The Western gateway, encompassing connections through the South Caucasus and Türkiye to Europe and the Black Sea, serves as the main conduits for trade between corridor countries and external markets. Together, these gateways illustrate the corridor’s segmented but interdependent structure, with each segment contributing differently to overall volume growth, trade composition, and system performance. The purpose of this report is to articulate the TCTC’s potential, diagnose the barriers that may prevent the realization of this potential, and offer options to remove or mitigate these barriers. The report’s messages are intended for the wider community of TCTC freight stakeholders—senior policy makers and leaders in the countries that host the TCTC, as well as in the countries at the corridor’s eastern and western termini; management teams, government owners, and public regulators of freight transport state-owned enterprises (SOEs) domiciled in those countries, such as railways, maritime ports, and shipping lines; international financial institutions and commercial lenders; bilateral and multilateral development partners of the TCTC host countries; the private sector shippers and beneficial cargo owners who use the corridor; and the transport carriers and logistics service providers serving the TCTC across its length. This report builds on the World Bank’s 2023 publication on the TCTC while substantially expanding its scope and analytical depth. It extends country coverage to include all TCTC host economies, updates the baseline year to reflect recent postpandemic and geopolitical dynamics, and lengthens its modeling projections horizon to 2040. It also broadens commodity coverage— most notably by incorporating tanker-based flows across the Caspian Sea— thereby providing a more complete representation of corridor activity. Beyond these updates, the report introduces additional analytical dimensions, including a stronger focus on market segmentation, climate vulnerability, and emissions impacts, while retaining methodological consistency with the modeling framework of the 2023 report. It further advances the analysis by assessing the economic impacts of corridor development, examining the viability of priority infrastructure investments, and mapping complementary investments needed to support the TCTC’s transition from transport corridor to economic corridor. Finally, it provides deeper analysis of institutional and operational issues— particularly the role of SOEs, trade facilitation, digitalization, and cross-border coordination—thereby offering a more comprehensive and forward-looking assessment of the corridor’s development pathway. The report does not seek to provide investment-ready project appraisals or prescriptive reform blueprints at the country level; rather, it offers an analytical framework and evidence base to inform decision-making by governments, corridor institutions, the private sector, and development partners.

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Main Findings Against this background, 10 main findings emerge from the report. Finding 1: The TCTC has the potential to serve as an engine of growth, generating measurable economic gains, including increases of approximately 3.3 percent in gross domestic product (GDP) and 2.9 percent in employment across its host countries—provided that appropriate investments are undertaken alongside complementary policy, institutional, and operational reforms. Investing in the TCTC has the potential to generate meaningful economic benefits across Central Asia, the South Caucasus, and Türkiye, primarily through improved connectivity and reductions in trade and transport costs. Macroeconomic modeling indicates that all participating countries experience positive, although differentiated, impacts on GDP and employment. On average, the long-run increase in GDP across corridor economies is estimated at approximately 3.3 percent (refer to table O.1). Larger economies, such as Kazakhstan and Türkiye, are projected to register the largest absolute gains, reflecting their economic scale and central position within the corridor network. In contrast, smaller and landlocked economies—including Armenia and the Kyrgyz Republic—are expected to experience higher proportional gains, reflecting the outsized impact of improved connectivity on relatively constrained logistics systems. Employment effects are also positive across all host countries, leading to a 2.9 percent TCTC-wide increase, with the strongest growth observed in construction, trade, and business services, alongside spillovers into manufacturing, transport, and agrifood sectors. Host countries located at relatively longer distances from the corridor’s core sections, such as Tajikistan, are expected to benefit from reduced transport costs and improved access to regional markets, illustrating the broad-based effects associated with networkwide connectivity improvements. TABLE O.1 Country-level GDP impacts from TCTC development

Country

% GDP increase (long run)

% Employment increase (long run)

Equivalent compounded annual GDP growth rate (% over 10 years)

Absolute change in GDP ($, millions)

Armenia

3.40

3.90

0.33

873

Azerbaijan

0.43

0.66

0.04

326

Georgia

3.61

0.79

0.36

1,197

Kazakhstan

2.22

3.19

0.22

6,141

Kyrgyz Republic

4.83

3.97

0.47

735

Tajikistan

0.31

0.45

0.03

Türkiye

4.11

4.38

0.40

47,137 791

Turkmenistan

1.25

1.52

0.12

Uzbekistan

0.70

0.40

0.07

749

All countries

3.30

2.90

0.33

57,988

Source: Original table for this publication. Note: GDP = gross domestic product; TCTC = Trans-Caspian Transport Corridor.

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Overview

The development of the TCTC can contribute to both climate mitigation and resilience—reducing transport-related greenhouse gas emissions by approximately 3.2 percent while enhancing the corridor’s capacity to manage climate and natural hazard risks—provided that investments incorporate resilience considerations and are complemented by improvements in system performance and coordination. Finding 2: Trade across TCTC economies is expected to grow strongly—1.5 times by value and 60 percent by volume between 2023 and 2040. Nevertheless, structural constraints persist, limiting the pace of diversification toward higher-value products. Trade modeling suggests that trade across the TCTC host countries is likely to grow 1.5 times in value and 60 percent in volume between 2023 and 2040, but with diverging country trends (refer to figure O.1). The structure of this growth reflects persistent underlying constraints. Export baskets remain concentrated in hydrocarbons, metals, and other bulk commodities, and higher-value trade— such as machinery, electronics, and processed goods—expands from a relatively low base. Although the share of higher-value commodities is projected to increase over time, their use of the corridor itself remains limited in relative terms. Trade costs also remain elevated compared with comparator regions, reflecting geography, institutional fragmentation, and logistical inefficiencies. As a result, although trade volumes increase, the pace of structural transformation remains moderate, reinforcing the importance of improving corridor performance to support diversification. FIGURE O.1 Baseline forecast change in trade value, by TCTC host countries, 2023–40 Percent 300

250 20

28 3

100

400 474

ta n is en

Ky Export growth

rk m

Tü rk iy e

n ta is jik Ta

pu bl ic

kh st an za

rg eo G

ja n ai rb

Az e

Ar m

ta n

11 16

150

112

200

Import growth

Source: Original figure for this publication. Note: Bar labels indicate absolute change in billions of US dollars. TCTC = Trans-Caspian Transport Corridor.

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Finding 3: TCTC host countries stand to gain significantly from improving the corridor in terms of trade growth, freight and logistics activity, and trade diversification. Cargo volumes across the TCTC network are projected to expand substantially by 2040 under a development scenario that incorporates planned infrastructure investments and equipment expansion. Specifically, total trans-Caspian volumes are expected to increase by about 3.6 times, from 8.8 million tons in 2023 to 32.1 million tons by 2040. The Eastern gateway—consisting of the main entry and exit points along the corridor’s eastern flank—is projected to grow at a similar pace, increasing from 28.5 million tons to 105.7 million tons, and the Western gateway is expected to expand from 12.1 million tons to around 35.0 million tons over the same period (refer to figure O.2a). When oil and oil products are excluded, the projected growth is even more pronounced. Nonoil volumes could increase by about 4.5 times at the Caspian crossing, 4.1 times at the Eastern gateway, and 5.1 times at the Western gateway, reflecting the corridor’s potential to support diversification toward nonenergy trade (refer to figure O.2b). The composition of cargo also varies across segments of the corridor. The Eastern gateway handles a more diverse mix of commodities, including metals, machinery, chemicals, and equipment, whereas flows through the Caspian crossing and the Western gateway remain more concentrated in oil and other low-value commodities (refer to figure O.3).

FIGURE O.2 Total commodity flows, millions of tons, by TCTC gateway, 2023 and 2040 a. All commodities 28.5

Eastern gateway 8.8

Caspian crossing

12.1

Western gateway 0

b. Excluding oil and oil products 105.7

3.5

Caspian crossing

32.1

4.0

Western gateway

35.0 40

24.1

Eastern gateway

100

120 2023

Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

2040

98.6

15.6 20.5 20

100

120

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Overview

FIGURE O.3 Commodity composition of TCTC gateway flows, 2023 and 2040 a. 2023 Eastern gateway

Caspian crossing

Western gateway

20 20

Eastern gateway

15 0

b. 2040

65 40 60 Percent

100

High value added

Caspian crossing

Western gateway

40 60 Percent

0 Medium value added

Low value added

Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

Finding 4: The TCTC faces significant infrastructure investment needs; the highest-priority, most urgent, and most consequential of these investments, as identified in this report, have an aggregate value of approximately $25.1 billion and are required to relieve key bottlenecks and support corridor performance and growth through 2040. The TCTC faces a set of specific, high-impact infrastructure bottlenecks, which are primarily concentrated in rail segments, port capacity, and maritime links. Addressing the most urgent of these constraints, whose geographic locations span the corridor (refer to map O.2), requires approximately $25.1 billion in investments, predominantly in rail ($22.5 billion), with the remainder focused on ports and maritime systems. These priority investments would also need to be accompanied by complementary investments in feeder roads and logistics equipment, such as rolling stock and short-sea shipping vessels in the Caspian Sea. Notably, a significant share of these highest-priority infrastructure investments is already underway or at an advanced stage of preparation, indicating that the foundation for physical connectivity is being proactively established. Of the 16 most critical infrastructure investments identified by this report, 75 percent are either ongoing or expected to launch in the near term— accounting for 85 percent of aggregate estimated costs—and the rest are firmly embedded in government plans and expected to proceed in the near term. These investments are largely driven by demand from regional, primarily bulk, freight rather than more uncertain transit flows, which strengthens their underlying economic rationale.

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MAP O.2 Most critical rail and maritime port infrastructure investment needs of the TCTC today KAZAKHSTAN

Black Sea

8 1

16 UZBEKISTAN

Caspian Sea

TÜRKIYE

3 IRAQ

KYRGYZ REPUBLIC

10 TURKMENISTAN

2 TAJIKISTAN

Iran, Islamic Rep.

Investment list (in order of estimated size, $)

CHINA

TCTC TCTC extensions

Ongoing?

1. Overland rail crossing of the Istanbul Strait (Bosphorus) (8.2B)

Yes

2. Uzbekistan to Kyrgyz Republic to China railway line (4.7B)

Yes

3. Railway link between Azerbaijan and Türkiye via southern Armenia (2.7B) 4. Divriği to Kars to Georgia border railway line rehabilitation and expansion (1.6B)

Not yet in all three participating countries Yes

5. Moiynty to Kyrgyz railway line (1.4B)

Yes

6. Bakhty to Ayagoz railway line and BCP (1.2B)

Yes

7. Anaklia Port construction (1.2B)

Yes

8. Halkali to Kapikule railway line (1B) 9. Targeted Tashkent to Turkmenbashi railway line rehabilitation (625M)

Yes Not yet

10. Darbaza to Maktaaral railway line (550M)

Yes

11. Baku Port expansion (500M)

Yes

12. Almaty Bypass railway line (315M)

Yes

13. Aktau Port expansion (310M)

Yes

14. Port of Turkmenbashi improvements (285M)

Not yet

15. Poti Port in situ capacity addition (250M)

Not yet

16. Altynkol to Zhetigen railway line (212M)

Yes

Source: Original map for this publication. Note: BCP = border crossing point; TCTC = Trans-Caspian Transport Corridor.

This report further identifies, in a time-bound manner, additional core infrastructure investments that will be required by 2030 and 2040. These interventions are included under the report’s TCTC Development scenario to estimate the impact of infrastructure action on corridor volumes and performance. These investments are individually listed, by host country and time horizon, in appendix B.

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Overview

Finding 5: Core infrastructure investments, as identified in finding 4, should be enhanced by additional, complementary economic activity–enabling investments in linear infrastructure, nodal infrastructure, and logistics equipment—estimated at an initial $30.5 billion, subject to feasibility studies and demand-supply viability assessments—that are in principle critical to translating connectivity gains into broader economic outcomes such as private investment and jobs. Although core infrastructure investments are necessary to address key physical bottlenecks, their full economic impact depends on an additional layer of complementary enabling investments, estimated at approximately $30.5 billion (refer to figure O.4). Prioritized in a time-bound manner over the short (by 2030) and medium (by 2040) terms (refer to appendix D), these investment opportunities include, inter alia, logistics hubs, intermodal terminals, industrial and agro-processing zones, fleet and equipment upgrades, and digital systems. Together, these enabling investments help convert improved connectivity into productive economic activity, supporting value addition, diversification, and stronger local linkages. Without them, the corridor risks functioning primarily as a transit route with limited domestic spillovers. With them, however, countries can capture a greater share of value, fostering the emergence of economic clusters, enhancing productivity, and supporting sustained job creation and regional integration. FIGURE O.4 Priority economic activity–enabling investments in the TCTC through 2040, by host country Investment ($, millions) 30,542

1,915

2,750

510

1,160

1,402

3,775 7,530

Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

bl pu Re z

To t

n Ky rg y

ija

n ta is ik Ta j

eo rg ia G

ye ki

is en Tu rk

Tü r

n ta

an st kh za Ka

is ta n

11,500

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Finding 6: Greater private sector participation is essential to mobilizing investment and improving corridor performance, with significant untapped potential across priority enabling investments. The scale and composition of investment needs—combining approximately $25 billion in priority core infrastructure alone, with additional infrastructure interventions needed in a time-bound manner as identified by this report’s TCTC Development scenario (refer to appendix B)—underscore the importance of diversifying sources of financing and expanding the participation of the private sector in financing, operations, and service delivery. However, current private participation remains concentrated in limited segments, such as trucking and freight forwarding, and core infrastructure and rail operations are largely dominated by SOEs. As shown in figure O.5, there is substantial potential to expand private sector involvement across a range of economic activity–enabling investments through 2040 (appendix D further segregates these investment opportunities by the 2030 [short-term] and 2040 [medium-term] time horizons). Of the initial $30.5 billion in priority economic activity–enabling investments assessed, 66 percent (roughly $20 billion) are considered open to private sector participation. Within this, opportunities are concentrated in areas with clearer revenue streams, including toll-based linear infrastructure (about 53 percent of the investable share), as well as logistics equipment (26 percent) and nodal infrastructure such as terminals and hubs (19 percent). These segments offer the strongest prospects for private investment, particularly where regulatory frameworks and risk allocation mechanisms are sufficiently developed. In addition, public sector projects can mobilize commercial financing depending on project- and entity-level bankability. FIGURE O.5 Private sector participation potential in priority TCTC economic activity–enabling investments through 2040 100 80

$30,542M 34%

60 40

$20,032M

26%

Toll roads (linear infrastructure) 53%

66%

Public sector

Nodal infrastructure Logistics equipment

19%

Railway lines (linear infrastructure)

Open to private sector participation Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

Overview

Realizing this potential will require strengthening the enabling environment, including more predictable regulatory frameworks, improved SOE governance, enhanced transparency, and clearer risk-sharing mechanisms. Targeted reforms in these areas would allow private capital and expertise to play a larger role not only in financing corridor investments but also in improving service quality, operational efficiency, and innovation, thereby ensuring that infrastructure development translates into sustained economic gains. Finding 7: The performance and reform of transport SOEs—especially railways and maritime operators—are central to service delivery in the TCTC and therefore to its overall competitiveness; improving their governance, financial sustainability, and operational efficiency is essential to translating infrastructure investment into reliable, market-aligned logistics. The TCTC’s competitiveness will depend less on how much infrastructure is built and more on how effectively it is operated. Across the corridor, SOEs own and manage most of the critical assets—including rail networks, rolling stock, ports, and trans-Caspian shipping fleets—and are therefore directly responsible for the quality, reliability, and cost of services provided to users. Their operational performance determines whether the corridor can move beyond physical connectivity to deliver reliable, market-facing logistics services. In this sense, infrastructure investments, although necessary, are only as effective as the institutions that operate them. Railway SOEs along the TCTC vary significantly in scale, performance, and institutional maturity, with direct implications for corridor outcomes. At one end, Kazakhstan’s Kazakhstan Temir Zholy operates a large, high-density network (about 16,000 kilometers; approximately 303 million tons) that functions as the corridor’s core backbone and shows comparatively stronger asset utilization and progress toward commercial financing. At the other end, smaller but strategically critical systems such as Georgian Railway (about 1,400 kilometers; 13.7 million tons) demonstrate high utilization and relatively advanced governance and financial practices despite their modest size. Midsize systems—including Uzbekistan Railways (about 6,100 kilometers; 103 million tons) and Azerbaijan Railways (about 2,100 kilometers; 18.5 million tons)—play key regional connector roles but remain in transition, with ongoing reforms in governance, tariffs, and operational systems. In contrast, Türkiye’s Turkish State Railways, although large in network scale (about 13,000 kilometers), carries comparatively lower freight volumes (approximately 26 million tons), reflecting a system oriented toward passenger service and with untapped freight potential despite ongoing reforms such as sector unbundling. This diversity highlights that corridor performance is shaped not only by infrastructure but also by the institutional and operational capacity of these systems, with outcomes often constrained by weaker segments and uneven reform progress.

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A review of railway SOEs along the TCTC points to three priority reform areas:

• Governance remains a key area for improvement, because variations in

mandates, accountability frameworks, and decision-making autonomy influence operational efficiency and investment outcomes. Strengthening ownership structures, professional management, and oversight can support greater commercial discipline, closer alignment with demand, and more effective asset utilization.

• Financial sustainability and bankability are important enablers of long-term

performance, because many SOEs operate under structural constraints such as non-cost-reflective tariffs, reliance on public support, and limited access to long-term financing. Enhancing financial transparency, improving funding predictability, and gradually strengthening pricing frameworks can help position SOEs to better mobilize investment, access commercial finance, and engage with private partners.

• Operational efficiency and organizational capacity present opportunities for

further gains, because improvements in asset management, planning, and coordination can help increase throughput and reliability. Strengthening organizational structures, asset governance, data systems, and cross-border coordination can support more consistent and market-responsive service delivery.

SOE reform is a prerequisite for meaningful private sector participation rather than a substitute for it. Well-governed, financially viable, and operationally efficient SOEs are better positioned to partner with private actors, attract investment, and support competitive service provision. Where these conditions are not in place, risks remain high, and private participation is limited. Finding 8: Performance matters to TCTC. If infrastructure and economic activity–enabling investments are combined with reforms and improvements in trade facilitation, service delivery, and cross-border collaboration, the corridor is expected to be competitive in its most performance-driven market segment—the Eurasian containerized rail landbridge market—and, by extension, in other containerized and complex, time-sensitive segments. The Eurasian containerized rail landbridge—the movement of containerized freight between East Asia and Europe by rail (and in the case of the TCTC, including, in addition, one or more short-sea shipping connections)—is the most performance driven of all market segments served by the TCTC. That is because the routing of freight shipments between East Asia and Europe is discretionary, with multiple modal, pathway, and service-type options available. The only way for the TCTC to compete in this market is to increase its logistics competitiveness relative to alternatives.

Overview

The TCTC is not yet competitive as a Eurasian rail landbridge. It offers, on average, longer delivery lead times at higher out-of-pocket transport costs than the sea freight routing options that dominate East Asia-Europe trade. Only when the TCTC is able to consistently provide shorter and more predictable delivery lead times will TCTC-based routing options begin to offer a total logistics costs tradeoff compared with sea freight routes door to door, even if the out-of-pocket unitary transport costs of rail freight are inherently higher than those of sea freight in Eurasian intercontinental logistics. Modeling findings suggest that through improvements in trade facilitation, service delivery operations, and cross-border collaboration, the TCTC can be competitive in the Eurasian rail landbridge market, with the possibility of reaching average East Asia-Europe door-to-door delivery lead times in the order of 18–19 days (depending on the specific origin-destination pair route) by 2040, down from current average door-to-door lead times in the range of 47–50 days (compared with average sea freight supply chain door-to-door delivery lead times in the 45-day range). Modeling findings further suggest that the volume impact of attaining these improvements would be significant. Specifically, containerized landbridge volumes along the TCTC are expected to be more than twice as large as those under a scenario in which these improvements are not attained and the TCTC’s development remains primarily based on infrastructure expansion. International experience with other landbridge markets, such as the mini-landbridge market of North America, suggests that the benefits of attaining competitiveness in the Eurasian landbridge are likely to spill over into other containerized and operationally demanding market segments served by the TCTC, such as for regional and intraregional trade. This in turn is expected to be among the necessary enablers for TCTC host countries to attain their economic diversification goals. Finding 9: Improving logistics performance in the TCTC will necessarily entail a new approach to trade facilitation and operations. This report argues that this should ideally be rooted in integration, supported by digitalization: (1) integration of multiple corridor documents into a single Transport, Transit, and Trade (T3) document or data entry from origin to destination; and (2) integration of containerized rail transport and shipping operations into a joint-venture non-asset-based railway and shipping undertaking owned by core host countries. A typical Eurasian landbridge shipment along the TCTC enters and leave customs transit regimes 10 times between origin and destination, each requiring a customs transit declaration document. It also requires five transport contract of carriage documents, known as consignment notes, and two maritime

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bills of lading. Additional documents, such as truck transit permits and custom payment guarantee documents, may be required. This is a highly redundant and inefficient process that increases delivery lead times and makes them less predictable while also increasing trade costs. Drawing on international experience, including in Eurasian logistics elsewhere, the TCTC has the opportunity to reimagine its transport and customs transit governance model by integrating all of these previously listed documents into a single T3 document or data entry. In addition to facilitating customs transit and transport service contracts, a T3 document would be negotiable, thus facilitating trade by allowing shippers to use the document for trade finance purposes or to sell their products while en route. Documentation is only one of two critical dimensions in service delivery. The other is the way transportation and cargo handling and distribution services are offered, priced, provided, and regulated. To attain improvements in service delivery in the face of fragmentation—with multiple railway undertakings and trans-Caspian shipping lines involved—the TCTC has the opportunity to integrate operations into a single joint-venture non-asset-based containerized railway and trans-Caspian shipping operator, ideally owned by the lead asset-based railway and trans-Caspian shipping SOEs in the corridor: those in Azerbaijan, Georgia, Kazakhstan, and Türkiye. This would facilitate shipment handovers between carriers, modal interfaces, pricing and routing optimization, exceptions management, shipment origination, and customer service. Although the need to transform the TCTC’s transport and customs transit governance model and better integrate its transport service operations is urgent, and therefore measures to address it should be taken by host and terminus countries in the immediate term, international experience suggests that these actions are likely to be a long-term effort that can play out over a period of years, subject to trial and error, pilot programs, and course correction along the way. Finding 10: Performance improvements will further require a new level of cross-border collaboration. This should ideally address current gaps in (1) availability of widely trusted market and operational data on corridor activity, (2) meaningful collaboration between public and private freight stakeholders, and (3) ownership by host countries of the process of facilitating joint action on the corridor and holding each other accountable for carrying it out. There is no shortage of cross-border collaboration mechanisms in the TCTC. They include initiatives by intergovernmental organizations, ratified intergovernmental agreements, multilateral cooperation platforms, business cooperation initiatives, industry associations, and joint ventures. More than 20 such mechanisms are identified in this report, on a nonexhaustive basis (refer to appendix E).

Overview

Yet, testimony from private sector entities on the corridor’s front lines, including multinational carriers and third-party logistics service providers, shows that perceptions remain that logistics services along the TCTC are unreliable and that coordination efforts to address this are either insufficient or lacking. The report finds three collaboration gaps that stand out: (1) lack of a single version of the truth as to what goes on in the corridor in terms of key dimensions of corridor activity such as volumes and demand, bottlenecks and supply, performance, and pricing, with entities and stakeholders instead relying on multiple estimates of the situation on the ground, which are often significantly different from each other or suffer from representativeness, methodological, or robustness gaps and are thus unable to be verified and elicit trust; (2) insufficiently deep forms of public-private collaboration in logistics planning and decision-making specifically; and (3) insufficient clarity as to how best to promote joint action by host countries in corridor development. To address this, the report proposes a three-pronged approach that it calls the TCTC Assessment and Response Structure (TARS), consisting of (1) a verifiable measurement function to establish a single version of the truth as to basic, policyrelevant aspects of corridor activity; (2) a Private Sector Advisory Committee to act as a reality check on corridor performance and a critical source of insight, data and information, and advice for public sector leaders; and (3) a periodic Intergovernmental Policy Dialogue Platform owned by host countries, where host countries, groups of host countries, or entities belonging to those host countries propose actions and hold each other accountable for carrying them out. Implementing TARS does not necessarily entail the creation of new institutions. Rather, efforts should ideally build on what exists while having a clear focus on performance improvement and addressing gaps in current practice.

Sequenced and Time-Bound Actions This report identifies a sequenced and time-bound set of actions required to translate the TCTC’s potential into realized economic outcomes, distinguishing between near-term priorities through 2030, to be undertaken in the 2020s, and medium-term actions through 2040, to be undertaken in the 2030s (refer to figure O.6). These recommendations reflect the central finding of the report: although targeted infrastructure investments are necessary to unlock capacity, sustained gains in competitiveness, freight capture, and economic impact will depend equally on performance improvements and institutional transformation across the corridor.

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Taken together, the recommendations highlight three mutually reinforcing areas of action:

• First, priority infrastructure investments—many already underway—should be completed and complemented by additional targeted investments to address residual bottlenecks;

• Second, economic activity–enabling investments should be advanced to

support the transition from a transport corridor to an economic corridor; and

• Third, and most critically, transformational reforms in corridor governance,

operations, and service delivery will be required over time to ensure that infrastructure development translates into reliable and competitive marketfacing logistics services.

FIGURE O.6 Sequenced and time-bound actions 2020s Core infrastructure investments

2030s

Undertake 16 highest-priority core infrastructure investments identified by this report, with aggregate estimated cost of ~$25B (summarized in map O.2 in the Overview; investment-specific time horizons and other details shown in table 4.1 in chapter 4) Undertake additional core infrastructure investments identified under the report’s TCTC Development 2030 scenario (appendix B)

Undertake additional core infrastructure investments identiﬁed under the report’s TCTC Development 2040 scenario (appendix B)

Economic activity– enabling investments

Assess as to feasibility and, if warranted, implement priority economic activity–enabling investments identiﬁed by this report through 2040 (country- and time-horizon-speciﬁc list of investment opportunities shown in appendix D)

Transformational reforms

• Strengthen corporate governance, bankability, organizational streamlining and asset governance, and independent regulation of railway, shipping, and maritime port SOEs (finding 7 in the Overview; details in chapter 6) • Negotiate, test, and ultimately adopt, operationally and legally, a single Transport, Transit, and Trade (T3) document for TCTC operations (finding 9 in the Overview; details in chapter 7) • Establish or more formally empower a non-asset-based joint venture containerized railway and trans-Caspian shipping operator that is operationally integrated with the asset-based carriers that comprise it (finding 9 in the Overview; details in chapter 7) • Build consensus for, adopt, and fine-tune, through feedback, three TARS prongs (finding 10 in the Overview; details in chapter 8)

Source: Original figure for this publication. Note: SOEs = state-owned enterprises; TARS = TCTC Assessment and Response Structure; TCTC = Trans-Caspian Transport Corridor.

Abbreviations ABC

activity based costing

ADB

Asian Development Bank

ADY

Azerbaijan Railways

AIIB

Asian Infrastructure Investment Bank

Andean Comm.

Andean Community of Nations

APIs

application programming interfaces

ASCO

Azerbaijan Caspian Shipping Company

ASEAN

Association of Southeastern Asian Nations

AZCON

Azerbaijan Transport and Communications Holding

BCP

border crossing point

BoL

bill of lading

B-READY

Business Ready

BSEC

Black Sea Economic Cooperation

BTK

Baku-Tbilisi-Kars

CAREC

Central Asia Regional Economic Cooperation

CASCA+

Central Asia-South Caucasus-Anatolia

CCTT

International Coordination Council for Trans-Eurasian Transportation

CIM/SMGS

International Convention Concerning the Carriage of Goods by Rail/Agreement on the International Goods Transport by Rail

CIS

Commonwealth of Independent States

CMR

Convention on the Contract for the International Carriage of Goods by Road

CPKC

Canadian Pacific Kansas City

CRCT

China Railway Container Transport Corporation Ltd.

CRE

China-Europe Railway Express

DTC

Digital Trade Corridor

EAC

East African Community

EAD

estimated annual direct damage

EAEU

Eurasian Economic Union

EBRD

European Bank for Reconstruction and Development

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Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

ECA

Europe and Central Asia

ECO

Economic Cooperation Organization

ECOTA

ECO Trade Agreement

ECOWAS

Economic Community of West African States

eFTI

Electronic Freight Transport Information

eIDAS

Electronic Identification, Authentication, and Trust Services

EIRR

economic internal rate of return

ERAI

Eurasian Rail Alliance Index

ERP

enterprise resource planning

ESG

environmental, social, and governance (framework)

ESMS

environmental and social management system (framework)

European Union

FAF

Freight Analysis Framework

FBL/eFBL

International Federation of Freight Forwarders Associations Bill of Lading

FEU

40-foot equivalent unit

FIATA

International Federation of Freight Forwarders Associations

feasibility study

GCC

Gulf Cooperation Council

GDP

gross domestic product

GHG

greenhouse gas

GLEIF

Global Legal Entity Identifier Foundation

Georgian Railway

GTAP

Global Trade Analysis Project

GVC

global value chain

higher sea freight rates

IBRD

International Bank for Reconstruction and Development

ICD

inland container depot

ICS2

Import Control System 2

IDSA

International Data Spaces Association

IFC

International Finance Corporation

IFI

international financial institution

IFRS

International Financial Reporting Standards

IMCs

intermodal marketing companies

IsDB

Islamic Development Bank

ISO

International Organization for Standardization

joint venture

KMTF

Kazmortransflot

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Abbreviations

KTZ

Kazakhstan Railways

KZ-UZ

Kazakhstan-Uzbekistan

LCL

less-than-container-load

LEI

Legal Entity Identifier

MAICs

multiannual infrastructure contracts

MERCOSUR4

Mercado Común del Sur (Southern Common Market)

MIGA

Multilateral Investment Guarantee Agency

MLES

Model Law on Electronic Signatures

MLETR

Model Law on Electronic Transferable Records

MLIT

Model Law on the Use and Cross-Border Recognition of Identity Management and Trust Services

MMT RDM

Multimodal Transport Reference Data Model

MTO

multimodal transport operator

NCDs

negotiable cargo documents

NCTS

New Computerized Transit System

NVR

no volume recorded

origin-destination

OECD

Organisation for Economic Co-operation and Development

OPEC

Organization of the Petroleum Exporting Countries

PPPs

public-private partnerships

PSAC

Private Sector Advisory Committee

PSO

public service obligation

SAARC

South Asian Association for Regional Cooperation

SCO

Shanghai Cooperation Organization

SMEs

small- and medium-size enterprises

SOE

state-owned enterprise

status quo

TARS

TCTC Assessment and Response Structure

TCDD

Turkish State Railways

TCTC

Trans-Caspian Transport Corridor

TCTR

Trans-Caspian Trade Route

TCTC development

TDY

Turkmenistan Railways

TEU

20-foot equivalent units

TIR

Transports Internationaux Routiers

TITR

Trans-Caspian International Transport Route

Tajikistan

TK-BG

Türkiye-Bulgaria

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TRACECA

Transport Corridor Europe–Caucasus–Asia

TCTC stretch

TS-HR

TS with higher sea freight rate

TSI

Technical Specifications for Interoperability

TTFA

Transit Transport Framework Agreement

Transport, Transit, and Trade

UIC

International Union of Railways

UKC

Uzbekistan-Kyrgyz Republic-China

UMIC

upper-middle-income countries

UN/CEFACT

United Nations Centre for Trade Facilitation and Electronic Business

UNESCAP

United Nations Economic and Social Commission for Asia and the Pacific

USMCA

United States-Mexico-Canada Agreement

UTLC ERA

United Transport and Logistics Company-Eurasian Rail Alliance

UTY

Uzbekistan Railways

Uzbekistan

vLEI

verifiable Legal Entity Identifier

WCO DM

World Customs Organization Data Model

WTO

World Trade Organization

All dollar amounts are US dollars unless otherwise specified.

Introduction: Purpose and Structure of the Report

Eurasia’s economic prosperity is highly dependent on trade, which for centuries has linked its countries. More recently, the past three decades have seen major transformations in this region, including the rise of East Asia as a global manufacturing powerhouse, the transition of formerly centrally planned economies to market-based systems, and the economic consolidation and geographic expansion of the European Union, to name a few. Trade was a core component of these transformations. Yet today this system is under strain from supply chain disruptions, heightened calls for protectionism, a generalized need for new drivers of growth, and the impacts of changes in climate. To safeguard trade, promote gains in prosperity, and foster international integration, the countries of East Asia, Central Asia, the South Caucasus, and Europe seek to invest in and build alternative trade and transport links to supplement existing and legacy ones. Among these, the Trans-Caspian Transport Corridor (TCTC), also known as the Middle Corridor, is the most viable and has the highest potential. The TCTC’s transport, trade, and economic potential is both considerable and achievable. This report argues that the TCTC has significant potential to facilitate trade and capture greater freight volumes and in the process spur economic activity, incentivize private investment, and generate jobs. The report also argues that attaining these benefits to their fullest extent is only achievable if the corridor’s current limitations in infrastructure provision, trade facilitation, service delivery, and decision-making mechanisms are addressed at the right time, with sufficient investment backing, and in the right sequence, with prioritized and coordinated action across borders. 1

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The purpose of this report is to articulate the TCTC’s potential, diagnose the barriers that may prevent the realization of this potential, and offer options to remove or mitigate these barriers. The report’s messages are intended for the wider community of TCTC freight stakeholders—senior policy makers and leaders in the countries that host the TCTC, as well as in the countries at the corridor’s eastern and western termini; management teams of freight transport stateowned enterprises domiciled in those countries, such as railways, maritime ports, and shipping lines; international financial institutions and commercial lenders; bilateral and multilateral development partners of the TCTC host countries; and the private sector shippers and beneficial cargo owners, transport carriers, and logistics service providers serving the TCTC across its length. The report is structured in eight interrelated chapters. Chapter 1 articulates the differentiated role of the TCTC for the countries that comprise it, discusses the macroeconomic context and trade dynamics of TCTC host countries, and links these countries’ economic aspirations with the corridor’s value proposition. Chapter 2 diagnoses the TCTC’s current capacity constraints, the extent to which TCTC infrastructure is exposed to climate hazards, and some of the key challenges facing the corridor’s operating environment. Chapter 3 quantifies the TCTC’s short- and medium-term freight capture potential under different policy-relevant investment and market scenarios, as well as the wider economic benefits that development of the TCTC would generate for the corridor’s host countries. Chapter 4 further drills down into understanding the TCTC’s freight capture potential by focusing on the most performance-dependent TCTC market segment: the Eurasian containerized rail landbridge; in so doing, chapter 4 maps the most urgent and consequential infrastructure investments facing the TCTC at present and assesses their in-principle economic viability. Chapter 5 defines in concrete terms what it means—and what it would take—for the TCTC to transition from a transport corridor to an economic corridor, including a countryby-country mapping of the key enabling investments that would be necessary to achieve this transition. Taken together, the findings from chapters 2, 3, 4, and 5 show that the most critical challenge facing the TCTC going forward is unlikely to be a lack of infrastructure but a lack of performance. Chapter 6 assesses the organizational performance of the main state-owned transportation enterprises serving the TCTC, with an emphasis on railway undertakings, and suggests options to strengthen it. Chapter 7 discusses the TCTC’s trade facilitation, digitalization, and operational limitations and offers actionable long-term recommendations to reset the corridor’s trajectory on these dimensions as essential drivers of performance. Chapter 8 closes by discussing the corridor’s limitations in cross-border collaboration and by proposing a threepronged mechanism to deepen collaboration and fill key gaps left by existing mechanisms in a way that still builds on what exists. Taken together, the recommendations offered by chapters 6, 7, and 8 aim at long-term yet urgently

Introduction: Purpose and Structure of the Report

needed, transformational rather than incremental improvements in TCTC performance. This report expands on the World Bank’s (2023) publication on the TCTC, while sharing many of its analytical building blocks. The present report both builds on and differs from the 2023 publication in the following respects:

• Country coverage was expanded. Whereas the 2023 report centered on

Azerbaijan, Georgia, and Kazakhstan, the present report includes, in addition, the remaining nations of Central Asia—the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan—as well as Armenia and Türkiye, thus offering full coverage of what it defines as the TCTC host countries.

• The base year was updated, and the analytical temporal horizon and commodity

flow coverage were expanded. Whereas the 2023 report used 2021 as the base year and developed freight flow projections to 2030, the present report updates its assessment of the current situation by using 2023 as the base year—a particularly important update because this new base year controls for postpandemic dynamics and recent geopolitical shocks. Furthermore, the present report develops freight flow projections for both 2030 and 2040. Its commodity flow coverage was widened compared with the 2023 report and now includes oil and derivative products transported by tanker vessels across the Caspian Sea (and onward via the railway network, the Baku-Tbilisi-Ceyhan and Baku-Supsa pipelines, or both), thus more accurately reflecting the pivotal role the TCTC plays (and is expected to continue to play) in regional energy markets.

• Additional dimensions of freight and infrastructure analysis were introduced.

Beyond geographic and sectoral scope expansion, the present report puts greater emphasis on market segmentation in all quantitative assessments compared with the 2023 report. It also further assesses the climate vulnerability of TCTC infrastructure and the transportation emissions impact of corridor interventions.

• The same trade and freight flow model and software were used for both reports.

This ensures analytical consistency, with both reports using a common set of data inputs and broadly similar modeling assumptions.

• Infrastructure investment viability, wider economic benefits, and complementary

enabling investments are considered. Compared with the 2023 report, the present report quantifies the broader economic impacts of corridor improvements—including with respect to gross domestic product growth, job creation, and trade expansion—offering a more comprehensive view of the TCTC’s long-term potential. It also (1) assesses the in-principle economic viability of what the report identifies as the 16 most urgent and consequential infrastructure investments facing the corridor today and (2) maps key

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complementary enabling investments that can expand the corridor’s economic impact.

• New deep-dive analyses on priority topics are featured. The report offers more

detailed assessments of three priority topics: (1) state-owned enterprises, with an emphasis on railway undertakings; (2) integration in trade facilitation, digitalization, and operations; and (3) cross-border collaboration.

• Different headline volumes reported. As a result of the previously mentioned

changes in base year, temporal horizon, and commodity coverage, the TCTC headline current volumes and volume projections shown by the two reports differ while still being mutually consistent. These differences are explained in box I.1.

BOX I.1 Comparative analysis of headline freight flow findings in World Bank (2023) and this report World Bank (2023) was the first World Bank publication dedicated to the Trans-Caspian Transport Corridor (TCTC). One of that report’s main contributions was its comprehensive modeling of the TCTC to shed light on the corridor’s freight capture and logistics potential. Using trade forecasting and freight flow assignment modeling techniques over a detailed multimodal transport network with global scope, it estimated the corridor’s volume size, commodity mix, and routing composition for base year 2021 and projected expected volumes and related performance parameters under different scenarios for 2030. The current report both updates and expands the 2023 modeling findings. It does this by (1) using the same modeling methodology as World Bank (2023) with a more recent base year of 2023 instead of 2021; (2) expanding the scenario projection horizon to 2040 in addition to 2030, thus more fully capturing the corridor’s long-term potential; (3) expanding the commodity coverage to include oil and oil products transported by tanker vessels across the Caspian Sea (the 2023 report included only oil and oil products transported in nontanker vessels across the Caspian Sea, which is a small subset of this trade); and (4) more comprehensively considering potential (planned or expected) interventions under what the 2023 report called the corridor’s operationalization scenario and what the present report refers to as the TCTC Development or TD scenario (refer to chapter 3 and appendix B for details), particularly with regard to major infrastructure investments whose preparation maturity or implementation status has advanced since the publication of World Bank (2023). The result of these extensions is higher current and projected total TCTC volumes (including oil and oil products) in this report compared with its predecessor, mainly resulting from the addition of the sizable trans-Caspian tanker market (refer to figure BI.1.1). The present report’s nonoil volumes projection for 2030 is equivalent to that of World Bank (2023). For both total and nonoil volumes, the present report’s projections further extend to 2040. Continued

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Introduction: Purpose and Structure of the Report

BOX I.1 Comparative analysis of headline freight flow findings in World Bank (2023) and this report (Continued) FIGURE BI.1.1 Freight flows across the Caspian Sea a. World Bank (2023)

b. Current report, excluding oil and oil products

c. Current report, including oil and oil products

Freight flow (tons, millions) 40 35 30 25 3.1x 20

Freight flow (tons, millions) 40 35 30 25 3.3x 20 15.6 15 11.4 10 4.5x 3.5 5

Freight flow (tons, millions) 40 3.3x 35 32.1 29.2 30

pm TC

t2 en pm

lo ve de

TC TC

03 t2 en

pm lo

ve de

23 20 ar ye se Ba

TC TC

liz

8.8

3.7

3.6x

11.4

15 10 5 0

25 20 15 10 5 0

Source: Original figure for this publication. Note: MC = Middle Corridor; TCTC = Trans-Caspian Transport Corridor.

Reference World Bank. 2023. The Middle Trade and Transport Corridor: Policies and Investments to Triple Freight Volumes and Halve Travel Time by 2030. Washington, DC: World Bank. http://documents .worldbank.org/curated/en/099111723122527465.

1 Trans-Caspian Transport Corridor: Strategic Promise and Trade Transformation Main Messages

• The Trans‑Caspian Transport Corridor (TCTC), also known as the Middle

Corridor, is a multimodal route linking Asia and Europe. It serves as a vital trade lifeline for landlocked Central Asia, a more direct connection to Asia for the South Caucasus and Türkiye, and a resilience-enhancing option for containerized, high‑value, time‑sensitive trade between East Asia and the European Union.

• To capture the TCTC’s strategic value and realize its full potential, physical

and nonphysical bottlenecks must be addressed. These include infrastructure constraints and upkeep, regulatory and systems bottlenecks, deferred sectoral reform, financial sustainability challenges facing stateowned enterprises, and limitations in cross-border coordination.

• Despite experiencing strong growth momentum, TCTC host countries face

structural constraints such as low job quality, human capital gaps, high trade costs, uneven business environments, and lagging institutional capacity. These issues limit their ability to translate growth into job creation, emphasizing the need for a long-overdue structural reform agenda to support economic growth, build resilience, and fully capture the opportunities presented by the TCTC.

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Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

• The trade patterns of most TCTC host countries remain dominated by

concentrated exports and high trade costs, with only a gradual move toward higher-value goods alongside rapidly expanding intraregional trade.

• Trade between TCTC host countries is forecast to grow significantly

between 2023 and 2040, with intraregional flows projected to nearly triple in value during this period.

• This evolving trade landscape places rising demands on the corridor’s

reliability, cross-border coordination, and service delivery performance, transforming it into an increasingly integrated economic space whose future competitiveness depends on targeted investments, structural reforms, and coordinated policy making.

Introduction The Trans-Caspian Transport Corridor (TCTC) is rapidly emerging as a critical multimodal trade route connecting Asia and Europe. It spans Central Asia, the South Caucasus, and Türkiye. In addition to linking these countries with global markets and with each other via rail, Black Sea and Caspian Sea short sea shipping, and road connections, the TCTC links East Asia with Europe because of their location at the eastern and western ends of the corridor, respectively (refer to map 1.1). On this basis, this report defines the current TCTC host countries as Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, Türkiye, and Uzbekistan. A TCTC beneficiary country, Armenia is not yet a TCTC host country, but it is expected to become one in the future, with direct through links likely to be built and become operational (refer to chapter 4). As such, and considering that its analytical temporal horizon is the 2023–40 period, this report considers Armenia a TCTC host country. Furthermore, the report refers to China, the rest of East Asia, the European Union, and the rest of Europe as TCTC terminus countries.1 Together, these countries form a diverse yet interdependent region whose economic trajectory, development aspirations, populations, consumer and producer markets, competitive advantages, and structural challenges shape the TCTC’s potential as an engine of trade, economic transformation, and regional integration. This chapter introduces the macroeconomic context and development priorities of TCTC host countries as the foundation for understanding the corridor’s strategic role. Capturing the TCTC’s strategic value is achievable—if physical and nonphysical bottlenecks are addressed. The corridor suffers from infrastructure bottlenecks, regulatory and systems bottlenecks, deferred sectoral reform, financial

Trans-Caspian Transport Corridor: Strategic Promise and Trade Transformation

sustainability challenges facing key state-owned enterprises, and cross-border coordination bottlenecks. International experience in corridor development shows that alleviating these shortcomings is possible and highly desirable. It also shows that the bulk of this task can be achieved within the next 15 years, with significant benefits expected from TCTC development by 2040. The TCTC is a multipurpose trade corridor that plays different roles in different countries and subregions. For the five nations of Central Asia, the TCTC is a lifeline connection to global markets for all freight and a physical enabler of trade diversification. For the South Caucasus and Türkiye, the TCTC is a more direct connection to Central and East Asia for all freight, which can boost trade competitiveness and deepen regional integration. For East Asia and the European Union, the TCTC is a discretionary connection for containerized trade that can reduce logistics costs for highly logistics-intense supply chains. And for all host and terminus countries, the TCTC is a vector of economic activity and a potential catalyst of economic diversification, private investment, job creation, and cross-border collaboration.

MAP 1.1 Main trade corridors connecting Asia and Europe

Duisburg

ASTANA VIENNA

Karaganda

Shalkar Odessa

Ayagoz

Beineu Aktau

Anaklia

Constanta

Kuryk

Poti TBILISI

Istanbul ANKARA

Batumi

BAKU

Kars

Piraeus

Baku

Shymkent

Turkmenbashi Bukhara

TASHKENT

Khorgos Almaty

TCTC TCTC extensions Sea ports

Turkmenabat

Mersin

Serakhs

Planned sea port

Haifa

Al Faw Jabal Ali

Mundra

Mumbai

Source: Original map for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

Bakhty

Dostyk

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Structural Reforms in TCTC Host Countries The TCTC host countries have experienced strong growth momentum in recent years, outpacing many global comparators. Average gross domestic product growth surged after 2022, with several countries—including Armenia, Georgia, and the Kyrgyz Republic—recording growth rates above 8–9 percent (refer to figure 1.1), driven by post pandemic recovery, redirected trade and financial flows, and migration.

FIGURE 1.1 Average GDP growth rates, 2014–24 Percent 10 8 6 4 2 0

Average growth (2014–19)

A EC

en is ta n U zb ek is ta n Co nv er ge rs

Tu rk m

Tü rk iy

G eo rg ia Ka za kh Ky st rg an yz Re pu bl ic Ta jik is ta n

–2

en ia Az er ba ija n

Ar m

10 ●

Average growth (2020–21)

Average growth (2022–24)

Source: World Development Indicators (https://databank.worldbank.org/source/world -development-indicators). Note: Convergers includes European countries that have transitioned to high-income status in the past 30 years: Croatia, Czechia, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovak Republic, and Slovenia. ECA = Europe and Central Asia; EU = European Union; GDP = gross domestic product.

Trans-Caspian Transport Corridor: Strategic Promise and Trade Transformation

Despite this strong growth performance, the TCTC host countries face structural constraints—low job quality, human capital gaps and skills mismatches, high trade costs, uneven business environments and macroeconomic management, and lagging institutional capacity—that limit their ability to translate growth into job creation. A long-overdue structural reform agenda is essential to support economic growth, build resilience, and fully capture opportunities from the TCTC:

• Investment‑led growth dominates. Like many middle-income economies, TCTC

host countries have relied primarily on capital accumulation as their core growth engine. However, between 2017 and 2022 this investment‑heavy model delivered fewer quality jobs than expected because of the prevalence of resource‑ and market‑seeking investments and limited diversification in parts of the region.

• Labor market challenges persist. Unemployment generally sits between 5 and

10 percent (refer to figure 1.2), but this masks deeper problems of low productivity and informality. Labor force participation remains below that of high-income European economies.

FIGURE 1.2 Unemployment rates, 2014–24 Percent 16 14 12 10 8 6 4 2

EC A

U zb ek is ta n Co nv er ge rs

U M IC

e Tü rk iy

za kh st an rg yz Re pu bl ic Ky

G eo rg ia

Az er ba ija

Ar m

en ia

2014–19

2020–21

2022–24

Source: World Development Indicators (https://databank.worldbank.org/source/world -development-indicators). Note: ECA = Europe and Central Asia; EU = European Union; UMIC = upper-middle-income countries.

● 11

Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

• Weaker learning outcomes undermine the capacity to support higher-quality job

creation. Structural constraints such as skills gaps and human capital deficits limit upward mobility. Across the region, differences in learning-adjusted years of schooling are reflected in poor human capital quality and labor market outcomes. Learning-adjusted years of schooling remain less than nine years on average. Kazakhstan, Türkiye, and Uzbekistan exhibit stronger learning outcomes, consistent with deeper skill bases and more productive employment structures. Armenia, Azerbaijan, Georgia, and the Kyrgyz Republic show mid-level outcomes, aligned with mixed labor market patterns, whereas Tajikistan reflects more limited human capital accumulation and greater reliance on lower-productivity activities.

• Macroeconomic management is a fundamental enabler. Sound macrofiscal

management is essential to sustaining inclusive growth. Georgia illustrates this with reforms that strengthened public finances and maintained stability, whereas most TCTC economies have kept inflation broadly contained.

• Business environment constraints remain significant. Business Ready indicators show wide disparities across regulatory quality, public services, and operational efficiency among TCTC host countries (refer to figure 1.3). The Kyrgyz Republic and Turkmenistan underperform the most relative to convergers, reflecting weak competition frameworks, low digital adoption, and limited access to finance.

FIGURE 1.3 Business environment and regulatory burdens in TCTC host countries Pillar score 90 80 70 60 50 40 30 20 10

Regulatory framework pillar

Public services pillar

nv er ge rs

U zb ek is ta

en is ta n

Tu rk m

Tü rk iy

Ta jik is ta n

Re pu bl ic

rg yz

za kh st an

G eo rg ia

Az er ba ija

en ia

Ar m

12 ●

Operation eﬃciency pillar

Source: World Bank 2025. Note: World Bank B-READY scores for 2025 range from 0 to 100, with 100 = best performance. B-READY = Business Ready; TCTC = Trans-Caspian Transport Corridor.

Trans-Caspian Transport Corridor: Strategic Promise and Trade Transformation

• Governance and institutional quality remain uneven. Many TCTC economies face gaps in government effectiveness and regulatory quality relative to recent high‑income convergers. Institutional capacity constraints— combined with limited transparency and inconsistent enforcement— raise operational risks, constrain private sector development, and undermine the predictability needed to attract investment and fully leverage the TCTC.

Trade Dynamics Shaping the TCTC TCTC economies share a set of core structural features that shape their growth trajectories. Most TCTC host countries are post‑Soviet transition economies with similar institutional legacies; six are landlocked; and all face geographic, physical, operational, or regulatory constraints that raise trade costs and heighten dependence on neighboring infrastructure and coordinated policy action. Trade across TCTC host countries is being shaped by four reinforcing dynamics: (1) persistent export concentration; (2) high and variable trade costs; (3) a gradual shift from energy commodities to higher-value manufactures and agrifoods, although from a low base and with global value chain (GVC) participation remaining constrained; and (4) fast-growing intraregional flows. Together, these trends raise the stakes for corridor reliability, cross-border coordination, and services performance, especially as they open space for diversification and upgrading. The trade of most TCTC host countries remains undiversified. Export baskets remain narrow in many corridor economies, leaving them exposed to price and demand shocks and limiting movement into more sophisticated, time-sensitive products. This lack of diversification is manifested along three reinforcing dimensions—product concentration, market concentration, and the structure of corridor logistics systems:

• Exports remain concentrated. In half of TCTC countries, the top three goods

exceed half of export value, limiting resilience and product upgrading (refer to figure 1.4).

• Market diversification remains limited. Recent export growth is led by the

European Union; imports are concentrated in a small number of partners, notably China and the European Union.

• Logistics systems favor bulk. Corridor systems are configured for minerals and energy, constraining higher-value, time-sensitive trade without better handling, cold chain, and reliability.

● 13

14 ●

Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

FIGURE 1.4 Top three exports and imports of TCTC host countries, share of total, by value, 2023 a. Top 3 exported goods Nonferrous

Kyrgyz Republic metal ores Machinery Türkiye

Electronics

Cars, parts Machinery

Uzbekistan

Copper

Cotton

Georgia

Oil products Fruits and nuts Nonferrous metal ores

Beverages

Armenia

Precious metals

Kazakhstan

Crude oil

Tajikistan

Fruits and nuts Electronics

Nonferrous metal ores

Precious metals

Cotton

Nonferrous metal ores

Turkmenistan

Radioactive chemicals

Gas

Azerbaijan

Oil products

Crude oil

Gas

Crude oil Oil products

100

Percent

b. Top 3 imported goods Georgia

Machinery

Oil products

Electronics

Türkiye

Machinery

Precious metals

Cars, parts

Azerbaijan

Cars, parts

Machinery

Electronics

Tajikistan

Cars, parts

Kazakhstan

Machinery

Armenia

Precious metals

Turkmenistan

Electronics

Uzbekistan

Cars, parts

Electronics

Cars, parts

Electronics

Cars, parts

Electronics

Cars, parts

Machinery

Kyrgyz Republic

Machinery

Oil products

Machinery

Oil products

Percent 1st export

2nd export

3rd export

Source: Original figure for this publication based on data from UN Comtrade (https://comtradeplus.un.org/).

Trade costs are high in TCTC host countries. Geography and policy frictions keep trade costs elevated and unpredictable, especially for landlocked countries. These geographical constraints limit direct access to international markets, increase transportation costs, and heighten reliance on neighboring countries’ infrastructure and trade policies (ADB and UNESCAP 2024; Arvis et al. 2023).

Trans-Caspian Transport Corridor: Strategic Promise and Trade Transformation

Multiple borders, coordination gaps, and limited multimodal integration amplify time and cost penalties, discouraging upgrading to products that require reliability and standards compliance. Several structural and policy-related factors continue to constrain trade competitiveness and upgrading along the TCTC, including the following:

• Landlocked geography drives structural trade cost penalties. Two-thirds of TCTC economies are landlocked, raising dependence on neighbors’ infrastructure, border regimes, and policies.

• Trade costs are declining but remain elevated relative to peers. Manufacturing

and agriculture trade cost indices declined from 2013–17 to 2018–22 in most TCTC host countries yet remain well above the those of the European Union—and at or above those of Latin America, the Middle East and North Africa, and South Asia, especially for agriculture. In addition, agriculture trade costs exceed manufacturing across the corridor in both periods (refer to figure 1.5).

• Partial convergence in trade costs. Dispersion narrowed in 2018–22—particularly in manufacturing—yet high-cost countries (for example, landlocked Central Asia) still trail corridor leaders (refer to figure 1.5).

FIGURE 1.5 Trade costs in TCTC countries and comparator regions a. Average manufacturing trade costs

Trade cost index

2013–17

ro p

ta n M t n i id n U d ni th Am Af le on gh Ea e C er ar ica an st ib a is an b n ta d n, N ean d an ort d hA Pa f ki ric st a So an , ut h As ia

e iy rk

U zb

Tü

jik Ta

st Ky rg

a rg i Ka

G eo

ba ija

er Az

Ar m

500 450 400 350 300 250 200 150 100 50 0

2018–22 Continued

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Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

FIGURE 1.5 Trade costs in TCTC countries and comparator regions (Continued) b. Average agriculture trade costs Trade cost index

La M

n tin id U d ni Af le t A on gh Ea he me r s C an t ic a is an rib a a ta d n, N bea nd an ort n d hA Pa f ki ric st a, So an ut h As ia

e iy zb

Tü

jik

st kh

ia rg Ka

eo G

ija ba

500 450 400 350 300 250 200 150 100 50 0

16 ●

2013–17

2018–22

Source: United Nations Economic and Social Commission for Asia and the Pacific-World Bank Trade Cost Database (https://www.unescap.org/resources/escap-world-bank-trade-cost-database). Note: The Trade Cost Index quantifies the additional costs incurred in international trade compared with domestic trade, expressed as an ad valorem percentage. TCTC = Trans-Caspian Transport Corridor.

GVC integration is likely to deepen among TCTC host countries, as the trade mix shifts toward higher-value manufactures. Hydrocarbons remain dominant, but recent value gains have been largely price driven rather than volume led, and manufactures and agrifoods are growing from a lower base. This shift hinges on the continued reshaping of corridor logistics and creates an opportunity to deepen GVC participation. This evolving trade composition is reflected in several recent trends across TCTC economies:

• Energy remains dominant, but gains are price led. From 2017 to 2023, the value of energy trade increased by 90 percent ($76 billion to $144 billion), and volumes increased by 18 percent (264 million tons to 311 million tons), indicating that price movements drove growth rather than deeper market penetration (refer to figure 1.6).

• Country examples underline the pattern. Kazakhstan’s crude oil export value

increased by $16.1 billion alongside a $28 per barrel price rise, and Azerbaijan’s gas export value increased by $12.3 billion with a $7.4 per million British thermal unit price increase. Oil and petroleum products accounted for 60 percent of transCaspian trade in 2023.

● 17

Trans-Caspian Transport Corridor: Strategic Promise and Trade Transformation

FIGURE 1.6 TCTC host country imports and exports of select commodities, 2017 and 2023 Value ($, billions)

Value ($, billions)

60 50 40

Export

20 0

10 0 –10 –20

Import

–1

Import

–30 –40

2017 2023 2017 2023 2017 2023 2017 2023 Azerbaijan

Kazakhstan

Türkiye

–2

Turkmenistan

Volume (tons, millions)

2017 2023 2017 2023 2017 2023 2017 2023 2017 2023 Armenia

Georgia

Kyrgyzstan

Tajikistan

Uzbekistan

Volume (tons, millions)

150 100 50

5 Export 0

0 –50 –100

Export

–5

Import 2017 2023 2017 2023 2017 2023 2017 2023 Azerbaijan

Kazakhstan

Oil

Türkiye

Oil products

2017 2023 2017 2023 2017 2023 2017 2023 2017 2023

Turkmenistan

Coal, coke

Import

Armenia

Gas

Georgia

Ferrous ores

Kyrgyzstan

Nonferrous ores

Tajikistan

Fertilizer

Source: Original figure for this publication based on data from UN Comtrade (https://comtradeplus.un.org/). Note: TCTC = Trans-Caspian Transport Corridor.

• Trade in manufactures is increasing from a low base. Trade in machinery, cars, and electronics added $109 billion in value over 2017 to 2023 (versus energy’s $66 billion), with value increasing by 82 percent and volume increasing by 68 percent in that period; these goods now make up about 20 percent of export value in Armenia and the Kyrgyz Republic and about 12 percent in Uzbekistan.

• Momentum is broadening across the corridor. Kazakhstan and Uzbekistan

recorded triple-digit growth in automotive and machinery in 2023 compared with 2017; Türkiye’s exports increased by $11.6 billion in machinery, $7 billion in electronics, and $7 billion in vehicles.

Uzbekistan

18 ●

Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

• Agrifoods sector is also expanding. The agrifoods sector contributed about

one-third of total positive volume growth during 2017 to 2023 and reached 111 million tons by 2023, led by Kazakhstan’s grain and Türkiye’s flour exports.

Momentum is building in intraregional trade. TCTC intraregional trade—defined as trade among TCTC host countries—nearly doubled in volume and more than doubled in value between 2017 and 2023. Large economies are driving totals, and smaller economies are relying on regional markets for a sizable share of their trade. Despite this momentum, TCTC intraregional exports as a share of total exports remain below comparator regions, pointing to continued connectivity and facilitation gaps. The data highlight several important characteristics of intraregional trade across TCTC economies:

• Rapid intraregional trade growth from a low base. Between 2017 and

2023, intraregional volumes nearly doubled, from 29 million tons to 55 million tons (an increase of 90 percent), and values more than doubled from $16 billion to $37 billion (an increase of 138 percent) (refer to figure 1.7).

FIGURE 1.7 Trade between TCTC host countries, 2017 and 2023 Value ($, billions)

Volume (tons, millions)

Value

Volume

0 2017

2023

Transportation Plastic, rubber Textiles, clothing

2017

Chemicals Machinery, electonics Other

Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

2023 Metals Agrifood Minerals

● 19

Trans-Caspian Transport Corridor: Strategic Promise and Trade Transformation

• Different leaders by trade value and trade volume. Türkiye and Kazakhstan

dominate in absolute terms: Türkiye is the top exporter by value ($13 billion in 2023), leveraging its industrial base in machinery and electronics, and Kazakhstan leads in volume (25 million tons), driven by bulk commodity shipments.

• Strong dependence on intraregional markets in smaller economies. For Georgia, the Kyrgyz Republic, and Tajikistan, intraregional trade accounts for around one-third of total trade, underscoring its role in diversification and market access.

• An integration gap relative to peer regions. Intraregional export shares remain below those of the 27 member states of the Association of Southeast Asian Nations, the European Union, and other regions and blocks, indicating significant room for improvements in connectivity and trade facilitation (refer to figure 1.8).

FIGURE 1.8 Intraregional exports as a share of total exports in TCTC and comparator regions EU ASEAN EAC ECOWAS MERCOSUR4 GCC TCTC Andean Comm. SAARC USMCA 0

30 Percent

2012–13

2022–23

Source: Original figure for this publication, based on data from UN Comtrade (https://comtradeplus .un.org/) and national statistics. Note: Andean Comm. = Andean Community of Nations; ASEAN = Association of Southeastern Asian Nations; EAC = East African Community; ECOWAS = Economic Community of West African States; EU = European Union; GCC = Gulf Cooperation Council; MERCOSUR4 = Mercado Común del Sur (Southern Common Market); SAARC = South Asian Association for Regional Cooperation; TCTC = Trans-Caspian Transport Corridor; USMCA = United States-Mexico-Canada Agreement.

20 ●

Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

Economic Aspirations and Development Goals of TCTC Host Countries Across the TCTC, governments articulate ambitious medium-term goals. These goals include sustaining high growth rates, accelerating poverty reduction, strengthening private sector dynamism, and transitioning to higher-value economic activities. Although reform priorities differ across the TCTC, countries are broadly pursuing overlapping agendas focused on diversification, state-owned enterprise restructuring, competitiveness, innovation, and human capital, reflecting varying starting points rather than distinct reform paths. A unifying theme is the desire to avoid the middle-income trap. Growth deceleration, modest productivity gains, and concentrated economic structures threaten countries’ ability to converge with high-income peers. The World Bank’s analysis in Iacovone et al. (2025) underscores that structural reform momentum has slowed, leaving gaps in human capital, governance, competition, and private sector enablers. The TCTC is central to the region’s development for several reasons:

• A platform for diversification. High trade costs and narrow export baskets

constrain resilience. The TCTC, if modernized, can lower trade barriers and connect firms to new markets, enabling diversification into manufacturing, agribusiness, and services.

• A catalyst for job creation. Deeper regional integration boosts demand for

logistics, transport, warehousing, digital services, and valued production sectors that generate more and better jobs than capital-intensive extractives.

• A conduit for foreign direct investment and private sector growth. Predictable,

efficient corridor operations signal stability and attract investment in logistics, manufacturing, energy, and technology—areas in which foreign direct investment inflows remain low across much of the region.

• A mechanism for strengthening governance and institutions. Harmonizing border procedures, upgrading customs, improving regulatory quality, and aligning standards across TCTC countries can help close the region’s institutional performance gaps.

• A route for embedding countries into GVCs. Improved logistics performance,

stronger multimodal integration, and enhanced trade facilitation can help countries move beyond raw material exports and into higher-value regional and global production networks.

The TCTC stands at the intersection of infrastructure, trade, and key drivers of economic transformation. Its promise lies not only in deepening physical connectivity but also in its potential as an enabler of economic integration, resilience, and shared prosperity across the region—including through the creation of new jobs in logistics,

Trans-Caspian Transport Corridor: Strategic Promise and Trade Transformation

transport services, and corridor-linked industries. Over time, the TCTC can also support economic diversification by enabling new sectors—such as agro-processing, mining and extractives and minerals processing, light manufacturing, and digital logistics—likely to emerge around key nodes and trade flows. Realizing this promise will require sustained investment, policy harmonization, and regional cooperation, but the strategic rationale for the TCTC has never been clearer or more compelling. The TCTC generates economic activity in distinct ways along its route, with each subregion playing a different functional role in shaping trade, employment, and logistics demand:

• Kazakhstan and Türkiye anchor the corridor at scale, with Kazakhstan serving

as the TCTC’s largest origin point (4.8 million tons exported across the Caspian Sea in 2023—more than half of all flows) and Türkiye its largest western destination (2.7 million tons imported—more than any other TCTC country and 18 percent above the European Union’s combined Caspian imports). These large volumes support employment in ports, logistics, and transport‑related industries.

• South Caucasus economies play a strategic transit role, especially Azerbaijan, which is a key transit hub for trans‑Caspian oil shipments in particular and a facilitator of trans-Caspian trade in general. Georgia relies on the corridor for commodity‑specific flows—53 percent of its nonferrous metals imports and 20 percent of its mineral product exports move via the Caspian Sea—and Armenia’s volumes remain small but support jobs in warehousing and border logistics and could significantly expand in the future.

• For the landlocked countries of Central Asia, the TCTC is a critical trade lifeline,

enabling access to key markets and promoting regional integration. Kazakhstan moves 38 percent of its nonferrous metal exports and 5 percent of its fuel exports via trans-Caspian shipping; the Kyrgyz Republic uses the trans-Caspian route for 4.4 percent of textiles, 6.8 percent of oil products exports, and 1.4 percent of imports of vehicles and machinery and equipment. Tajikistan relies on the corridor for meaningful shares of food, machinery and equipment, and vehicle imports; Turkmenistan exports 2.2 million tons—more than one-third of nongas exports—via the route; and Uzbekistan exports 388,000 tons (5.1 percent of its total) and imports 461,000 tons (1.6 percent of its total) this way.

• For China and the European Union, the corridor is a niche but strategically

valuable resilience option, offering an alternative path for containerized high‑value and time‑sensitive goods. Volumes remain small relative to their global trade—China shipped 304,000 tons via the Caspian Sea in 2023 (0.2 percent of exports), and the European Union received 2.3 million tons (0.1 percent of imports), but the corridor enhances supply‑chain redundancy, and the participation of China and Europe in the TCTC, especially for trade between them, has the potential to elevate corridorwide performance.

● 21

Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

Trade Outlook for the TCTC Economies Aggregate trade (imports and exports) by all TCTC host countries is forecast to grow 1.5 times in value and 60 percent in volume between 2023 and 2040, albeit with diverging country-specific trends (refer to figure 1.9). Although several economies are set for strong expansion, the region remains anchored by commodity exports that are vulnerable to price dynamics, with higher-value trade growing from a low base. Trade projections suggest that the TCTC economies are likely to experience both continued trade expansion and shifts in the composition and geography of trade flows:

• Although trade is expected to expand overall, country-specific paths diverge. Armenia, the Kyrgyz Republic, Türkiye, and Uzbekistan are expected to lead export expansion, and Kazakhstan, the Kyrgyz Republic, Turkmenistan, and Uzbekistan lead import growth—likely driven by infrastructure initiatives, rising consumption, and increasing intermediary trade activity. For Uzbekistan, strong export gains are expected in textiles, vehicles, machinery, and copper. More than a third of Armenia’s export gains will consist of machinery, electronics, and vehicles. Türkiye is set to continue its broad-based trade expansion from a high base. In contrast, Azerbaijan and Turkmenistan are expected to face more muted export outlooks because of continued reliance on hydrocarbons and limited diversification.

FIGURE 1.9 Baseline forecast change in trade value, by TCTC host countries, 2023–40 Percent 300

250 28 3

100

400 474

n is en m

rk Tu

Ky Export growth

ye rk i Tü

ta n

pu Re

kh za

Ta jik

bl ic

an st

ia Ka

eo rg

n ija ba er

11 16

150

112

200

22 ●

Import growth

Source: Original figure for this publication. Note: Bar labels indicate absolute change in billions of US dollars. TCTC = Trans-Caspian Transport Corridor.

Trans-Caspian Transport Corridor: Strategic Promise and Trade Transformation

• Intraregional flows are expected to accelerate. Intraregional volumes are projected to nearly double by 2040 compared with 2023, to 99 million tons, and values to reach over $100 billion by 2040, an almost threefold increase over 2023 levels. Even in a significantly adverse macroeconomic situation, volumes are still expected to grow, albeit at a more modest rate of 20 percent from 2023, and values are expected to almost double.

• Trade of higher-value goods by TCTC host countries is projected to grow, although

from a relatively low base. Trade in electronics, vehicles, and machinery is projected to more than triple in value (up 245 percent) and more than double in volume (up 128 percent) by 2040, underpinned by imports from China, the European Union, and Türkiye.

• Energy trade outlook bifurcates. Energy trade value increases 24 percent by

2040, with volumes up 17 percent, implying real expansion in flows. But in a significantly adverse macroeconomic situation, energy trade value is projected to drop by around 42 percent from 2023 levels.

This trade outlook is supported by a soft-landing macroeconomic outlook across the TCTC economies, with growth patterns shaping countries’ capacity to finance logistics upgrades, absorb higher-value imports, and expand corridor transit (Cusolito et al. 2025):

• Central Asia is set to continue to lead headline growth—projected

around 5 percent in 2026 before moderating to 4.6 percent in 2027—supported by higher oil output in Kazakhstan, remittances, and investment.

• The South Caucasus forecasts point to growth slowing to just above 3 percent as Azerbaijan’s oil production declines and Armenia and Georgia normalize.

• Türkiye is projected to strengthen to 3.7 percent in 2026 and 4.4 percent in 2027 as inflation moderates and investment broadens.

This outlook supports the anticipated scale-up of intraregional trade and movement into electronics, machinery, and vehicles, but outcomes remain sensitive to weaker euro-area demand, rising trade tensions, and potential remittance softening, alongside constrained fiscal space. For the corridor’s development objectives—jobs, productivity, and value addition—macroeconomic stability and inflation within the target range will be critical to keep real trade costs predictable and to crowd-in financing for connectivity investments; otherwise, tighter global conditions and lower energy prices could compress trade values, slow diversification beyond commodities, and raise the cost of achieving these goals.

● 23

24 ●

Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

Conclusions The TCTC stands at the center of a regional transition, with a long-overdue structural reform agenda. TCTC economies have demonstrated strong recent growth, yet this momentum is tempered by structural constraints—ranging from labor‑market weaknesses and human capital gaps to high trade costs, uneven business environments, and governance gaps. These challenges shape not only the pace of economic convergence but also the region’s capacity to diversify beyond resource dependence, build resilience, and generate better jobs. Against this backdrop, governments across the TCTC have articulated ambitious development goals. These include sustaining rapid growth, reducing poverty, expanding private sector activity, and accelerating the shift to higher‑value, more knowledge‑intensive production. The corridor is essential to achieving these aspirations. Modernized transport links, smoother border and customs systems, and more predictable logistics can lower trade barriers, integrate firms into new markets, attract investment, and strengthen institutional performance through harmonized standards and procedures. The TCTC’s economic footprint is not uniform. Kazakhstan and Türkiye anchor the corridor at scale, the South Caucasus countries provide indispensable transit functions, Central Asia’s landlocked economies depend on the corridor as a trade lifeline, and China and the European Union increasingly view it as a strategic resilience option even if volumes remain small. These differentiated roles underscore that the corridor’s value lies not only in east‑west transit potential but also in the domestic and regional economic activity it enables. The region’s evolving trade landscape places rising demands on the corridor. Persistent export concentration, elevated trade costs, the gradual emergence of higher‑value manufactured and agrifood exports, and rapidly growing intraregional trade are reshaping the types of goods moving through the TCTC. At the same time, long‑term projections show expanding trade volumes through 2040, with intraregional trade becoming especially important for smaller economies. These trends reinforce that the TCTC is no longer just a transit link—it is becoming an increasingly integrated economic space whose future competitiveness hinges on targeted investments, structural reforms, and coordinated policy making. Taken together, the evidence points to a clear conclusion: the TCTC is an economic vector of opportunity for its host countries. It presents a strategic opportunity for deeper regional integration, economic diversification, and shared prosperity, but realizing this promise requires sustained reform commitment, upgraded infrastructure, and a unified regional approach to connectivity and trade facilitation.

Trans-Caspian Transport Corridor: Strategic Promise and Trade Transformation

Note 1. Some nations of Southeast Europe, specifically, the EU member states of Bulgaria and Romania and the EU enlargement candidate nations of North Macedonia and Serbia, can be considered both TCTC host and TCTC terminus countries. Just as the TCTC network in effect extends into China for trade originating in or destined for that country or other nations in East Asia, the TCTC network extends into—and depends on—the railway and maritime port infrastructure and related services of Bulgaria, North Macedonia, Romania, and Serbia in support of TCTC trade flows between Europe, TCTC host countries, and China and East Asia. At the same time, Bulgaria, North Macedonia, Romania, and Serbia, as with the rest of Europe, benefit from the TCTC as an alternative connection for trade with TCTC host countries, China, and the rest of East Asia. Although this report focuses on what it defines as TCTC host countries, the operational status of the railway and maritime port infrastructure and associated services of Bulgaria, North Macedonia, Romania, and Serbia are considered under the report’s TCTC modeling assessments (refer to chapters 3 and 4). These countries are a critical component of the TCTC as it relates to trade to and from Europe. Policy action similar to that advocated by this report for the TCTC host countries should apply to Bulgaria, North Macedonia, Romania, and Serbia as part of realizing the TCTC’s potential as a facilitator of European trade. This potential hinges on the role of these countries as gateway nations into the EU core and extended Trans-European Transport network.

References ADB (Asian Development Bank) and UNESCAP (United Nations Economic and Social Commission for Asia and the Pacific. 2024. Asia-Pacific Trade Facilitation Report 2024: Promoting Sustainability and Resilience in Global Value Chains. Manila: Asian Development Bank. https://www.adb.org/sites /default/files/publication/954501/asia-pacific-trade-facilitation-report-2024.pdf. Arvis, Jean-François, Lauri Ojala, Ben Shepherd, Daria Ulybina, and Christina Wiederer. 2023. Connecting to Compete: Trade Logistics in the Global Economy—The Logistics Performance Index and Its Indicators. Washington, DC: World Bank. https://doi.org/10.1596/39760. Cusolito, Ana Paula, Ivailo Izvorski, Sergiy Kasyanenko, Michael M. Lokshin, and Iván Torre. 2025. Jobs and Prosperity: Europe and Central Asia Economic Update, Fall 2025: Jobs and Prosperity. Washington, DC: World Bank. https://doi.org/10.1596/978-1-4648-2301-5. Iacovone, Leonardo, Ivailo Izvorski, Christos Kostopoulos, et al. 2025. Greater Heights: Growing to High Income in Europe and Central Asia. Europe and Central Asia Studies. Washington, DC: World Bank. https://doi.org/10.1596/978-1-4648-2206-3. World Bank. 2025. Business Ready. Washington, DC: World Bank. https://hdl.handle .net/10986/44047.

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2 Trans-Caspian Transport Corridor Capacity Constraints and Operating Environment

Main Messages

• The Trans-Caspian Transport Corridor (TCTC) is constrained by aging and limited railway infrastructure, including single-track sections, partial electrification, and insufficient rolling stock. Similarly, the Caspian Sea ports of Aktau, Baku, and Kuryk suffer from limited berth capacity, fluctuating water levels, and a chronic shortage of suitable vessels, leading to high utilization rates and congestion risk. Georgia’s Black Sea ports of Poti and Batumi suffer from capacity constraints, hinterland connectivity limitations, and, in some cases, outdated equipment.

• Inefficient rail border crossings, uneven digitalization, limited yard

capacity, and poor coordination among rail, ports, and maritime services drive missed connections, congestion, and long dwell times. Concentrated logistics nodes further raise last-mile costs, undermining reliability and competitiveness—especially for time-sensitive, containerized trade.

• The TCTC operates within a fragmented institutional and policy

environment, where regional cooperation frameworks exist, but investment planning, operational standards, and digital systems remain largely national. These issues highlight a need for deeper cross-border coordination and harmonized regulatory practices to achieve corridorwide optimization.

28 ●

Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

• The corridor is increasingly exposed to environmental and climatic

stresses, particularly declining Caspian Sea water levels affecting port operations and extreme temperatures affecting railway infrastructure reliability. These conditions increase maintenance needs and vulnerability to service disruptions.

• Collectively, these interconnected physical, operational, environmental, and institutional challenges create vulnerabilities that limit the TCTC’s reliability, scalability, and overall competitiveness.

• More than 90 percent of TCTC volumes across the Caspian Sea consist of

bulk and break-bulk commodities. The logistics of these commodities are primarily driven by infrastructure availability and transport costs. The TCTC’s share of containerized and higher‑value freight is small relative to bulk and break-bulk freight because of gaps in delivery lead time, lead time reliability, and coordination across borders.

Introduction The TCTC operates in an environment of rising strategic relevance but remains constrained by a combination of physical bottlenecks, interoperability gaps, and environmental and operational stresses that create vulnerabilities and limit the corridor’s reliability, scalability, and competitiveness. Although recent investments and geopolitical shifts have led to a marked increase in TCTC traffic and policy interest in the corridor,1 its current operations face structural constraints across railway lines, maritime ports, railway border crossings and maritime borders, and shipping links that require coordinated resolution. In addition to railway and maritime connections, a not-insignificant portion of current (and prospective) TCTC traffic is (and is expected to be) handled by trucking services and road assets, including major motorways, secondary roads, and feeder roads. Because the core of the TCTC lies in rail freight, rail intermodal, and maritime logistics as a result of the corridor’s length (≥10,000 kilometers) and commodity mix—primarily bulk commodity shipments that are well suited to rail freight, such as shipments of grain, fuels, construction materials, minerals, and fertilizer (refer to chapter 3)—this chapter’s assessment of infrastructure and operational bottlenecks focuses, as does most of the rest of the report, on the TCTC’s rail and shipping dimensions as a priority, even as important aspects of the TCTC’s road transport dimension are covered in this report.2

Trans-Caspian Transport Corridor Capacity Constraints and Operating Environment

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Physical and Operational Bottlenecks Rail infrastructure capacity and quality—the TCTC’s infrastructure backbone— constitute the most binding source of infrastructure constraints along the corridor (refer to box 2.1). To assess the nature of these bottlenecks, such as their location and urgency, this report undertook detailed network-based modeling to estimate current and expected rail infrastructure capacity utilization rates across the TCTC’s length, from the China-Kazakhstan border to the Türkiye-Bulgaria border. The resulting volume-to-capacity ratios for base year 2023 are shown in map 2.1.

BOX 2.1 Overview of TCTC railway infrastructure and rolling stock capacity The TCTC is a network of networks. It consists of multiple national railway networks and rolling stock fleets, with most operators being state owned. This TCTC network needs significant upgrades to be able to accommodate its main base of bulk commodity traffic; further improvements would be needed, beyond infrastructure improvements alone, to competitively serve containerized freight. Much of the TCTC’s railway network is singletrack, partially electrified, or fully diesel dependent and is reliant on aging rolling stock:

• Kazakhstan. Kazakhstan’s rail network is approximately 16,000 kilometers in length,

of which only about 26 percent is electrified and 30–35 percent is double-tracked, leaving long single-track sections as systemic constraints. Kazakhstan currently operates approximately 2,000 locomotives and 142,000 wagons, but more than 80,000 are expected to reach end of life by 2035, implying large renewal needs simply to preserve current capacity. As part of its national strategy, the country plans to expand the fleet by about 500 locomotives and 7,000 wagons.

• Uzbekistan. Uzbekistan’s rail network is 6,118 kilometers, about 41 percent

electrified, and still predominantly single-track, with different customs and rail procedures than neighboring countries. In terms of rolling stock, it operates approximately 60,000 wagons, with a significant share constrained by axle-load and age limitations, driving plans to renew 10,000 wagons by 2030 through local production and imports.

• Tajikistan. Tajikistan’s rail network is 680 kilometers in length, almost entirely singletrack and nonelectrified, split into disconnected segments that depend on neighboring networks.

• Kyrgyz Republic. The Kyrgyz Republic’s rail network is small (320–450 kilometers in

service), entirely single-track and nonelectrified, and fragmented between northern (Kazakhstan-linked) and southern (Uzbekistan-linked) sections, forcing transit via neighboring networks. Rolling stock constraints are severe, with around 80 percent of freight wagons unusable and most locomotives requiring replacement, sharply Continued

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BOX 2.1 Overview of TCTC railway infrastructure and rolling stock capacity (Continued) limiting both interoperability and throughput. Full renewal of the fleet is needed, in coordination with the ongoing construction of the Uzbekistan-Kyrgyz RepublicChina railway line that will connect the country with Uzbekistan and China.

• Türkiye. Türkiye’s rail network is approximately 13,000 kilometers in length, with

electrification concentrated on high-speed rail and selected mainlines while much of the conventional freight network remains mixed single- and double-track. Corridor performance is constrained by the gauge break at Akhalkalaki (Georgia) and nightonly freight slots at the Marmaray undersea tunnel, which together cap westbound rail capacity despite relatively modern infrastructure. Türkiye’s freight fleet consists of approximately 550 locomotives and some 20,000 wagons, and about 20 percent of the rolling stock is more than 40 years old, prompting near-term renewal orders for 95 locomotives and more than 3,300 wagons by 2027.

• Turkmenistan. Turkmenistan’s rail network is 4,900–5,100 kilometers in length,

predominantly single-track and diesel operated, with limited double-track sections and no electrification. Although Turkmenbashi port provides modern maritime capacity, corridor performance is constrained by diesel traction, long single-track sections, gauge breaks with Iran, and an aging wagon fleet of 12,000–14,000 units, about 70 percent of which are more than 30 years old. This reduces reliability and effective transit capacity.

These characteristics limit average corridorwide speeds, increase operating costs, and constrain the ability to absorb traffic surges. Critical segments, such as the AlmatyKhorgos, Beineu-Aktau and Divriği-Georgia border railway lines, act as system-wide chokepoints, where capacity limitations propagate delays across the corridor.

Considering that a utilization rate of approximately 75 percent is typically used in the international experience to trigger railway capacity expansion interventions for mixed-use railway lines (Landex 2007), significant portions of the TCTC railway network in Kazakhstan, the South Caucasus, and Türkiye, as depicted in map 2.1, can be considered immediate capacity bottlenecks. Specifically, by this benchmark the following railway sections are, or may soon become, logistics chokepoints that need to be addressed by 2030 (consistent with the time-bound TCTC infrastructure development scenarios presented in chapter 3 and described in detail in appendix B), with several of them already being addressed.

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Trans-Caspian Transport Corridor Capacity Constraints and Operating Environment

MAP 2.1 TCTC rail and maritime port infrastructure capacity utilization, 2023 Railway line and Maritime Port Capacity Loading ≥100% 95–100% 75–95% 50–75% Modernization of the <50% Baku-Boyuk Kasik railway line

ODESSA

ISTANBUL

18% Eskisehir

ANKARA

10%

[10]

Zharyk Shalkar

10% Kayseri

Sivas 1%

[21]

65% 52% TBILISI Kars

Divriği [1]

100%

[1]

[23]

BAKU

91%

49% >100%

Van

Alat Connection

MERSIN

56%

TEHRAN

Shu Shymkent Arys

19% 50%

Moiynty [16]

[34] 99%

Navoi Bukhara

17% Serakhs

Bachty

38%

[91]

[16] 100% 49%

[78]

Almaty

Dostyk Khorgos

>100%

[18]

TASHKENT

Turkmenabat

[14]

Ayagoz

100%

[25] 88%

Beineu

PORT TURKMENBASHI

BANDAR-ANZALI

[6]

Saksaul

[12]

PORT OF BAKU

[79] 47%

92%

[9]

96%

37%

[30]

60%

28%

78%

PORT AKTAU + KURYK PORT POTI + BATUMI

Gebze

ASTANA

has signiﬁcantly advanced since 2023, with utilization at an estimated 46 percent in some sections as of year-end 2025

CONSTANTA

Dostyk-Moiynty railway line was double-tracked in 2025 and its utilization as of year-end 2025 was an Karaganda estimated 40 percent

88%

[17] [23]

21%

[14]

Sea ports Airports Functioning TCTC sections

MC sections planned for construction

Source: Original map for this publication. Note: Railway line capacity in trains per day is shown in brackets. TCTC = Trans-Caspian Transport Corridor.

In Kazakhstan

• The Khorgos-Almaty railway line is an urgent bottleneck, with traffic

surpassing installed capacity at present and expected to be addressed, inter alia, by the proposed Almaty bypass railway line investment, which has received financial support from the World Bank Group.

• The Dostyk-Moiynty railway line was fully saturated as of 2023; it has

since been double-tracked and was no longer a mainline bottleneck as of year-end 2025.

• The Zharyk-Saksaul railway line had a 92 percent utilization rate in 2023 and

limited effective train carrying capacity of approximately six trains per day; the line is expected to be upgraded to 23 trains per day by 2030, nearly quadruple its current capacity, with support from the World Bank Group and the Asian Infrastructure Investment Bank.

• The Arys-Saksaul railway line was 88 percent utilized in 2023 and is expected to be upgraded to enable a capacity of 60 trains per day by 2030, up from approximately 25 trains per day in 2023.

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• The Arys-Tashkent railway line is a major chokepoint at the border between

Kazakhstan and Uzbekistan and is expected to be relieved through the ongoing Darbaza-Maktaraal greenfield line investment (approximately 30 trains per day), with World Bank Group support.

• The Shalkar-Beineu railway line is borderline congested, at a 78 percent

utilization rate in 2023; this line’s freight-carrying capacity is expected to be upgraded from approximately nine trains per day in 2023 to 15 trains per day by 2030.

• The Beineu-Mangistau railway line was critically congested at a 96 percent

utilization rate in 2023. It has a special role in the network because it provides access to and from the Aktau port gateway; the line is expected to be upgraded to increase capacity from approximately 12 trains per day in 2023 to 18 trains per day by 2030.

In Azerbaijan

• The Baku-Boyuk Kasik railway line was approximately 91 percent utilized in

2023. This line is being upgraded and modernized by Azerbaijan Railways and the government of Azerbaijan and is expected to increase capacity from approximately 23 trains per day in 2023 to 53 trains per day by 2030.

• The port of Baku-Alat railway link, which connects the port of Baku with

Azerbaijan’s national railway network, was fully utilized in 2023; this link is being upgraded by Azerbaijan Railways and the government of Azerbaijan and will expand capacity from approximately 10 trains per day to 23 trains per day by no later than 2030.

In Georgia

• The Tbilisi-Akhalkalaki-Türkiye border railway line (a subsection of the Baku-

Tbilisi-Kars railway line) was fully congested in 2023, with freight-carrying capacity within the range of one to two trains per day. The line’s capacity was quintupled in 2024, from 1 million tons to 5 million tons (approximately five to eight trains per day), through close coordination between the governments of Azerbaijan and Georgia; this stands as a model of cross-border collaboration in infrastructure development in the TCTC. Further expansion will be needed in the coming years, through 2030 and 2040. There is also the opportunity to enable dual-gauge track capacity along the Akhalkalaki-Türkiye border subsection to enhance the operational resilience of gauge-change operations between Georgia and Türkiye.

Trans-Caspian Transport Corridor Capacity Constraints and Operating Environment

In Türkiye

• The Divriği-Kars-Georgia border railway line is congested and in need of

modernization and expansion. In 2023, the Kars-Georgia border subsection was at capacity; the rest of the line, between Divriği and Kars, was relatively less congested at 60 percent utilization, although this was in part because of the barrier posed by the Kars-Georgia border bottleneck. Moreover, at one train per day in 2023, the Divriği-Kars-Georgia border line had the single lowest effective train carrying capacity of any railway segment along the entire TCTC alignment, from the China-Kazakhstan border to the Türkiye-Bulgaria border. The line, which lacks signalization and electrification, is now being upgraded and modernized with international financial institution support (World Bank Group, Asian Infrastructure Investment Bank, and Islamic Development Bank).

• Although not shown in map 2.1 because of its granularity, the rail crossing of

the Istanbul Strait (Bosphorus) is a major chokepoint affecting the three international trade corridors that traverse (or are expected to traverse) the metropolitan area of Istanbul: the TCTC, the proposed Iraq Development Road corridor, and the economically vital Türkiye-European Union corridor. At present, rail crossings of the Istanbul Strait are only possible via the inherently constrained Marmaray undersea tunnel, which was designed primarily to serve passenger trains and can only serve freight trains for a handful of hours each night. As a result, it has an estimated maximum annual throughput capacity of 3 million tons per year, although its operating capacity could be as low as 1.2–1.3 million tons per year, depending on maintenance and train operations scheduling. This effectively caps westbound rail transit through Türkiye. The tunnel’s limited capacity is expected to be fully utilized by the mid-2030s at the latest and is already giving rise to inefficient rail-truck-rail transshipments within the Istanbul metropolitan area and adjacent provinces, if not dissuading shippers from using rail freight options altogether. With the support of six international financial institutions, including the World Bank Group, the government of Türkiye will build an alternative overland, higher-capacity railway line across the Istanbul Strait, expected to be completed in the early 2030s. This transformational investment will in effect complete the overland alignment of the TCTC from Central Asia to Europe.

Rail border crossing points and their cargo-handling capacity are an integral part of overall TCTC railway network capacity and should be managed accordingly. At international borders, break-of-gauge interfaces—notably China-Kazakhstan and Georgia-Türkiye—require transshipment or bogie exchange, adding dwell time, handling costs, and operational risk. These rail-specific bottlenecks are compounded by limited yard capacity and uneven digitalization of border

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processes, particularly at high-volume gateways such as Dostyk, AltynkolKhorgos, and Kapıkule. For example, at Khorgos the average transshipment time is approximately 2.6 hours, compared with approximately 6.3 hours at Dostyk, reflecting sharp performance divergence across key gateways. Ports and maritime constraints in the Caspian Sea represent a second major source of operational bottlenecks in the TCTC. Although ports such as Aktau, Kuryk, and Baku are expanding capacity and deepening their access channels and berths, their performance is structurally limited by fluctuating water levels, inclement and unpredictable weather conditions, and what so far has been a chronic shortage of fit-for-purpose vessels to serve the trans-Caspian market. Notably,

• Port of Aktau. Current overall capacity is 11.8 million tons and 70,000 20-foot

equivalent units (TEU), with upgrades targeting 240,000 TEU by the end of 2027—bringing total containerized throughput capacity to 310,000 TEU when considering the additional 70,000 TEU of containerized throughput capacity available at the adjacent Aktau Marine North Terminal. Operations remain constrained by 5–7 meters maximum draft, which reduces effective capacity, although dredging operations to increase depth by 1.5–2.0 meters were ongoing at the time of writing. Although overall utilization in 2023 was a seemingly manageable 38 percent based on a total throughput of 4.5 million tons, in 2025 it handled 65,000 TEU, representing an elevated containerized utilization rate of 93 percent. Whereas Aktau handled 22,782 TEU in 2023, the 65,000-TEU throughput of 2025 represents a near-tripling (2.9 times increase) of containerized throughput between 2023 and 2025. This exemplifies the TCTC’s current containerized growth momentum—and the need to expand port (and rail) capacity to accommodate it.

• Port of Kuryk. The port of Kuryk consists of a ferry complex with a capacity of

6 million tons and, as of November 2024, a grain terminal with a capacity of 1 million tons. The port is undergoing further expansion, with private sector participation, in the form of the Sarzha Multipurpose Marine Terminal, which aims to provide an additional 10 million tons in throughput capacity by 2030 across dry bulk (including grain), liquid bulk, and general cargo, including 150,000 TEU. The current ferry complex handles up to five ferries per day, each carrying about 54 wagons, illustrating tight physical limits on throughput capacity set by the capacity of available ferry vessels. The port of Kuryk’s utilization in 2023 was 35 percent.

Map 2.1 shows the combined overall capacity utilization of the ports of Aktau and Kuryk, which in 2023 stood at 37 percent; by the end of 2025 this had slightly increased to 38 percent, despite Kuryk’s capacity increasing by 1 million tons between 2023 and 2025, upon the 2024 operationalization of its current active grain terminal. Although this prima facie suggests that Kazakhstan’s ports have

Trans-Caspian Transport Corridor Capacity Constraints and Operating Environment

ample capacity, headline utilization masks two key challenges: (1) the effective capacity limitations facing these ports, including depth restrictions (still current at Aktau and present at both ports in 2023, with dredging of the port of Kuryk having been completed in 2024), vessel capacity restrictions, and changing conditions in the Caspian Sea that affect operations (harsh weather conditions, long-term loss of water levels), and (2) differences in terminal- or commodity-specific capacity utilization levels, primarily with regard to the significantly higher levels of containerized capacity utilization at the port of Aktau (93 percent in 2025).

• Port of Turkmenbashi. The port of Turkmenbashi is a modern public service port

with significant maximum installed capacity of 17 million tons and 400,000 TEU. The utilization of this capacity was a mere 19 percent in 2023 (refer to map 2.1), although by the end of 2025 it had more than doubled to 43 percent. The port of Turkmenbashi still needs infrastructure investments to increase effective capacity, particularly with regard to dredging its access channel (to both deepen it and enable two-way traffic) and berthing areas, as well as to expand hinterland connectivity and facilitate multimodal transshipment inland, especially via rail. It is estimated that these shortcomings significantly reduce the port of Turkmenbashi’s effective throughput capacity, particularly for container handling, by a factor of approximately 50 percent.

• Port of Baku. As of 2023, Azerbaijan’s port of Baku had an installed annual

throughput capacity of 15 million tons and 100,000 TEU, although depth limitations in its access channel and berthing areas reduced its effective capacity because of the inability to handle fully loaded vessels at certain times. That year the port’s overall utilization was 49 percent (refer to map 2.1), and its containerized utilization was 44 percent. However, by 2024 its containerized utilization had reached 76 percent, above the 70 percent rule-of-thumb threshold typically used by global container terminal operators to trigger capacity expansion interventions. In 2025, the port of Baku expanded its containerized capacity from 100,000 to 150,000 TEU through efficiency gains and in situ measures at its existing facilities. Against 2025 containerized volumes of 107,000 TEU, the port of Baku’s containerized throughput capacity is currently utilized at a rate of 71 percent, still within the expansion trigger range to prevent congestion risk. With a total throughput of 8.2 million tons in 2025, its overall utilization stood at a seemingly more manageable 55 percent at the end of 2025; however, this masked two key capacity challenges: (1) an urgent need to undertake maintenance dredging of the existing access channel and berthing areas, which have not been dredged since the port’s relocation to Alat in 2018, despite constant water level losses in the Caspian Sea in the years since, and (2) commodity- and terminal-specific supply-demand mismatches, particularly with regard to roll-on/roll-off and ferry capacity. As a result, the government of Azerbaijan intends to expand the port’s containerized capacity to 260,000 TEU in the short term (before 2030) and further expand to

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approximately 500,000–650,000 TEU—and an overall capacity of 25 million tons—by no later than the early 2030s.

• Georgia’s maritime ports. Poti is the largest of Georgia’s two currently operational

ports, accounting for 85 percent of national containerized port throughput. In 2023 and 2024, its containerized throughput capacity was 600,000 TEU against handling volumes of 592,589 and 545,297 TEU, respectively, yielding containerized utilization levels of 99 and 91 percent for each of those years, respectively. In 2025 Poti’s capacity was estimated to have increased slightly, to 650,000 TEU, through operational measures; compared with actual volumes of 636,466 TEU that year (more than at any other point in the port’s history), Poti’s containerized utilization for 2025 was 98 percent. This signals high containerized congestion risk and an urgent need for port capacity expansion in Georgia. Taken together, and considering containerized and noncontainerized freight, the aggregate utilization of Georgia’s two active Black Sea ports—Poti and Batumi— was a slightly more manageable 65 percent back in 2023 (refer to map 2.1), although this overall utilization level is estimated to have since increased.

• The Caspian Sea suffers from a chronic vessel shortage, raising freight rates

and reducing schedule reliability. The Caspian’s physical characteristics restrict ship size and loading factors, and limited fleet availability constrains frequency and schedule reliability. As a result, unless new vessel designs customized for Caspian Sea conditions are developed and the operating vessel fleet expanded accordingly, rail capacity upgrades inland would not automatically translate into end-to-end corridor performance gains. This will require maritime investments and coordinated scheduling.

Logistics Nodes and Network Integration Across the corridor, logistics and dry port infrastructure remain uneven and highly concentrated, particularly around a small number of urban hubs such as Almaty, Astana, Istanbul, and Tashkent. Many secondary cities and border regions lack modern intermodal facilities, forcing cargo into congested urban terminals or inefficient road-based handling. This spatial imbalance increases last-mile costs, exacerbates urban congestion, and limits the corridor’s ability to support diversified and higher-value trade (chapter 5 discusses in more detail the enabling investments needed to amplify the TCTC’s economic impact). The corridor also suffers from weak synchronization between modes. Rail timetables, port berthing windows, and maritime sailings are often planned independently, leading to missed connections, storage congestion, and high inventory dwell times. This fragmentation reduces reliability—one of the corridor’s key potential advantages over alternative routes—and disproportionately affects time-sensitive and containerized flows.

Trans-Caspian Transport Corridor Capacity Constraints and Operating Environment

Environmental and Climate Conditions The TCTC is operating under increasing environmental and climatic stress, particularly in the Caspian Sea, South Caucasus, and Central Asian hinterland (refer to appendix A for a detailed assessment of this exposure). Declining Caspian water levels and sedimentation require continuous dredging to maintain navigability, raising both operating costs and environmental management challenges. Seasonal weather extremes—strong winds, winter freezes, and heat stress—further disrupt maritime operations and reduce predictability. Inland desert conditions, mountainous terrain, and climate-induced degradation of road and rail assets increase maintenance needs and heighten vulnerability to service disruptions, especially in Uzbekistan’s western regions, the Kyrgyz Republic, and Tajikistan. Although rail offers lower carbon intensity than road transport, the corridor’s environmental performance is currently constrained by diesel traction, inefficient asset utilization, and congestion-related idling at borders and ports.

Institutional and Policy Environment The corridor’s operating environment is shaped by fragmented governance and uneven policy implementation. Although regional cooperation frameworks exist, investment planning, operational standards, and digital systems remain largely national, limiting corridorwide optimization (chapter 8 discusses in more detail the collaboration challenges facing the TCTC and how they could be addressed). Inconsistent adoption of electronic documentation, limited data sharing, and divergent regulatory practices amplify physical bottlenecks and reduce the effectiveness of infrastructure investments (chapter 7 discusses in more detail the cross-border documentation, digitalization, and operational integration challenges facing the TCTC and how they could be addressed).

Notes 1. According to Middle Corridor (2026), between 2021 and 2025 overall tonnage volumes along the TCTC grew at an average annual rate of 34 percent, whereas containerized volumes grew at an average annual rate of 32 percent over the same period. 2. Specifically, chapter 5, on enabling investments, discusses prioritized complementary investments in road infrastructure at key sections of the TCTC. Chapter 7, on trade facilitation, digitalization, and operations, discusses opportunities to increase the TCTC’s logistics efficiency, including trucking logistics, through noninfrastructure interventions. Appendix A, on infrastructure resilience risks, discusses the exposure of key TCTC road sections in Central Asia and the South Caucasus to natural hazards.

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References Landex, Alex. 2007. “Capacity Statement for Railways.” Presented at the Annual Transport Conference, Aalborg University, Aalborg, Denmark, August 27–28, 2007. https://backend.orbit .dtu.dk/ws/portalfiles/portal/2725569/Capacity%20Statement.pdf. Middle Corridor. 2026. “Trans-Caspian International Transport Route.” https://middlecorridor.com/en/.

3 Trans-Caspian Transport Corridor Freight and Economic Potential Main Messages

• More than 90 percent of Trans-Caspian Transport Corridor (TCTC) volumes

across the Caspian Sea consist of bulk and break-bulk commodities and are primarily driven by infrastructure availability and transport costs, whereas containerized and higher-value freight share is small because of gaps in delivery time, reliability, and coordination across borders.

• Targeted infrastructure investments can unlock large volume gains along the TCTC, especially for nonoil trade.

• Under the TCTC development scenario, TCTC volumes across the Caspian Sea increase from 8.8 million tons in 2023 to 32.1 million tons by 2040, compared with 24.1 million tons under a status quo scenario. For nonoil freight, volumes rise from 3.5 million tons in 2023 to 15.6 million tons by 2040, nearly double the 2040 nonoil volumes under the status quo scenario.

• Different gateways play distinct strategic roles in capturing freight: ○ The Eastern gateway anchors multi-corridor Eurasian transit, with

transit freight rising from 46 percent of volume in 2023 to more than 60 percent by 2040. ○ The Caspian crossing serves as the backbone of regional integration in

the TCTC, with the vast majority of tonnage consisting of trade among TCTC countries and between TCTC countries and global markets.

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○ The Western gateway predominantly serves TCTC countries’ trade with

global markets, accounting for roughly 70 percent of total flows through these gateways.

• Reducing logistics costs along the TCTC can deliver economy-wide gains.

It is estimated that investing in the TCTC will raise the gross domestic product (GDP) of TCTC economies by 3.3 percent in the long run, with GDP gains in countries ranging from 0.3 percent to 4.8 percent across countries and employment increases ranging from 0.4 percent to 4.4 percent across countries. The largest absolute and percentage gains in GDP are in the Kyrgyz Republic and Türkiye.

Introduction The Trans-Caspian Transport Corridor’s (TCTC’s) economic impact is commensurate with the amount of freight it can reliably capture. Unlocking this freight potential depends not only on the scale of the demand it can serve but also on how well its infrastructure and services perform for different market segments. Building on the preceding chapter’s assessment of trade dynamics and diversification potential across corridor economies, this chapter examines how freight demand translates into transport flows across the TCTC network and what this implies for infrastructure investment, service delivery, and policy priorities. The analysis combines corridorwide freight flow modeling with a focused assessment of logistics performance for the most demanding and performancesensitive market segment served by the corridor: containerized transcontinental shipments between East Asia and Europe. A central organizing principle of this chapter is market segmentation. Not all freight using the TCTC is driven by the same factors. The supply chains of bulk and break-bulk noncontainerized commodities primarily depend on infrastructure availability and minimization of out-of-pocket transport costs, whereas those of containerized goods, which are typically higher value or more time sensitive compared with bulk and break-bulk commodities, depend critically on speed, reliability, coordination, and operational performance. Similarly, regional trade (defined, for the purposes of this report, as trade between a TCTC host country and a non-TCTC host country) and intraregional trade (defined as trade between TCTC host countries) tend to be more captive to the corridor, whereas transit trade (defined as trade that traverses at least a portion of the TCTC network yet neither originates in nor is destined for a TCTC host country, with East AsiaEurope traffic being the most policy-consequential transit subsegment; refer to chapter 4) is discretionary and therefore elastic, with shippers typically able to switch routes and modes in response to relative changes in performance and logistics costs.

Trans-Caspian Transport Corridor Freight and Economic Potential

For a fuller view of market segmentation in the TCTC, this chapter should be read in conjunction with chapter 4. This chapter examines freight potential across the corridor under different operational scenarios, including projected overall volumes, the role of the various TCTC gateways, the commodity composition of overall volumes, and the sensitivity of overall volumes to changes in macroeconomic conditions and transport cost shocks. Chapter 4 assesses more closely the issue of logistics performance in the TCTC by zeroing in on a specific market segment: transcontinental containerized traffic. Specifically, it assesses the performance conditions under which the TCTC could emerge as a competitive rail landbridge for Eurasian containerized trade and the implications this has for the viability and prioritization of major infrastructure investments. This chapter extends its whole-of-corridor analysis beyond freight outcomes to assess the wider economic benefits associated with corridor development. Drawing on economy-wide modeling, it examines how reductions in transport costs and increased connectivity are transmitted through national economies— affecting trade flows, gross domestic product (GDP), employment, and sectoral output across TCTC host countries. By linking freight capture to economy-wide impacts, the chapter provides an integrated view of how investments and reforms along the TCTC can translate into growth, jobs, and structural transformation.

Freight Markets and Segmentation along the TCTC The TCTC serves a diverse set of freight markets, each with distinct operational requirements and growth prospects. At one end of the spectrum are bulk and break-bulk commodities—such as crude oil and petroleum products, minerals, metals, grains, construction materials, and fertilizers—that currently account for more than 90 percent of tonnage transported across the Caspian Sea. These flows are relatively less sensitive to transit time and reliability and are primarily driven by infrastructure capacity, equipment availability, and out-of-pocket transport costs per ton-kilometer. For these commodities, the TCTC functions above all as a regional and interregional logistics backbone, particularly for landlocked Central Asian economies. At the other end are containerized, higher-value, and time-sensitive goods, including machinery, equipment, manufactured inputs, and select consumer products. These flows are more sensitive to total logistics costs, which combine out-of-pocket transport costs with inventory carrying costs linked to transit time and reliability. As a result, the owners of this cargo place much higher priority on corridor performance—especially the efficiency of border crossings, ports, intermodal interfaces, and operational coordination across countries. This distinction also maps closely onto the geography of demand. Trade among TCTC host countries, and between host countries and global markets, is relatively

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captive, whereas long-distance Eurasian transit trade—that is, trade between TCTC terminus countries—is discretionary, with shippers able to choose between multiple maritime routes and alternative overland corridors. Recognizing these differences is essential for interpreting freight flow projections and for assessing which investments depend most critically on performance improvements versus those justified by more stable regional demand. This assessment is based on projections of Eurasian trade and transport flows from a scenario-based model covering all transport modes, geographies, detailed georeferenced transportation networks, and routes—including road and rail, sea freight, and air freight connections. The model’s methodology is described in appendix B. Modeling output was obtained for base year 2023 and volume projections for 2030 and 2040. Seven policy scenarios were conceptualized, implying varying levels of relative competitiveness and performance by the TCTC and alternative routes resulting from infrastructure interventions, noninfrastructure interventions, and route-specific pricing shocks. The actions considered under the 2030 and 2040 scenarios that include infrastructure and noninfrastructure interventions in the TCTC should be considered as time-bound recommendations to attain the level of volume capture projected by the modeling assessment. The scenarios and their analytical rationale are summarized next, with full country-by-country details presented in appendix B:

• A status quo (SQ) reference scenario, to assess TCTC volume capture potential assuming no new infrastructure investments through 2040 beyond maintenance of existing rail and port assets and projects already firmly committed as of early 2025.

• A TCTC development (TD) scenario, to assess TCTC volume capture potential

should several well-defined infrastructure investments and logistics equipment (vessels, rolling stock) expansion interventions be undertaken by 2030 and 2040. These interventions were guided by the capacity utilization assessment presented in chapter 2 (refer to map 2.1) and informed by government plans and expectations available as of 2025 (see detailed list of interventions by country and by time horizon in appendix B). The TD scenario can be considered the most likely case of future TCTC development, focused mainly on infrastructure improvements and involving investments that are either ongoing or highly likely to materialize in the short (2030) or medium (2040) term as a result of being included in currently available investment and policy plans by TCTC host and terminus countries.

• A TCTC development stress test (TD-ST) scenario aimed at mimicking

macroeconomic stress that includes the same infrastructure and noninfrastructure interventions as the TD scenario but assumes subdued global growth, lower energy prices, and greater incidence of geopolitical tensions that weaken trade and industrial activity, compared with baseline TD conditions.

Trans-Caspian Transport Corridor Freight and Economic Potential

• A TCTC stretch (TS) scenario, a high-performance scenario that assumes no

infrastructure capacity constraints after 2030, in addition to significant service delivery improvements through trade facilitation, cross-border collaboration, and operational measures that solidify throughout the 2030s (chapters 6, 7, and 8 discuss how these improvements could be attained). This can be interpreted as a best-case scenario in which freight flows with minimal delays and high efficiency, matching regional best practice. This scenario is not evaluated in this chapter because it is most relevant for transcontinental containerized shipments between East Asia and Europe, which are examined in chapter 4.

• A group of higher and lower sea freight rate scenarios to interact with the TD and

TS conditions to test how the TD and TS projections would change in the face of higher or lower sea freight rates (-HR or -LR) in the Asia-Europe maritime trade compared with base-case assumptions. All else being equal, higher or lower Eurasian sea freight rates are likely to bring more or less cargo, respectively, to overland routes. The implications that higher or lower volumes may have for capacity availability make these scenarios policy relevant.

Modeling results are presented for three key gateways along the TCTC. The first is the Eastern gateway, at the border of Central Asia and East Asia. The second is the Caspian crossing to and from ports in Azerbaijan (Baku), Kazakhstan (Aktau), and Turkmenistan (Turkmenbashi), which this report considers core TCTC traffic per the trans-Caspian definition of this corridor. The third is the Western gateway, including the Black Sea ports of Georgia along the TCTC’s Black Sea branch, as well as the rail links into and across Türkiye toward the European Union, along the TCTC’s Türkiye branch. In its 2040 projections, the model considers the development of an additional subbranch within the Türkiye branch of the TCTC, linking the Port of Baku (Azerbaijan) with Kars (Türkiye) via Armenia, which is assumed to become operational in the early 2030s. By tracking freight activity across these different gateways, the report’s modeling is able to track changes in TCTC logistics, such as volumes and commodity types, in different sections of this long corridor. Overall, the model confirms that infrastructure improvements in the TD scenario lead to higher throughput and greater resilience across all gateways, even under stress scenarios with adverse macroeconomic conditions or higher sea freight rates compared with baseline TD conditions.

Freight Flows through the Gateways of the TCTC The TCTC network is projected to see substantial growth in cargo volumes by 2030 and 2040 (refer to figure 3.1). Under the SQ scenario, overall volumes across the Caspian Sea are expected to rise from 8.8 million tons in 2023 to 24.1 million tons by 2040—a 2.7 times increase—with the Eastern and

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Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

Western gateways projected to reach 91.5 and 23.7 million tons, respectively.1 However, when targeted infrastructure improvements are considered—specifically, the greenfield and expanded or rehabilitated rail segments, expanded maritime ports, and enhanced Caspian shipping services included under the TD scenario (refer to appendix B)—these figures increase substantially: by 2040, overall volumes across the Caspian Sea are projected to reach 32.1 million tons, 3.6 times as large as the 2023 volumes, with the Eastern gateway handling 105.7 million tons and the Western gateway 35.0 million tons. Map 3.1 depicts the 2023 freight flows and the projected evolution of freight flows along the length of the TCTC under the TD scenario for 2030 and 2040.

FIGURE 3.1 TCTC freight flows, millions of tons, by gateway and by scenario, 2023, 2030, and 2040 a. Caspian crossing 8.8

23.0 24.1

8.8

66.5

28.5

105.7

64.9 79.5

120.2

90.0

20 40 60 80 100 120 140 2023

2030

12.1

23.8 23.7

12.1

TD-ST

88.4

65.1

c. Western gateway

91.5

77.1

28.5

TD-HR

TD-LR

27.2 29.5 20

28.5

TD-ST

32.7 36.7

8.8

TD-LR

28.5

25.7 26.4

8.8

TD-HR

28.5

29.2 32.1

8.8

TD-ST

b. Eastern gateway

32.9 35.0

28.2 26.7

12.1

TD-HR

36.3 39.5

12.1

TD-LR 0

30.9 32.3 30

2040

Source: Original figure for this publication. Note: Freight flows are considered TCTC flows if they pass through at least one section of the TCTC’s rail and shipping network during their transport route. However, volumes captured by the Eastern gateway include flows that are routed via other corridors, because some of those gateways are shared by multiple corridors. The Caspian crossing volumes are considered core TCTC volumes. The estimates for 2023 are based on the existing TCTC network, current macroeconomic conditions, and sea freight rates. SQ = status quo; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development; TD-HR = TD with higher sea freight rates; TD-LR = TD with lower sea freight rates; TD-ST = TD stress test.

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Trans-Caspian Transport Corridor Freight and Economic Potential

MAP 3.1 TCTC freight flows, 2023, and under the TD scenario, 2030 and 2040

Zharyk-Saksaul

Moyinty-Zharyk

Dostyk-Moyinty

Shalkar-Saksaul

Bakhly-Ayagoz

Shalkar-Beineu Beineu-Aktau Tbilisi-Kars

Sivas-Çetinkaya

Arys-Saksaul

Tbilisi-Poti Baku-Tbilisi Ankara-Kayseri

Khorgos-Almaty

Arys-Tashkent Aktau+Kuryk-Baku UKC

Kayseri-Sivas

Divrigi-Kars Turkmenbashi-Baku

Almaly-Shu

Tashkent-Bukhara

Baku-Kars

Eskisehir-Ankara

Shu-Arys

Bukhara-branch to Serakhs branch to Serakhs branch to Serakhs-Turkmenbashi

Total volume of freight traﬃc along each section, million tons

2040 TD 2030 TD 2023

Sea ports Sea ports: Planned constrution Airports

Source: Original map for this publication. Note: TCTC = Trans-Caspian Transport Corridor; TD = TCTC development; UKC = Uzbekistan-Kyrgyz Republic-China.

The TCTC stands to lose a significant amount of tonnage capture potential, especially nonoil tonnage capture potential, if the corridor’s infrastructure is not upgraded. A corollary of comparing tonnage projections under the SQ and TD scenarios is that, without the infrastructure-focused interventions considered under the TD scenario (refer to appendix B), by 2040 there would be approximately 8 million tons of unrealized cargo left on the table (that is, the difference between the 24.1 million tons projected in 2040 under SQ and the 32.1 million tons projected under the TD scenario). This is cargo that could have been captured by the TCTC but is not captured under SQ conditions because of infrastructure constraints, equivalent to 33 percent of the SQ-projected cargo capture by 2040. This can be interpreted as the volume cost of infrastructure investment inaction in the TCTC by 2040. As shown later in chapter 7, when considering nonoil volumes—another way to segment the TCTC market—instead of overall volumes, the impact of the TD scenario investments on volume capture is even larger. Specifically, the TCTC’s nonoil tonnage across the Caspian Sea, estimated at 3.5 million tons in 2023, is projected to increase to 15.6 million tons in 2040 under the TD scenario, an increase of 4.5 times. In contrast, under SQ

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Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

conditions nonoil volumes are expected to reach 8.3 million tons in 2040. By comparing the projected 2040 nonoil tonnage under the SQ and TD scenarios—8.3 million tons and 15.6 million tons, respectively—one can conclude that the nonoil volume cost of infrastructure investment inaction in the TCTC is a staggering 89 percent, much higher than the impact of inaction on overall volumes. Modeling findings also show that cargo volumes are sensitive to macroeconomic conditions and sea freight rates (refer to figure 3.1). Under macroeconomic stress, volumes could decrease by nearly a quarter in the Eastern and Western gateways. Higher sea freight rates boost TCTC volumes by 13–14 percent, and lower rates reduce them. The model also shows substitution between different gateways and routes on the eastern and western ends. A sizable share of the freight demand for new rail segments, such as the planned Bakhty rail border checkpoint between China and Kazakhstan and the proposed Uzbekistan-Kyrgyz Republic-China line linking those countries, comes from rerouted traffic (that is, from existing gateway links) rather than entirely new flows. Although TCTC development increases freight activity, associated demand driven greenhouse gas (GHG) emission increases are partly offset by route and modal shifts toward lower carbon rail transport along the core corridor. Export-import flows benefit from lower carbon intensity because improvements along the core TCTC corridor induce a shift of export-import flows toward rail based transport (which has a lower carbon intensity than road transport). However, some long distance Eurasian transit shifts slightly increase emissions given the TCTC’s higher intensity relative to other routes. Overall, these effects largely balance out, resulting in a modest net reduction of 3.2 percent in transport related GHG emissions from TCTC freight flows (refer to box 3.1).

BOX 3.1 Impact of Trans-Caspian Transport Corridor development on greenhouse gas emissions from transportation The development of the Trans-Caspian Transport Corridor (TCTC) is expected to result in modal and route reallocation for import and export freight volumes to and from TCTC host countries, as well as for transit flows. The increase in exports and imports to and from Central Asia and the South Caucasus would increase emissions because of higher transport activity (demand effect). Yet, the increase in emissions from higher transport

Continued

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Trans-Caspian Transport Corridor Freight and Economic Potential

BOX 3.1 Impact of Trans-Caspian Transport Corridor development on greenhouse gas emissions from transportation (Continued) demand is expected to be more than offset by the lower carbon intensity of importexport flows along the core TCTC (rail and maritime port, shipping based) compared with road-based transport (modal shift effect). For East Asia-European Union landbridge and East Asia-Türkiye flows, the TCTC is slightly more carbon-intensive than other freight routes. Hence, route and modal shift for long-distance transit between East Asia and Europe result in a modest increase in emissions for this demand segment, limited by the extent of the expected modal shift. Overall, the development of the TCTC is expected to have a slightly positive net impact (that is, reduction) on transport-related greenhouse gas emissions for the demand segments considered in the analysis—a 3.2 percent net reduction in emissions (refer to figure B3.1.1). FIGURE B3.1.1 Comparative analysis of GHG emissions from TCTC transportation activity by 2040, SQ versus TD scenario GHG emissions (million tons of CO2) –3.2

37 +0.05 36

+0.20 35.71

+0.38

–1.10

–0.75

[+0.09]

34.57 –0.02

2040 Demand emissions increase under SQ in scenario Central Asia

Demand increase in the South Caucasus

Demand increase in transCaspian shipping

Modal shift in Central Asia

Modal Route Route 2040 shift in shift for shift for emissions the South Eurasian East Asia- under TD Caucasus landbridge Türkiye scenario trade trade

Source: Original figure for this publication. Note: CO2 = carbon dioxide; GHG = greenhhouse gas; SQ = status quo; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development.

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Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

Strategic Role of Different TCTC Gateways The Eastern gateway of the TCTC network, which is unique in that it is shared by multiple land-based Eurasian trade routes, handles a more varied mix of commodities by volume compared with the Caspian crossing or the Western gateway. In 2023, oil and oil products dominated flows through the Caspian crossing (60 percent) and Western gateway (69 percent), but the Eastern gateway saw only 15 percent of such cargo, instead moving a more diverse mix of commodities, including ferrous metal ores, machinery, chemicals, and equipment (refer to figure 3.2). The Eastern gateway primarily handles mediumto high-value-added goods,2 with 65 percent of its 2023 cargo falling into this category. In contrast, the Caspian crossing and Western gateway predominantly transport bulk, low-value-added commodities, with their 2023 share of highvalue and medium-value commodities being 47 percent and 35 percent, respectively. As the TCTC network expands under TD conditions, commodity flows through it diversify. If the TCTC network is developed and expanded through the interventions considered in the TD scenario, by 2040 the share of oil in TCTC traffic is projected to drop by 14–16 percentage points at the Caspian crossing and Western gateway, whereas the share of machinery and equipment, mineral products, and ferrous metals are all projected to increase (refer to figure 3.2). The TCTC facilitates the movement of sizable amounts of critical metals and agricultural commodities, reinforcing its role in new-economy industrial supply chains and as breadbasket facilitator for the rest of the world. A substantial portion of cargo through the TCTC consists of rare earth minerals and related materials, highlighting its growing role in global supply chains for critical raw inputs. In 2023, nonferrous metals and their ores—used as proxies for rare earth metals—made up 9 percent of freight through the Eastern gateway, 6 percent through the Caspian crossing, and 4 percent through the Western gateway. Meanwhile, in 2023, agricultural products, fertilizers, and grains (agrifoods), which are vital for global food security, accounted for 20 percent of flows through the Eastern gateway, 8 percent through the Western gateway, and 13 percent through the Caspian crossing. These figures underscore the TCTC’s strategic importance in ensuring access to essential industrial and food commodities across borders. Box 3.2 further discusses the role of TCTC in enabling the flow of critical minerals.

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Trans-Caspian Transport Corridor Freight and Economic Potential

FIGURE 3.2 TCTC freight flows, millions of tons, by gateway, commodity type, and scenario, 2023, 2030, and 2040 a. SQ, 2023 Eastern gateway Caspian crossing Western gateway 5

b. SQ, 2030 Eastern gateway Caspian crossing Western gateway 0

c. SQ, 2040 Eastern gateway Caspian crossing Western gateway 0

100

d. TD, 2030 Eastern gateway Caspian crossing Western gateway 0

Agricultural products

Grains

Ferrous metal ores

Nonferrous metal ores

Coal

Chemicals

Rubber and plastics

Woods

Textiles and leather

Ferrous metals

Nonferrous metals

Metal products

Machinery and equipment

Vehicles

Fertilizers

Prepared foodstuﬀs

Mineral products Oil

Oil products

Pulp and paper Other Continued

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Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

FIGURE 3.2 TCTC freight flows, millions of tons, by gateway, commodity type, and scenario, 2023, 2030, and 2040 (Continued) e. TD, 2040 Eastern gateway Caspian crossing Western gateway 0

100

120

f. TD-ST, 2030 Eastern gateway Caspian crossing Western gateway 0

g. TD-ST, 2040 Eastern gateway Caspian crossing Western gateway 0

100

Agricultural products

Grains

Ferrous metal ores

Nonferrous metal ores

Coal

Chemicals

Rubber and plastics

Woods

Textiles and leather

Ferrous metals

Nonferrous metals

Metal products

Machinery and equipment

Vehicles

Fertilizers

Prepared foodstuﬀs

120

Mineral products Oil

Oil products

Pulp and paper Other

Source: Original figure for this publication. Note: SQ = status quo; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development; TD-ST = TD stress test.

BOX 3.2 Role of the Trans-Caspian Transport Corridor in the movement of critical minerals Minerals play a prominent role in the economies of Central Asia. The mining sector accounts for an estimated 25, 15, 10, and 8 percent of gross domestic product in the Kyrgyz Republic ($4.5 billion), Kazakhstan ($25 billion), Uzbekistan ($16 billion), and Tajikistan ($1.2 billion), respectively. It is also the leading export sector in the Kyrgyz Republic, Tajikistan, and Uzbekistan and second only to oil and gas in Kazakhstan. Minerals are a key growth segment for the Trans-Caspian Transport Corridor (TCTC). Across Central Asia, the South Caucasus, and Türkiye, nonferrous metal trade is Continued

Trans-Caspian Transport Corridor Freight and Economic Potential

BOX 3.2 Role of the Trans-Caspian Transport Corridor in the movement of critical minerals (Continued) projected to expand nearly 50 percent by 2040—from 25 million tons in 2023 to 37 million tons. Aluminum, copper, and zinc dominate the trade portfolio, with aluminum alone making up nearly 70 percent of projected volumes by 2040. Copper and zinc remain smaller in volume but critical in strategic relevance and routing behavior. In 2023, copper ores and aluminum accounted for 63 percent of the TCTC region’s nonferrous metal trade by volume, followed by refined copper and zinc. Between 2021 and 2023, ore trade increased at an average of 28 percent per year, led by copper exports from Kazakhstan. Processed metal exports, by contrast, grew by only 5 percent annually, underlining the dominance of upstream trade in the current structure. The Eastern gateway remains the primary entry point for nonferrous metals and ores by volume, particularly for copper, and the Caspian crossing is emerging as a strategic connector for both copper and aluminum. The Western gateway, although it carried only small volumes in 2023, is expanding the fastest in relative terms, driven by rising aluminum and copper flows from Azerbaijan, Türkiye, and Uzbekistan. The following is a summary of volume prospects by gateway:

• Eastern gateway flows. In 2023, 2.5 million tons of nonferrous metals and ores crossed the corridor’s eastern entry. This is projected to increase to 7.2 million tons by 2040, representing an almost 3 times increase in volume. Eastern gateway routings are especially significant for copper flows from Kazakhstan and for China’s import diversification.

• Caspian crossing flows. Caspian shipments totaled 487 kilotons in 2023, projected to

grow to 1.7 million tons by 2040. This includes both westbound Kazakhstanoriginated ores or metals and potential eastbound flows of Armenian and Georgian nonferrous metals toward China. Caspian growth is highly sensitive to ferry capacity and multimodal integration.

• Western gateway flows. In 2023, 466 kilotons of metal trade crossed via the western segments. By 2040, volumes may rise to 1.1 million tons, with significant growth expected from Azerbaijan, Türkiye, and Uzbekistan. This reflects expanding intraregional and Türkiye‑linked metal supply chains.

In 2023, approximately 428 kilotons of nonferrous metals and 59 kilotons of ores were moved across the Caspian Sea. By 2040, these are projected to reach 1.2 million tons and 554 kilotons, respectively. Historically, much of this cargo was transshipped onto trucks in Baku and routed to Batumi, Poti, or directly to Türkiye because of limited rail access. Some flows also rely on rail-linked ferry services. If new ferry vessels and port handling infrastructure are introduced, the Caspian crossing segment could accommodate larger volumes, including westbound Kazakhstan-originated metal exports and eastbound copper exports from Armenia and Georgia to China.

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Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

Analysis of trade flows through the Eastern gateway, Caspian crossing, and Western gateway reveals distinct roles within the TCTC network. These corridor sections serve different combinations of transit trade, trade between TCTC countries and the rest of the world, and trade between TCTC countries (refer to figure 3.3). Specifically,

• The Eastern gateway emerges as a powerhouse for TCTC transit trade, acting 3

as a critical artery for long-distance freight, particularly between East Asia and Europe. Transit volumes are projected to surge from 13.0 million tons in 2023 to an impressive 62.8 million tons by 2040 (in the SQ scenario). Trade between TCTC countries and the rest of the world also grows robustly, reaching more than 28.7 million tons by 2040 (in the SQ scenario). Notably, with the development of the TCTC, intra-TCTC trade—otherwise absent—begins to materialize by 2030 and grows steadily, signaling the development of new internal trade links within the region.

• The Western gateway primarily facilitates trade between TCTC countries and the

rest of the world. This is complemented by moderate intra-TCTC trade and relatively limited transit flows. Over time, trade between TCTC countries and the rest of the world through this corridor rises sharply from 9.3 million tons in 2023 to 16.2 million tons and 23.8 million tons by 2040 in the SQ and TD scenarios, respectively. Although transit volumes through the Western gateway remain comparatively small in absolute terms, they carry disproportionate logistical and policy significance for the functioning and competitiveness of the TCTC—a point that is explored in greater detail in chapter 4.

• The Caspian crossing mirrors the Western gateway in its primary function but

plays a more pronounced role in supporting trade between TCTC countries. In 2023, the Caspian crossing facilitated 4.5 million tons of trade between TCTC countries. By 2040, this volume is projected to increase dramatically to approximately 10.9 million tons under the SQ scenario and 11.5 million tons under the TD scenario. Trade between TCTC countries and global markets is also expected to increase significantly from 4.3 million tons in 2023 to 12.1 million tons and 16.1 million tons in 2040 in the SQ and TD scenarios, respectively. As the TCTC network expands, both the Western gateway and the Caspian crossing are poised to attract an increased (albeit small) volume of transit trade—reaching more than 3 million tons in 2040 under the TD scenario. These volumes of transit trade do not materialize in the SQ scenario, where transit volumes at the Western gateway and Caspian crossing remain less than 1 million tons in 2040 in the SQ scenario.

• Together, these patterns suggest that although the Western gateway and the

Caspian crossing are increasingly important for trade between TCTC countries and trade between TCTC countries with the rest of the world, the Eastern gateway is cementing its role as a strategic transit node for East Asia-Europe flows.4 This distinction has important implications for the elasticity of trade across the TCTC network.

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Trans-Caspian Transport Corridor Freight and Economic Potential

FIGURE 3.3 TCTC freight flows, millions of tons, by gateway, type of origin and destination, and scenario, 2023, 2030, and 2040 a. SQ, 2023 Eastern gateway Caspian crossing Western gateway 5

c. SQ, 2040

b. SQ, 2030 Eastern gateway

Eastern gateway Caspian crossing

Caspian crossing

Western gateway

Western gateway 0

d. TD, 2030

100

120

100

120

e. TD, 2040 Eastern gateway

Eastern gateway Caspian crossing

Caspian crossing

Western gateway

Western gateway 0

40 50

f. TD-ST, 2030 Eastern gateway

g. TD-ST, 2040 Eastern gateway

Caspian crossing

Western gateway

Western gateway 0

10 20 30 40 Transit trade

50 60 70 80 0 Trade between MC and non-MC countries

100 120 20 40 60 80 Trade between MC countries

Source: Original figure for this publication. Note: MC = Middle Corridor; SQ = status quo; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development; TD-ST = TD stress test.

Elasticity of Freight Flows through the TCTC The elasticity of trade flowing through the TCTC network is multifaceted, influenced by commodity type, origin-destination routing, and the availability of alternative routes. High-value-added goods, which are typically time sensitive and containerized, tend to favor faster rail for long transit itineraries and trucks for shorter ones. In contrast, low-value-added goods, which are less time sensitive and typically transported in bulk or break-bulk, exhibit mixed elasticity: although small volumes may shift to trucks, bulk commodities such as grains and coal remain rail dependent. Perishable goods are particularly sensitive to

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Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

service reliability. This highlights the need for consistent quality in transport services. It also further illustrates the importance of market segmentation for policy making and business and logistics planning purposes. Elasticity also varies by origin-destination pair. East-west transit flows with multiple routing options—such as East Asia-Europe and East Asia-Türkiye trade— are expected to be highly elastic, particularly for high-value‑added commodities, given strong competition from alternative routes. Different categories of trade exhibit varying elasticities. These can be grouped into three broad categories:

• Intra-TCTC trade tends to have low to moderate elasticity, largely dependent on service reliability. This is exemplified by the heavy reliance of TCTC countries on the TCTC network for trading among themselves.

• Trade between TCTC countries and the rest of the world shows medium elasticity, with potential diversion to other routes if TCTC performance declines.

• Transit trade—such as East Asia-Europe flows—is the most elastic, easily

shifting to competing sea freight or rail freight corridors if the TCTC network is unable to deliver efficient transport solutions. For this reason, chapter 4 is dedicated to a detailed assessment of the performance conditions required for the TCTC to compete effectively as a transcontinental landbridge.

The Eastern gateway carries both more transit trade and higher-value-added goods than the other TCTC gateways. This reinforces the strategic imperative for the Eastern gateway to maintain high performance standards because it mostly supports intercontinental trade flows, and their role in transit trade makes them vulnerable to shifts in route preference, even considering that multiple overland routes use these gateways. Because the elasticity of trade flows can be defined as the sensitivity of freight demand to changes in logistics costs, understanding the impact of TCTC development on the logistics costs incurred by shippers is an important policy matter. Modeling findings show that, under the TD scenario, the logistics costs to the private sector,5 expressed as a percent of sales, in Kazakhstan and Türkiye, the two largest TCTC host countries, are projected to reduce by between 6 and 9 percent by 2040. This represents a drop of 0.9 percentage points for Türkiye, whose current logistics costs to the private sector are estimated to be in the order of 14.0 percent of sales, and a drop of 1.5 percentage points for Kazakhstan, whose current logistics costs to the private sector are estimated to be in the order of 17.0 percent of sales. This would bring these countries’ logistics costs closer to key peer comparators such as Mexico (10.3 percent of sales) and aspirational comparators such as the European Union (10.0 percent of sales). Logistics costs reductions in other TCTC host countries are likely to be even higher in relative magnitude than those projected for Kazakhstan and Türkiye, because the logistics

● 55

Trans-Caspian Transport Corridor Freight and Economic Potential

costs of the other TCTC host countries as a percent of sales are likely to be higher than those of Kazakhstan and Türkiye. As a special case, the analysis examines the impact of reductions in logistics costs along the TCTC on agrifood exports. Transport connectivity is a key driver of agrifood trade along the TCTC and, by extension, a driver of food security, because reducing logistics costs directly boosts export volumes and market access. Table 3.1 shows how 5, 10, 20, and 50 percent reductions in logistics costs within the TCTC network affects exports of agrifoods by TCTC host countries. Specifically, a 5 percent reduction in logistics costs could result in an additional 2.9 million tons (equivalent to a 13.8 percent increase relative to 2023) of agricultural and food product exports. Logistics cost reductions can significantly boost agrifood exports, opening new markets and enhancing competitiveness. Kazakhstan, because of its large agro-industrial complex, inherently contributes significantly to this increase, with 2.3 million tons resulting from a 5 percent reduction in logistics costs. Uzbekistan also shows potential for substantial export growth. Reducing logistics costs by 50 percent can boost agrifood exports by more than two-thirds in several countries, but the impact varies. As in earlier scenarios, Kazakhstan captures the bulk of these gains, contributing 11.9 million tons of the total 15.1-million-ton increase. Many other countries also see notable growth, albeit from a relatively small agrifood export base in 2023. A 50 percent cost reduction would increase exports by 85.6 percent in Turkmenistan, 76.6 percent in Armenia, and 69.2 percent in the Kyrgyz Republic, reflecting significant untapped potential. Kazakhstan’s gains are tied to its grain sector, whereas Turkmenistan’s rise stems from high trade frictions. These findings show that both geography and sector readiness shape the benefits of logistics cost reductions. TABLE 3.1 Logistics cost-reduction effects on agrifood exports, millions of tons % decrease in logistics costs TCTC country

Armenia

0.07

0.09

0.14

0.28

Azerbaijan

0.14

0.16

0.20

0.32

Georgia

0.10

0.12

0.18

0.34

Kazakhstan

2.26

3.33

5.48

11.91

Kyrgyz Republic

0.04

0.06

0.10

0.24

Tajikistan

0.03

0.04

0.07

0.15

Turkmenistan

0.03

0.04

0.06

0.10

Uzbekistan

0.20

0.37

0.72

1.75

All countries

2.87

4.21

6.95

15.09

Source: Original table for this publication. Note: Türkiye is excluded from this analysis because its agrifood trade is highly diversified, and the Trans-Caspian Transport Corridor does not play a dominant role in shaping these flows.

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Wider Economic Impacts: GDP, Jobs, and Trade Building regional transport infrastructure and lowering transport costs can generate substantially wider economic benefits that extend beyond direct freight savings to include job creation, productivity gains, and deeper economic integration. Two main channels are particularly important and considered here. First, large‑scale investments in railways, maritime ports, and related infrastructure stimulate economic activity through construction and associated supply chains. Second, improved connectivity reduces trade and transport costs, expands market access, and strengthens integration, allowing firms to source inputs more efficiently and reach larger markets while allowing households to access cheaper and higher‑quality goods. Together, these channels support productivity growth, job creation, and the integration of peripheral regions with major economic centers, helping reduce spatial disparities. This section assesses the wider economic impacts of improving the TCTC. It uses a macroeconomic computable general equilibrium framework, tracing how transport investments and trade integration benefits are transmitted across nine corridor economies. The analysis measures impacts on GDP, employment, exports, and imports, using the Global Trade Analysis Project (GTAP) model to focus on sectors most relevant to corridor development, including construction, trade, manufacturing, agrifood, and key services.6 Although the overall impacts are generally positive, corridor development can also have distributional effects, creating winners and losers as trade and transport activity shift across regions. Recognizing and quantifying these effects is a critical, nuanced input for policy making. Still, spillover effects from TCTC development are expected to be wide (refer to box 3.3). The development of the TCTC is projected to deliver differentiated GDP gains across host countries (refer to table 3.2). The magnitude of the impact varies according to each country’s economic structure, initial connectivity, and scale of investment. Generally, larger relative gains are observed in smaller, landlocked economies where improved connectivity yields outsized benefits, whereas the largest absolute gains accrue to the region’s largest economies.7 Notably,

• Kazakhstan and Türkiye see the largest absolute GDP gains, reflecting their economic size and centrality to the corridor, and

• Armenia, Georgia, the Kyrgyz Republic, and Türkiye experience the highest percentage increases. In the case of Armenia and the Kyrgyz Republic, this highlights the transformative effect of improved regional connectivity for smaller, landlocked economies.

Trans-Caspian Transport Corridor Freight and Economic Potential

BOX 3.3 Spillovers among Trans-Caspian Transport Corridor host countries: The case of Tajikistan The development of the Trans-Caspian Transport Corridor (TCTC) will generate economic benefits for all host countries. This includes host countries with a relatively lower extent of trunk transport links to the corridor’s core routes and branches and those with a relatively longer distance to the TCTC core routes and branches. Tajikistan is a case in point. Tajikistan has two railway links to the TCTC, via Uzbekistan and Turkmenistan, in a nonelectrified network less than 1,000 kilometers in length. Yet Tajikistan is expected to benefit from railway improvements across the region. In addition, Tajikistan has multiple highway links to Uzbekistan, which benefit from the kind of multimodality in longdistance supply chains the TCTC intends to champion. Imports and exports to and from Tajikistan benefit from reduced transport costs derived from TCTC investments more broadly. In the long run, Tajikistan’s gross domestic product (GDP) is estimated to increase by about $39 million (0.31 percent) as a result of TCTC development. This GDP gain is primarily driven by higher economic output and consumption, supported by an increase in imports of 0.56 percent ($46 million). Exports also rise modestly, by about $8 million (0.24 percent), reflecting improved regional connectivity. The largest increases in Tajikistan’s imports originate from Kazakhstan, Türkiye, and the Kyrgyz Republic, where imports rise by $13.4 million (1.1 percent), $10.6 million (3.6 percent), and $0.7 million (0.8 percent), respectively. These increases are driven by reductions in import transport costs of around 1.4 percent from Kazakhstan, 1.8 percent from Türkiye, and 1.0 percent from the Kyrgyz Republic. Lower transport costs also lead to a 2.3 percent reduction in import costs from the rest of the world, resulting in an increase in world imports of around $24.3 million (0.4 percent). Overall, higher imports support an expansion in Tajikistan’s economic output of about $67 million (0.28 percent). The sectors experiencing the largest output gains are agricultural products (0.3 percent, $19.2 million), minerals (5.2 percent, $8.1 million), and trade (0.5 percent, $7.5 million). Employment increases by around 0.4 percent, and household consumption rises by 0.47 percent ($53 million). Exports from Tajikistan to regional partners also benefit from TCTC improvements. Exports to Türkiye, Uzbekistan, and Kazakhstan increase by about 2.8 percent, 2.1 percent, and 2.8 percent, respectively, together accounting for an export increase of roughly $25.4 million. These partners experience the largest reductions in export transport costs from Tajikistan. By contrast, exports to Azerbaijan decline slightly (about 1.0 percent) as a result of negligible transport cost reductions, and exports to the rest of the world fall by around $18.7 million (0.8 percent), reflecting a reorientation of trade toward regional markets.

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TABLE 3.2 Country-level GDP impacts from investing in TCTC infrastructure

Country

% GDP increase (long run)

% Employment increase (long run)

Equivalent compounded annual GDP growth rate (% over 10 years)

Absolute change in GDP ($, millions)

Armenia

3.40

3.90

0.33

873

Azerbaijan

0.43

0.66

0.04

326

Georgia

3.61

0.79

0.36

1,197

Kazakhstan

2.22

3.19

0.22

6,141

Kyrgyz Republic

4.83

3.97

0.47

735

Tajikistan

0.31

0.45

0.03

Türkiye

4.11

4.38

0.40

47,137

Turkmenistan

1.25

1.52

0.12

791

Uzbekistan

0.70

0.40

0.07

749

All countries

3.30

2.90

0.33

57,988

Source: Original table for this publication. Note: GDP = gross domestic product; TCTC = Trans-Caspian Transport Corridor.

The development of the TCTC is projected to create jobs in all host countries. This is expected both through direct job creation in infrastructure-related sectors and through broader multiplier effects across the economy (refer to table 3.2). All TCTC host countries experience a positive employment impact from the corridor’s development. The largest job gains are in construction, which benefits directly from infrastructure investment. For example, construction output increases sharply in several countries, including Armenia (10 percent), Georgia (23.6 percent), Kazakhstan (8.6 percent), the Kyrgyz Republic (27.3 percent), Türkiye (11.1 percent), and Uzbekistan (15.7 percent), driving substantial new employment opportunities. Trade and business services also see significant employment growth, reflecting increased economic activity and demand for logistics, distribution, and support services. Sectors such as manufacturing, vehicles, machinery, and agrifood benefit from improved access to markets and inputs, supporting job creation beyond the construction phase. Similarly, all TCTC host countries are expected to increase their trade volumes under the TD scenario (refer to table 3.3). The scale of impact varies by country and reflects differences in economic structure, trade orientation, and the magnitude of transport cost reductions. Exports increase in all countries except Turkmenistan, with the largest percentage increases in Armenia (3.6 percent), Georgia (1.6 percent), the Kyrgyz Republic (1.5 percent), and Türkiye (0.9 percent). Imports increase in all countries, with particularly strong growth in Georgia (8.2 percent), the Kyrgyz Republic (7.8 percent), and Uzbekistan (6.0 percent), reflecting increased demand for intermediate and capital goods associated with higher investment and output.

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TABLE 3.3 Country-level export and import impacts of investing in TCTC infrastructure Country

% Export increase

Absolute change in exports ($, millions)

% import increase

Absolute change in imports ($, millions) 547

Armenia

3.61

418

3.77

Azerbaijan

0.32

133

0.78

175

Georgia

1.61

8.21

1,477

Kazakhstan

0.69

612

3.11

2,282

Kyrgyz Republic

1.53

7.82

1,093

Tajikistan

0.24

0.56

Türkiye

0.92

2,837

4.63

18,291

Turkmenistan

−0.38

−63

1.83

150

Uzbekistan

0.97

253

6.02

2,558

Source: Original table for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

At the country level, the impacts reflect both existing trade patterns and corridor induced reductions in transport costs:

• Kazakhstan. Exports rise by 0.7 percent ($612 million), with the largest gains

directed toward the Kyrgyz Republic, Türkiye, and Uzbekistan. Imports increase by 3.1 percent ($2.3 billion), strengthening Kazakhstan’s integration with regional partners while also expanding trade with the rest of the world.

• The Kyrgyz Republic. Exports increase by 1.5 percent ($70 million), driven

primarily by higher shipments to Kazakhstan, Türkiye, and Uzbekistan. Imports expand sharply by 7.8 percent ($1.09 billion), consistent with the country’s role as a net importer and reflecting the strong response of import demand to reduced transport costs.

• Uzbekistan. Exports grow by 1.0 percent ($253 million), with the largest gains accruing to Kazakhstan, the Kyrgyz Republic, and Türkiye. Imports rise by 6.0 percent ($2.56 billion), supporting domestic industries and investmentdriven growth.

• Türkiye. Exports expand by 0.9 percent ($2.8 billion), with the strongest

increases directed toward Azerbaijan, Georgia, and Uzbekistan. Imports increase by 4.6 percent ($18.3 billion), reflecting Türkiye’s role as a regional trade hub and its strong demand for intermediate goods.

• Other TCTC host countries. Other host countries, including Armenia, Azerbaijan, and Turkmenistan,8 also see positive trade impacts, with the scale of benefit reflecting both the size of investment and the degree of integration into regional trade and transport networks.

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Trade expansion is not uniform across sectors. Imports of machinery and equipment rise sharply in Armenia, Georgia, Kazakhstan, the Kyrgyz Republic, Türkiye, and Uzbekistan, supporting industrial upgrading and diversification. Vehicle imports increase significantly in Georgia, the Kyrgyz Republic, Türkiye, and Uzbekistan, reflecting both consumer demand and the needs of expanding logistics networks. Exports of construction-related goods rise, supporting job creation.

Conclusions The analyses in this chapter show that the TCTC’s ability to generate economic value is fundamentally shaped by how much freight it can attract and how reliably it can serve different market segments. Freight flows across the corridor are highly heterogeneous: bulk and low‑value commodities rely primarily on capacity and cost, and containerized, higher‑value, and time‑sensitive goods depend critically on speed, reliability, and operational coordination. This segmentation, combined with differing elasticities across origin-destination pairs, explains why improvements in corridor performance translate unevenly across gateways, commodities, and countries. The results hint at the strategic importance of targeted investments and reforms. Infrastructure upgrades in rail, ports, and border crossings materially increase throughput and resilience, particularly along the Caspian crossing and Western gateway, and performance improvements at the Eastern gateway are decisive for capturing discretionary transit traffic. At the same time, the analysis shows that a substantial share of future freight growth—especially in agrifood products, critical minerals, and manufactured inputs—depends on reducing total logistics costs, including time‑related costs, rather than on capacity expansion alone. Beyond freight outcomes, improved corridor performance generates meaningful wider economic impacts. Lower transport costs and better connectivity support GDP growth, job creation, and trade expansion across TCTC economies, with relatively larger proportional gains accruing to smaller, landlocked countries and large absolute gains concentrated in the region’s largest economies. These benefits, however, are not uniform: corridor development can also reallocate trade and activity across regions, underscoring the importance of understanding distributional effects alongside aggregate gains. Taken together, the findings suggest that unlocking the TCTC’s full potential requires a balanced approach that combines infrastructure investment with operational, institutional, and policy reforms. Prioritizing performance where elasticity is highest, aligning investments with the needs of different freight segments, and strengthening cross‑border coordination will be critical to transforming the TCTC from a promising alternative route into a reliable, competitive corridor embedded in regional and global value chains.

Trans-Caspian Transport Corridor Freight and Economic Potential

Notes 1. Because of its geographic location, the Eastern gateway handles trade flows from multiple Eurasian land routes in addition to the TCTC. 2. Oil products are considered medium-value goods. 3. As explained in chapter 4, the only exception to this is the Uzbekistan-Kyrgyz Republic-China line (under construction), which is not expected to play a primary role in transcontinental transit traffic through 2040. 4. The cargo volumes presented are flows of goods at each gateway. Not all trade within TCTC countries is captured by the gateways. 5. Logistics costs are defined as the summation of transport costs and inventory carrying costs in supply chains (refer to chapter 4 for a more detailed discussion of what constitutes logistics costs and how this influences shipper-level decision-making). 6. GTAP is a standard computable general equilibrium model. The GTAP 12.0 database (https:// www.gtap.agecon.purdue.edu/databases/v12/), referenced to 2019, served as the primary data source. For this report, the GTAP database was set up to model the nine TCTC host countries in detail, and the rest of the world was considered an aggregated outside region. Similarly, commodities were aggregated into 40 strategically significant sectors. The full database was updated to 2023 using GDP and macroeconomic data from the World Bank and growth projections from the International Monetary Fund. This ensures that the economic structure and scale reflect the most recent realities of the TCTC region. The sectors were aggregated to retain those most relevant for the TCTC economies and the assessment of transport improvements, including construction, trade, manufacturing, agrifood, and key services. See appendix C for more details on the GTAP model and analytical approach. 7. The exception is Türkiye, which experiences both a high absolute GDP and a percentage increase in GDP because of the transformational nature of TCTC investments in the country. 8. Turkmenistan’s exports see a reduction mainly because of a reduction in exports to the rest of the world of $91 million (0.65 percent). However, its trade within the TCTC region sees an increase.

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4 Trans-Caspian Transport Corridor Performance: Drivers, Volumes, and Investment Viability Implications Main Messages

• Maximizing the Trans-Caspian Transport Corridor’s (TCTC’s) cargo capture and economic potential depends, in part, on improving the corridor’s logistics performance—its ability to serve shippers at lower levels of unitary logistics costs both in absolute terms and relative to alternative logistics options.

• The TCTC’s logistics performance is driven not only by fit-for-purpose

infrastructure and equipment availability but also by improvements in trade facilitation, service delivery, and cross-border collaboration.

• The containerized landbridge linking East Asia and Europe is the most performance driven of all markets served by the TCTC because of its discretionary nature.

• Competitively serving the Eurasian landbridge has two major implications for the TCTC: (1) the landbridge is an important source of volume growth and (2) serving it is likely to act as a catalyst to increase the logistics performance of other markets served by the TCTC, including regional markets connecting its host countries.

• If targeted infrastructure and equipment capacity investments in the TCTC are combined with improvements in trade facilitation, service delivery,

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and cross-border collaboration, the corridor is expected to competitively serve the Eurasian landbridge by 2040, with important gains throughout the 2030s.

• Significant infrastructure investments are underway: of the 16

investments that have been identified as needed to address the most urgent or consequential infrastructure bottlenecks along the corridor, with a combined estimated cost of $25.1 billion, 12 investments (75 percent, accounting for 85 percent of the aggregate estimated cost) are already in implementation. Although additional investments—several of them identified by this report—will be needed, a key opportunity going forward is to complement infrastructure development progress with operational improvements.

Introduction Performance matters to the Trans-Caspian Transport Corridor (TCTC). This is a more nuanced statement than it would seem at first glance because (1) high performance may mean different things to different freight stakeholders and (2) not all market segments served by the TCTC are driven by logistics performance at the same rate, elevating the importance of market segmentation as a policy making tool in cross-border, multipurpose corridors such as the TCTC. Because the TCTC serves several containerized and noncontainerized markets, capturing its full freight volume potential will necessarily depend on improved logistics performance. Although chapter 3 quantified projected TCTC volumes, gateway roles, commodity composition, and sensitivity to macroeconomic and cost shocks, it also highlighted an important distinction between market segments: not all freight responds to infrastructure development and service delivery improvements (or deterioration) in the same way. In particular, transit trade—especially intercontinental transit trade—was shown to be more elastic and therefore more sensitive to logistics performance than regional trade. Similarly, trade in higher-value-added or time-sensitive goods, which are typically containerized, is more dependent on logistics performance than is trade in bulk and break-bulk commodities. Against this backdrop, this chapter focuses on the TCTC’s performance dimension, with particular attention to transcontinental containerized shipments between East Asia and Europe. These flows represent the most demanding segment served by the TCTC, because their routing is discretionary and exposed

Trans-Caspian Transport Corridor Performance

to multiple well-performing alternatives, including integrated sea freight routes and alternative overland corridors. For this segment, competitiveness is determined not only by infrastructure availability but by end-to-end logistics performance, including transit times, transit time reliability, border and port processing efficiency, and operational coordination across countries and transport modes. This chapter examines the conditions under which improvements in infrastructure, trade facilitation, and operations could enable the TCTC to function as a competitive Eurasian landbridge and what this implies for investment prioritization and sequencing. It assesses performance outcomes, volume capture, and capacity adequacy under alternative corridor development pathways, and it evaluates the extent to which major investments depend on performance-sensitive transit demand versus more stable regional freight markets. Read together, this chapter and the preceding one provide an integrated view of how freight potential translates into performance requirements and investment choices in the TCTC. The chapter builds on the scenario-based trade and transport model introduced in chapter 3. Chapter 3 laid out the model structure, temporal horizon (base year 2023 with projections to 2030 and 2040), and core policy scenarios used throughout the analysis, including a status quo (SQ) do-minimum reference case; a TCTC development (TD) scenario reflecting key planned and ongoing infrastructure investments (primarily) and service delivery improvements (secondarily, and mostly focused on expansion of logistics equipment capacity, such as rolling stock and Caspian crossing vessels); and a set of sensitivity scenarios testing outcomes under higher and lower sea freight rate conditions compared with those of the baseline TD scenario (refer to appendix B). Of particular relevance to this chapter is the consideration of a TCTC stretch (TS) scenario, which represents a best-case performance benchmark. In addition to the investments considered under the TD scenario, TS assumes the removal of residual capacity constraints by 2040 and the implementation of cross-border collaboration, trade facilitation, and operational improvements at a level that substantially enhances end-to-end efficiency (chapters 6, 7, and 8 discuss what these improvements could entail in practice). When the TS scenario is further combined with higher sea freight rates (TS-HR scenario), this configuration constitutes an in-principle high case for transcontinental landbridge volume capture. Building on this shared framework, this chapter uses the SQ, TD, TS, and associated high and low sea freight rate scenarios to assess logistics performance, competitiveness, and TCTC volume capture potential for transcontinental containerized traffic, where outcomes are most sensitive to service quality and reliability.

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Current Performance of the TCTC Gains in logistics performance increase firm-level productivity and profitability; they also contribute to country-level economic diversification, economic growth, and job creation (refer to box 4.1). High logistics performance is primarily the mainstay of containerized trade, because the value content or time sensitivity of containerized freight justifies the use of premium—that is, faster and more reliable, although typically more expensive—transport and handling services. By contrast, the mainstay of noncontainerized bulk and break-bulk freight is readily available but also basic low-unit-cost transport services, because of their lower-value content and time sensitivity compared with containerized freight. Whereas infrastructure capacity and equipment availability are arguably the most dominant determinants of market viability for bulk freight logistics services, containerized logistics services depend on much more than adequate infrastructure and equipment capacity: they are sold on the basis of factors such as speed, coordination, predictability, responsive exceptions management, and visibility.

BOX 4.1 Why premium logistics services matter in international logistics despite their relatively small market size The most meaningful metric to assess the logistics performance of a trade corridor, including the Trans-Caspian Transport Corridor, is the total unitary logistics costs it generates for shippers who route cargo through it. This single metric encapsulates the (outof-pocket transport) cost, time, and reliability dimensions that are of interest to policy makers, shippers, carriers, and logistics service providers. Several other metrics are also relevant, notably among them change of climate mitigation and adaptation metrics, such as greenhouse gas emissions per ton-kilometer transported, or the incidence of disruption at key nodes and links. Yet it can be argued that these aspects too are encapsulated in unitary logistics costs, because (1) on the mitigation side, cost-efficient logistics and low-carbon logistics are overwhelmingly aligned, given the share of transport costs typically accounted for by fuel consumption and the share of logistics costs driven by vehicle maintenance and downtime, and (2) on the adaptation side, supply chain disruption, including that on account of climate shocks, increases costs, lengthens delivery times, and reduces reliability. Unitary logistics costs are defined as the sum of transport costs and inventory carrying costs expressed on a per-unit basis, such as per ton or per 20-foot equivalent unit. There is an inverse relationship between these two cost components in supply chains served by Continued

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BOX 4.1 Why premium logistics services matter in international logistics despite their relatively small market size (Continued) competitive markets: higher (lower) unitary transport costs are generally associated with lower (higher) unitary inventory carrying costs. This stems from the fact that higher unitary transport costs are typically associated with faster and more reliable modes of transport and mode-specific transport services, such as when comparing sea freight with air freight services. On a per-unit basis, air freight is approximately 6–10 times more expensive than sea freight in terms of out-of-pocket transport costs; at the same time, air freight reduces delivery lead times by a factor of 10–15 compared with sea freight itineraries while being 5–10 times more reliable (typically measured by the standard deviation of the delivery lead time). Faster delivery lead times reduce in-transit inventory carrying costs, and more predictable delivery lead times reduce safety stock inventory carrying costs. Given this inverse relationship, the rational shipper makes logistics decisions at the itinerary level—routing, modal, and service-type choices—in such a way as to minimize the summation of transport costs and inventory carrying costs (that is, total unitary logistics costs) rather than to minimize one or the other in isolation, among available (alternative) itineraries. For example, there may be commodities and origin-destination pairs for which the logistics cost impact of incurring higher transport costs for better service may be more than offset by the inventory carrying cost implications—that is, cost reductions—enabled by this choice. In this situation, a “naïve shipper” seeking to minimize transport costs alone would increase rather than reduce the logistics costs of its supply chain. This is how premium products, such as air freight and, in the case of many (although not all) landbridge markets, rail freight, can compete with lower unitary transport cost modes such as sea freight. Premium logistics services in international logistics are also niche market solutions, because only a small subset of commodities and supply chains can justify incurring higher transport costs—specifically, commodities with (1) a certain minimum value-to-weight ratio or value content, because their value makes it significantly more expensive to hold these products in inventory, or (2) a certain level of physical perishability, obsolescence risk, or operational urgency, because their value diminishes significantly with time (obsolescence, perishability) or their associated operational costs increase significantly with time (operational urgency). This is why most global long-distance trade is handled by sea freight supply chains, which generally consist of mass-market, rather than nichemarket, services. Yet for commodities that do meet this value-obsolescence-urgency threshold, the availability of premium logistics services can reduce shipper-borne logistics costs, help raise firm-level productivity and profitability, and ultimately make entire economies more competitive. Premium logistics services are not mode specific. Within the sea freight supply chain there are multiple service types, some faster and more reliable (and likely more expensive in Continued

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BOX 4.1 Why premium logistics services matter in international logistics despite their relatively small market size (Continued) terms of unitary out-of-pocket transport costs) than others. High-performing logistics markets and, by extension, countries with high logistics performance, usually attain this status by offering a range of logistics services within and across transport modes to fit the needs of a wide variety of commodity types and shipper needs, from low-value goods (for example, construction materials) to high-value goods (for example, machinery and equipment), obsolescence-exposed goods (for example, fashion apparel and electronics), and time-sensitive goods (for example, perishable consumables and urgently needed industrial parts). The economic significance of premium logistics services is often disproportionate to their tonnage share. Although premium logistics services—by definition—account for a lower tonnage share compared with mass-market services, their economic size is best measured in terms of logistics costs saved or corporate value and jobs created by the shippers that rely on them. This is one important reason why premium logistics services matter from a policy, sectoral, and firm-level standpoint, despite their relative size.

The challenge for the TCTC is that its current logistics performance is poor relative to alternatives, particularly premium alternatives, notwithstanding the significant additions of rail, port, and highway infrastructure capacity ongoing across the corridor. This challenge is most visible in the Eurasian containerized rail landbridge market—the overland rail link between East Asia and Europe for containerized trade. This is the single most performance driven of all markets served by the TCTC because, in addition to its commodity mix (preponderance of high-value-added products), it is entirely discretionary: shippers have several options at their disposal to route containerized cargo between East Asia and Europe across modes and routes, including the mass-market, highly operationally, environmentally, and cost-efficient sea freight supply chain and the proven, highly integrated, premium China-Europe Railway Express (CRE) rail landbridge product (refer to box 4.2). The only way for the TCTC to compete in this contested market is through high performance, which it currently lacks. Similar containerized landbridge products elsewhere, such as the mini-landbridge market of North America, linking its West and East coasts by rail as part of shipments from East Asia to the East Coast of North America as an alternative to all-water sea freight services via the Panama Canal (refer to box 4.3), confirm the central role of performance as an anchor of their value proposition.

Trans-Caspian Transport Corridor Performance

BOX 4.2 Role of the China-Europe Railway Express in the East Asia-Europe containerized rail landbridge The current main service along the Eurasian containerized rail landbridge is the ChinaEurope Railway Express (CRE), led by China State Railway Group Co., Ltd., in coordination with partner railway undertakings in Central Asia, Eastern Europe, and the European Union. Operational since 2011, CRE is made up of dozens of scheduled routes (93 as of May 2026) and thousands of individual train services per year linking 129 cities in East Asia with 232 cities in 26 European countries. CRE is a cross-border highperformance, premium, niche-market logistics product: it is more expensive than sea freight (by a factor of 2–4 on a per-unit basis as of the time of writing, excluding government subsidies and depending on origin-destination route), yet it is also 2.5 times faster and significantly more reliable. For a subset of commodities in the overall East Asia-Europe market, this combination of service factors reduces total unitary logistics costs (refer to box 4.1). In 2023, this was the case for 217,545 laden 20-foot equivalent units (TEU), or about 1.2 percent of all containerized freight transported between East Asia and Europe that year; sea freight accounted for 95.3 percent of this market over the same period (refer to figure 4.1). Because of the premium, niche-market nature of landbridge services, CRE’s small relative market size compared with sea freight routes is to be expected. Still, CRE demand in absolute terms—upward of 215,000 containers, or about 2.6 million tons of freight, in 2023; 393,000 containers in 2024; and 325,000 containers in 2025—is significant. As early as 2021, CRE volumes were 3.5 times higher than in 2023, having reached 765,280 laden TEU that year. Beyond their logistics cost reduction and firm-level productivity impact (refer to box 4.1), premium logistics services such as the CRE matter at the policy and firm levels because they tend to generate logistics and economic spillovers across the geographies they span. This is particularly true in the case of long-haul cross-border routes such as the Eurasian landbridge. To the extent that the TCTC can provide competitive Eurasian landbridge services relative to other modes and routes on the East Asia-Europe trade, shippers based in the TCTC host countries—from Central Asia to the South Caucasus and Türkiye—are likely to benefit from services provided by the same carriers and nonasset based logistics service providers serving the Eurasian landbridge. More important, the Eurasian containerized landbridge has a history of volume capture and market growth, which can provide the initial level of demand to make scheduled, timedefinite, value-added containerized transport and logistics services between East Asia and Europe along the TCTC viable. Source: Original compilation for this publication; United Transport and Logistics Company-Eurasian Rail Alliance; China-Europe Railway Express.

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BOX 4.3 Role of the North American mini-landbridge in logistics between East Asia and the East Coast of North America Like the China-Europe Railway Express in Eurasia (refer to box 4.2), the North American mini-landbridge is a premium, niche-market logistics product in support of containerized freight shipments, in this case between East Asia and the East Coast of North America. Like the East Asia-Europe market, the East Asia-East Coast of North America market is discretionary, with multiple routing and service options available to the shippers that comprise it. The dominant logistics alternative in this market’s eastbound (headhaul) direction is the transportation of containers from East Asia to the East Coast of North America by mass-market, highly cost-efficient “all-water” sea freight services via the Panama Canal. The port-to-door delivery lead time of all-water itineraries in this trade is typically 30–35 days, at a per-40-foot equivalent unit (FEU) container cost that has historically fluctuated, roughly, within the $2,500–$3,500 range (excluding periods of high supply chain stress). Alternatively, a mini-landbridge shipment entails using a sea freight connection between East Asia and the West Coast of North America—say, the port of Los Angeles or the port of Seattle/port of Tacoma—and then putting the container on rail for transportation, in this example, across the continental United States, until reaching its final destination on the U.S. East Coast—say, the New York metropolitan area. Such a service, reliant on what is widely recognized as the world’s most efficient rail intermodal network, is about twice as fast as all-water services—with typical port-to-door lead times in the 15- to 17-day range—and more reliable, but it is also roughly 50 percent more expensive per FEU compared with all-water services. When total logistics costs, rather than only transportation costs, are taken into consideration, a subset of East Coast shippers moving premium commodities such as high-end electronics, fashion apparel, footwear, machinery and parts, and premium or highly seasonal consumer goods, can reduce the cost of their supply chains by using mini-landbridge instead of all-water services. More important, for some shippers the sources of logistics cost savings facilitated by mini-landbridge services compared with all-water alternatives extend beyond factors determined by modal and route choice. Specifically, mini-landbridge services can reduce logistics costs through at least two additional cost savings drivers, as follows: 1. Cargo transloading. Eastbound mini-landbridge shippers can reduce per-unit transportation costs by transferring (transloading) their cargo from International Organization for Standardization (ISO) marine (typically 40-foot-long, high-cube) containers to domestic 53-foot containers upon reaching the U.S. West Coast. Because the volumetric capacity of North American domestic high-cube 53-foot containers is approximately 40 percent higher than that of ISO 40-foot high-cube marine containers, fewer domestic container loads are needed to transport the same amount of freight compared with ISO container loads, resulting in transport cost

Continued

Trans-Caspian Transport Corridor Performance

BOX 4.3 Role of the North American mini-landbridge in logistics between East Asia and the East Coast of North America (Continued) savings relative to mini-landbridge itineraries without transloading, further reducing the logistics costs differential compared with all-water services.a 2. Inventory postponement. Mini-landbridge logistics give shippers the option to delay (postpone) their inventory positioning decisions by the amount of time it takes their cargo to reach the U.S. West Coast (as much as 2 weeks in typical itineraries). That is, rather than deciding where to position inventory in North America at the point of cargo handover to the vessel operator in East Asia, as is necessary for all-water itineraries, mini-landbridge shippers can make this determination when their cargo arrives on the West Coast and is being transferred (especially when this includes transloading) to the subsequent rail intermodal connections, at which point final inland destinations need to be filed (but not earlier). This strategy in effect reduces demand risk, because the variability of demand is proportional to the length of the forecasting period; this in turn reduces the amount of safety stock inventory that shippers need to keep on hand at any given location for a given service level, which in turn reduces total logistics costs. Like the North American mini-landbridge, Trans-Caspian Transport Corridor containerized landbridge services can develop sources of competitiveness from both modal-route and nonmodal-nonroute drivers. This can help transform the corridor into a compelling logistics alternative in the East Asia-Europe market. a. The (modest) delivery lead time impact (increase) of undertaking transloading operations is typically offset by preferential cargo handling historically given to domestic shipments by North American rail intermodal carriers.

Notably, the TCTC is not yet competitive as a Eurasian rail landbridge, whether relative to the sea freight routes or CRE services. This is borne out by the two most basic service parameters defining the logistics competitiveness of the TCTC and the sea freight routes: travel times and out-of-pocket transport costs. Specifically, taking Chongqing, China-Budapest, Hungary as a representative door-to-door route in the Eurasian rail landbridge market, the TCTC today is on average both slower and more expensive in terms of out-ofpocket transport costs than the sea freight supply chain (refer to figure 4.1) (it is also believed to be no more predictable than the sea freight supply chain, although verifiable data on this are generally not available).1 This means, by definition, that a typical or average TCTC connection in this market would yield higher unitary logistics costs for shippers than the sea freight routes at present, irrespective of freight value (refer to figure 4.2). Only when the TCTC

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FIGURE 4.1 Chongqing-Budapest containerized market: Comparative service delivery benchmarks for the TCTC rail landbridge and the sea freight supply chain, 2023 b. Out-of-pocket transport costs

a. Delivery lead time

$ per FEU

Number of days 50 50

12,000

10,534

10,000

9,834

8,000

6,000 20

5,267

4,000

2,000

TCTC Türkiye branch

TCTC Black Sea branch

Sea freight route

TCTC Türkiye branch

TCTC Black Sea branch

Sea freight route

Source: Original figure for this publication. Note: For a discussion of TCTC branches, including the Türkiye branch and Black Sea branch, refer to box 4.4. FEU = 40-foot equivalent unit; TCTC = Trans-Caspian Transport Corridor.

FIGURE 4.2 Chongqing-Budapest containerized market: Comparative unitary logistics costs for the TCTC rail landbridge and the sea freight supply chain, by product value, 2023 a. Household goods (product value ~$80,000 per FEU) $ per FEU 15,000 12,000

$ per FEU

14,916 8% 21% 9,362

9,000 6,000

12% 32% 71%

3,000 0

30,000

28,060

25,000

17%

20,000 15,000

45%

Sea freight

Safety stock inventory carrying costs

5,000 0

21,649 21%

55%

10,000 56%

TCTC

b. Machinery and equipment (product value ~$320,000 per FEU)

38%

TCTC

In-transit inventory carrying costs

Source: Original figure for this publication. Note: FEU = 40-foot equivalent unit; TCTC = Trans-Caspian Transport Corridor

24% Sea freight Transport costs

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Trans-Caspian Transport Corridor Performance

is able to consistently (that is, on average) provide shorter and more predictable delivery lead times compared with the sea freight routes will it begin to generate a logistics cost trade-off compared with the sea freight options, despite entailing higher out-of-pocket unitary transport costs— particularly for high-value or time-sensitive goods. This raises several questions. First, given the TCTC’s current delivery lead time and lead time predictability profile, how much shorter, and how much more predictable, would this lead time need to be for the TCTC to be competitive with the sea freight routes as a rail landbridge? Figure 4.3 sheds light on this question. Again using Chongqing-Budapest as a representative origin-destination pair in the Eurasian landbridge market, it plots the TCTC door-to-door delivery lead time that yields the same unitary logistics costs compared with the sea freight supply chain as a function of shipment value per container at current average out-ofpocket unitary transport costs.2

FIGURE 4.3 TCTC Chongqing-Budapest containerized service delivery lead time yielding the same unitary door-to-door logistics costs as the sea freight supply chain, as a function of shipment value per container TCTC door-to-door delivery lead time (days) 30

• Sea freight door-to-door delivery lead time = 45.3 days • Sea freight door-to-door transport cost per FEU = $5,267 • TCTC door-to-door transport cost per FEU = $10,534

25 20 18.8 days

10 5

$165,500 per FEU

• Machinery, equipment, and parts • Vehicles • Computers and electronics • Professional and scientiﬁc instruments • Fashion apparel, footwear, and accessories • Leather products • Premium toys • Seasonal products

0 100 110 120 130 140 150 160 170 180 190 200 210 220 230 240 Freight value per FEU ($, thousands)

250

Average value per FEU in the East Asia-Europe trade (all modes and routes) = ~$100,000 Source: Original figure for this publication. Note: $165,500 is the approximate median value per FEU of goods transported in the East Asia-Europe trade. Analysis assumes that the coefficient of variation of the TCTC delivery lead time is 8 percent compared with 15 percent for the sea freight supply chain. FEU = 40-foot equivalent unit; TCTC = Trans-Caspian Transport Corridor.

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Most containerized goods transported between East Asia and Europe fall within a value range of $19,000–$312,000 per 40-foot equivalent unit (FEU), with the average p er-FEU value for this trade being in the order of $100,000. As figure 4.3 shows, at this average value of $100,000 per FEU, no reduction in delivery lead time would make the TCTC competitive on a unitary logistics costs basis (that is, on a per-container basis) with the sea freight routes. This is not surprising: because of its higher out-of-pocket transport costs, the TCTC landbridge can only compete as a premium, niche-market alternative to lowercost, mass-market sea freight options. Figure 4.3 confirms that, as the value of freight increases, the TCTC delivery lead time required for TCTC-linked unitary logistics costs to match those of the sea freight supply chain starts to climb. A reasonable target for the TCTC would be to consistently yield a delivery lead time that roughly matches the median product value (not the average product value) of the containerized East Asia-Europe market, which is estimated to be in the order of $165,500 per FEU. At this value, the delivery lead time that would make the TCTC competitive with sea freight alternatives is 18.8 days (refer to figure 4.3), with key target commodities including, but not limited to, machinery, equipment, and parts; vehicles; computers and electronics; professional instruments; fashion apparel and footwear; leather products; premium toys; and seasonal products. Second, what would it take for the TCTC to achieve an average delivery lead time in the Eurasian rail landbridge consistent with 18.8 days between Chongqing and Budapest? By when might this be achievable, and with what volume implications? More broadly, how dependent are infrastructure investments along the TCTC on the corridor’s ability to capture this demanding, discretionary Eurasian landbridge traffic? The rest of the chapter sheds light on these questions.

The TCTC’s Competitiveness Reach as a Eurasian Landbridge A performance transformation of the TCTC will require, in addition to infrastructure investments, action on three fronts: cross-border collaboration, trade facilitation, and operations. It will also require time to consolidate these improvements in the market. Transforming the TCTC into a competitive Eurasian containerized landbridge will take additional interventions to complement infrastructure development, including on collaboration, trade facilitation, and operational improvements aimed at better service delivery. International experience suggests that attaining these improvements is unlikely to be feasible in the short term. Both these assertions are confirmed by modeling findings. Specifically, taking the Chongqing-Budapest itinerary as a benchmark, model estimates show, unsurprisingly, that the current noncompetitiveness of the

Trans-Caspian Transport Corridor Performance

TCTC landbridge relative to the sea freight route in terms of door-to-door delivery lead time will remain through at least 2040 under SQ conditions (refer to figure 4.4a). They also show that, at 18.0 days, the CRE service today, unlike the TCTC, is competitive as a Eurasian landbridge product relative to the sea freight routes at slightly less than the median commodity value level for this market (refer to figure 4.3). Emphasis on infrastructure is unlikely to alone close the TCTC’s delivery lead time performance gap in the Eurasian landbridge market. Model findings suggest that, although significant improvements in service levels, as measured by doorto-door travel times, can be expected under the infrastructure-focused TD scenario for both 2030 and 2040, sufficient to attract certain premium-value or time-sensitive commodities to the TCTC, these improvements are not expected to maximize the TCTC’s cargo capture potential (refer to figure 4.4b). This would require achieving competitiveness with the sea freight options at a level that also reaches performance convergence with CRE services. However, if infrastructure bottlenecks are timely addressed to prevent capacity chokepoints, and, in addition, collaboration, trade facilitation, and operational improvements are introduced to further increase logistics efficiency, particularly with regard to cross-border procedures, rail-shipping integration, and maritime port operations, as envisaged under the TS scenario, modeling projections suggest that by 2040 the TCTC’s Türkiye branch could both be more competitive relative to the sea freight routes compared with the TD projections and match the CRE landbridge lead time performance (refer to figure 4.4c). Under these conditions, both the TCTC and CRE services are expected to reach average delivery lead times in 2040 consistent with being competitive with the sea freight route at the current estimated median commodity value for this market. Meanwhile, the TCTC’s Black Sea branch would reach the same level of competitiveness as that of the Türkiye branch under TD 2040 conditions. This would bring the TCTC reasonably within its maximum cargo capture potential in the Eurasian containerized rail landbridge market. Maritime port and border crossing efficiency gains hold the key to capturing most of the TCTC’s unrealized performance potential. A lead time decomposition analysis for the SQ, TD, and TS scenarios through 2030 and 2040 reveals the importance of minimizing port dwell times along the TCTC as a competitiveness driver (refer to figure 4.5).3 According to this assessment, in 2023 more than half of the TCTC transit time in our benchmark ChongqingBudapest itinerary when using the Black Sea branch—55 percent—was spent with the cargo standing still at maritime ports. In all improvement scenarios (TD 2030, TD 2040, and TS 2040), this share is reduced significantly, especially in the operations- and trade-facilitation-focused TS 2040 scenario, under which port dwell time is estimated to take a comparatively lower 42 percent of the lead time.

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FIGURE 4.4 Eurasian containerized rail landbridge: Chongqing-Budapest average delivery lead time, by scenario, 2023, 2030, and 2040 b. Scenario 2: TD

a. Scenario 1: SQ

c. Scenario 3: TS

Number of days 60 50

51.0 51.1

50.0 47.0

55.5 53.5 47.0

50.0

47.0 39.5 33.5

40 30

22.5

18.0

21.5

20.5

18.0

50.0

Sea freight route = 45.3 39.5 33.5

34.1 26.5 19.0

26.1

20.5

18.0

18.8 18.8

10 0

2023

2030

2040

2023

TCTC Black Sea branch (9,966 km)

2030

2023

2040

TCTC Türkiye branch (10,952 km)

2030

2040

CRE (10,130 km)

Source: Original figure for this publication. Note: CRE = China-Europe Railway Express; km = kilometer; SQ = status quo; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development; TS = TCTC stretch.

FIGURE 4.5 Eurasian containerized rail landbridge: Chongqing-Budapest average delivery lead time decomposition, by TCTC branch and scenario, 2023, 2030, and 2040 a. TCTC Black Sea branch

b. TCTC Türkiye branch Number of days

Number of days 47.0

51.0

39.5

55.5

34.1

26.1

10%

55%

37%

56%

36%

49%

44%

54%

39%

48%

45%

100%

51.1 3%

33.5 3%

53.5 3%

27%

25%

26%

70%

72%

70%

2030 SQ

2030 TD

2040 SQ

26.5 2% 18%

18.8 3% 11%

100%

42%

80%

87%

48% NVR

2023 SQ

2030 SQ

2030 TD

2040 SQ

2040 TD

2040 TS Sea

2023 SQ Port

2040 TD

2040 TS

Rail

Source: Original figure for this publication. Note: NVR = no volumes recorded; SQ = status quo; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development; TS = TCTC stretch.

Trans-Caspian Transport Corridor Performance

For its part, the TCTC’s Türkiye branch did not serve landbridge volumes in 2023 because of capacity constraints. By 2030, port dwell times—which are lower as a share of total lead time compared with the Black Sea branch because of less exposure to maritime ports—are still expected to account for more than a quarter of time spent in transit in all scenarios for this branch. However, the improvement scenarios see a significant reduction of port dwell time share by 2040, to 18 percent and 11 percent under TD and TS, respectively, as ports further expand capacity and the corridor has more time to internalize efficiency gains, particularly under the TS scenario (refer to figure 4.5b). With 87 percent of lead time spent on rail by 2040, the TS scenario looks operationally similar to the single-mode CRE service. It is therefore not surprising that under the TS scenario the TCTC’s Türkiye branch matches the CRE’s average lead time by 2040 (refer to figure 4.4c).

Expected Landbridge Volumes The Eurasian containerized rail landbridge volumes expected to be captured by the TCTC and CRE services by 2030 and 2040 under different modeling scenarios (refer to appendix B) are shown in figure 4.6. The key market share ratios implied by these volumes are shown in figure 4.7. The key messages stemming from these findings are explained next. The TCTC landbridge would see growth even without additional investments, but this would fall well short of potential. Modeling output suggests that under SQ conditions, the TCTC is still likely to see a significant increase in landbridge volumes through 2030, at an average annual growth rate of upward of 50 percent over the 2023–30 period, from a low base, reaching 53,337 laden TEU by 2030 (up from 2,754 TEU in 2023). This stems from the fact that the SQ scenario controls for (1) key recently completed, critical infrastructure expansion projects and (2) expected greater participation of East Asian shippers in the TCTC going forward. Meanwhile, under SQ conditions the CRE service is expected to grow at a more modest rate through 2030 compared with the TCTC. Given its recent history of volume volatility, the CRE service is expected to reach 675,626 laden TEU by 2030 (below its all-time peak of 765,280 laden TEU in 2021). By 2040 the additional landbridge volume growth captured by the TCTC is much smaller compared with the gains expected through 2030, as the effect of recent infrastructure and operational improvements dissipates over time and, per SQ assumptions, is not further expanded or deepened.

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FIGURE 4.6 Eurasian containerized rail landbridge: Total volume by route and scenario, laden TEU, 2023, 2030, and 2040 a. TCTC S1: SQ

S2: TD 4.3%

4.5% 82,830 81.4%

52.7% 53,337

S3: TS 271,883

S4: TD-HR

12.5% 578,624

178,186

11.6% 81.4%

81.4%

2023

2,754

2030

2040

2023

2040

2023

2030

S6: TS-HR

–3.7% 178,186 122,850 81.4%

14.6%

2040

2023

2,754

2030

697,788

81.4% 178,186

2,754

2030

S5: TD-LR

178,186

178,186 2,754

534,575

2040

2,754

2023

2030

2040

2023

2030

2040

b. CRE S1: SQ 7.5%

S2: TD 1,395,439

675,626

2040

2023

S4: TD-HR 1,064,551

6.8%

2040

2023

2040

2023

1,248,100 6.8%

217,545

2030

2040

2023

1,251,664

16.8% 645,512

645,512

217,545

2030

S6: TS-HR

16.8%

645,512 217,545

2030

S5: TD-LR

7.7% 1,360,113 16.8%

16.8% 645,512

217,545

2030

5.1%

16.8% 646,512

17.6%

2023

7.4%

S3: TS 1,312,247

217,545

2030

2040

2023

2030

2040

Source: Original figure for this publication. Note: Percentage numbers inside bubbles refer to average annual growth rates over the referenced period. CRE = ChinaEurope Railway Express; S = scenario; SQ = status quo; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development; TD-HR = TD with higher sea freight rates; TD-LR = TD with lower sea freight rates; TEU = 20-foot equivalent units; TS = TCTC stretch; TS-HR = TS with higher sea freight rates.

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FIGURE 4.7 Eurasian containerized rail landbridge: Key laden TEU market shares, by market segment and by scenario, 2023, 2030, and 2040 a. Eurasian containerized rail landbridge (TCTC and CRE), in percent of East Asia-Europe containerized sea and rail freight market S1: SQ

S2: TD 6.0

1.3 2040

2023

2040

2023

8.0

4.2 4.2 1.3

1.3 2030

S6: TS-HR

5.6

4.2

1.3 2030

S5: TD-LR 7.7

4.2

1.3 2030

S4: TD-HR 6.7

4.2

3.7

2023

S3: TS

6.5

2040

2023

2030

2040

2023

1.3 2030

2040

2023

2030

2040

b. TCTC, in percent of Eurasian containerized rail landbridge market S1: SQ

S2: TD

7.3

21.6 5.6

S3: TS

S4: TD-HR

S5: TD-LR

28.2

35.2

S6: TS-HR 35.8

21.6

17.2

21.6

21.6 9.0 1.3 2023

1.3 2030

2040

2023

2030

2040

2023

1.3

1.3 2030

2040

2023

2030

2040

2023

1.3 2030

2040

2023

2030

2040

c. TCTC Türkiye branch, in percent of TCTC containerized rail landbridge market S1: SQ 0.8

S2: TD

0.8

29.5

S3: TS

S4: TD-HR 62.0

29.5

S5: TD-LR

31.3

29.5

S6: TS-HR 62.1

28.5

29.5

0.0 2023

0.0 2030

2040

2023

0.0

2030

2040

2023

2030

2040

2023

2030

2040

0.0

2023 2030 2040

2023

2030

2040

Source: Original figure for this publication. Note: CRE = China-Europe Railway Express; S = scenario; SQ = status quo; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development; TD-HR = TD with higher sea freight rates; TD-LR = TD with lower sea freight rates; TEU = 20-foot equivalent units; TS = TCTC stretch; TS-HR = TS with higher sea freight rates.

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Without investments, the TCTC would remain a small actor—less than 10 percent of volumes—in the Eurasian containerized rail landbridge market, and, in particular, its Türkiye branch would remain virtually disconnected from it. Under SQ conditions, by 2030 the TCTC is expected to account for 7.3 percent of the Eurasian containerized rail landbridge market, slightly lower than its current (2025) share of 7.8 percent. This share reduces to 5.6 percent by 2040 because of the lack of interventions assumed by the SQ scenario. In both 2030 and 2040, the TCTC’s Türkiye branch is expected to play a negligible role in the Eurasian containerized rail landbridge under SQ conditions, with a TCTC route share of 0.8 percent (with the rest captured by the Black Sea branch). Targeted infrastructure investments will increase TCTC landbridge volumes through 2040 at a rate more than 3 times faster than without them, and they will enable the TCTC’s Türkiye branch as a performance- and resilience-enhancing option. Expectations differ significantly under TD conditions compared with SQ, rooted in the sizable infrastructure- and equipment-driven performance improvements expected under TD compared with SQ. Specifically, the TCTC is expected to handle 178,186 laden TEU by 2030 and 271,883 laden TEU by 2040, with most volume gains expected to be front loaded, given the extent of ongoing or planned infrastructure investments and other improvements that are projected to be completed by 2030. Model projections suggest that, with infrastructure investments, TCTC landbridge volumes will be approximately 100 times larger than 2023 volumes, compared with “only” 30 times larger without investments—a differential of 190,061 laden containers by 2040. The TCTC’s share of the Eurasian containerized rail landbridge market under TD is significantly higher compared with that under SQ, reaching 17.2 percent by 2040, whereas the Türkiye branch is projected to serve nearly 30 percent of TCTC rail landbridge volumes, up from none in 2023 and compared with a mere 0.8 percent share under SQ assumptions. In other words, under TD the Türkiye branch is fully operationalized, which will have a performance- and resilience-enhancing impact by offering a competitive option within the TCTC to complement the Black Sea branch. Still, under TD assumptions the Black Sea branch would continue to account for most TCTC rail landbridge traffic (about 70 percent). When combined with cross-border collaboration, trade facilitation, and operational improvements, the volume capture impact of infrastructure investments by 2040 is more than doubled. The TS scenario assumes no infrastructure frictions and significant improvements in cross-border formalities and operational efficiency gains throughout the 2030s—both marked improvements compared with TD assumptions. As a result, the TCTC landbridge gains volumes approximately 3 times more rapidly in the 2030s compared with TD, reaching 578,624 laden TEU by 2040, more than doubling (2.1 times) the TD projection for 2040. This represents 35.2 percent of the overall Eurasian containerized rail landbridge market that year, compared with less than half that—17.2 percent—under the TD scenario.

Trans-Caspian Transport Corridor Performance

It is only through the combination of infrastructure, trade facilitation, and operational improvements that the potential of the TCTC’s Türkiye branch is unlocked as a rail landbridge route. As the TCTC branch with most logistics improvement potential, the Türkiye branch’s share of total TCTC rail landbridge volumes spikes to 62 percent under TS assumptions, or more than double the TD share of 29.5 percent. At least two policy implications can be discerned from this finding: (1) combining infrastructure investments with trade facilitation and operational improvements pays off and is the only way to compete in the demanding Eurasian containerized rail landbridge market and (2) nowhere does this matter more than along the TCTC’s Türkiye branch. The aggregate Eurasian containerized rail landbridge market—TCTC and CRE—is sensitive to changes in sea freight rates, but between the two available routes the TCTC is expected to be more sensitive to these. TCTC development with higher sea freight rates (TD-HR) and TCTC development with lower sea freight rates (TD-LR) test the impact of pronounced changes in Asia-Europe sea freight transport rates on rail landbridge volumes for both the TCTC and the CRE. As expected, TCTC and CRE rail landbridge demand is, in both cases, higher under the TD-HR scenario compared with the TD scenario, because sea freight shippers are incentivized to search for potentially lower-cost alternatives. However, modeling output suggests that the TCTC would be expected to gain much more volume in an environment of higher sea freight rates relative to TD conditions. This is due to TD conditions providing the TCTC with spare capacity to attract increased volumes, whereas CRE supply-demand patterns would remain generally stable across scenarios—as a more mature service than TCTC offerings—even as the CRE would still gain freight from an environment of higher sea freight rates. The opposite is true in the TD-LR scenario. Namely, both the TCTC and the CRE are projected to lose volumes under these conditions; however, the TCTC loses significantly more volume than the CRE service, to the point of ending up with projected 2040 volumes (122,850 laden TEU) that are below the TD 2030 projection. Taken together, this suggests not only that the Eurasian containerized rail landbridge market (for both the TCTC and the CRE) is sensitive to changes in sea freight rates but that the TCTC landbridge, developed as per TD assumptions but keeping all else equal, has a markedly higher sea freight tariff elasticity of demand than the CRE. When further combined with high sea freight rates, the provision of infrastructure investments and trade facilitation and operational improvements result in the highest volume gains for the TCTC rail landbridge through 2040. Considering the previous finding of a relatively high TCTC rail landbridge sea freight tariff elasticity of demand, the TS-HR scenario combines the three rootcause drivers that are most likely to lead to increases in TCTC rail landbridge volumes by 2040: unconstrained infrastructure, trade facilitation and operational improvements, and higher sea freight rates through the 2030s. Findings from this scenario can be considered a high case for TCTC rail

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landbridge volumes in 2040, which can be a useful policy input when planning infrastructure investments and adequacy of operations. Model projections show that under TS-HR conditions the TCTC rail landbridge would capture 697,788 laden TEU in 2040, or 2.6 times more volume than under TD for that year (and 8.6 times more volume than under SQ). At this level of demand, the TCTC would account for 35.8 percent of the overall Eurasian containerized rail landbridge market (TCTC and CRE), compared with 17.2 percent under TD. The share of the Türkiye branch in total TCTC landbridge volumes would reach 62.1 percent, still at about the same level as under TS assumptions—which speaks to the importance of the Black Sea branch, even under these conditions—and more than double that of the TD scenario.

TCTC Branch- and Subbranch-Level Analysis for the Eurasian Landbridge The TCTC is, uniquely in Eurasia, in the process of developing new resilienceenhancing branches and subbranches. One of the operational strengths of the TCTC landbridge, which is likely to partially offset the inherent drawbacks of its multimodal and more fragmented nature compared with other corridors, is that it consists of resilience-enhancing branches and is in the process of operationalizing additional subbranches. The upshot is that, as the TCTC develops, it will provide shippers with multiple options to route freight along its span, thereby increasing operational resilience against heightened disruption risk. This is arguably the TCTC’s most compelling advantage from a shipper’s perspective, at least under TD conditions. The previous section made several references to TCTC landbridge demand allocation by TCTC main branch, considering that west of the Caspian Sea the TCTC has two main branches: the Black Sea branch and the Türkiye branch. This section drills down further by breaking down the Black Sea and Türkiye branch volumes into their subbranches (box 4.4 offers further details on TCTC branches and their role in the TCTC network).4

BOX 4.4 Network effects of Trans-Caspian Transport Corridor branches The Trans-Caspian Transport Corridor (TCTC) does not consist of a single alignment catering to all users, commodity types, and shipment types. Instead, it consists of branches and subbranches. Branches and subbranches introduce network redundancy to a trade corridor by adding gateways and links. These redundant connections reduce network vulnerability and increase corridorwide logistics performance. For example, they enhance business continuity should one or more branches or subbranches be Continued

Trans-Caspian Transport Corridor Performance

BOX 4.4 Network effects of Trans-Caspian Transport Corridor branches (Continued) disrupted or rendered inaccessible. Some of the most efficient international trade corridors in the international experience, such as in North America, feature network redundancy through branches. Beyond redundancy, branches provide service customization opportunities to better match the needs of a heterogenous shipper base. Considering its large geographic scope and modal and institutional fragmentation, which all else being equal increase vulnerability risks, the TCTC is unlikely to serve trade markets competitively without offering options through branching. The TCTC’s most operationally consequential branches lie on the western side of the Caspian Sea and encompass the Black Sea branch and the Türkiye branch. The Black Sea branch connects the ports of Georgia with those of Bulgaria, Romania, Türkiye, and Ukraine through short-sea shipping links. The Türkiye branch routes goods to and from the European Union via Türkiye’s railway network, with further multimodal connections via Türkiye’s maritime port gateways. These branches in turn consist of subbranches, which are anchored by gateway nodes and links, such as the ports of Poti and Batumi in the Black Sea branch and the Baku-Tbilisi-Kars railway line and potential additional rail and road links through the South Caucasus, via Armenia, in the Türkiye branch. The TCTC is further reinforced by resilience-enhancing branches and subbranches on the eastern side of the Caspian Sea: 1. The main TCTC branch across Kazakhstan currently consists of two subbranches along the roughly eastern half of Kazakhstan’s railway network: a northern route using the Dostyk border crossing point (BCP) as gateway and a southern route using the Khorgos BCP as gateway. To further enhance resilience, these branches are interconnected. An additional international gateway and railway connection is under development in Kazakhstan—the Bakhty BCP and the Bakhty-Ayagoz railway line, both included under the TCTC development (TD) 2030 scenario—which will enable a third subbranch, further strengthening resilience by reducing congestion in the existing gateways. 2. The proposed Uzbekistan-Kyrgyz Republic-China (UKC) line, also considered under the TD 2030 scenario, will in effect create a new TCTC main branch in Central Asia, linking East Asia, the Kyrgyz Republic, Uzbekistan, Turkmenistan, Kazakhstan, and the Caspian Sea. As this main branch is developed in the coming years, it too will feature subbranches: one reaching the Caspian Sea in Turkmenistan at the port of Turkmenbashi and a second one reaching the Caspian Sea in Kazakhstan, via the ports of Aktau and Kuryk. The TCTC’s branches and subbranches generate network effects that reduce vulnerability, create resilience through redundancy, and increase corridorwide logistics performance. For example, by providing Uzbekistan with an alternative route to access East Asia, the UKC line will enhance the business continuity of Uzbekistan’s trade and logistics activity with major trading partners. Similarly, the western branches reduce dependency on any one node (for example, maritime ports) or link (for example, railway lines) in the South Caucasus and Türkiye, making all TCTC end users and host countries, including Armenia, better off.

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The Black Sea branch currently consists of two subbranches, both part of Georgia’s rail and maritime port networks; a third subbranch within these networks is expected by the early 2030s. Specifically, cargo can be routed via either the (currently dominant) port of Poti or the port of Batumi, both of which are rail enabled. In the future, an additional option will become available to Black Sea branch shippers, as Georgia develops a third maritime gateway at the proposed greenfield, multimodally connected, deep water port of Anaklia. Anaklia’s development, most likely to be completed (including hinterland connectivity) and reach initial market ramp-up by the early 2030s, is considered under the TD and TS 2040 scenarios. The TCTC’s Türkiye branch is also expected to develop an additional subbranch in the 2030s; this is likely to transform the logistics geography of the South Caucasus. The TCTC’s Türkiye branch currently offers a single option in the South Caucasus: routing cargo to and from the Turkish railway network via the BakuTbilisi-Kars (BTK) railway line. However, it is expected that by the early 2030s a second subbranch will be developed, which would route cargo to and from Türkiye via Azerbaijan and Armenia. Although this remains dependent on the normalization of trade relations between Armenia and Azerbaijan, and between Armenia and Türkiye, available plans already propose this link, including under Armenia’s Crossroads of Peace Initiative (refer to box 4.5). Construction of this link is considered under the TD and TS 2040 scenarios.

BOX 4.5 Armenia’s connectivity and its changing role in the South Caucasus as a link between Asia and Europe Armenia is strategically positioned to enhance its role in regional connectivity and international trade. The government of Armenia (2023) proposed the Crossroads of Peace Initiative that aims to achieve long-term peace and prosperity in the region through direct trade, transport, and communication ties between Armenia and its neighbors. It envisions the restoration or new construction of cross-border rail and road links connecting Armenia with Azerbaijan and Türkiye in particular. These investments within Armenia, complemented by linked investments in Azerbaijan and Türkiye, are expected to improve freight and passenger connectivity in the region, enhance international trade for Armenia and its neighbors, lower transport costs for imports and exports across host countries, increase operational resilience by enabling new trade routes across the region, and deepen economic and social integration. More important, the proposed investments also create the opportunity to integrate Armenia with the Trans-Caspian Transport Corridor (TCTC). The Crossroads of Peace Initiative proposes, inter alia, a rail link between Azerbaijan and Türkiye via Armenia. This would create a TCTC subbranch that would provide an Continued

Trans-Caspian Transport Corridor Performance

BOX 4.5 Armenia’s connectivity and its changing role in the South Caucasus as a link between Asia and Europe (Continued) operational alternative to the Baku-Tbilisi-Kars line for shipments originating in or destined for Türkiye and points west, including the rest of Europe. Armenia stands to greatly benefit from these potential connectivity improvements, because of its historical dependence on a limited number of access gateways. With its borders with Azerbaijan and Türkiye—representing approximately 83 percent of Armenia’s land boundaries—closed for decades, cross-border movements have historically relied primarily on connections with Georgia. Rail access is restricted to a single operational link through Georgia, whereas alternative corridors, including the TCTC, remain only indirectly available. This concentration of routes increases exposure to congestion, capacity limitations, and external disruptions, and underscores the importance of diversifying transport options to support long-term economic resilience. Armenia’s trade is highly concentrated on a limited number of routes. In 2023, more than 80 percent of Armenia’s total trade was transported by road, with more than 65 percent of that volume, around 3.3 million tons, passing through Georgia alone. A rail connection to Georgia accounts for an additional 1.1 million tons. Maritime trade, also routed mainly through Georgian ports, accounted for 2.4 million tons, further concentrating Armenia’s international connectivity. This dependence highlights Armenia’s limitations in crossborder connectivity, which not only hampers its own trade but also restricts Armenia’s potential to capture transit freight flows within and across the South Caucasus region. This is a de facto loss of a source of revenue that has proven significant in the international experience as a facilitator of transport and logistics development, such as in Kazakhstan. The reopening of long-closed borders and the prospect of linking Armenia to multiple international trade corridors, including the TCTC, could change this picture. Through the rehabilitation of key routes and the operationalization of targeted border crossing points with Azerbaijan and Türkiye, Armenia could regain access to diversified rail and road corridors that link the Caspian Sea to the Mediterranean, the Black Sea, and the Persian Gulf. These connections would not only strengthen Armenia’s own trade resilience but also enhance its relevance within emerging regional transport architectures, attracting investment and generating jobs as a result.

The TCTC’s Eurasian containerized rail landbridge demand breakdown by branch and subbranch for 2023, 2030, and 2040 is shown in figure 4.8. Two major conclusions emerge from these modeling projections: 1. The landbridge volume capture prospects of the TCTC’s Türkiye branch are directly proportional to the corridor’s logistics performance. The Black Sea branch, which is the dominant branch for all TCTC traffic (landbridge and nonlandbridge) is expected to remain the dominant branch for the Eurasian containerized rail landbridge specifically under all scenarios—except the TS

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scenarios; the implication is that the most effective way of realizing the logistics potential of the Türkiye branch is through performance improvement across the corridor, along the lines of what is contemplated under the TS scenarios. 2. The proposed Armenia-bound branch is projected to be operationally competitive with the BTK line, owing in part to its expected shorter and lesscircuitous nature; however, this assumes that TCTC logistics are quickly enabled across borders that have been closed for decades, which international experience suggests is likely to be a protracted challenge that should be given top policy priority through the 2030s. FIGURE 4.8 TCTC Eurasian containerized rail landbridge volumes, by branch and subbranch and by scenario, laden TEU, 2023, 2030, and 2040 a. 2023 S1: SQ 2,754 23% 77% 0 BSB

b. 2030 S1: SQ 52,886

S2: TD 125,650 25%

24% 76%

451 100%

BSB

75% BSB

52,536 100% TB

c. 2040 S1: SQ

S2: TD

82,141

191,775

25%

75% BSB

S3: TS

S4: TD-HR

358,503 220,120 25%

49%

75%

51%

BSB

TCTC Black Sea branch via

Batumi

689 100% TB

75% BSB

80,075 48% 52%

S5: TD-LR

367,300

87,883

25%

75%

167,275 48%

75%

52% BSB

Poti + Anaklia

BSB

TCTC Türkiye branch via

S6: TS-HR 433,320

34,967 48% 52%

264,468 25%

49%

75%

51%

BSB

TB Armenia

BTK

Source: Original figure for this publication. Note: BSB = Black Sea branch; BTK = Baku-Tbilisi-Kars railway line; S = scenario; SQ = status quo; TB = Türkiye branch; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development; TD-HR = TD with higher sea freight rates; TD-LR = TD with lower sea freight rates; TEU = 20-foot equivalent units; TS = TCTC stretch; TS-HR = TS with higher sea freight rates.

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Trans-Caspian Transport Corridor Performance

Containerized Infrastructure Adequacy and Volume Projections The preceding volume projections can serve several policy and planning purposes. One of them relates to the question of whether actual and planned dedicated containerized infrastructure along the TCTC under different scenarios would be sufficient to accommodate the projected volumes. This is particularly important as a planning exercise with respect to the scenarios of higher expected volume gains, namely the 2040 TD, TD-HR, TS, and TS-HR scenarios. Figure 4.9 presents this benchmarking assessment for the specific case of trans-Caspian maritime port containerized throughput capacity and vessel deployment capacity, which are essential to landbridge and nonlandbridge containerized operations in the TCTC.

FIGURE 4.9 Expected 2040 landbridge and nonlandbridge containerized freight flows across the Caspian Sea by scenario relative to expected maritime port and trans-Caspian vessel capacity Laden TEU 1,000,000

906,645

900,000 800,000

740,465

787,481

Potential maximum containerized throughput capacity at PoB by 2040 under TD scenario

700,000 600,000

Expected 2040 containerized throughput capacity at PoB and capacity of trans-Caspian vessel deployment under TD scenario; on the east coast of the Caspian Sea, Kazakhstan is expected to have 460,000 TEU in containerized handling capacity by 2040 (310,000 TEU at the port of Aktau and 150,000 TEU at the port of Kuryk), whereas Turkmenistan's port of 260,000 TEU: Turkmenbashi is expected to have 400,000 TEU handling capacity

477,607

500,000 400,000 300,000 200,000

165,733

100,000 0

Aggregate expected 2040 containerized throughput capacity under TD scenario at the ports on the east coast of the Caspian Sea

TD-HR

TS-HR

Expected 2040 PoB dedicated capacity under SQ scenario

Source: Original figure for this publication. Note: Including containerized flows from all other routes in addition to the Eurasian landbridge. PoB = port of Baku; SQ = status quo; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development; TD-HR = TD with higher sea freight rates; TEU = 20-foot equivalent units; TS = TCTC stretch; TS-HR = TS with higher sea freight rates.

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Modeling projections yield the following conclusions:

• The expected effective containerized port throughput capacity by 2040 under

the SQ scenario, on both sides of the Caspian Sea—260,000 TEU at the port of Baku, 310,000 TEU at the port of Aktau, and an estimated 100,000–200,000 TEU at the port of Turkmenbashi—would be sufficient to accommodate SQ 2040 containerized demand of 165,733 TEU (landbridge and nonlandbridge), with reasonable room to spare.

• Under TD conditions, however, the expected containerized port throughput

capacity at the port of Baku by 2040 and the expected trans-Caspian vessel deployment capacity by 2040—500,000 TEU in both cases—would barely be sufficient to accommodate projected 2040 TD scenario volumes of 477,607 laden TEU, although it is possible, depending on the technical solutions deployed, for the port of Baku to reach maximum capacity of up to approximately 600,000–650,000 TEU by 2040. Considering that ports handle both laden and empty containers, which would increase volumes further, this suggests that TD scenario capacity interventions for both port of Baku and trans-Caspian vessel deployments are likely to be met with congestion and delays by 2040. Even at a maximum capacity level of 650,000 TEU, the TD scenario 2040 projection of 477,607 at the port of Baku would still represent 73.5 percent utilization, excluding empties. The port of Baku could therefore consider, in due course and by 2040, further expanding its containerized handling capacity beyond what is currently planned, including both dedicated containerized handling capacity as well as rail ferry and roll-on/roll-off capacity. Similarly, all Caspian Sea TCTC host countries and shipping lines should consider expanding planned vessel deployments, particularly nextgeneration vessels—containerships, rail ferries, and roll-on/roll-off vessels—that can move more freight per sailing and better adapt to changes in Caspian Sea navigation conditions.

• Demand projections under the TD-HR, TS, and TS-HR scenarios amply surpass

the expected and theoretically maximum containerized throughput capacity at the port of Baku envisaged under TD scenario assumptions. Under TS-HR conditions in particular—the best-case scenario for containerized cargo capture by the TCTC—the expected trans-Caspian containerized demand of 906,645 laden TEU will not only be nearly twice as large as the expected base TD scenario capacity at the port of Baku but would surpass the expected TD scenario dedicated capacity of all ports on the east coast of the Caspian Sea (Aktau, Kuryk, and Turkmenbashi) combined. As such, these scenarios are expected to be met with considerable congestion. The implication is that capacity additions by 2040 beyond what currently available plans suggest should be considered, particularly at the port of Baku and with regard to vessel deployments, depending on market developments in the TCTC and alternative corridors in the 2030s.

Trans-Caspian Transport Corridor Performance

In-Principle Viability of Investments in TCTC Infrastructure The most urgent and consequential infrastructure investments needed in the TCTC have either been confirmed to be economically viable or are expected to be viable. Among all infrastructure investments considered under both the TD 2030 and TD 2040 scenarios (refer to appendix B), 16 have been identified as the most urgent or most consequential. Although they vary widely in individual size, in aggregate they are significant, with an estimated cost of $25.1 billion (refer to table 4.1). Although each investment has been or will be subject to feasibility studies, several indicators suggest that their economic viability is, or is likely to be, robust. For example, a full half of these investments (eight of 16) have the backing of international financial institutions (IFIs)—including the World Bank Group—for which confirmation of economic viability based on standardized methodologies is a prerequisite of financing. Some of the largest investments shown in table 4.1, including the proposed overland rail crossing of the Istanbul Strait (Bosphorus) ($8.2 billion), the Divriği-Kars-Georgia border railway line ($1.6 billion), the Moiynty-Kyzylzhar railway line ($1.4 billion), and the HalkaliKapikule railway line ($1.0 billion), are being implemented with IFI backing. All four of these latter investments have been confirmed to be economically viable at economic internal rates of return in the 10–14 percent range (box 4.6 provides details on the first three investments). IFIs are, to date, providing or expected to provide or enable financing in the amount of $13.8 billion in support of these priority investments, more than half—55 percent—of their combined estimated cost. Second, most of these investments—12 of 16 (75 percent), accounting for 85 percent of their aggregate estimated cost ($21.2 billion)—are underway or about to commence implementation. This confirms their urgency and ability to raise financing. Third, the utilization rates of the infrastructure these investments intend to rehabilitate, expand or modernize, or provide an alternative for is high. Excluding greenfield investments for which there is no direct utilization comparator, most of the remaining investments will rehabilitate, expand or modernize, or relieve assets that are currently utilized at rates of 70 percent or higher, the typical threshold rate used in the international experience to trigger capacity expansion.

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Rationale

Ongoing?

Modeling time horizon

IFI financing

Reported EIRR (%)

Current capacity utilization (%)a

Alternative overland railway link across the Istanbul Strait (Bosphorus)

8,200

Completes uninterrupted overland railway length of TCTC and addresses major bottleneck

Yes

TD 2040

IBRD, ADB, AIIB, IsDB, OPEC Fund, EBRD

13.4

Greenfield (100)

Uzbekistan-Kyrgyz Republic-China railway line

4,700

Provides TCTC with new branch in Central Asia

Yes

TD 2030

Greenfield

Mainline railway link between Azerbaijan and Türkiye via Southern Armenia

2,700

Creates new resilienceenhancing TCTC branch in the South Caucasus complementary to the BTK line

Not yet in all 3 countries

TD 2040

Greenfield

Divriği-Kars-Georgia border railway line rehabilitation and expansion

1,600

Addresses the most capacity-constrained railway section of the TCTC at present

Yes

TD 2030 and 2040

IBRD, AIIB, IsDB

11.7

Near 100

Moiynty-Kyzylzhar railway line

1,405

Enables a more direct rail link along Kazakhstan’s East-West railway network

Yes

TD 2030

IBRD, AIIB

14.0

Greenfield (83)

Bakhty-Ayagoz railway line and BCP

1,200

Helps decongest Dostyk BCP and Dostyk-Moiynty line

Yes

TD 2030

Greenfield (100)

Anaklia port construction

1,200

Provides Georgia with a deep water port with room to expand into the long term

Yes

TD 2040

Greenfield (98)

Halkali-Kapikule railway line

1,000

Expands and upgrades railway connectivity between Istanbul and the TK-BG border

Yes

TD 2030

Targeted TashkentTurkmenbashi railway line rehabilitation

625

Facilitates use of Turkmenbashi port as TCTC gateway

Not yet

TD 2030

EU, EBRD, AIIB

10.4

77.5

50–60

Continued

Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor

Estimated cost ($, millions)

Investment

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TABLE 4.1 Priority infrastructure investments in the TCTC under TD 2030 and 2040 scenarios

Investment

Estimated cost ($, millions)

Rationale

Ongoing?

Modeling time horizon

IFI financing

Darbaza-Maktaaral railway line

550

Improves KZ-UZ rail connection to Tashkent region

Yes

TD 2030

IFC, MIGA

Baku port expansion

500

Essential investment for the operational viability of the TCTC

Yes

TD 2040

Proposed

Almaty Bypass railway line

315

Bypass line needed to decongest Almaty bottleneck

Yes

TD 2030

IFC, MIGA, AIIB

Aktau port expansion

310

Container hub needs additional investments; further dredging required

Yes

TD 2030

EBRD

93b

Port of Turkmenbashi improvements

285

Modernization and integration investments; dredging expected to be needed

Not yet

TD 2030

N/A

Poti port in situ capacity addition

250

Additional equipment and operational optimization can add urgently needed capacity

Not yet

TD 2030

91.0

Altynkol-Zhetigen railway line

212

Helps decongest Khorgos BCP

Yes

TD 2030

Total

Reported EIRR (%)

Current capacity utilization (%)a

Trans-Caspian Transport Corridor Performance

TABLE 4.1 Priority infrastructure investments in the TCTC under TD 2030 and 2040 scenarios (Continued)

25,052

Source: Original table for this publication. Note: ADB = Asian Development Bank; AIIB = Asian Infrastructure Investment Bank; BCP = border crossing point; BTK = Baku-Tbilisi-Kars; EBRD = European Bank for Reconstruction and Development; EIRR = economic internal rate of return; EU = European Union; IBRD = International Bank for Reconstruction and Development; IFC = International Finance Corporation; IFI = international financial institution; IsDB = Islamic Development Bank; KZ-UZ = Kazakhstan-Uzbekistan; MIGA = Multilateral Investment Guarantee Agency; OPEC Fund = OPEC Fund for International Development; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development; TK-BG = Türkiye-Bulgaria; N/A = not available. b. Containerized utilization at Aktau port only, excluding Aktau Marine North Terminal.

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a. For greenfield projects, data refer to utilization of asset (if it exists) for which investment will provide an alternative.

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BOX 4.6 Economic rationale for key World Bank–backed investments in the Trans-Caspian Transport Corridor Istanbul North Rail Crossing Project (INRAIL)

• Provides overland railway crossing of the Istanbul Strait (Bosphorus) as an alternative to the inherently constrained Marmara undersea tunnel. Completes the TransCaspian Transport Corridor’s (TCTC’s) overland railway alignment across Eurasia. Expected to complete testing in 2033 and become operational in 2034.

• Enables 50 million tons of overland cross-Bosphorus rail freight capacity and delivers a double-track, electrified, and signalized mixed-use line.

• Estimated cost is $8.2 billion, including $6.75 billion in international financial

institution financing from six multilateral development banks, including the World Bank (lead lender).

• Serves multiple international trade corridors: Türkiye-European Union, TCTC, and the proposed Iraq Development Road corridor.

• Mixed-use line will serve high-speed passenger trains connecting Istanbul’s two airports with the rest of the national network.

• Freight volumes to be carried by the target line estimated at 36 million tons by

2040—94 percent of which will be accounted for by Türkiye’s own imports and exports and only 6 percent by transit freight (across all corridors). Around 60 percent of the project’s volumes are estimated to be bilateral trade flows between Türkiye and the European Union.

• The current railway network limits freight transport between the European Union and Türkiye to approximately 1–2 million tons per year, whereas road transport through the Kapikule border crossing handles about 1 million trucks per year. In 2024, almost 17 million tons were traded between Türkiye and the European Union by road, accounting for 19 percent of total volumes on this trade, and sea transport accounted for the largest share at 77 percent (66 million tons in 2024).

• Expected net economic benefits include savings in out-of-pocket transport costs for

freight and passengers, as well as savings in inventory carrying costs for freight, travel times for passengers, reductions in greenhouse gas emissions, and road safety benefits.

• The project is estimated to yield an economic internal rate of return of 13.4 percent.

Economic viability compared with the benchmark 6 percent economic cost of capital is robust to a simultaneous increase in costs and decrease in benefits of up to 47 percent each. Continued

Trans-Caspian Transport Corridor Performance

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BOX 4.6 Economic rationale for key World Bank–backed investments in the Trans-Caspian Transport Corridor (Continued) Eastern Türkiye Middle Corridor Railway Development Project (ETMIC)

• This project will rehabilitate and modernize the 660-kilometer main railway line

between Divriği (Sivas province) and the Türkiye-Georgia border at the eastern end of Türkiye’s national railway network.

• It will enable the TCTC’s Türkiye branch, by increasing the target line’s capacity to 20 million tons, including full electrification and signalization.

• Estimated cost, including taxes, is $1.6 billion, with approximately $1.2 billion

provided by international financial institutions, including the World Bank ($660 million), Asian Infrastructure Investment Bank ($250 million), and Islamic Development Bank ($250.7 million).

• By 2040 the target line is expected to handle 5 million tons, including 4.5 million tons linked to the TCTC, of which nearly half (46.3 percent) are Türkiye’s own imports and exports on the corridor; by 2060 the line is expected to capture 11.5 million tons, including 9.5 million tons linked to the TCTC, of which 49 percent are associated with Türkiye’s own TCTC-bound imports and exports.

• Project benefits are expected to include savings in freight transport costs, inventory

carrying costs, greenhouse gas emissions, and road safety improvements, including by inducing a truck-to-rail modal shift for domestic Turkish commerce.

• Comparing the economic benefits and costs of the with- and without-project

scenarios yields an economic internal rate of return of 11.7 percent; the project’s economic viability is robust to a simultaneous increase in costs and decrease in benefits of up to 38.5 percent each.

Transforming Rail and Connectivity in Kazakhstan Project (TRACK)

• The project will finance construction of the 322-kilometer railway link between Moiynty and Kyzylzhar, including track, passing loops, and signaling.

• It will reduce TCTC distance within the Kazakhstan railway network by 149 kilometers.

• The estimated cost is $1.4 billion, with financing support from the World Bank and

Asian Infrastructure Investment Bank in the form of guarantees to facilitate mobilization of commercial financing by Kazakhstan Railways (Kazakhstan Temir Zholy).

• Rail traffic on the target line is expected to reach 5.5 million tons in 2027 and 29 million tons by 2066.

Continued

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BOX 4.6 Economic rationale for key World Bank–backed investments in the Trans-Caspian Transport Corridor (Continued)

• Benefits accrue from cost savings for the customer, reduced in-transit inventory

carrying costs from shorter times in the logistics chain, lower greenhouse gas emissions, reduced accident costs, lower requirements for rolling stock, and savings because of lower fuel consumption.

• The investment is economically justified with a cost-benefit analysis over a 42-year

horizon at a 6 percent social discount rate, yielding an economic internal rate of return of 14.0 percent and a net present value of $3,969 million. Economic viability is robust to a decrease of 20 percent in projected traffic or an increase of 20 percent of total investment costs.

Source: World Bank project appraisal documents.

Building on the modeling assessments presented in this chapter, there is an additional approach to assessing the in-principle viability of these priority investments: measuring their exposure to Eurasian containerized rail landbridge demand, both individually and in the aggregate. Given the landbridge market’s dependence on realizing trade facilitation and operational efficiency improvements, which are long term in nature and may not necessarily be realized sufficiently—or sufficiently quickly—to capture these volumes in practice, a relatively high level of exposure to the landbridge by these investments would indicate, all else being equal, challenging viability underpinnings. Conversely, low levels of exposure to the landbridge (say, for less than a third of demand) mean that the lion’s share (at least two-thirds) of demand for each investment comes from regional and intraregional (that is, nonlandbridge and nonintercontinental) freight. The regional freight market is more predictable (less elastic) compared with the landbridge market, because landbridge freight generally has more (and more service-level diverse) options to be routed through. For regional freight, particularly to and from Central Asia, the TCTC may often be the most attractive option: whereas the landbridge is a niche discretionary market for East Asia and Europe, the TCTC is a mass-market, lifeline connection for Central Asia. Furthermore, unlike the landbridge market, which exclusively serves containerized freight, the regional freight market is mostly composed— and expected to continue to be mostly composed—of bulk commodity cargo, which is less dependent on high performance, is more predictable given the primary nature of these commodities, and is relatively more dependent on availability of infrastructure and equipment. As a result, high reliance on regional

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Trans-Caspian Transport Corridor Performance

freight (for example, two-thirds or more of total demand) would indicate, in principle and all else equal, more solid economic and operational viability underpinnings for a given investment. Figure 4.10 shows the results of a landbridge incidence assessment by 2040 for the 16 most critical, high-priority investments considered under the TD 2030 and TD 2040 scenarios, as listed in table 4.1. The following can be concluded: 1. The 16 most significant investments to alleviate TCTC infrastructure bottlenecks through 2040 generally have low exposure to the operationally demanding Eurasian containerized rail landbridge, with a weighted-average aggregate demand exposure of 4.5 percent. This suggests that these are no-regret, in-principle viable investments primarily rooted in regional markets.

FIGURE 4.10 2040 share of Eurasian containerized rail landbridge freight in demand mix of key TCTC investment projects under TD scenario Almaty Bypass railway line

32.0 (315)

Altynkol-Zhetigen railway line

32.0 (212)

Baku Port expansion

20.6 (500)

Poti Port in situ capacity addition

11.2 (250)

Aktau Port expansion

11.0 (310)

Divriği-Kars-Georgia border railway line

10.7 (1,600)

South Caucus railway connection via Armenia

7.5 (2,700)

Moiynty-Kyzylzhar railway line

7.4 (1,405)

Anaklia Port construction

7.4 (1,200)

Turkmenbashi Port improvements

Total investment = $25,052 Weighted average demand exposure to Eurasian containerized rail landbridge = 4.5%

5.7 (285)

Uzbekistan-Kyrgyz Republic-China railway line Targeted Tashkent-Turkmenbashi railway line rehabilitation Overland crossing of Istanbul Strait

1.3 (8,200)

Halkali-Kapikule railway line

1.0 (1,000)

2.0 (4,700) 1.5 (625)

Darbaza-Maktaaral railway line

0.6 (550)

Bakhty-Ayagoz railway line and BCP 0.0 (1,200) 0

25 30 35 10 15 20 Share of landbridge freight (%)

Source: Original figure for this publication. Note: Values are percent of total freight demand (estimated investment size in millions of US dollars); average demand exposure across all investments is weighted by investment size. BCP = border crossing point; TCTC = Trans-Caspian Transport Corridor; TD = TCTC development.

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2. No individual investment reaches a full third of demand share accounted for by the Eurasian containerized rail landbridge in 2040. The Almaty Bypass and Altynkol-Zhetigen railway line investments come close, but this is mainly due to the fact that these projects are expected to serve a mix of TCTC and CRE traffic given their location in Kazakhstan’s railway network. 3. In addition to the two latter lines, there are investments that are, in relative terms, moderately exposed to the landbridge market, such as the port of Poti, the Caspian Sea ports, the Divriği-Kars-Georgia border railway line, the proposed new South Caucasus connection via Armenia, the Moiynty-Kyzylzhar railway line, and the port of Anaklia; this analysis suggests that there should be a concerted effort to elevate the logistics performance of these nodes and links in particular, not only by the projects’ owners in isolation but ideally in coordination with partners across the TCTC (for example, to improve the ports’ hinterland connectivity and availability of shipping services or the performance of the BTK line because it is directly connected to the Divriği-Kars-Georgia border railway line). 4. This is not to say that logistics performance is irrelevant even for investments with low to negligible exposure to the TCTC landbridge. As this chapter has argued, attaining high logistics performance is broadly desirable for multiple reasons, and all sections should take measures in that direction. For example, the overland crossing of the Istanbul Strait has a low landbridge demand share in 2040 (1.3 percent), yet most of the traffic expected to be served by this line pertains to Türkiye-EU trade, which is intense in containerized freight, making it imperative for this connection to offer high-performance logistics services for reasons that go beyond serving the TCTC Eurasian landbridge.

Notes 1. This analysis assumes that the sea freight supply chain or route for a Chongqing-Budapest containerized shipment consists of a rail freight connection between Chongqing and Shanghai, a sea freight connection between the port of Shanghai and a European port in either the North Adriatic or Northern European port ranges, and a rail freight connection from the European port to Budapest, including last-mile truck drayage links at origin and destination. 2. Figure 4.3 also assumes that the coefficient of variation of the TCTC delivery lead time is approximately 53 percent that of the sea freight route, because premium rail freight services in the international experience are typically more predictable than mass-market sea-freightbased itineraries. 3. Although this analysis does not segregate the time spent at land border crossings, maritime ports along the TCTC are border crossings, which suggests that the time spent when cargo is not moving—whether at a maritime port or at a land border crossing point—is where most (although not all) lead time performance (length and predictability) improvement opportunities lie. 4. Because the Kazakhstan-based branches are used by both TCTC and CRE services, and the Uzbekistan-Kyrgyz Republic-China line is not expected to primarily serve the TCTC Eurasian landbridge market, the landbridge volume decomposition analysis presented in this section focuses on the branches and subbranches located west of the Caspian Sea.

Trans-Caspian Transport Corridor Performance

Reference Government of the Republic of Armenia. The Crossroads of Peace. 2023. https://www.primeminister .am/u_files/file/documents/The%20Crossroad%20of%20Peace-Brochure.pdf.

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5 From Transport Corridor to Economic Corridor: Broader Logistics Investments in the Trans-Caspian Transport Corridor

Main Messages

• Host countries should pursue strategies to develop the Trans-Caspian

Transport Corridor (TCTC) from a transport corridor into an economic corridor.

• A transport corridor moves freight; an economic corridor serves shippers, sustains supply-demand balance in infrastructure and equipment over time, and creates jobs.

• The shift from a transport corridor to an economic corridor will depend on

investments that enable productive economic activity, much of which will come from the private sector. In addition to linear and nodal infrastructure, these investments include transport and logistics equipment and services that can unlock downstream investment in manufacturing and nonlogistics sectors. Although there are already important sources of investment, economic activity, and job creation directly linked to the TCTC, more will be needed over the next 15 years.

• An initial screening of investment opportunities identifies a prioritized list of interventions, by country and activity type, with an aggregate value of $30.5 billion across all nine TCTC host countries.

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• Although subject to feasibility and financial structuring assessments,

these investments should be given consideration by public and private sector entities in host countries to both unlock the TCTC and tap into the opportunities that the TCTC creates for host countries.

Introduction Transforming a transport corridor into an economic corridor is a well-justified policy goal. The challenge is that it is also an amorphous one because the distinction between transport corridor and economic corridor is subject to interpretation. Clarifying this distinction can help make policy measures more actionable. This chapter argues that the distinction can be explained in these terms: a transport corridor moves freight; an economic corridor serves shippers, invests in and utilizes infrastructure and equipment in a way that avoids chronic capacity underutilization on the one hand or persistent congestion on the other, and creates jobs. Over time, transport corridors can also support economic diversification by enabling new sectors—such as agro-processing, mining and extractives and minerals processing, light manufacturing, and digital logistics— likely to emerge around key nodes and trade flows. Attaining economic corridor status requires investment in several categories, from linear infrastructure to logistics nodes and service provision. These investments, if targeted and with a demonstrable economic rationale, can ultimately yield benefits that spread across sectoral boundaries, including job creation, productivity growth, greater import-export activity, and more robust economic growth around the corridor.

The Trans-Caspian Transit Corridor as an Economic Corridor At present the Trans-Caspian Transit Corridor (TCTC) is a transport corridor in transition. It moves freight—an estimated 8.8 million tons across the Caspian Sea in 2023—but, as this report has documented, it suffers from supply-demand mismatches, including in (1) infrastructure (chokepoints in some portions of the corridor coexist with underutilized assets in others), (2) service delivery (insufficient availability of customized services aligned with shippers’ operational requirements), and (3) the regulatory environment (high documentation burden and procedural delays that raise trade and logistics costs; refer to chapter 7 for details). The TCTC creates jobs and supports economic activity, including, increasingly, through private investment, yet it lacks a deliberate private capital– enabling program that is shared across the corridor’s national border and sectoral silos. Without such a program, the TCTC is unlikely to reach the demand capture potential estimated by this report’s volume projections. It entails a series of complementary public, private, and public-private investments spanning

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concentric circles of economic activity, covering not just the most immediate circle of transport infrastructure and transport service provision but adjacent circles that facilitate shipment origination, multimodality, and cargo handling; transshipment; consolidation-deconsolidation; and distribution. It is through the combination of these concentric circles, rather than a focus on one or a subset of them, that viable logistics investments can ultimately enable private capital in wider circles—that is, sectors—of the broader real economy of TCTC host countries, such as manufacturing and nonlogistics services (refer to figure 5.1). Three main asset categories comprise the TCTC investment program umbrella: (1) linear infrastructure, including rail and road infrastructure and their subcategories (main lines, feeder lines, and last-mile connections); (2) nodal infrastructure, including maritime ports, inland logistics centers, border crossing points (BCPs), trucking terminals, container freight stations, and dry ports, including activity colocation as logistics clusters; and (3) logistics equipment, including rolling stock, trucks, vessels, and digital connectivity assets. Although significant investments in these three categories are underway, transforming the TCTC into an economic corridor will require more, better-targeted, and more coordinated investments across these categories. It will also, and necessarily, require a long-term view, because the economic activity–enabling impact of these investments in the rest of the real economy—where the wider job creation and economic growth footprint lies— will take time to materialize and depend on factors beyond transport and logistics facilitation alone.

FIGURE 5.1 Economic activity–enabling asset categories in the TCTC

Manufacturing and nonlogistics services • Manufacturing plants and organized industrial zones • Hospitality, health, education, and other support services Logistics equipment • Rolling stock, vessels, trucks • Digital enablers for third-party logistics Nodal infrastructure • Maritime ports, truck terminals, and rest areas • Inland logistics centers, dry ports, and border crossing points Linear and basic infrastructure • Main line and last-mile railway infrastructure • Motorways and secondary roads Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

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Linear infrastructure Linear infrastructure in the TCTC is subdivided into rail and road infrastructure. Railway infrastructure is in turn subdivided into main line and last-mile infrastructure, and it may further be categorized according to asset-specific operational attributes such as single- versus double-tracked, electrification and signalization status, mixed or dedicated use, incidence of tunnels and viaducts, and the like, depending on geographical context and operational requirements. Similarly, road infrastructure is, in broad terms, subdivided into high-capacity and trunk multilane motorways and single- or dual-carriageway secondary roads. Often in the TCTC, these asset categories are complementary. For example, motorways and secondary roads may feed cargo into main line railway infrastructure links, particularly in extended-length haul networks such as those of Kazakhstan and Türkiye. Examples of this include the World Bank–financed Jezkazgan-Karagandy highway corridor in Kazakhstan and the Kakheti highway corridor in Georgia, both of which are under construction and expected to act as feeder roads for the TCTC when operational. Nodal infrastructure Nodal infrastructure refers to facilities dedicated to handling freight, whether for the purposes of transshipping between modes, storage, or value-added logistics services provision. This infrastructure category includes maritime ports, trucking terminals and rest areas, inland logistics centers, dry ports, inland terminals, and BCPs. Often these facilities overlap. For example, an inland logistics terminal may be developed adjacent to (and therefore meant to operate in a complementary manner with) a maritime port, as in the case of Poti TransTerminal, a 9-hectare, 80,000 20-foot equivalent unit inland intermodal terminal located adjacent to the port of Poti in Georgia. Poti TransTerminal opened in June 2025 and is an investment by a joint venture formed by Kazakhstan Railways (Kazakhstan Temir Zholy; KTZ) and the Kazakhstan-based transport and logistics services group PTC Holding. Similarly, an inland logistics center may cluster several logistics facilities within its premises, such as a trucking terminal, a rail terminal, and several warehousing and distribution facilities. Examples are the Tbilisi Dry Port, opened in June 2025 with private investment by AD Ports Group (the United Arab Emirates), Wilhelmsen (Norway), and Inveco LLC (Georgia), and Railport, an integrated logistics cluster in Izmit, Türkiye, opened in December 2025 with private investment by Arkas Holding (Türkiye) and Duisburger Hafen AG (Germany). KTZEKhorgos Gateway, the most important logistics center of Kazakhstan, acts as a dry port, a railway station, a change-of-gauge station, and a BCP. Logistics equipment Equipment has a direct line of sight to service delivery and end users. Investments in logistics equipment provide the traction and conveyances—trucks, tractors,

From Transport Corridor to Economic Corridor

trailers, locomotives, rail wagons, vessels, aircraft, and containers—that use nodal and linear infrastructure and are deployed by asset-based transportation carriers, such as railway undertakings, trucking companies, and shipping lines, and equipment lessors or asset owners, which hire out the use of their equipment to carriers, sometimes involving additional services such as crew provision or fueling. In certain sections of the TCTC, the binding constraint is often not insufficient provision of linear railway infrastructure but insufficient availability of rolling stock, such as wagons and locomotives. In other cases, there can be mismatches between linear infrastructure and equipment, for example if electrified main line railway links are built without a plan to deploy electric traction with sufficient capacity to match expected demand. It may also be that logistics equipment ceases to be fit for purpose over time, for example because of obsolesence or, as in the case of the Caspian Sea, because of changing physical conditions (for example, water levels) that require context-specific adapted vessel designs. By contrast, the provision of adequate, fitfor-purpose equipment—electrified rolling stock, modern and fuel-efficient trucks, dual-fuel or low-draft vessels, and electric traction—can define the effective volume capture capacity of a corridor and be the difference between cost-competitive and uneconomic logistics services. Available information suggests that (1) rolling stock shortages affect several TCTC jurisdictions,1 (2) the provision of sufficient and adapted vessel capacity is a long-standing challenge in trans-Caspian services,2 and (3) truck modernization programs are needed to shore up aging fleets.3 Still, much economic impact linked at least in part to the TCTC is being felt from investments in logistics equipment. Türkiye’s state-owned enterprise TÜRASAŞ designs and manufactures its own electric locomotives and freight wagons, and it is actively investing in growing this industry, generating jobs in the process (refer to box 5.1). Similarly, Kazakhstan is home to (1) EKZ, the only electric locomotive manufacturer in Central Asia and a wholly owned subsidiary of French multinational rail transport systems manufacturer Alstom SA, employing more than 1,200 people across its EKZ locomotive plant (Astana), KEP switching machines plant (Almaty), and four maintenance service sites, which is in the process of adding four additional maintenance service centers expected to create 700 permanent jobs; (2) Lokomotiv Kurastyru Zauyty JSC, a wholly owned subsidiary of U.S.-based Wabtec Corporation and a major manufacturer of dieselpowered locomotives, employing approximately 700 people; and (3) five active freight wagon manufacturers (Savenkova 2025). With regard to the truck manufacturing sector, Türkiye is a heavy-duty truck and trailer manufacturing and export base of global importance,4 with the presence of multiple original equipment manufacturers with direct employment in the tens of thousands. With regard to vessel manufacturing, Azerbaijan’s majority state-owned Baku Shipyard manufactures and repairs vessels for the trans-Caspian market, and it employs approximately 1,400 people, with plans to increase employment to 2,200 because of recent increases in orders. Kazakhstan’s KazMunayGas is planning to build a shipyard on the Caspian coast in a joint venture with AD Ports Group.

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BOX 5.1 The economic impact of transport corridors: Production of modern rolling stock in Türkiye To support its significant expansion of linear and nodal railway infrastructure, Türkiye faces a large-scale need for new-generation electric locomotives and conversion of locomotives to electric power to operate on electrified lines. Of the 879 locomotives and train sets presently under operation in Türkiye, more than half are diesel powered and older than 30 years. Therefore, new electric train sets will be required to meet the government of Türkiye’s electrification and decarbonization targets. There is a well-articulated government strategy to ensure adequate provision of the required electric train sets. The government is making concerted efforts and has a welldesigned program in place for development and manufacturing of new-generation electric locomotives to sustainably meet the demand for additional electric traction power that will be necessary with the railway electrification program. In addition, the government plans to provide incentives to facilitate the acquisition of rolling stock by public and private operators. The government created a dedicated rolling stock company, TÜRASAŞ, from the merger of Turkish State Railway’s (TCDD’s) affiliated companies in rolling stock manufacturing. By 2024 TÜRASAŞ had become one of the largest rail system vehicle manufacturers in the region, employing more than 4,000 people. It produces new-generation locomotives, diesel and electric train sets, passenger and freight cars, traction converters, traction motors, diesel engines, and train control management systems domestically in compliance with international standards. At TÜRASAŞ’s Eskişehir regional facilities—the main hub of the Turkish rail industry, consisting of seven integrated factories for the manufacturing of locomotives, bogies, electrical machines, and rail engines—912 locomotives and 11,974 rail cars of various types have been completed to date. In 2023 TÜRASAŞ launched production of 95 units of its first self-designed, newgeneration Eskişehir 5000 electric mainline locomotives for TCDD Transport, planned to be fully delivered by 2027. This 5-megawatt locomotive, with a maximum speed of 140 kilometers per hour, will be used in both passenger and freight trains and has received the EU Technical Specifications for Interoperability (TSI) certification in railways. The units’ traction system, transformer, auxiliary power unit, and converter units are mostly designed and produced domestically (about 85 percent). In addition, TÜRASAŞ has completed production of the New Sakarya National Electric Train, also TSI certified and suitable for higher-speed operations. Two prototype sets of this train set, with a maximum speed of 160 kilometers per hour, were completed and put into service in May 2024. As of May 2025, three new Sakarya sets are now in regular operation, with 10 additional sets under construction and nine more planned for 2026. TÜRASAŞ plans to increase their number to 56 by 2030. Continued

From Transport Corridor to Economic Corridor

BOX 5.1 The economic impact of transport corridors: Production of modern rolling stock in Türkiye (Continued) In November 2025, plans were announced regarding development of a stronger domestic Co-Co electric locomotive with six axles and 7.2 megawatts of traction power. These new-generation electric locomotives are expected to play a crucial role in successful freight rail operation along the Türkiye branch of the TCTC. Prototypes of a new type of train capable of running at even higher speeds than the New Sakarya are being developed. In collaboration with the Scientific and Technological Research Council of Türkiye-Rail Transportation Technologies Institute, TÜRASAŞ has been working on what is referred to as the National Electric High-Speed Train, capable of maximum speeds of 225 kilometers per hour with a capacity of up to 584 passengers. Ten prototype sets are planned to be built by 2026–27. TÜRASAŞ is expanding manufacturing capacity in support of this new locomotive program. It has expanded the Sivas Bogie Production Factory, which now has an enclosed area of 10,500 square meters, and has an annual bogie production capacity of 4,600 units or 9,200 wheel sets. In addition, in 2025 TÜRASAŞ announced the development of three new factories over the 2025–27 period: one in Eskişehir, for new electric locomotives; one in Sakarya, for new electric train sets; and a third one in Sivas, for train parts. The new manufacturing and test facility under construction in Sakarya is aimed at producing up to 12 high-speed train sets per year.

Mapping Investment Opportunities in the TCTC by Country and Asset Category This section elaborates on a set of prioritized investment opportunities in the TCTC that are expected to solidify the corridor’s ongoing transition to an economic corridor. These investments are strictly in addition to those presented in chapters 3 and 4 and are generally enabled by them. As a matter of prioritization, the timebound, country-specific investment recommendations included under the TCTC development (TD) 2030 and TD 2040 scenarios discussed in chapter 3 (and described in detail in appendix B), and especially the subset of 16 of the TD 2030 and TD 2040 infrastructure interventions highlighted in chapter 4 (refer to table 4.1), are the most urgent linear and nodal infrastructure investments facing the TCTC at present. Without these investments, the TCTC is unlikely to be operationally viable as a transport corridor. Not surprisingly given their backbone role, most investments listed in table 4.1 are underway, each targeted to address a fundamental bottleneck identified as already at hand. The additional investments considered in this section, with an aggregate estimated size of

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$30.5 billion, refer to in-principle economically desirable investment opportunities to address either (1) current service delivery and feeder road capacity bottlenecks of relatively less fundamental urgency than the table 4.1 investments, although they are still critical to TCTC operational viability in the next 5 years; (2) expected service delivery and feeder road capacity bottlenecks, likely to materialize by the early to mid-2030s if action is not taken and thus subject to some buffer time for planning and decision-making; or (3) current and expected main line railway infrastructure capacity bottlenecks through 2040. These economic activity–enabling investment opportunities, categorized as linear infrastructure, nodal infrastructure, and investments in logistics equipment, are part of a sequence. They are expected to be enabled by— and complementary to—the investments recommended under the TD 2030 and TD 2040 scenarios, which mainly relate to the two innermost concentric circles of figure 5.1. In addition to generating economic activity and jobs in their own right, these additional investment opportunities, if undertaken, are expected, in turn, to enable (mainly private sector–led) economic activity in the outermost concentric circle of figure 5.1— manufacturing and nonlogistics services—thus helping the TCTC transition to economic corridor status.

FIGURE 5.2 Priority economic activity–enabling investments in the TCTC through 2040, by host country Investment ($, millions) 35,000 30,000

1,915

2,750

25,000

510

1,160

1,402

30,542

3,775 7,530

20,000 15,000

11,500

10,000 5,000

Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

al To t

pu bl ic Re Ky rg yz

n ija er ba Az

ik is ta n Ta j

rg ia eo G

Tü rk iy e

n Tu rk m

an st kh za Ka

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Most of the investments considered in this section are not yet ongoing, although some are. All are prioritized, aligned with current (through 2030) or expected (through 2040) supply-demand mismatches, and therefore strategic. They are at various stages of viability assessment and preparation (not yet started, prefeasibility, feasibility, and procurement). The distribution of these investments is presented, segregated by TCTC host country (refer to figure 5.2) and investment category (refer to figure 5.3). Uzbekistan and Kazakhstan emerge as the markets that offer the most possibilities of economic corridor enabling investments in terms of aggregate size. This is in part because both countries have significant investment opportunities in railway and highway linear infrastructure, particularly Uzbekistan. Kazakhstan further stands out for its sizable opportunity to invest in the development of its rolling stock and trans-Caspian vessel fleet. In Turkmenistan, the TCTC creates an opportunity to modernize and expand its main railway line connecting to the port of Turkmenbashi, and the country faces the need to replace and modernize its rolling stock fleet. Türkiye’s main remaining opportunities along the TCTC (that is, beyond the sizable investments already identified in chapter 4) are in strategic linear railway FIGURE 5.3 Priority economic activity–enabling investments in the TCTC through 2040, by host country and investment category Uzbekistan = 11,500

Kazakhstan = 7,530

Turkmenistan = 3,775

23%

11% 40%

80%

45%

Türkiye = 2,750

31%

3% 69%

75%

15%

Georgia = 1,915

Tajikistan = 1,402

29%

Azerbaijan = 1,160

Kyrgyz Republic = 510

26% 41%

11%

60%

Linear infrastructure Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

69%

Nodal infrastructure

59% 74%

Logistics equipment

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infrastructure to enable additional TCTC routing options within its territory (such as to and from Mersin port and the maritime ports of Iskenderun Bay), as well as in nodal infrastructure, to continue to develop its network of dry ports and logistics centers. Georgia offers significant and diversified opportunities for investment across all three investment categories, including in linear infrastructure (highway assets as TCTC feeder connections), nodal infrastructure (dry ports), and logistics equipment (reflecting its urgent need for rolling stock capacity expansion and modernization). Georgia also has the opportunity to modernize its asset management systems to, inter alia, integrate climate considerations into the maintenance planning process for rail and road assets. For Tajikistan, connecting to the TCTC requires investing in road and rail linear infrastructure, modernization of rolling stock, and development of dry ports. Azerbaijan’s opportunities are in modernizing key sections of its railway network (linear infrastructure) and developing a network of rail-enabled dry ports (nodal infrastructure). The Kyrgyz Republic’s investment opportunities are primarily in rolling stock modernization. Appendix D includes country-specific tables listing the investment opportunities in descending order of strategic priority and temporal urgency. In each case, the tables define the investment, describe its operational and market rationale, estimated size, preparation status, temporal horizon, and potential for private sector participation. Two-thirds of these investments—valued at upward of $20 billion—have high potential for direct private sector participation in operations (logistics nodes, toll roads) or equipment provision (rolling stock manufacturing or leasing), mostly as public-private partnerships (refer to figure 5.4). More important, several of the public sector projects identified, such as in linear railway infrastructure, can mobilize commercial financing as state-owned enterprises become bankable or deepen their bankability (refer to chapter 6). FIGURE 5.4 Private sector participation potential in priority TCTC economic activity–enabling investments through 2040 100 80

$30,542M 34%

60 40

$20,032M

26%

Toll roads (linear infrastructure) 53%

66%

Public sector

Nodal infrastructure Logistics equipment

19%

Railway lines (linear infrastructure)

Open to private sector participation Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

From Transport Corridor to Economic Corridor

Notes 1. For example, at the end of 2023, 84 percent of the locomotives and 86 percent of the wagons operated by Georgian Railway were at least 30 years old, according to Georgian Railway (2024) data, and in November 2025 the company announced a tender for the acquisition of 120 wagons (Taktakishvili 2025); the World Bank Group is also providing Georgian Railway with financial support for the acquisition of next-generation locomotives. Similarly, in 2024 44 percent of KTZ’s locomotives were at least 25 years old, and in September 2025 the company announced a multiyear order of 30 locomotives per year over 2027–36 from Wabtec Corporation-Lokomotiv Kurastyru Zauyty, worth $4.2 billion, and is in discussion for a long-term electric locomotives contract with Alstom/EKZ. KTZ’s fleet modernization efforts are in part supported by the World Bank Group (MIGA 2023). 2. As OECD (2025) notes in its report on the TCTC, “Maritime transport across the Caspian Sea is hindered by a lack of vessels, . . .” which is exacerbated by sustained drops in water levels that force vessel operators to use only a fraction of their vessels’ tonnage capacity. 3. For example, according to data from the Turkish Statistical Institute (2026), the average age of heavy-duty trucks in Türkiye was 18.4 years and for tractors, 24.9 years, as of December 2025. In Kazakhstan, 56 percent of cargo vehicles were more than 20 years old as of December 2023, according to its Bureau of National Statistics (2026). 4. In 2024 Türkiye accounted for 3.5 percent of global exports of commercial freight vehicles, and for 2.7 percent of global exports of trailers and semi-trailers, according to UN Comtrade (https://comtradeplus.un.org/).

References Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan. “On the Number of Buses and Trucks in the Republic of Kazakhstan.” Accessed June 1, 2026. https://stat.gov.kz/en/industries/business-statistics/stat-transport/sprea dsheets/?year=&name=94485&period=&type=. Georgian Railway. 2024. JSC Georgian Railway. https://cdn3.grmedia.com.ge/app/uploads/2024/09 /IP-6M2024.pdf. MIGA (Multilateral Investment Guarantee Agency). 2023. “KTZ Railway Project.” https://www.miga .org/project/ktz-railway-project. OECD (Organisation for Economic Co-operation and Development). 2025. Enhancing the Competitiveness of the Trans-Caspian Transport Corridor in Central Asia. Competitiveness and Private Sector Development. Paris: OECD Publishing. https://www.oecd.org/en/publications/2025/11 /enhancing-the-competitiveness-of-the-trans-caspian-transport-corridor-in-central-asia _e989025f.html. Savenkova, Ekaterina. 2025. “Kazakhstan Railways: Market Overview and Current Landscape.” Rollingstock, October 1, 2025. https://rollingstockworld.com/locomotives/kazakhstan-railways -market-overview-and-current-landscape/. Taktakishvili, Natiko. 2025. “Georgian Railway Announces Tender for 120 New Freight Wagons Using Funds Saved through Optimization.” Business Media, November 25, 2025. https://bm.ge/en/news /georgian-railway-announces-tender-for-120-new-freight-wagons-using-funds-saved-through -optimization. Turkish Statistical Institute. 2026. “Road Motor Vehicles, December 2025.” Press release, January 16, 2026. https://veriportali.tuik.gov.tr/en/press/54047.

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6 Institutional and Regulatory Arrangements Shaping the Performance of Trans-Caspian Transport Corridor Transport State-Owned Enterprises

Main Messages

• State-owned enterprises (SOEs) are the decisive factor shaping the

Trans-Caspian Transport Corridor’s (TCTC’s) service delivery performance. Most of the corridor’s railway transportation, port operation, and transCaspian shipping services are provided by SOEs, meaning their governance, incentives, and operating autonomy directly determine reliability, capacity, and competitiveness for TCTC bulk and containerized traffic.

• Railways are the backbone of long-haul freight along the corridor, making

railway SOE performance in particular a binding constraint on—or enabler of—TCTC growth. Connectivity infrastructure investments alone are insufficient without institutional reform to improve operational performance.

• Port operations and trans-Caspian shipping services show more diverse ownership models than rail. Although rail is almost entirely state run, ports and shipping combine public service, landlord, and privatized

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models; these differences shape investment mobilization, risk allocation, and reform pathways across modes.

• No single institutional model fits all rail systems. Global experience shows

that vertically integrated, open-access, concession, and unbundled models each work under different traffic densities, market structures, and regulatory capacities, underscoring the need for context-specific reform choices rather than template solutions.

• TCTC railway SOEs are at uneven stages of institutional readiness.

Georgian Railway and Kazakhstan Railways show comparatively stronger governance foundations; Azerbaijan Railways occupies an intermediate position; Turkish State Railways and Uzbekistan Railways remain earlier in their transition to commercially oriented, market-ready operations.

• Strengthening SOEs is central to unlocking the TCTC’s potential. Aligning

governance, finance, organization, and regulation is necessary to crowd-in private capital and commercial financing where viable, reduce fiscal pressures, and convert infrastructure investments into reliable, marketfacing corridor services.

Introduction State-owned enterprises (SOEs) are the dominant actors shaping the Trans-Caspian Transport Corridor’s (TCTC’s) operational performance. SOEs own and operate substantially all of the railway infrastructure in the TCTC network, and they are responsible for the majority of the rail freight transportation services provided in this network. They also own and operate most of the trans-Caspian maritime shipping fleets and at least some of the maritime ports of Azerbaijan, Georgia, Kazakhstan, Türkiye, and Turkmenistan.1 Both the TCTC’s ability to accommodate bulk commodity supply chains and the extent to which it can offer competitive services, including premium services, to attract containerized freight—in competition with alternative Eurasian land corridors and established maritime routes—depend on the sustainability and performance of these SOEs. Framed this way, the performance of corridor institutions and service providers—especially transport SOEs—becomes central, because institutional arrangements, incentives, and operating autonomy directly shape these service outcomes. Road transport— trucking services— along the TCTC is largely provided by private operators and plays a complementary role to rail in long‑haul, cross‑border freight movements; it is therefore not central to the TCTC’s SOE performance dimension. Rail is the backbone of long‑haul freight across Central Asia and the South Caucasus. Rail freight carries 60–70 percent of inland nonpipeline cargo in

Institutional and Regulatory Arrangements

Kazakhstan and Uzbekistan and 35 and 25 percent in Azerbaijan and Georgia, respectively, making the performance of railway SOEs a direct determinant of TCTC throughput and its future logistics growth. Kazakhstan Railways (Kazakhstan Temir Zholy; KTZ), the largest SOE in the region,2 dominates freight flows and is already modernizing and accessing commercially structured financing with international financial institution support, setting an important benchmark for its neighbors. Azerbaijan Railways (ADY) and Georgian Railway (GR), the railway SOEs of Azerbaijan and Georgia, respectively, manage the crucial rail landbridge between the Black Sea and Caspian Sea. They also manage, with Turkish State Railways (TCDD), Türkiye’s incumbent railway SOE, the Baku-Tbilisi-Kars (BTK) railway line— one of the first cross-border investments in the TCTC and an early example of international, inter-entity collaboration in infrastructure on the corridor. Although limitations in infrastructure and rolling stock capacity continue to constrain these connections, important progress has been attained, such as (1) the quintupling of the capacity of the BTK line, from 1 million to 5 million tons, completed in 2024 mainly through investments in Georgia, supported by collaboration between the governments of Azerbaijan and Georgia (Coordinating Council of the Republic of Azerbaijan on Railroad Freight 2024), and (2) the introduction, on January 30, 2026, of an express block train service between the ports of Baku and Poti, organized by GR and ADY (Transportcorridors.com 2026). On the corridor’s western end, Türkiye’s state-owned and -managed railway network—in accordance with the EU acquis Communautaire for railways—connects the BTK line across the length of Türkiye with the EU border, yet rail accounts for only about 4 percent of the country’s national freight task (General Directorate of Highways, Ministry of Transport and Infrastructure, Türkiye 2025), highlighting substantial unrealized cargo capture potential that could be unlocked through institutional and operational reforms that are informed by the needs of the TCTC. Beyond rail, SOEs also manage critical assets in the TCTC’s Caspian Sea and Black Sea segments. In the Caspian Sea, national shipping SOEs operate vessel fleets providing trans-Caspian connections. Regarding maritime ports, in most cases public port authorities manage, and in some cases operate, port facilities. This is the governance model of the ports of Aktau, Baku, Kuryk, and Turkmenbashi. In Georgia, the basic marine, onshore, and multimodal hinterland connectivity infrastructure at the greenfield deep water port of Anaklia is being developed by the state, with the intention of competitively tendering long-term concession agreements for the provision of suprastructures and equipment, operations, and maintenance with expected private sector participation by experienced terminal operators, overseen by a public corporatized port authority—an SOE—to be established for this purpose. These SOEs manage critical assets that determine the TCTC’s capacity, reliability, and competitiveness in serving both bulk and containerized supply chains, including first- and last-mile railway (and highway) connectivity, port terminals, and vessel fleets, under different governance approaches and with varying degrees of state participation. This landscape is

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summarized in the next section, before the chapter turns to a detailed assessment of railway SOEs. Despite their central role, many TCTC SOEs face persistent operational, financial, and governance constraints. They often rely on aging assets, carry significant financial pressure, and have limited access to commercial financing for needed investments. Institutional and governance arrangements can also be challenging, with unclear accountability, limited transparency, and few performance‑based mechanisms. In ports, traditional public service models and modest private sector participation, where this applies, can slow efficiency gains and investment mobilization. Enhancing the performance of TCTC state-owned railways, maritime ports, and trans-Caspian shipping lines is fundamental to building a corridor that can accommodate large amounts of bulk traffic and compete on speed, reliability, and cost predictability for containerized traffic. Improvements in governance, financial management, operational processes, customer orientation, competitive neutrality, and regulatory clarity directly translate into better service delivery. Without progress in these areas, the TCTC will find it difficult to attract sustained containerized traffic or deliver sufficient infrastructure and equipment availability to serve bulk-commodity traffic. With such progress, the corridor can evolve into a dependable, commercially credible platform for long‑distance Eurasian trade for all commodity types. Global experience shows that no single institutional model fits all contexts. An organizational structure or governance approach that works well for railways and ports in one country may be ineffective—or even counterproductive—in another. For railways, the most suitable arrangements depend on factors such as freight density, geography, traffic mix, regulatory capacity, and the political economy of public investment. In the ports sector, the global standard is the landlord model, where the public sector retains ownership of land and core infrastructure and private operators manage terminals under long-term concessions. This structure has become dominant globally because it mobilizes investment, boosts efficiency, and enhances service quality, and there are opportunities to adopt it more widely in the TCTC. This chapter provides contextual analysis of maritime ports and trans-Caspian shipping—highlighting their diverse state participation models—while focusing on railway SOEs as the primary drivers of corridor performance. It draws on global experience with institutional models for railways and assesses the progress attained by the TCTC’s main railway undertakings toward becoming world-class commercially and financially sustainable enterprises. The basic premise of this assessment is that the corridor’s ability to move from basic viability to real competitiveness necessarily rests, in no small part, on the market-facing organizational strengths of its railway SOEs. To this end, the chapter reviews the comparative institutional readiness and performance—relative to international good practice, as well as relative to each other—of five TCTC railway SOEs: ADY, GR, KTZ, TCDD, and Uzbekistan Railways (Uzbekistan Temir Yollari, UTY).3

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These SOE-level findings should be read against the broader institutional backdrop in which corridor SOEs operate. State ownership arrangements—often exercised through line ministries, holding structures, or central ownership agencies—influence strategic mandates, risk tolerance, and accountability. Public investment management frameworks shape how major investments are appraised, approved, financed, and monitored, whereas procurement rules affect cost discipline, competition, and delivery efficiency. The extent to which sustainability considerations are embedded in governance, risk management, strategy, and performance monitoring is also increasingly relevant for operational credibility and access to finance. Issues related to border governance, customs administration, and cross-border regulatory coordination lie outside the scope of this chapter. Although analysis does not benchmark the broader institutional frameworks in detail, it recognizes their role in shaping SOE incentives, reform space, and, ultimately, bankability.

SOEs Across TCTC Transport Modes: State Participation in Ports and Shipping Although rail transport along the TCTC is dominated by SOEs operating under predominantly public ownership models, the corridor’s maritime ports and transCaspian shipping services display a more diverse pattern of state participation. Across the Caspian Sea and the Black Sea interface, ownership and governance arrangements range from fully privatized ports to landlord ports with private terminal operators, as well as public service ports operated directly by the state. Similarly, in the trans-Caspian market, state-owned shipping companies operate alongside private and foreign-invested firms, often in cooperative or joint venture arrangements. These differences matter for how investment is mobilized, how risks are allocated, and how performance incentives are structured. Whereas railway SOEs typically combine infrastructure management and operations within a single public entity— or within closely linked public entities—ports and shipping services often rely on hybrid models that blend public ownership of core assets with private sector participation in terminal operations, vessel ownership, or service provision. As a result, the reform levers available to governments, and the pathways toward improved efficiency and commercial credibility, differ meaningfully across modes. This section summarizes the incidence of state participation in the provision of maritime port and trans-Caspian shipping services along the TCTC, illustrating the diversity of ownership structures, governance models, and public-private collaboration arrangements across key nodes and operators. State participation in the provision of maritime port services and trans-Caspian shipping services in the TCTC is mixed. Unlike the TCTC’s rail sector, which is almost entirely made up of state-owned (vertically and nonvertically integrated) railway undertakings, the

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corridor’s maritime ports and trans-Caspian shipping service providers cover a wide spectrum of state participation. They encompass fully privatized maritime ports (for example, some ports in Georgia), landlord-based public ports with private sector participation (for example, in Kazakhstan), and public service or majority public service ports (for example, in Azerbaijan and Turkmenistan). They also include state-owned shipping companies (Azerbaijan Caspian Shipping Company, Kazmortransflot) operating alongside private and foreign-invested shipping companies, in collaboration with them, or both (Silver Shipping Caspian, AD Ports Group). Irrespective of the incidence of state participation, these operators play a crucial role in the daily operations of the TCTC—and in the economic prospects of their host countries more generally. Some of the key challenges and opportunities facing them are discussed here. Maritime ports in Georgia Georgia’s two active maritime ports handling general cargo (including containers)—Poti and Batumi—have been privatized, and their terminals are operated by a combination of international terminal operators and international and Georgian transportation and logistics companies. With respect to containerized freight handling specifically, Poti is Georgia’s dominant port, with annual containerized capacity of approximately 650,000 20-foot equivalent units (TEU) as of year-end 2025 against 2025 containerized throughput of 636,466 TEU (yielding an approximate utilization level of 98 percent and accounting for 85 percent of national containerized throughput that year). This compares with Batumi’s containerized capacity of 200,000 TEU and 2025 containerized throughput of 109,579 TEU (55 percent utilization and 15 percent national share). In a context of (1) imbalanced capabilities among active ports, (2) Poti’s containerized operations having reached capacity, and (3) expected continued growth in TCTC containerized cargo and in the average size of vessels calling at Georgia’s ports, Georgia has a unique opportunity to meet these supply-demand mismatches with fit-for-purpose throughput capacity expansion while introducing more port sector competition. To accomplish this, the government of Georgia is developing the port of Anaklia, a greenfield deep water port north of Poti, which is expected to become operational in 2029, have ample room to grow over time, handle the largest vessels expected to ply the Black Sea, and be multimodally connected to its hinterland. More important, the port of Anaklia is being developed under the landlord model, thus introducing a port sector governance approach that is aligned with global best practice and has no precedent in Georgia’s general-cargo maritime ports. This approach is expected to attract private sector investment while maintaining government control, enable world-class service provision, and facilitate the development, over time, of more than one terminal with more than one terminal operator at this port, thus delivering not only interport competition vis-à-vis Poti and Batumi but also intraport competition within Anaklia itself.

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Meanwhile, considering Poti’s elevated containerized utilization, there is a shortterm need to increase its productivity and handling capacity, which can be achieved through in situ measures such as investments in equipment and yard management optimization. Short-term improvements to Poti’s last-mile hinterland connectivity could also be considered. More broadly, and building on its chosen governance trajectory for Anaklia, the government of Georgia has the opportunity to draw on landlord model principles to deepen public-private collaboration in planning, hinterland connectivity, and regulation for all ports, including Poti and Batumi. Port of Baku Azerbaijan’s port of Baku is arguably the most critical single node in the entire TCTC because there is no complementary general cargo port readily available in Azerbaijan or the west coast of the Caspian Sea with capacity and operational capabilities comparable to those of the port of Baku. The port of Baku is undergoing expansion, from 15 million (current capacity) to 25 million tons and from 150,000 TEU (current capacity) to 260,000 TEU first and eventually to approximately 500,000–650,000 TEU, including dredging of the existing access channel and existing and planned berthing areas. In 2025, the port handled 8.2 million tons of cargo, including 107,000 TEU, representing a 39 percent increase in container throughput year on year. Although it is a majority public service port, the port of Baku has experience with public-private partnerships, having developed a fertilizer terminal with private sector participation and expanded private stevedoring participation into parts of its general cargo and container handling operations. The ongoing expansion to 25 million tons and approximately 500,000–650,000 TEU, which is expected to include the development of new terminals, including a dedicated container terminal, offers an opportunity to transform the port of Baku’s governance model by more widely adopting landlord port principles and attracting one or more world-class private operators to the new terminals through long-term, competitively awarded concession agreements. Port of Aktau Kazakhstan’s port of Aktau is operated under the landlord model and is thus aligned with best European and international practice. It has a capacity of 11.8 million tons and 70,000 TEU as of 2025, and it is in the process of reaching full buildout at a recently opened container hub, expected to increase Aktau’s containerized capacity to 240,000 TEU by the end of 2027. Its other facilities include separate terminals for oil, grain, ferry, and general cargo. The oil and grain terminals are operated by individual tenants, the ferry terminal is operated by the port authority, and the container hub is operated as a joint venture between KTZ Express, Aktau International Sea Commercial Port, and China’s Lianyungang Port. The port of Aktau is undergoing further expansion and modernization beyond new terminals,

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including dredging (ongoing), the reconstruction of two existing berths, and the acquisition of new cranes (the latter two with financial support by the European Bank for Reconstruction and Development and the European Union). Adjacent to the port of Aktau is the Aktau Marine North Terminal, a joint venture between Singapore-based Interport Development PTE Ltd., KTZ Express, and Aktau International Sea Commercial Port. Although not as TCTC focused as the port of Aktau, Aktau Marine North Terminal has a capacity of 3 million tons (grain and general cargo) and 70,000 TEU. Port of Kuryk Kazakhstan’s port of Kuryk is operated under landlord principles and has a capacity of 7 million tons. It consists of a ferry complex (owned and operated by KTZ, the national railway undertaking), the Kaspi Grain Way grain terminal (owned and operated by KTZ, Kuryk Port LLP, and Kaspi Grain Way), and the Sarzha Multipurpose Marine Terminal (owned and operated by Semurg Invest and AD Ports, and currently under development). The port of Kuryk was dredged in 2024 under a KTZ-led investment. This increased the depth of its access channel and berthing areas by 2 meters, to a range of 7–8 meters. At full buildout, the Sarzha Multipurpose Marine Terminal is expected to add 10 million tons to Kuryk’s overall throughput capacity by 2030, including an estimated 150,000 TEU in dedicated containerized handling capacity. Port of Turkmenbashi The port of Turkmenbashi, the largest of all Caspian ports by nominal installed capacity—17 million tons—as of 2025, is operated as a public service port. It consists of a container terminal with maximum capacity of 400,000 TEU, a ferry terminal, a roll-on/roll-off terminal, a dry bulk terminal, a general cargo terminal, and a polypropylene terminal. Like other Caspian Sea facilities, the port of Turkmenbashi is exposed to fluctuations in Caspian Sea water levels and to siltation. This raises the need for dredging and widening its 21-kilometer access channel, because (1) its current depth is as low as 4.2 meters at high spots (compared with operational requirements of 8 meters), and (2) its current width (90 meters) does not allow for two-way vessel traffic (140 meters). Unless addressed, these shortcomings constrain the port’s effective capacity. Azerbaijan Caspian Shipping Closed Joint-Stock Company Azerbaijan Caspian Shipping Closed Joint-Stock Company (ASCO) is a state-owned shipping company and the largest fleet operator in the Caspian Sea, including roll-on/roll-off vessels, rail ferry vessels, general cargo vessels, and liquid bulk vessels. In 2025 it transported 9 million tons of cargo across all markets (including in and outside the Caspian Sea). ASCO benefits from synergies with other Azerbaijani state-owned enterprises relevant to the TCTC, including Baku Shipyard,

Institutional and Regulatory Arrangements

ADY, and Port of Baku (ADY and Port of Baku were merged in 2025), all of which are part of the Azerbaijan Transport and Communications Holding (AZCON). ASCO is currently exploring plans to expand its Caspian Sea fleet, particularly as regards containerized freight (both container ship and rail ferry capacity). Kazmortransflot Kazmortransflot (KMTF) is a state-owned shipping company and wholly owned subsidiary of KazMunayGas, Kazakhstan’s state-owned oil and gas company. Although it is one of the main transportation service providers in the Caspian Sea, and particularly relevant to the TCTC because of its containerized transCaspian transportation services, the company as a whole is mainly focused on the transportation of fuel in open seas. In 2024 it transported 704,000 tons of cargo between Aktau and Baku, including 51,387 TEU—nearly 3 times its containerized volumes in 2023. In 2025 it entered into a collaboration agreement with AD Ports Group (Abu Dhabi) to (1) jointly commission and operate two shallow-draft container vessels specifically designed for Caspian Sea conditions, and of a size larger than currently available vessels in this market (more than 500 TEU), and (2) jointly commission and operate transCaspian ferry vessel capacity (up to 10 vessels with a 120-wagon capacity under consideration). This exemplifies public-private collaboration in Caspian shipping, because AD Ports Group is partially publicly traded on the Abu Dhabi Securities Exchange.

Global Experience on Institutional Models for Railways Globally, railways are organized under two dominant institutional models, each offering distinct advantages and trade-offs. Vertically integrated railways, where a single entity owns and controls both infrastructure and operations—as seen in Brazil, China, India, Mexico, the Russian Federation, and the United States—tend to benefit from strong coordination, unified planning, and economies of scale. However, these systems can also entrench monopoly power and limit competition. In contrast, vertically separated or open access systems, typical of the European Union and Australia, separate infrastructure management from train operations, allowing multiple operators to compete on shared tracks, subject to track access charges. This approach encourages competition, innovation, and service diversity, but it can create coordination challenges and requires strong regulatory capacity and steady public funding for infrastructure. The EU railway model combines publicly funded infrastructure with competitive, often private, train operations—improving transparency and contestability but also creating long‑term dependence on public funding of infrastructure and coordination challenges across entities. Alongside organizational structure, funding models vary widely across countries, although most railways rely heavily on public financing of

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infrastructure (refer to table 6.1). Public SOE models remain the norm for networks with substantial passenger service or moderate freight density. Open access systems combine public infrastructure funding with competitive private operators, whereas vertically integrated private freight railways—such as those in Brazil, Mexico, and the United States—perform well where high freight volumes can cover both operating and capital costs. Public-private partnerships (PPPs) and concessions are increasingly used to mobilize private capital in specific, bankable segments such as terminals, rolling stock, and high-density freight corridors. The EU rail sector continues to rely predominantly on public financing for infrastructure, with private investment—especially through PPPs—remaining limited. This pattern is largely a structural consequence of the European Union’s governance and regulatory framework, which separates infrastructure management from operations and prioritizes interoperability, harmonized standards, and EU-wide coordination. Although the European Union has explored alternative governance and business models to increase private sector participation in infrastructure provision, the need for strong public oversight, coordinated European Rail Traffic Management System deployment, and alignment with single market objectives means that public funding remains the backbone of the system, with private financing playing only a supplementary role. In effect, the limited presence of private capital reflects how responsibilities, risks, and regulatory obligations are allocated across the European rail sector (World Bank 2025). The EU experience is especially relevant for TCTC countries because the TCTC is an intercontinental, cross‑border rail corridor connecting Asian producers with European markets and vice versa. Most EU member states began with vertically integrated, state-owned railways. Early reforms aimed to dismantle state-owned monopolies by introducing vertical separation, thereby opening the way for competition in transport services. This model created regulated open access for commercial freight and passenger operators, alongside competitive tendering for public service obligation (PSO) services. The shift toward open access and vertical separation was a strategic response to historically fragmented national rail markets and the need to establish a unified, competitive, cross-border rail system. Under this governance structure, infrastructure continues to be managed nationally, and service providers—both domestic and international—are able to operate across borders, enabling genuinely European rail services. This model seeks to maximize welfare gains through competition and open access while also ensuring stable and efficient funding for infrastructure managers. However, the outcomes across member states vary widely, reflecting the ongoing challenge of balancing commercial incentives with the provision of PSO services and of sustaining infrastructure funding within a system where private investment plays only a limited role. Box 6.1 presents the evolution of the structure of railways in EU countries.

Model

State’s role

Operation structure

Key features

Freight suitability

Passenger suitability

Examples

Vertically integrated public model

Government budget (Capex and Opex), subsidies, ticket revenue, and freight revenue

State owns the SOE and assets; sets sector objectives and investment priorities; and often combines ownership, policy, and regulatory oversight.

SOE manages both infrastructure and operations.

Simplified coordination, cost synergies, unified planning

High—ideal for low-density networks, strategic national corridors.

Moderate—may limit competition and innovation.

China (dominantly) and India (dominantly)

Open access with public infrastructure

Public funding of infrastructure; operators pay access charges

State owns and funds rail infrastructure, sets access and competition policy, and regulates pricing and capacity allocation, and multiple (public or private) operators compete for services under strong, arm’s‑length regulation.

Infrastructure managed by public entity; multiple operators compete for services.

Encourages competition, leverages economies of scale, requires strong regulation.

High— effective in high-density freight markets with clear access rules.

High—promotes service diversity and cost discipline.

European Union and Australia (for interstate freight)

Concession or PPP model

Private investment with public guarantees or viability gap funding

State retains asset ownership and policy authority, and private operators finance and operate assets under time‑bound contracts, with roles, risks, and performance obligations defined and enforced through concession agreements and contract regulation.

Private operators manage services or infrastructure under longterm contracts.

Mobilizes private investment, performancebased contracts, risk sharing.

High—suitable for freight corridors with bankable demand.

Moderate— requires careful design to ensure service quality and affordability.

Mexico (since 1990s) and Brazil (since 1990s)

Separation model (unbundled)

Public funding of infrastructure; mixed funding for operations

State owns infrastructure and may own operators as separate entities, sets network and service policy objectives, and relies on independent regulation to manage access, pricing, and coordination between infrastructure and operations.

Infrastructure and operations managed by separate entities.

Transparency in cost allocation, potential for competition in operations

Mixed— coordination challenges may affect reliability.

High—supports competitive passenger services with proper regulation.

European Union

Vertically integrated private model

Private capital (Capex and Opex) recovered through tariffs and commercial revenue

Private entity owns and operates infrastructure and services on a commercial basis, and the state limits its role to setting high‑level transport policy and regulating safety, competition, and monopoly power where relevant.

Single private entity owns and controls infrastructure and runs trains.

High coordination; strong economies of density; commercial discipline; requires competition policy safeguards.

High—excels on thick, longhaul freight corridors where volumes can cover infrastructure and operating costs.

Low to limited— private operators seldom provide broad passenger services without subsidy.

United States (class I freight); Mexico (private concessionaires operating as integrated freight railways); Brazil (private freight concessions with integrated operations)

Source: Original table for this publication. Note: PPP = public-private partnership; SOE = state-owned enterprise.

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Financing source

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TABLE 6.1 Comparison of railway sector operational models: Public and private approaches

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BOX 6.1 The evolution of railways in the European Union The transformation of EU railways over the past three decades reflects a shift from geographically fragmented, state-owned national monopolies to a more integrated, competitive, and customer-oriented sector. Historically, each member state operated its own railway system with distinct technical standards and minimal cross-border coordination. This led to inefficiencies, declining freight market share, and limited innovation—prompting the European Union to launch a series of ambitious reforms. EU railway sector reform was implemented in successive phases (refer to table B6.1.1). The reform process began with the First Railway Directive in 1991, which introduced the separation of infrastructure management from train operations. This was followed by four successive Railway Packages between 2001 and 2016, aimed at opening markets, harmonizing standards, and fostering competition. Key milestones included the establishment of independent national regulatory authorities and the creation of supranational bodies such as the European Railway Agency to oversee safety and interoperability. Although some countries embraced reform early—establishing regulators and encouraging competition—others progressed more slowly. Service quality generally improved, especially where competition was introduced, and private investment in rolling stock increased. However, profitability remains mixed: freight services have become more financially sustainable, whereas passenger services often continue to rely on public subsidies. This evolution in EU railway governance—from state monopolies to a more liberalized and competitive framework—has had direct implications for how cost efficiencies are achieved across the sector. As reforms introduced vertical separation, open access, and regulatory oversight, they reshaped the operational landscape in ways that affect economies of scale, density, and scope. For example, the shift toward competition and infrastructure unbundling created opportunities for specialized operators to exploit scale and density efficiencies, particularly in freight. At the same time, the fragmentation of services introduced challenges to realizing economies of scope, especially in high-density, mixed-traffic networks where integrated management of infrastructure and operations can yield significant cost savings. Considering the context and priorities established by the European Union, the model pursued through its series of rail reforms has been appropriate. No single model fits all contexts. The balance between serving both passenger and freight markets, affordability, and fair competition, as well as the imperative to create a unified and competitive market across national borders—reducing fragmentation—has been addressed by the sequence of reforms implemented by the European Union. Continued

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BOX 6.1 The evolution of railways in the European Union (Continued) TABLE B6.1.1 Phases of the railway sector reforms in the European Union Phase

Key characteristics

Phase 1: Prereform era (before 1991) Structure

National monopolies, vertically integrated (infrastructure and operations combined), state owned, limited competition.

Service quality

Varied widely; generally, service was reliable but not customer oriented, with limited innovation.

Profitability

Most railways operated at a loss, requiring substantial government subsidies.

Drivers for change

Economic inefficiency, inability to compete with road transport, and barriers to cross-border traffic.

Phase 2: First Railway Directive (1991) Key reform

Directive 91/440/CEE mandated the separation of infrastructure management from transport operations, opening the door to competition.

Structure

Required accounting separation, later moving toward organizational separation.

Service quality

Initial improvements in transparency and efficiency, but limited impact on customer experience.

Profitability

Still low; reforms were slow to implement, and subsidies remained necessary.

Time frame

Some countries responded proactively (for example, Czechia, Estonia), establishing regulatory authorities within 4 years. Others were reactive, taking up to a decade.

Phase 3: railway packages (2001–16) First railway package (2001)

Opened the market to competition, established national regulatory authorities, and set rules for access and charging.

Second railway package (2004)

Focused on interoperability, safety, and the creation of the European Railway Agency.

Third railway package (2007)

Enabled international passenger services and furthered market integration.

Fourth railway package (2016)

Aimed to complete the single market for rail services, promote competition, and harmonize technical standards.

Structure

Gradual shift to open access, with infrastructure managed by national companies and train operations open to competition. Regulatory authorities became more independent.

Service quality

Notable improvements in service quality, especially where competition was introduced. Customer focus increased, and technical standards improved.

Profitability

Mixed results. Freight saw modest growth in traffic and market share; passenger services improved but often remained loss making and reliant on public support. Private investment increased, especially in rolling stock.

Time frame

The rollout of open access and regulatory reforms took years, with significant variation in speed and effectiveness across member states.

Source: Original table for this publication based on Forgács and Szabolcs 2015 and Tomo et al. 2024.

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Comparative Assessment of TCTC Railway SOEs Railway SOEs in the TCTC stand at different moments in their development trajectory. Comparing their organizational and governance practices, both among them and vis-à-vis global good practice, can yield useful policy lessons to identify reform opportunities. The discussion of TCTC rail sector SOEs is organized around four main organizational categories:

• Governance captures the foundational institutional structures that anchor

strategic direction, managerial autonomy, and accountability. Board independence and committee structures, professionalism of the senior management team, clarity of shareholder expectations, and the core corporate control systems—for example, enterprise resource planning (ERP), International Financial Reporting Standards (IFRS), e-procurement, and internal audit—reinforce internal discipline.

• Bankability assesses whether the regulatory and institutional framework

enables a railway SOE to operate on a financially sustainable and commercially credible basis. It focuses on the presence of the following: cost‑reflective tariff and infrastructure charging systems with proper market segmentation; the presence of clear PSO contracts and multiannual infrastructure contracts (MAICs);4 activity based costing (ABC); and environmental, social, and governance (ESG) and environmental and social management system (ESMS) frameworks relevant for access to commercial finance.

• Organizational streamlining and asset governance bring together the enabling foundations of performance—such as noncore divestiture, labor right‑sizing, and the rollout of digital and asset management systems—with the market‑facing attributes that shape competitiveness for containerized cargo, including reliability, service frequency and differentiation, and real‑time visibility.

• Independent regulation measures whether regulatory structures exist—and function—to ensure nondiscriminatory access, prevent monopolistic practices, and align public service requirements with commercial incentives.

Although a broader set of railway SOEs operate across the TCTC geography, this section focuses its detailed assessment on five core railway undertakings— ADY, GR, KTZ, TCDD, and UTY—that currently carry the majority of corridor traffic and play a central role in determining end-to-end corridor performance. Other railway systems in the wider region, including those of Armenia, the Kyrgyz Republic, Tajikistan, and Turkmenistan, are not covered in detail because of data limitations, their more limited direct integration into the corridor at present, or both, but their role is expected to grow as connectivity expands.

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Overall, the five TCTC railway SOEs considered in this section are at different stages in their transition toward modern, commercially oriented operations, and comprise a wide spectrum of enterprise profiles in terms of size and logistics role (refer to box 6.2). KTZ and GR exhibit comparatively stronger institutional readiness, with more advanced governance arrangements and clearer progress toward market‑aligned practices. Important gaps remain, however—most notably financial sustainability for KTZ and operational efficiency and commercial orientation for GR. ADY occupies an intermediate position, with relatively stronger operational and regulatory capabilities, but still faces constraints in bankability and broader commercial orientation. UTY and TCDD are earlier in their institutional transformation journey, with several core capabilities still emerging—particularly in bankability, commercial orientation, and the development of independent and fully effective regulatory frameworks.

BOX 6.2 Snapshot of core Trans-Caspian Transport Corridor railway state-owned enterprises Kazakhstan Railways KTZ is the largest railway system in the region and serves as the core transit backbone of the Trans-Caspian Transport Corridor (TCTC). It operates a network of about 16,000 km, carries large freight volumes (~303 million tons; 261.7 billion ton-kilometers [ton-km]), and employs more than 117,000 staff. Its scale, high traffic density, and long-haul corridor orientation underpin strong asset utilization. KTZ has made progress in modernizing operations and accessing commercially structured financing with international financial institution support, and exhibits comparatively more advanced governance foundations.

Uzbekistan Railways UTY is a midsize but strategically important system, with a network of around 6,100 kilometersa and substantial traffic volumes (approximately 103 million tons; 27.5 billion ton-km), supported by a relatively large workforce (about 66,000 employees). It plays an increasingly important role as a regional connector, with significant domestic and crossborder freight activity. The system is in a phase of transition, with ongoing modernization and governance and tariff reforms under development.

Georgian Railway GR is smaller in scale, with a network of about 1,400 kilometers, but highly strategic as a landbridge between the Caspian and Black Seas. Despite its modest size, it carries meaningful freight volumes (approximately 13.7 million tons; 3.9 billion ton-km) and demonstrates relatively high asset utilization. GR shows comparatively advanced governance and financial management practices, including more developed tariff and reporting systems. Continued

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BOX 6.2 Snapshot of core Trans-Caspian Transport Corridor railway state-owned enterprises (Continued) Azerbaijan Railways ADY is a medium-size system (approximately 2,100 kilometers of track, about 14,000 employees) and a key connector across the Caspian interface and South Caucasus landbridge. It carries moderate freight volumes (approximately 18.5 million tons; about 3.1 billion ton-km) and serves a central role in linking maritime and rail segments of the corridor. The system shows relatively strong operational capacity and progress in areas such as environmental, social, and governance and management professionalism.

Turkish State Railways TCDD represents the western gateway of the TCTC, with a large and geographically extensive network of approximately 13,000 kilometers, but comparatively lower freight intensity (approximately 26 million tons; 10.6 billion ton-km) relative to network size. It serves large passenger volumes and operates with a workforce of around 9,000 employees. Rail freight accounts for a relatively small share of national freight transport, indicating significant unrealized potential. Türkiye has undertaken important reforms, including the unbundling of infrastructure and operations, aligning with international practice. Source: Original compilation for this publication, based on company reports and national statistical offices. a. Including sidings, industrial parks, and double tracks.

Governance: independent governance and reporting Governance quality varies meaningfully among the TCTC railway SOEs, reflecting differences in the depth of board independence, professionalism of management, and strength of reporting and internal control systems. In relative terms, governance foundations are more advanced in KTZ and GR when compared with those of UTY, ADY, and TCDD, where institutional development remains less mature or uneven. For both KTZ and GR, governance arrangements broadly enable strategic direction, managerial accountability, and oversight to reinforce one another, notwithstanding remaining constraints outside the governance sphere. KTZ’s governance framework has a formally constituted supervisory board, multiple functioning committees (including audit, risk, and remuneration), and a largely professionalized senior management cadre (consisting mostly of railway or management specialists). Regular IFRS reporting, internal audit functions reporting to the board, and the use of enterprise systems together provide a credible structural basis for strategic planning and oversight. At the same time, as in many large network utilities with strong national development mandates,

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operational decisions—particularly those linked to strategically important bulk flows—continue at times to be shaped by short-term policy priorities, highlighting the distinction between formal governance alignment and full operational autonomy. GR demonstrates a governance model that is comparatively disciplined, with half of its supervisory board members being from outside the government, directors, established board committees, regular audited IFRS reporting, and a consistent internal audit function. These elements support transparency and accountability, even as operational and commercial challenges persist. UTY, ADY, and TCDD each exhibit important governance strengths while also facing areas where further institutional strengthening would enhance effectiveness. ADY stands out for its fully professionalized senior management, providing a solid managerial foundation for operational delivery, whereas UTY has begun to put in place core governance arrangements—by designing regulations for the sole shareholder—that signal an ongoing transition to more structured oversight. In Türkiye, the formal unbundling of infrastructure management and operations represents a significant institutional step, aligning the sector with international good practice in separating infrastructure and operations. At the same time, across all three SOEs the absence of independent supervisory boards and structured committee arrangements constrains the effectiveness of strategic supervision. In UTY and TCDD, management structures combine professional expertise with political appointments, whereas in ADY, strong management capacity operates within a governance framework that lacks independent board oversight. Strengthening supervisory independence, clarifying the board’s oversight and fiduciary roles, and formalizing board‑level committee functions would reinforce governance predictability while leaving policy formulation and day‑to‑day operational decisions firmly with the state and management, respectively. Bankability: transparency, financial health, and predictable funding Bankability reflects whether a railway SOE is financially transparent, commercially credible, and supported by predictable funding arrangements. Four elements are particularly important for lenders and investors: (1) cost‑reflective tariffs, (2) clear PSO and MAIC contracts (including with regard to key contract provisions such as their duration and ability to be amended during their lifetime), (3) separation of infrastructure and operational costs using ABC, and (4) ESGESMS systems that meet modern financing standards. KTZ and GR demonstrate relatively stronger foundations for bankability, although both face important constraints. GR stands out for having segmented, cost‑reflective tariffs, ERP adoption, and a complete ABC framework, alongside ESG-ESMS arrangements aligned with international financing requirements. KTZ has developed many of the institutional building blocks associated with

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bankability—including ERP adoption, IFRS reporting, internal audit functions, and partial progress on PSO or MAIC and ABC frameworks. However, tariff structures remain insufficiently segmented and not fully cost reflective, which continues to limit commercial transparency and weakens the credibility of cashflow projections despite the company’s scale and traffic base. Bankability profiles among UTY, ADY, and TCDD show clear differentiation across key instruments. UTY demonstrates relatively more progress on tariff practices, which are assessed as partially market segmented and cost reflective, although it has yet to put in place formal PSO or MAIC arrangements, ABC‑based cost separation, or ESG-ESMS systems. ADY, by contrast, has made notable advances on ESG-ESMS frameworks and shows partial progress toward contractual funding arrangements for public services and infrastructure. TCDD presents a different profile, with established separation of infrastructure and operational costs using ABC and partial progress on PSO- or MAIC‑type arrangements, but with tariffs that remain non-cost reflective and ESG-ESMS systems that are still underdeveloped. Taken together, these patterns suggest that although each SOE has begun to build specific elements of bankability, none has yet achieved a comprehensive, internally consistent framework that would provide financiers with clear, predictable signals across tariffs, contracts, cost structures, and ESG compliance. In terms of underlying financial health, there are differences across the SOEs in liquidity positions, leverage, and operating ratio discipline. For some, liquidity constraints imply a need to reinforce working capital management, align receivable and payable cycles, or rationalize short-term liabilities. For others, the presence of liquidity cushions suggests opportunities to channel resources into backlog reduction, digital systems, or asset management implementation— investments that directly improve service reliability. Meanwhile, operating ratio performance indicates satisfactory cost discipline for at least two SOEs, although cost discipline alone does not yield competitiveness for time-sensitive cargo. Organizational streamlining and asset governance Corridor competitiveness is shaped by two mutually reinforcing factors: how effectively assets are governed and utilized and how organizational and service structures translate those assets into market‑facing performance. On the operational side, all five railway SOEs show some progress in streamlining organizational footprints, with partial elimination of noncore activities observed across KTZ, UTY, and GR and more decisive progress in ADY and TCDD. Labor right-sizing efforts are also underway, although uneven: ADY shows the clearest progress, whereas KTZ, UTY, and GR remain mid-transition and TCDD has yet to demonstrate comparable adjustment. Digitalization of systems and processes is progressing across all SOEs, although largely at a partial stage, suggesting broad recognition of its importance but

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uneven depth of implementation. By contrast, enterprise asset management systems remain a key gap, with KTZ, ADY, and TCDD showing partial adoption and UTY and GR yet to implement such systems in a systematic way. Differences in asset utilization and productivity largely reflect network roles and scale. KTZ, by virtue of its size and traffic base, exhibits high rolling stock utilization and traffic density, and GR and ADY also register high utilization indicators, consistent with their focused transit and corridor functions. TCDD’s asset utilization indicators are mid-range: in some instances they compare well with those of GR and ADY, but they compare unfavorably across the board with those of the much larger KTZ. For UTY, comparable utilization metrics are not yet available, reflecting ongoing modernization efforts and continued development of operational data systems. Independent regulation: ensuring fairness, transparency, and predictable access Independent regulation plays a critical role in ensuring that access charges, service tiers, and priority decisions are transparent, predictable, and subject to oversight. It provides the institutional guardrails needed to operationalize instruments such as tariff segmentation and PSO and MAIC contracts, helps mitigate risks of monopolistic behavior, and aligns public policy objectives with commercial discipline. Where regulatory authority is weak or fragmented, these instruments are more likely to be applied inconsistently or overridden by shortterm considerations. GR stands out as the only system with a clearly established independent safety and market regulator, providing defined oversight over access, safety, and economic regulation. This institutional separation supports greater predictability for both public authorities and market participants. KTZ and ADY show partial progress, with elements of regulatory oversight and competition safeguards in place but with independence and enforcement capacity still evolving. UTY remains at an earlier stage, particularly with respect to mechanisms to regulate competition and prevent monopolistic behavior, despite partial arrangements for safety and market oversight. TCDD exhibits partial safeguards against monopolistic practices, but it lacks an independent safety and market regulator, limiting the effectiveness of regulatory separation in practice.

Conclusions This chapter has shown that rail SOE performance ultimately depends not on a single reform lever but on the ability of transport SOEs to advance a broad, mutually reinforcing set of capabilities. Governance arrangements, organizational streamlining, asset governance, commercial orientation, and the strength of

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regulatory and funding frameworks all matter—and progress in one area is rarely sufficient in the absence of progress in others. Across the corridor, SOEs exhibit uneven maturity along these dimensions. Some have made tangible gains in clarifying mandates, improving financial transparency, and rationalizing organizational footprints; others remain constrained by legacy structures; weak asset management practices; or incomplete separation between policy, ownership, and operational functions. The chapter more importantly shows that creditworthiness and bankability emerge as powerful summary indicators of this broader institutional readiness. Bankability reflects not only financial performance but also the credibility of governance, the predictability of funding (including PSO and infrastructure contracts), the transparency of cost structures, and the ability to meet modern ESG and risk management standards. In that sense, whether an SOE is bankable—or on a credible path toward bankability—is a more telling measure of reform progress than any single operational metric. At the same time, the chapter underscores that context matters. Differences in network scale, traffic density, and corridor function and the balance between passenger and freight priorities have a first‑order influence on how railways are structured and operated. High‑density freight or transit‑oriented networks naturally exhibit stronger utilization metrics than mixed or passenger‑heavy systems, and these structural conditions shape what can reasonably be expected from SOEs at different stages of development. Reform trajectories therefore need to be interpreted—and designed—with these contextual constraints in mind, rather than through one‑size‑fits‑all benchmarks. Looking forward, the central question is not whether SOEs should converge on a single organizational model, but how to help them move toward the frontier of performance given their starting points. The chapter points to several complementarities that are critical in this transition. Stronger governance and clearer state ownership arrangements support better investment decisions and reduce political risk. Organizational streamlining and asset governance create the managerial focus and data foundations needed to translate infrastructure into reliable, market‑facing services. Independent and capable regulation underpins fair competition, credible access regimes, and investor confidence. Together, these elements enable SOEs to engage with markets—whether through commercial borrowing, partnerships, or PPP‑type arrangements—on more sustainable terms. Helping SOEs become bankable is not an end in itself, but a means to crowd-in private capital, improve service quality, and reduce the long‑term fiscal burden on the state. Where traffic density and corridor economics allow, this opens space for greater private participation; where they do not, it strengthens the case for transparent public funding tied to performance. In sum, bringing corridor SOEs to the top of their game requires aligning governance, finance, organization, and regulation with the realities of their networks and markets. The prize is not

Institutional and Regulatory Arrangements

uniformity but credible, market‑ready SOEs that can convert public investment into reliable services, mobilize capital responsibly, and support corridor competitiveness over the long term. Ultimately, the TCTC will only be as strong as its railway undertakings, maritime ports, and trans-Caspian shipping lines. Their institutional readiness, financial health, and customer-facing capabilities remain the decisive factors shaping the corridor’s competitiveness. Strengthening and commercializing these SOEs is therefore not just an internal reform agenda—it is the foundation for unlocking the TCTC’s full strategic and economic potential.

Notes 1. The assessments presented in this chapter, which are focused on railway SOEs, do not include the state-owned railway undertakings of Turkmenistan, because of unavailability of data, and the Kyrgyz Republic and Tajikistan, because of their comparatively limited direct links to the TCTC’s core railway network. The Kyrgyz Republic’s railway connectivity role in the TCTC is expected to be transformed upon completion of the Uzbekistan-Kyrgyz RepublicChina railway line (under construction). 2. On the basis of its system scale, corridor centrality, and operational weight. 3. Following liberalization, Türkiye unbundled its rail sector, with TCDD acting as the national infrastructure manager and TCDD Transport operating passenger and freight services under a separate legal and financial structure. This review presents a combined assessment, because both entities have strong synergies in their governance, bankability, operational efficiency, and regulations. The only aspect in which they differ is operational benchmarking, for which data from TCDD Transport are used because it is the most relevant entity for this aspect. 4. Including with regard to key contract provisions such as performance indicators and commitments, reasonable duration, and ability to be amended during their lifetime.

References Coordinating Council of the Republic of Azerbaijan on Railroad Freight. 2024. “Modernisation of BakuTbilisi-Kars Railway.” https://transit.gov.az/en/media-en/news/modernisation-of-btk-railway-en. Forgács, Anna, and Szabó Szabolcs. 2015. “Rail as a Natural Monopoly and Possibilities of Its Regulation,” Studia Mundi—Economica 2 (2): 50–60. https://doi.org/10.18531/Studia .Mundi.2015.02.02.50-60. General Directorate of Highways, Ministry of Transport and Infrastructure, Türkiye. 2025. Highway Transportation Statistics. https://www.kgm.gov.tr/SiteCollectionDocuments/KGMdocuments /Yayinlar/YayinPdf/KarayoluUlasimIstatistikleri2025.pdf. Tomo, Andrea, Mario Pezzillo Iacono, Lorenzo Mercurio, Gianluigi Mangia, and Lucio Todisco. 2024. “Regulation, Governance and Organisational Issues in European Railway Regulation Authorities.” Journal of Rail Transport Planning & Management 29: 100428. https://doi.org/10.1016/j.jrtpm .2023.100428. Transportcorridors.com. 2026. “ADY Express Has Launched a Regular Express Container Service between Azerbaijan and Georgia.” Accessed June 1, 2026. https://www.transportcorridors.com /ady-express-launches-azerbaijan-georgia-container-service/. World Bank. 2025. Enhancing Transport Decarbonization in the European Union. Washington, DC: World Bank. https://documents1.worldbank.org/curated/en/099012125085536598/pdf/P50164 01b3ed380a618fac1940454097e66.pdf.

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7 Transforming the Trans-Caspian Transport Corridor through Improved Trade Facilitation, Digitalization, and Integrated Operations: Toward a Single Transport, Transit, and Trade (T3) Document Main Messages

• Reducing logistics costs in the Trans-Caspian Transport Corridor (TCTC)

will entail trade facilitation and operational improvements, which can be attained through consolidation and digitalization of documentation and integration of operations for enhanced service delivery.

• There is an opportunity to consolidate the several contracts of carriage,

customs transit documents, and other transport and transit documents needed to move freight along the TCTC into a single document or data entry from origin to destination.

• Furthermore, there is an opportunity to make this single document or data entry negotiable, thereby enabling TCTC logistics based on a single Transport, Transit, and Trade (T3) document or data entry.

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• In operations, the TCTC’s main railway undertakings and trans-Caspian

shipping lines should come together to form a single joint-venture multimodal non-asset-based containerized operator that (1) is fully integrated with the networks, conveyances, equipment, and operations of its asset-based parent carriers and (2) adopts best practices in corporate governance and reporting.

Introduction Few policy measures can do more to improve the logistics competitiveness of a cross-border trade corridor in terms of cost, time, and reliability than minimizing its transaction burden on shippers, carriers, and logistics service providers. Trading and transporting goods across borders requires documentation to undertake multiple transactions from origin to destination. Although necessary to enable trade, these transactions—often lumped under the rubric of red tape—are also time sinks, increase (formal and informal) trade costs, and are a source of exemptions that reduce predictability. These are not rounding-error effects. Available evidence suggests that direct transaction costs (such as administrative fees, agent charges, and document preparation) amount to anywhere between 2 percent and 15 percent of the value of traded goods, whereas indirect transaction costs (such as dwell time while awaiting clearance, border crossing delays, and informal payments) can be even higher, ranging from 1 percent to 24 percent of the value of trade (Moïsé and Le Bris 2013). These shortcomings are particularly binding for the cross-border movement of containerized freight, which is more sensitive to time, cost, and reliability considerations than bulk cargo because of its higher value content relative to its weight. This is why infrastructure investments are necessary but not sufficient to position the Trans-Caspian Transport Corridor (TCTC) as a competitive option for the transportation of containerized freight. Owing to its multimodal nature and geographic span, the TCTC is, in the international experience, more fragmented—and therefore more documentation intense—than most cross-border corridors. Yet it has significant untapped potential to capture containerized freight not only in the Eurasian landbridge but also linked to regional trade between Türkiye, the South Caucasus, and Central Asia. As a result, it can disproportionately benefit from—and be transformed by— efforts to reimagine its cross-border governance model and the documents that underpin it. The digitalization of documents resulting from a reimagined crossborder governance model for the TCTC would drive efficiency gains even further. This is especially true if digitalization interventions are (1) properly sequenced, preceded by the consideration of governance models with a high degree of

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document consolidation, and (2) treated as a delivery tool to enable the end goal of integrated transport operations with low transaction costs. The incidence of containerized freight along the TCTC—8 percent overall and 21 percent excluding oil and oil products—is modest at present, and the interventions needed to change this trajectory are long term. For example, they are likely to rely on intergovernmental collaboration; lengthy testing periods; internalization of lessons from trial and error; and the engagement of champions with the size, convening power, financial capacity, and operational credibility to elicit inter-entity agreements across borders. International experience, including in the Eurasian landbridge, shows that such measures, if undertaken, are likely to take years to play out. Therefore, for the TCTC the time to act is now. Containers are a growth market for the TCTC—if logistics performance improves. Despite the TCTC’s intensity in bulk commodity trade, improving its containerized logistics performance matters, for two main reasons:

• First, containers are a growth market, expected to be the fastest-growing TCTC segment over the 2023–40 period if performance improvement measures are implemented. Specifically, the incidence of containerized freight under the TCTC development (TD) scenario is projected to roughly double between 2023 and 2040, increasing from 8 percent to 19 percent of total volumes and from 21 percent to 39 percent of nonoil volumes (refer to figure 7.1). By contrast, under the status quo (SQ) scenario, the TCTC’s incidence of containerized freight remains constant between 2023 and 2040 as a share of total volumes (8 percent) and only modestly higher as a share of nonoil volumes (24 percent in 2040 compared with 21 percent in 2023).

• Second, the TCTC’s ability to deliver containerized shipments competitively—

based on scheduled, time-definite services that can be traced from origin to destination and compare consistently well with alternatives in terms of cost, time, and reliability—will be an enabler of economic diversification by TCTC host economies. Because host countries are expected to take measures to increase productivity, enhance growth, and increase the value-added content of their exports over the next 15 years, bringing these higher value-added exports to market and delivering time-sensitive imports to factories and consumers will require competitive containerized logistics, including along the TCTC. For example, Karymshakov and Sulaimanova (2023) demonstrate empirically that the volume of imports and exports of the five nations of Central Asia is dependent on factors beyond infrastructure, primarily including costs incurred at border crossing points and origin-destination travel times, as determined by speed of travel along regional corridors. These performance drivers are the mainstay of trade facilitation and regional—as well as operational—integration.

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FIGURE 7.1 TCTC: Trans-Caspian volumes, thousands of tons, by freight type and by scenario, 2023, 2030, and 2040

a. Status quo

b. TCTC development

Total volumes 35,000

30,000

25,000

22,978 5%

20,000

24,127 8%

5,000 0

14%

25,000

15,000 8,821 8%

92%

95%

10,000 5,000

92% 2023

2030

2040

8,821 8%

2023

Nonoil volumes 20,000

15,000

86%

81%

2030

2040

15,589 11,444

5,000

8,259 3,487 21% 79% 2023

19%

92%

Nonoil volumes 20,000

10,000

32,064

20,000

15,000 10,000

29,223

10,000

39%

37%

24%

5,672 22%

76%

78% 2030

2040 Containerized

5,000

3,487 21% 79% 2023

63%

2030

61%

2040

Noncontainerized

Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

The rest of this chapter lays out a vision of how TCTC containerized logistics performance improvements could be attained in practice. Like chapter 4, this chapter uses the TCTC’s Eurasian containerized landbridge as the most illustrative, policy-relevant use case.

Eurasian Containerized Landbridge The TCTC’s Eurasian containerized landbridge market is growing rapidly from a small base. In 2023 it handled a mere 2,754 containers, compared with 217,545 handled by China-Europe Railway Express (CRE) services,1 the historically

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dominant route in the Eurasian rail landbridge, and with 16.6 million East AsiaEurope containers handled by sea freight shipping routes. It is estimated that in 2025 the TCTC landbridge handled almost exactly 10 times its 2023 volumes, or approximately 27,669 containers. Although modest in absolute size, this 10-fold increase in landbridge volumes in the past two years alone is a game changer for the TCTC, because it more visibly positions the corridor as an option in the landbridge market than at any point in its recorded history. This turnaround is even more remarkable considering that, before 2023, the TCTC is reported to not have served Eurasian landbridge shippers at all (UTLC ERA 2022). Although numerous interventions over the 2023–25 period collectively explain the recent gains in TCTC landbridge volumes, most of them were related to infrastructure provision and expansion of cargo handling capacity (refer to box 7.1). The underlying logistics performance of TCTC landbridge services, equally as dependent on efficiency gains in trade facilitation and operations as it is on infrastructure and handling capacity expansion, remains well below potential, despite recent progress. The gap stems primarily from three reinforcing factors along the TCTC: (1) a significant transactional burden in cross-border logistics, (2) fragmented rail and shipping operations, and (3) insufficient process redesign as a basis for ongoing digitalization efforts, that is, with most attention given to digitalizing existing processes and comparatively less attention given to reimagining them in the first place. The following sections illustrate how these factors manifest in the TCTC in practice.

BOX 7.1 Recent interventions to expand the TransCaspian Transport Corridor’s ability to serve the Eurasian containerized landbridge (and containers more generally) In 2025 the Trans-Caspian Transport Corridor (TCTC) is estimated to have handled 10 times more Eurasian landbridge containers than it did in 2023. It is also estimated that before 2023 the TCTC did not serve the Eurasian landbridge market. Several recent investments related to containerized TCTC logistics in the 2023–25 period enabled this growth, including

• The opening in February 2024 of a rail intermodal terminal at the Xi’an Dry Port, with capacity of 133,000 containers, through a joint venture (JV) between Kazakhstan Railways (KTZ) and Xi’an Free Trade Port Construction and Operation Co.;

• The opening in June 2025 of the Almaty Zhetysu container terminal, with a capacity of 125,000 containers, implemented as a second JV between KTZ and Xi’an Free Trade Port Construction and Operation Co.;

Continued

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BOX 7.1 Recent interventions to expand the TransCaspian Transport Corridor’s ability to serve the Eurasian containerized landbridge (and containers more generally) (Continued)

• The opening in June 2025 of a new container hub at the port of Aktau, which is

expected to increase the port’s container handling capacity from 70,000 to 240,000 20-foot equivalent units (TEU), developed by a JV between KTZ, Aktau Sea Commercial Port, and China’s Lianyungang Port and is the third major collaboration between KTZ and Lianyungang Port, with previous JVs including the development of a terminal at the port of Lianyungang (2014) and the development of the KTZE-Khorgos Gateway, the largest dry port in Central Asia (2017);

• The September 2025 completion of the KTZ-led double-tracking of the 836-kilometer Dostyk-Moiynty railway line;

• The November 2024 completion of the KTZ-led dredging of the port of Kuryk; • The June 2025 opening of Poti TransTerminal, an inland intermodal terminal

developed by KTZ and Kazakhstan-based transport and logistics services group PTC Holding, with an annual handling capacity of 80,000 TEU;

• The May 2024 completion of modernization works along the Baku-Tbilisi-Kars railway line in Georgia, which increased the line’s annual capacity from 1 million to 5 million tons; and

• The June 2025 opening of the Tbilisi Dry Port, with private investment by AD Ports

Group (United Arab Emirates), Wilhelmsen (Norway), and Inveco LLC (Georgia), as a rail-enabled extended gateway of the ports of Poti and Batumi.

Meanwhile, key noninfrastructure interventions undertaken during this period include

• The establishment in October 2023 of Middle Corridor Multimodal Ltd., a joint

venture between the railway undertakings of Georgia Railway, Azerbaijan Railways, and KTZ, later joined by China Railway (in August 2025), aimed at facilitating collaboration between these carriers, although stopping short of delivering joint asset-based railway transportation services;

• The January 2024 launch in Kazakhstan of the Digital Trade Corridor (DTC) platform by Global DTC, a JV between PSA Singapore and Pegasus Logistics (Singapore), in coordination with KTZ Express and the State Revenue Committee of the Ministry of Finance of Kazakhstan, initially focused mainly on Kazakhstan-China cross-border logistics, but with its geographic coverage expanded by DTC to include Azerbaijan (Azerbaijan Railways) and Georgia (Ministry of Economy) and intended, over time, to become a TCTC-wide digital platform for containerized logistics; and

• The launch in October 2024 of the Eurasian Transport Route International

Association, a platform convened by the railway departments of several TCTC host and terminus countries to facilitate coordination on infrastructure development, digitalization, commerce, and logistics.

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The (Long) Documentation Trail Along the TCTC’s Eurasian Landbridge A TCTC westbound containerized rail freight journey between East Asia and Europe starts, from a documentation perspective, with a contract of carriage. Issued by the initial railway undertaking in the transport chain—China Railway—this document establishes a legal obligation by the carrier to transport a well-specified shipment to the Kazakhstan border on behalf of the shipper or its representative. As an integral part of this obligation, the contract of carriage introduces carrier liability clauses to protect shippers in case goods are damaged or otherwise impaired in transit. Although this may seem like little more than the fine-print detail of a legal document, trading across borders would not be possible without liability protections, which are often the result of long-gestated international agreements between countries and among carriers, further streamlined at the operational level by intercarrier service agreements on the ground. The document used as contract of carriage for this leg of the journey is known as a unified consignment note reliant on both the International Convention Concerning the Carriage of Goods by Rail (CIM) and the Agreement on the International Goods Transport by Rail (SMGS), typically referred to as a CIM/SMGS consignment note (refer to box 7.2). The CIM/SMGS consignment note is mode specific: it can only be used for the cross-border transportation of freight by rail. It includes vital information about the shipment, including its contents, the names of the carrier or carriers, shipper, and consignee, and the identification of the container that carries the cargo. This information can be used for multiple purposes beyond establishing a contract of carriage. The most common additional use of a CIM/SMGS consignment note in Eurasian logistics, including in the TCTC, is as a customs transit document. This eliminates the need to produce a separate customs transit declaration, in addition to the consignment note, to allow the westbound landbridge shipment to leave China as transit freight, free of any otherwise applicable duties. Document consolidation examples like this are at the core of trade facilitation initiatives in cross-border corridors.2

BOX 7.2 Rail freight consignment note regimes in Eurasia A consignment note in Eurasian rail logistics can be governed by (1) the Agreement on the International Goods Transport by Rail (SMGS), an international convention adopted by the Organization for Cooperation of Railways, which was founded in 1956 and is made up today of 30 countries mainly in Eastern Europe and Asia, or (2) the International Convention Concerning the Carriage of Goods by Rail (CIM) adopted by the Intergovernmental Organization for International Carriage by Rail, which was founded Continued

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BOX 7.2 Rail freight consignment note regimes in Eurasia (Continued) in 1893 and consists today of 52 countries, mostly in Europe (including most of the European Union) but also including parts of Asia, the Middle East, and North Africa. Historically, cross-border rail freight transportation involving countries in Eastern Europe, Central Asia, and parts of East Asia was governed by the SMGS consignment note, whereas the CIM consignment note was used primarily for cross-border rail freight shipments in Western and Central Europe. For years this geographical divide led to logistics inefficiencies in practice, because it meant that transporting a rail freight shipment to an SMGS-governed country from a CIM-governed country or vice versa required the production of a new consignment note. Depending on the chosen route, this process would repeat itself every time the shipment would cross a CIM/SMGS jurisdictional line. A major breakthrough in Eurasian rail logistics was achieved in 2006 with an international agreement to enable a consolidated CIM/SMGS consignment note that could be used for shipments across the length of Eurasia, covering CIM and SMGS member countries alike. This eliminated the need to produce a new consignment note when going from a SMGS-governed state to a CIM-governed state or vice versa. As long as the shipment remained on rail as its mode of transport, a single consignment note could cover the entire Eurasian route from origin to destination. It meant less time and costs spent producing, checking, correcting, submitting, and clearing consignment notes along the way, with all information contained in a single end-to-end document. Although initially adopted in 2006, use of the CIM/SMGS unified consignment note was operationalized through significant testing in Eurasian logistics, particularly along China-Europe Railway Express (CRE) services, over a period of more than 10 years. Testing was facilitated by agreements among railway undertakings—with a key role played by China Railway, later complemented by the United Transport and Logistics CompanyEurasian Rail Alliance (UTLC ERA) joint venture—and between railway undertakings and customs authorities, including in the European Union, to ensure mutual acceptance (harmonization) of the CIM/SMGS consignment note as both a contract of carriage and a customs transit document. Today the CIM/SMGS single consignment note is the document of record and transit facilitation backbone of CRE services, including the adoption of the electronic CIM/SMGS (e-CIM/SMGS) digital single consignment note. Advance information based on e-CIM/SMGS, apart from serving as a transit declaration, also facilitates prearrival processing, both in transit and at destination. As of April 1, 2025, the European Union’s Import Control System 2 (ICS2) extends mandatory Entry Summary Declaration reporting requirements to rail and road transport. The e-CIM/ SMGS unified consignment note, which is the standardized electronic transport document for rail across borders, provides the necessary data elements required for ICS2 Entry Summary Declaration compliance. This is an incentive for countries that trade with the European Union, including Trans-Caspian Transport Corridor host and terminus countries, to adopt—and mandate—the e-CIM/SMGS consignment note.

Transforming the Trans-Caspian Transport Corridor through Improved Trade Facilitation

As the containerized shipment enters Kazakhstan and is transferred from China Railway to the next carrier—Kazakhstan Railways (KTZ)—the same information contained in the original consignment note issued by China Railway could in principle be used as the contract of carriage with KTZ. However, this is not the case in the TCTC, which lacks intercarrier agreements necessary to adopt “through” CIM/SMGS consignment notes. Instead, the shipper or its representative must arrange for KTZ to issue a new consignment note, this time to govern the transportation of the shipment across the territory of Kazakhstan, and the entry into Kazakhstan’s customs transit regime, up until the point where the shipment reaches one of Kazakhstan’s maritime ports on the Caspian Sea. Here, the container exits Kazakhstan’s customs transit regime, with the KTZissued CIM/SMGS consignment note acting as a customs transit declaration document. Because consignment notes are mode specific, having cleared customs the shipment will require a third consignment note—this time a maritime bill of lading (BoL), issued by the shipping carrier that will transport the shipment across the Caspian Sea. Maritime BoLs are governed by a different convention than those governing the international transportation of freight by rail: they are governed by the Hague-Visby Rules, originally adopted in 1924 to facilitate the international carriage of goods by sea. Despite containing information similar to the original CIM/SMGS consignment notes, the shipment will need a separate BoL to continue on its journey. The same pattern repeats a few more times through final destination in Europe. Upon arriving at the port of Baku, on the other side of the Caspian Sea, the shipment will be transferred back to rail for its onward journey in the South Caucasus while simultaneously entering Azerbaijan’s customs transit regime. Both processes will require a third CIM/SMGS consignment note, this time issued by ADY, Azerbaijan’s incumbent railway undertaking. Upon reaching the Azerbaijan-Georgia border, exiting Azerbaijan’s customs transit regime, and transferring the container to Georgian Railway en route to the maritime ports of Georgia, the shipment will require a fourth CIM/SMGS consignment note, issued by Georgian Railway, and then a second maritime BoL to send the shipment across the Black Sea. Last, a fifth CIM/SMGS consignment note will be issued to move the shipment across the EU single-railway market and customs transit area to its final destination, where it will eventually clear customs subject to applicable duties. To further complicate matters, if at any point the landbridge shipment uses a trucking leg instead of a railway leg (a common occurrence in TCTC logistics), such a shift will require another mode-specific consignment note: one issued by a trucking company under the Convention on the Contract for the International Carriage of Goods by Road (CMR), adopted by the United Nations in 1956, known as a CMR consignment note. More important, this trucking leg of the journey would require,

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in addition to the CMR contract of carriage, a separate customs transit document, known as the Transports Internationaux Routiers (TIR) Carnet.3 The TIR Carnet is governed by the TIR Convention, most recently approved in 1975. It provides for the unimpeded movement of trucks across borders between countries signatory to the TIR Convention under customs control, protected, inter alia, by the use of (1) sealed conveyances (trailers and containers), and (2) a customs payment guarantee system, administered by the International Road Transport Union.4 Moreover, some TCTC host countries, including Azerbaijan, Türkiye, and Uzbekistan require trucking companies to obtain a permit, before arrival, to perform a transit operation within their territory. Truck transit permit requirements, and the amount of permits available over a prespecified period of time, are often subject to bilateral or multilateral agreements to regulate them. In some cases, countries have entered into bilateral or multilateral agreements to exempt transit trucks from permit mandates (Kazakhstan is an example) (ADB 2024). In all, this Eurasian landbridge shipment via the TCTC would enter and leave customs transit regimes 10 times between origin and destination; require five CIM/ SMGS consignment notes and two maritime BoLs; and could need one (or more) CMR consignment notes, the issuance of one (or more) accompanying TIR Carnets, and one or more country-specific truck transit permits. This is a highly redundant and inefficient transport and customs transit governance model. It translates into longer and less predictable delivery lead times, with higher trade costs for TCTC landbridge itineraries compared with CRE services, widely considered best crossborder governance practice in Eurasian logistics (refer to box 7.3).

BOX 7.3 The cross-border logistics governance model of China-Europe Railway Express services China-Europe Railway Express (CRE) services offer one of the fastest and most predictable ways to transport containerized cargo between East Asia and Europe other than air freight. Often credited with reigniting Eurasian rail freight logistics since its inception in 2011, CRE services saw rapid growth in the 2010s. In recent years, during 2021–25, their growth has been volatile, including important volume losses although also partial recoveries. Nevertheless, the remarkable logistics performance of CRE services in terms of cross-border transport documentation management, operations, and customs transit governance offers several lessons that should inform efforts to improve the Trans-Caspian Transport Corridor’s (TCTC’s) performance as a competitive and resilience-enhancing alternative for intercontinental containerized shipments. Continued

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BOX 7.3 The cross-border logistics governance model of China-Europe Railway Express services (Continued) There are two fundamental differences between the CRE and the TCTC as landbridge markets from the perspective of cross-border logistics governance. First, unlike the TCTC, CRE services are monomodal: all transportation from origin to destination takes place by rail, with no incidence of maritime shipping legs (and virtually no incidence of trucking-based legs, which are rendered unnecessary because of the efficient railway operations on offer). This immediately removes the need to produce multiple mode-specific consignment notes. Second, at the heart of CRE connections lies the Eurasian Economic Union, a customs union of five Eastern European and Central Asian member states. This single customs market, similar to that of the European Union, facilitates cross-border rail operations across a large portion of CRE services’ length, without the need to undertake additional customs transit procedures. In contrast, the countries that host the TCTC do not belong to a customs union or single market, thus increasing the number of customs regimes that TCTC shipments must enter and exit from origin to destination. Despite these differences, several of the CRE’s most salient good logistics governance practices are in principle applicable to the TCTC, including the following: 1. Enablement of a “through” consignment note reliant on both the International Convention Concerning the Carriage of Goods by Rail (CIM) and the Agreement on the International Goods Transport by Rail (SMGS). Although the CIM/SMGS consignment note can contain information about more than one railway undertaking along the journey, acceptance of a single consignment note by more than one rail carrier requires supplemental agreements between the involved carriers. In the case of CRE services, China Railway, as a carrier of significant size and the origin carrier for most landbridge shipments, has led a multiyear effort to reach agreements between the railway undertakings participating in the CRE, including in the European Union, toward the use of a “through” consignment note that is readily accepted along the way. This would remove the need to reissue a rail consignment note every time a shipment crosses a border or switches railway undertakings, despite staying on the same mode of transport. 2. Enablement of a streamlined liability regime. Although a key feature of the CIM/SMGS consignment note is its liability regime to protect shippers and consignees in case of cargo damage or shrinkage, pursuing claims from multiple carriers in multiple legal jurisdictions can still be costly and inefficient. To streamline this process, China Railway also led a multiyear effort to reach agreements with participating CRE railway undertakings, including in the European Union, such that any shipment originated by China Railway or affiliated entities (for example, its non-asset-based arm China Railway Container Transport Corporation Ltd.; see point 5) will retain liability protection by the original carrier across the entire journey, with the original carrier later seeking compensation from individual (asset-based) carriers elsewhere, as applicable, if a claim is filed. This greatly reduces the burden on shippers and logistics services providers, who can interact with a single point of contact for liability claims. Continued

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BOX 7.3 The cross-border logistics governance model of China-Europe Railway Express services (Continued) 3. Broad adoption of a CIM/SMGS consignment note as a customs transit document. There has been a significant effort by all CRE participating railway undertakings to coordinate and collaborate with the customs authorities of the countries that host CRE services, such that they would accept the CIM/SMGS consignment note as a customs transit document. Furthermore, there has been a concerted effort to digitally link railway undertakings’ systems with those of customs authorities to enable advanced customs transit declarations, which have significantly reduced border crossing times. 4. Establishment of a joint venture containerized, non-asset-based railway operator responsible for the broad-gauge network portion of all CRE services—the United Transport and Logistics Company-Eurasian Rail Alliance (UTLC ERA). UTLC ERA, operational since 2018, transformed the CRE product by introducing a single railway operator—a nonasset-based undertaking with full operational integration with its asset-based parent railway undertakings—covering the broad-gauge network segment of CRE connections. Because UTLC ERA acts as a de facto single carrier across borders, it minimizes cross-border operational procedures, such as changes in crew or traction, and centralizes key efficiency-enhancing operational functions across its 5,430-kilometer network, such as digitalization, track-and-trace, and green-lane train prioritization. This has significantly increased the ability of CRE services to offer shippers scheduled connections and time-definite delivery products, which are the mainstay of containerized logistics globally. 5. A strong shipment origination and itinerary integration role. China Railway’s non-assetbased containerized services operator, China Railway Container Transport Corporation Ltd. (CRCT), typically acts as the lead arranger of door-to-door CRE itineraries on behalf of its customers, as so-called intermodal marketing companies (IMCs) do in the North American context. The transport corporation is a logistics intermediary and a single point of contact for freight forwarders, third-party logistics, and large shippers seeking to book CRE capacity, whether on a contractual or spot market basis. Although a portion of the CRE’s historical track record of growth, particularly early on, was due to the provision of public subsidies at the national and subnational levels, the good practices described here were almost certainly of much larger consequence, effectively positioning the services as a significant force in Eurasian overland containerized logistics. These practices can in principle be replicated in the TCTC. The railway undertakings that host the trunk portion of the TCTC—Kazakhstan Railways (KTZ), Azerbaijan Railways (ADY), Georgian Railway (GR), and Turkish State Railways (TCDD)—can, together, in collaboration with China Railway and EU-based carriers, or both, provide the financial and operational backing needed to operationalize these or similar measures. International experience suggests that without these integrated approaches the TCTC is unlikely to match the logistics performance needed to compete in the Eurasian landbridge market.

Transforming the Trans-Caspian Transport Corridor through Improved Trade Facilitation

Negotiable Documents In addition to contracts of carriage and customs transit documents, there is a third document category that is used to facilitate trade in the international experience: negotiable documents of title. Negotiable documents of title represent the goods in transit; whoever holds the document holds the legal rights to the goods. As such, negotiable documents of title can be used in financial transactions, such as to obtain trade finance or enter into buy-sell transactions while the goods are in transit. Unlike maritime BoLs, consignment notes, such as the CIM/SMGS or CMR consignment notes, are typically not negotiable. Nor are so-called air waybills (consignment notes for air freight shipments). This is a major gap in global cross-border logistics that puts rail, road, and air transport at a relative disadvantage compared with sea freight supply chains. In recognition of this gap, on December 15, 2025, the United Nations General Assembly adopted the Convention on Negotiable Cargo Documents, also known as the Accra Convention on Negotiable Cargo Documents (UNCITRAL 2025). Developed by UNCITRAL, the convention creates a common legal framework for the issuance and use of negotiable cargo documents, or NCDs. These are a new category of negotiable documents of title—available in paper or electronic form—that represent goods in transit. The convention’s aim is to extend the benefits of negotiable documents beyond maritime transport. Because NCDs can be traded, the convention protects any third party that acquires an NCD in good faith and relies on the information it contains. This feature makes the information contained in an NCD (that is, data about the goods) highly reliable, thereby making the NCD a robust instrument to serve multiple purposes and be trusted across multiple jurisdictions. NCDs sanctioned by the convention can act as documents of title for goods in transit irrespective of mode—that is, including rail freight, whether on its own or as part of multimodal itineraries. Furthermore, the convention enables the use of a single NCD for an entire itinerary from origin to destination, regardless of changes in mode en route. This makes it in principle possible for an NCD under this convention to act as a single source of information for contracts of carriage and customs transit declarations, in addition to being a document of title that is legally recognized by the national laws of all states that ratify the convention. This can reduce to one the number of times that data are entered about a TCTC journey—in effect creating a single document applicable to a typical TCTC itinerary that includes rail freight and maritime shipping legs. Notably, the issuance of NCDs is entirely based on mutual agreement between contractual carriers5 and shippers, who are free to agree on the method of issuance. For example, an NCD may be issued by entering an annotation into a multimodal document, such as an International Federation of Freight Forwarders Associations (FIATA) Bill of Lading (FBL/eFBL), signed by the contractual carrier (for example, a freight forwarder acting as a multimodal

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transport operator, or MTO), or China Railway Container Transport Corporation Ltd.’s (CRCT’s) “one bill” multimodal transport document. Alternatively, an NCD may be issued by entering an annotation signed by the transport operator in a transport document, such as a consignment note. A stand-alone NCD may be issued where no transport document has been issued or where a transport document has been issued and then cancelled. This illustrates the flexibility of the NCD convention. As with documents governed by past international conventions, the widespread use of NCDs in international rail freight and multimodal corridor logistics, particularly their potential use as a single document or single data entry of record along a cross-border itinerary, is likely to undergo a period of significant testing and trial and error. Several pilot projects have been launched, involving stakeholders in East Asia, Central Asia, and Southeast Europe (CargoX 2025; ESCAP 2026). Although these pilot operations may prove time consuming and potentially more complex, with a steeper learning curve, compared with staying with current practice, experience suggests—such as in the case of the adoption of the single CIM/SMGS consignment note (refer to box 7.2)—that the long-term benefits are likely to outweigh short-term costs.

Digitalization All of the transport documents discussed so far are substantially governed by additional protocols that make it possible in principle to use them in digital form. This includes the electronic versions of the CIM/SGMS consignment note (e-CIM/ SMGS), the CMR consignment note (e-CMR), the TIR Carnet (e-TIR), ocean BoLs (eBOL), electronic truck transit permits, and the recognition of electronic NCDs by the NCD convention. The efficiency impact from the digitalization of trade documents like these is confirmed in the international experience: it reduces trade costs, minimizes costly errors in documentation, increases transparency and visibility, enhances supply chain resilience, and facilitates trade (OECD 2025). Yet, there are persistent paper-based requirements for rail and truck documentation in multiple TCTC jurisdictions. For example, although several TCTC host countries, including Azerbaijan, Kazakhstan, and Uzbekistan, have enabled the digital submission of custom transit declarations, which among other things has facilitated the use of advanced declarations before arrival of cargo at border crossing points, most TCTC countries still require the additional (redundant) submission to customs authorities of paper copies of consignment notes and TIR Carnets, because the e-CIM/SMGS, e-CMR, and e-TIR protocols have not yet been fully adopted (ADB 2024). Adoption of these protocols has been considerably facilitated in recent years, because the latest version of the World Customs Organization Data Model (WCO DM; version 4, released in June 2023; https://www.wcoomd.org/DataModel) includes a harmonized data set covering these documents.

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Digitalization is, at its core, an enabler. What digitalization enables (that is, the processes that are the target of digitalization interventions) is at least as important as the digitalization action itself; the latter should ideally be preceded by an assessment of the former. For example, although it is in principle possible to route a shipment along the TCTC’s Eurasian landbridge relying solely on digital trade documents (should available protocols be adopted in full—a significant digitalization effort in its own right), this still means that five (digital) CIM/SMGS consignment notes would have to be produced, along with two eBOLs, while entering and exiting custom regimes at least 10 times along the way. This level of complexity, which is not fundamentally changed by the digitalization of current fragmented processes, reduces the benefits of digitalization, leading to what can be called digitalized inefficiency. To be sure, digitalizing the TCTC’s existing custom transit and cross-border transport governance model is a significant improvement compared with errorprone, vulnerable, and costlier paper-based transactions; yet it is, fundamentally, an incremental improvement. In contrast, the combination of reformulated processes to consolidate transport, transit, and trade documents into a single source of record, along with its digitalization, is transformational—especially when combined with operational efficiency gains in the provision of logistics services themselves (refer to the next section). In either case, effective information exchange between entities, whether domestically or across borders, will require minimum standards and technical requirements (refer to box 7.4).

BOX 7.4 Data standards and trusted digital identities Redesigning the Trans-Caspian Transport Corridor’s (TCTC’s) cross-border transaction governance model, and its subsequent digitalization, will necessarily rely on data standards and trusted digital identities. These are the building blocks of interoperability in practice. In particular, the following standards have been widely adopted in the international experience:

• International Data Spaces Association (IDSA). The IDSA is a European nonprofit

organization with the goal of facilitating secure and autonomous data exchange between organizations. It provides a set of standards and architecture for creating data spaces, which allow for secure data exchange and data sovereignty, where the data owner maintains control over their data even when they are shared.

• United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT). UN/

CEFACT is a subsidiary of the United Nations Economic Commission for Europe. One of its top mandates is the creation of standardized languages for trade, such as the Continued

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BOX 7.4 Data standards and trusted digital identities (Continued) United Nations Electronic Data Interchange for Administration, Commerce, and Transport and UN/CEFACT’s Core Component Library, which are used for defining the semantics and format of common business data elements. These standards are used globally to ensure that different businesses, systems, and processes can speak the same language when exchanging data, which makes the communication more efficient and reliable.

• Electronic Freight Transport Information (eFTI). The eFTI regulation is an EU initiative

dedicated to making freight transport more efficient and environmentally sustainable by digitizing all necessary documents. The eFTI is a piece of legislation at the EU level that dictates that all EU member states must accept digital documentation for freight transportation in the same way they accept paper documentation. Its aim is to make freight transportation across the European Union more efficient by reducing the administrative burden of paper documents and facilitating the exchange of digital information. If a transport corridor involves any EU member states, it would need to comply with eFTI regulation, ensuring that digital documentation is used and accepted in freight transportation. Any communication with EU member states must therefore also be eFTI compliant.

• eFTI and UN/CEFACT are not mutually exclusive. eFTI encourages the use of UN/

CEFACT data models. The two work together, with eFTI providing the legislative requirement for the digitization of transport-related documentation and UN/CEFACT providing the data standards used in the digitization. This means that implementing both UN/CEFACT and eFTI can be a practical approach to digitizing data and processes along a transport corridor, particularly if the corridor serves international trade flows to and from EU member states (such as the TCTC).

Data models and data infrastructure require standardization:

• Data models. Data models define the structure, relationships, and format of data in a

specific domain or context. They provide a standardized representation of data elements, their attributes, and how they relate to each other. Data models serve as blueprints or templates that guide the organization and interpretation of data, ensuring consistency and coherence in data management and integration. By adhering to standardized data models, organizations can achieve interoperability, enabling seamless data exchange and understanding between different systems, applications, and stakeholders. In the context of trade and supply chain management, data models such as the UN/CEFACT Multimodal Transport Reference Data Model (MMT RDM) and the World Customs Organization Data Model (WCO DM) define the structure and content of trade- and customs transit-related data, ensuring consistency and compatibility across different participants and systems. Adoption of the WCO DM, which is harmonized with the UN/CEFACT MMT RDM, facilitates acceptance by customs jurisdictions. Continued

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BOX 7.4 Data standards and trusted digital identities (Continued)

• Data infrastructure. Data infrastructure refers to the technical and organizational

framework that supports the storage, processing, management, and exchange of data. It encompasses the hardware, software, networks, protocols, and governance structures that enable data operations and facilitate data flows. Standardizing data infrastructure involves establishing common frameworks, protocols, and technologies that ensure interoperability, security, and scalability in data exchange. IDSA provides a framework for creating secure and sovereign data spaces, where data can be exchanged and accessed under predefined conditions, ensuring data sovereignty, privacy, and security. A standardized data infrastructure promotes interoperability, trust, and seamless data exchange between different entities in the data ecosystem.

Digital Identity Digital ID systems can support digital transformation and service delivery in the TCTC by providing a secure and reliable way to authenticate and verify identities in various transactions and processes. These systems can streamline operations and enhance efficiency in the multimodal transportation of cargo. Some of the key mechanisms through which digital ID systems can support the TCTC are as follows:

• Data-driven decision-making. Digital ID systems enable the collection and analysis of

data, helping governments and businesses make informed decisions about logistics, infrastructure development, and policy making. These data can be used to identify bottlenecks, optimize resource allocation, and improve overall corridor efficiency.

• Streamlined processes. Digital ID systems can simplify and automate processes such as cargo clearance, customs checks, and cross-border transactions. This reduces paperwork, saves time, and minimizes human error, leading to more efficient and secure operations.

• Enhanced security. By providing a unique digital identifier for individuals and

organizations, digital ID systems can help prevent fraud, theft, and other illicit activities. This is particularly important in the context of international cargo transportation, where secure and trustworthy transactions are crucial.

• Interoperability. Digital ID systems that adhere to common standards and design

principles can easily be integrated with other systems, such as customs, immigration, and transport management systems. This allows for seamless data exchange and collaboration among TCTC freight stakeholders.

• Remote service delivery. Digital ID systems enable secure authentication in online contexts, allowing for remote access to various services and transactions.

Continued

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BOX 7.4 Data standards and trusted digital identities (Continued)

• Inclusion and accessibility. Digital ID systems that are designed with inclusivity and

accessibility in mind can help ensure that all users, from multinationals to small- and medium-size enterprises to marginalized and remote populations, can access and benefit from digital services linked to TCTC activity.

For digital ID systems and ecosystems to deliver benefits to the TCTC, they need to have several shared features that ensure their effectiveness, security, and usability. These features should be tailored to the unique requirements of the TCTC, particularly in relation to the eFTI initiative and components such as the Verifiable Data Registry and Authority Access Points. Some of the key shared features important for digital ID systems in this context include the following:

• Unique identification. Entities and individuals should be uniquely identifiable within

the digital ID system. This is crucial to prevent fraud, ensure the integrity of transactions, and avoid duplicate records in the Verifiable Data Registry. The Global Legal Entity Identifier Foundation (GLEIF) issues the so-called verifiable Legal Entity Identifier (vLEI)—the digital equivalent of a conventional Legal Entity Identifier (LEI). This can be a solution across TCTC jurisdictions.

• Digital verification and authentication. The system should provide secure and efficient

mechanisms for digital verification and authentication of identities, both online and offline. This includes support for various authentication methods, such as biometrics, passwords, or tokens, that cater to different risk levels and user requirements.

• Interoperability. Digital ID systems should be designed using common standards and

protocols that enable seamless integration with other systems, such as eFTI, customs, and transportation management platforms. Interoperability is essential to facilitate data exchange and collaboration among TCTC participants.

• Data security and privacy. Ensuring the security and privacy of users’ data is

paramount. The system should have robust security measures in place to protect against data breaches and unauthorized access. Additionally, privacy-preserving techniques should be used to maintain user privacy while enabling data sharing among trusted parties.

• Strong governance and legal frameworks. Digital ID systems should operate within clear governance and legal frameworks that define roles, responsibilities, and accountability for stakeholders. This includes provisions for oversight, auditing, and dispute resolution, ensuring trust and compliance among users.

• Authority access points. The digital ID system should support the creation and

management of authority access points, which serve as trusted gateways for accessing and sharing verifiable data within the eFTI ecosystem. These access points should be secure, reliable, and able to efficiently process requests from authorized parties. Continued

Transforming the Trans-Caspian Transport Corridor through Improved Trade Facilitation

BOX 7.4 Data standards and trusted digital identities (Continued)

• Scalability and flexibility. The system should be designed to scale as demand and usage grow, and it should be sufficiently flexible to adapt to evolving requirements and technologies.

Three legal and regulatory standards are of relevance to TCTC host and terminus countries: 1. Electronic Identification, Authentication, and Trust Services (eIDAS). The European Union’s eIDAS regulation provides a clear framework for digital signatures in the European Union. It stipulates that a digital signature from any EU country must be recognized by all other EU member states. 2. UNCITRAL Model Law on Electronic Signatures (MLES) (UNCITRAL 2001). This model law provides a blueprint that countries can follow when creating their own laws regarding electronic signatures. It establishes criteria of technical reliability for the equivalence between electronic and handwritten signatures. It also facilitates the cross-border recognition of electronic signatures. 3. UNCITRAL Model Law on the Use and Cross-Border Recognition of Identity Management and Trust Services (MLIT) (UNCITRAL 2022). This model law sets out rules that legally enable the use of identity management services for online identification of physical and legal persons, as well as the use of trust services to provide assurances as to the quality of data in electronic form. It also facilitates the cross-border recognition of the use of identity management and trust services.

Within the TCTC’s digitalization task, opportunities for consolidation apply not only to documentation but to digital platforms themselves. TCTC host countries are increasingly developing national platforms mainly in support of import-export and domestic trade. In Kazakhstan, the Ministry of Finance introduced a system of unified electronic transport documents (“e-waybills”) for certain import-export commodities for which end-to-end traceability is a priority, such as biofuels (SNI 2026). Azerbaijan launched its Digital Trade Hub, an e-governance platform implemented as a public-private partnership that functions as a cross-border digital services portal and enables electronic document exchange and e-signature issuance to nonresidents for business transactions, including import-export trade (Digital Trade Hub of Azerbaijan 2019). China Railway considerably revamped its 95306 digital platform in 2021 to offer a single point of contact for multimodal logistics services, including single-document multimodal itineraries (for example, sea–rail;

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China Railway 2026). Although not (yet) focused on the TCTC, this is an example of a digital platform underpinned by reimagined logistics procedures and governance, such as the introduction of a “through” multimodal waybill or consignment note (refer to, for example, China Railway 2025). Platforms such as these could extend functionality to transit logistics transactions and services. For example, in 2022 Azerbaijan’s Ministry of Digital Development and Transport, through the Coordinating Council of the Republic of Azerbaijan on Transit Freight, created a “Single Headquarters” for the national-level management of transit operations (Ministry of Digital Development and Transport of the Republic of Azerbaijan 2022). This entity has been tasked, inter alia, with simplifying and deepening the digitalization of transit operations, overseeing the implementation of a transit road map to redesign transit procedures, and troubleshooting actual transit operations on the ground, including through a call center. A digital platform could be an effective way of operationalizing the role of the single headquarters. Platforms across the TCTC could also be more interconnected and less fragmented. The current fragmented approach to country-specific digitalization often increases complexity, and likely costs, for firms: it can become another manifestation of the digitalized inefficiency challenge. Countries are following their own initiatives rather than moving toward a common approach, and existing platforms are not connected between most countries. There is currently no legally mandated governance or funding model for a National Digital Freight Hub in TCTC host countries, and existing initiatives’ cost-recovery models are currently undeclared. In addition, there are barriers for small- and medium-size enterprises (SMEs) to participate in corridorwide activities, because SME-targeted tools remain limited. SMEs also face costly interfaces and proprietary standards when trying to integrate with multiple systems. Against this backdrop, commercial platforms are increasingly appearing as solutions for digitalizing corridor flows. Emerging platforms aim to connect freight stakeholders across countries and to provide targeted services. For example, the Digital Trade Corridor platform (refer to box 7.1) aims to provide seamless multimodal digital document flows across the TCTC, with current functionality mainly covering Azerbaijan, Georgia, and Kazakhstan. Türkiyebased startup TIRPORT is also aiming to facilitate the digitalization of road freight transport operations. By leveraging application programming interfaces (APIs), these platforms also offer opportunities for external developers, including digital logistics startups or third-party service providers, to develop value-added services on top of core platforms. A different approach could be the development of a federated digitalization model that protects country-level data sovereignty while ensuring cross-country,

Transforming the Trans-Caspian Transport Corridor through Improved Trade Facilitation

cross-system interoperability through common data semantics. Such a model could consist of three building blocks:

• Country-specific national digital hubs, building on existing digitalization initiatives, such as the deployment of national single windows, port community systems, and similar solutions across the TCTC

• A central, corridorwide “hub of hubs” that connects country-level hubs while

ensuring data sovereignty (by exchanging and storing metadata, with full records remaining under the custody of country-specific platforms); interoperability (through a common data standard such as UN/CEFACT); user trust; data security and integrity (through adoption of mutually recognized digital ID systems and protocols to govern the legal and secure exchange of documents and the recognition and acceptance of digital signatures across borders); and scalability, functionality, and innovation, by providing standardized APIs to enable authorized public and private entities, such as transport carriers, freight forwarders, third-party logistics firms, data firms, commercial banks, and customs authorities, to access hub-of-hubs information

• Value-added retail platforms developed by these authorized entities, based on basic data retrieved via the hub of hubs, to foster innovation in service provision at the local, national, regional, or corridorwide level

A federated system could deliver additional benefits. Although private sector participation in developing corridorwide platforms is welcomed, it should ideally not be the only source of corridorwide digitalization structures. An exclusively privately led operation model would face uneven deployment across countries in the short term and, given the high costs linked to the setting up of platforms, could potentially open the door to monopolistic outcomes. An exclusively commercial focus can also overshadow corridor value creation from an economic development perspective. Several TCTC host countries endorsed in principle a road map toward the adoption of a federated digital platform as an organizational model for TCTC digital transformation. During a 2023 World Bank–led workshop on TCTC digitalization, country representatives from Azerbaijan, Georgia, and Kazakhstan expressed support in principle for a three-pronged approach that they considered a viable policy option to digitalize the corridor in a federated manner. This common approach option, designed to minimize digital fragmentation, relies on progressively developing and scaling up a modal, then national, and finally corridorwide digital hub that would ensure standardization, data harmonization and exchange, and common regulatory frameworks for multimodal services (refer to box 7.5).

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BOX 7.5 A hub-based model for digitalizing the TransCaspian Transport Corridor In workshops facilitated by the World Bank in 2023, Trans-Caspian Transport Corridor (TCTC) digital and freight stakeholders from Azerbaijan, Georgia, and Kazakhstan coalesced in principle around a common three-pronged strategy as a policy option for corridor digitalization.

Stage 1 (Short Term): Sector-Specific Digital Hubs

• Objective. On a fast-track basis, adopt core digital standards either for multimodal transport or within specific transport and economic sectors (rail, maritime ports, trucking services, customs).

• Action. Create targeted digital hubs for freight (for example, a rail digital hub) to more quickly attract freight stakeholder participation.

• Expected benefits. Efficiency gains, simplified processes within sectors, and lessons learned for future scale-up and consolidation.

Stage 2 (Medium Term): National Digital Hubs

• Objective. Combine individual sector hubs into integrated national hubs for freight. • Action. Engender government-led coordination to standardize data exchange, align processes, and enhance transport analytics nationwide. This would require confirming a preferred national hub governance structure and agreeing on an approach for developing and prototyping a national digital freight hub to realize benefits and scalability.

• Expected benefits. Improved logistics coordination, reduced administrative barriers,

enhanced national transit and trade efficiency, and standardization across modes and service types.

Stage 3 (Long Term): National Digital Hubs Linked to TCTC-Wide Hub-ofHubs Digital Platform

• Objective. Establish interconnected digital hubs across TCTC host countries, aligned

with United Nations Centre for Trade Facilitation and Electronic Business (UN/ CEFACT) and World Customs Organization Data Model (WCO DM) semantics, trusted digital identity (for example, verifiable Legal Entity Identifiers [vLEIs]), and EU‑facing compliances (Electronic Freight Transport Information [eFTI]/Electronic Identification, Authentication, and Trust Services [eIDAS]).

• Action. Harmonize regulatory frameworks, operational practices, data exchange, and trade agreements corridorwide.

• Expected benefits. Smoother transit operations, reduced trade costs, greater transparency, and enhanced economic integration.

Continued

Transforming the Trans-Caspian Transport Corridor through Improved Trade Facilitation

BOX 7.5 A hub-based model for digitalizing the TransCaspian Transport Corridor (Continued) To achieve these three stages, workshop participants suggested five main recommendations for digitalizing TCTC transit flows: 1. Championing unified legal frameworks across TCTC host countries. This would require ratifying cross-border recognition of e-signatures and digital identities, and accelerating regulatory harmonization, such as by adopting UN/CEFACT standards and WCO DM semantics. 2. Strengthening governance and ownership. This would entail empowering national multimodal hubs to coordinate public-private partnerships, define data-sharing policies, and oversee the orchestration layer while clarifying the role of line ministries (for example, to enforce consistent rules and processes). 3. Allocating resources and support. Some examples are funding capacity-building programs, particularly for smaller operators, customs agencies, and emerging digital providers and offering incentives (tax breaks, grants) for early adoption of standard platforms (for example, single-window systems). 4. Enabling scalable pilot projects. Endorse rapid pilots (combined rail and shipping, transit, and trade e-documentation with single-instance data input and cross-border exchange of single-input data) that could later scale to other countries or transport, logistics, transit, or trade processes. This would require creating synergies with international bodies to leverage financial and technical support. 5. Ensuring ongoing multilateral coordination. This would require setting up or reinforcing a ministerial-level steering committee, meeting regularly to track milestones, troubleshoot challenges, and share success stories. It would also entail promoting cocreation of solutions across modes, ensuring input from both governments and private logistics actors. Source: Original compilation for this publication using analysis of World Bank-led workshops with TCTC stakeholders.

Interoperability must necessarily be a core principle in developing a federated digitalization structure. In essence, a digital hub is a set of applications that would analyze data from various sources—if there are sector- or government-wide interoperability standards, the hub can deliver greater value at scale, rather than trying to develop specific solutions or applications at each level, which would be time and cost intensive. Furthermore, implementing digitalization projects and using the digital tools available at scale will also require investment in developing digital skills across the various transport and trade facilitation entities, not just physical investments. Investing in the digitalization of the TCTC is likely to generate spillover benefits beyond trade facilitation. The private sector will stand to benefit from investments in

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digitalization, both as data consumers (logistics firms) and as service providers to implement digitalization projects (information technology companies, data centers, cloud services providers). With most TCTC host countries highlighting development of their digital sector as a key economic growth driver, trade and transport digitalization would become a target market for their domestic digital industries. Although this strategy would need to be further considered against other digitalization options, as well as refined to consider the priorities and requirements of all (rather than a subset of) TCTC host countries, it could serve as an initial basis for a corridorwide federated digitalization platform.

Operational Efficiency One of the most salient lessons from 15 years of CRE service delivery experience (refer to box 7.3) is that operational efficiency matters. Arguably the single most important operational intervention that elevated the performance of CRE services, even though it nominally covers only a subset of them, was the launch of the United Transport and Logistics Company-Eurasian Rail Alliance (UTLC ERA) in 2018. UTLC ERA facilitated cross-border operations by unifying the cross-border containerized services of railway undertakings from three different countries. Even if these countries did not belong to a customs union, international experience shows that combined operations across borders significantly improves rail freight efficiency—such as in the case of Canadian Pacific Kansas City (CPKC), an assetbased railway undertaking providing full North American coverage across Canada, the United States, and Mexico, created from the 2023 merger of Canadian Pacific and Kansas City Southern.6 Through this unified operation, UTLC ERA was able to centralize key decisions that would likely have taken longer to come to fruition had the three carriers acted independently, such as regarding digitalization, real-time track-and-trace (for example, through the deployment of sensors in rolling stock and stations across its network), and operational prioritization (for example, green lanes, preferential treatment of priority trains, equipment and personnel repositioning or assignment, terminal handling prioritization, customer service, and shipment origination or non-asset-based services). More important, by consolidating networks, equipment, and corporate practices from three carriers into one, effectively establishing a single network to replace what would otherwise have been three networks divided by border and technical controls, UTLC ERA removed considerable complexity and made CRE services less fragmented. Often overlooked is the fact that less-fragmented CRE services—that is, with fewer participating railway undertakings and carriers and a simplified crossborder logistics governance model—paved the way for the successful provision of scheduled services with time-definite deliveries and end-to-end traceability. Containerized services cannot be competitive without these building blocks— which are missing in the TCTC at present.

Transforming the Trans-Caspian Transport Corridor through Improved Trade Facilitation

Implications for the TCTC Transforming the TCTC into a competitive intercontinental landbridge for containerized freight—a position it does not currently hold—will require more than investments in infrastructure alone, as essential as these are. It will require a realignment of the processes used to move cargo across borders, modes, and carriers along its full length—what this chapter refers to as the TCTC’s cross-border logistics governance model. Such a realignment could include three action items. Negotiate, test, and ultimately adopt a single Transport, Transit, and Trade (T3) document, or equivalent data entry, for multimodal—rail and shipping—itineraries end-to-end following global standards The TCTC host and terminus countries, including participating EU and non-EU member states, should take full advantage of the recently adopted NCD Convention7 and forge agreements to enter into trial periods for the possible use of a single T3 document, in digital form, for the corridor. This document (or single data entry) would integrate the contract of carriage, customs transit declaration (with prearrival data exchange), and negotiable document of title (usable across all modal legs) functions. Among other things, this would bring TCTC documentation on par with the CRE standard (one consignment note from origin to destination, containing all information for transport and transit documentation along the way, yet entered only once, at the beginning of the journey), while taking this concept further by using a negotiable document to facilitate traderelated financial transactions. Reliant on the NCD Convention, this document would necessarily be consistent with the UNCITRAL Model Law on Electronic Transferable Records (MLETR) (UNCITRAL 2017), which enables the legal use of electronic transferable documents both domestically and across borders, subject to the principles of nondiscrimination against the use of electronic means to exchange information and technology neutrality.8 The transition to a T3 document or single data entry adoption will require enabling provisions in regulations across TCTC jurisdictions that include but go beyond the contours of the NCD Convention, to address integration in contract of carriage (including liability protections) and customs transit procedures. Such a reform will necessarily include a significant—unprecedented, even— coordination effort across borders: (1) between TCTC host and terminus countries, to join the NCD Convention,9 organize trial periods on this basis, and ensure mutual recognition of documentation and harmonization of procedures, including with regard to data sets; (2) between asset-based railway undertakings and maritime shipping lines active in the TCTC, to agree to share information from the single T3 document, to use a single, end-to-end (that is, multimodal) “through” consignment note or contract of carriage for rail and shipping operations,

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and to operationalize regulatory provisions that have historically been governed by mode-specific conventions, most notably to introduce a single liability framework across modes (rail and shipping) and carriers (railway undertakings and shipping lines); and (3) between freight forwarders and railway operators, asset-based railway undertakings, maritime shipping lines, and the customs administrations of host and terminus countries, to ensure that the T3 document (and its information, as contained in the single “through” consignment note) can be accepted as a customs transit document with full alignment with the WCO DM and that its contents can be submitted prearrival as advanced customs declarations. Over time, this consolidation effort could be extended even further, to include the adoption, also subject to testing and trial-and-error learning, of jointly operated border crossings through bilateral and multilateral (TCTC-wide) collaboration. The digitalization of paper-based permits for truck transits across TCTC host countries would also be complementary. International experience offers the following insight: (1) although trials are underway, these do not necessarily cover all three prongs of the T3 tool, and a comprehensive T3 testing period could still take several years;10 (2) the processes, successes, and pitfalls that led to the widespread use of the unified CIM/SMGS consignment note and the TIR Carnet in Eurasian logistics, both generally considered success stories in the international experience, should be direct benchmarks to inform any effort toward T3 consolidation; and (3) the lead railway undertakings involved, above all China Railway, but also KTZ, Turkish State Railways (TCDD), Azerbaijan Railways (ADY), Georgian Railway (GR), and key European undertakings, should be actively involved in negotiations and intercarrier agreements, such as on liability obligations, harmonization, mutual recognition, and electronic data interchange. More important, freight stakeholders beyond shippers, freight forwarders, logistics service providers, and carriers, to include for example financiers (such as commercial and development banks), insurers, and donors, would have to be informed about—and reassured of—the progress of the pilot programs and the performance outcomes enabled by them. Establish a non-asset-based, operationally integrated joint-venture containerized railway and trans-Caspian shipping operator to form a multimodal equivalent to UTLC ERA for the TCTC This operator, which should have its own corporate identity, legal status, financial statements, and governance arrangements in line with good international practice, should ideally include the combined TCTC containerized operations of the railway undertakings of Azerbaijan, Georgia, Kazakhstan, and Türkiye—as well as the trans-Caspian shipping operations of

Transforming the Trans-Caspian Transport Corridor through Improved Trade Facilitation

the Azerbaijan Caspian Shipping Company (ASCO), the largest shipping line in the Caspian market, and Kazmortransflot (KMTF). In addition to strengthening railway operations, this multimodal operator would be able to better integrate rail-shipping logistics, because TCTC containerized cargo currently spends the most time standing still at maritime ports, often because of mismatches between rail freight and shipping connections. The multimodal operator, which could ramp up investment in rail ferry vessels specifically designed for the Caspian Sea (which ASCO and KMTF are already considering and which Baku Shipyard or other Caspian shipyards could produce), would be able to run operations that most closely resemble rail-only logistics across a large portion of the TCTC’s length, including the Caspian crossing, and with onward rail connections from the South Caucasus through Türkiye’s railway network, with more efficient gauge-change management, into the European Union. This operator should also (1) establish close operational agreements with China Railway and key asset-based railway undertakings serving the Türkiye-EU and Constanţa–intra-EU segments, and (2) enter into long-term contracts with the maritime ports of the Caspian Sea (Baku, Aktau, Kuryk, and Turkmenbashi). China Railway should consider this as an opportunity to replicate its CRE leadership role through similar integration with the proposed TCTC joint venture (JV) single multimodal operator. More important, and consistent with what UTLC ERA and other JV undertakings have done elsewhere, the TCTC JV multimodal operator should contribute to TCTC planning and decision-making through periodic data reporting, similar to UTLC’s data contributions (refer to chapter 8). The challenge of adopting the necessary intercarrier agreements on a unified liability regime for the TCTC landbridge mentioned in the previous point would apply directly to the effort of establishing a JV containerized railway and shipping operator. Several TCTC countries have railway undertakings and shipping lines that are state owned and assume transit liability backed, implicitly or explicitly, by sovereign guarantees. State assumption of liability can reduce transaction costs and facilitate transit by lowering counterparty risk for shippers, yet it also complicates efforts to create a commercial JV structure. Political economy considerations in other regions have proven to be major obstacles to transit reform. For this reason, such considerations should inform the governance and capitalization structure of the proposed JV, potentially including a dedicated liability reserve or an insurance facility. Empower the JV multimodal operator to originate shipments and focus on generating value for beneficial cargo owners and their logistics service providers, both on its own account as well as in close

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integration with the asset- and non-asset-based railway undertakings of terminus countries The proposed multimodal operator should focus on creating logistics value to customers, whether on the TCTC or on any other network: one-stop-shop shipment origination; customer acquisition and retention; door-to-door route planning, optimization, and coordinated execution (including precarriage and on-carriage); track-and-trace visibility and service digitalization; service customization, including value-added logistics services, such as consolidation and deconsolidation, less-thancontainer-load (LCL) services, and multimodal combinations; exemptions management; marketing strategies; and top-line growth. It should coordinate doorto-door itineraries end to end with third parties, including in coordination with China Railway, asset-based railway undertakings in the European Union, and other assetbased carriers (such as trucking companies) as may be optimal for any given shipment. The recently established Middle Corridor Multimodal Ltd. JV could be empowered to play this role. This should ideally be done by seeking further commercial integration with KTZ Express, KTZ’s non-asset-based arm, or its counterparts at other participating railway undertakings (ADY Express, GR Logistics & Terminals). The key principle is for the JV multimodal operator to imbue TCTC containerized services with a commercial and customer-centered orientation, given its focus on shipment origination. These measures have two key considerations in common: 1. They are not low-hanging fruits, nor are they exempt from risk. If proven feasible, they would most likely be realized over a period of years, dependent as they are on complex cross-border and inter-entity agreements. They are premised on the notion that incremental change is unlikely to transition the TCTC into a competitive Eurasian containerized landbridge. Transformational change will be needed. Their alignment with international experience (CRE services, North American logistics) suggests that these changes are possible, and also challenging and uncertain, but are likely to be highly beneficial to host economies, service providers, shippers, and, ultimately, consumers and participants in host country labor markets. 2. Although they are ostensibly focused on the TCTC’s intercontinental landbridge, in practice they will elevate the performance of all TCTC market segments across geographies, commodity types, routes, and service types. The operational capabilities these measures would unlock would be a catalytic tide that lifts all boats, because the Eurasian containerized landbridge is the most operationally demanding, performance-driven market segment of the TCTC. Serving this market well would almost certainly elevate the performance of substantially all other TCTC market segments—containerized and noncontainerized, along different origin-destination pairs beyond those linking East Asia and Europe, and irrespective of route. They are likely to produce broad-based performance spillovers.

Transforming the Trans-Caspian Transport Corridor through Improved Trade Facilitation

Notes 1. As early as 2021, CRE services handled 765,280 containers in the Eurasian landbridge. Since then, CRE landbridge volumes have been volatile, although they grew by 81 percent year on year in 2024, to reach 393,218 containers. 2. Particularly when these documents are digitalized. Not all TCTC jurisdictions yet permit the use of electronic CIM/SMGS consignment notes for processing; manual processing is time consuming and acts as a barrier to wider use of advanced customs transit declaration submissions. 3. Although the TIR Carnet (and its digital equivalent, eTIR) can serve as a customs transit document on its own, the contract and conditions of carriage are still governed by the CMR consignment note. 4. Upon entry into the European Union, all consignments, irrespective of mode of transport and whether or not a TIR Carnet has been secured, are mandated by the European Union’s New Computerized Transit System (NCTS) to be under the cover of a customs guarantee. 5. A contractual carrier is an entity, such as a freight forwarder, that enters into a transport contract with a shipper and assumes responsibility for the performance of the contract, irrespective of whether the entity performs the transport activity itself; the entity or entities that perform the transport activity are referred to as the actual carrier or carriers. 6. CPKC reported a 7 percent improvement in train speeds, 6 percent improvement in locomotive productivity, 5 percent improvement in terminal dwell times, and 3 percent improvement in volumes in the 12 months following the merger. 7. The NCD Convention will enter into force once it is ratified by 10 countries; China and the nations of Central Asia are among the countries that have expressed strong interest in ratification. 8. Some TCTC host countries, including Georgia and Türkiye, are already working on adopting legal reforms aligned with the Model Law on Electronic Transferable Records (MLETR), in collaboration with international financial institutions such as the European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ADB). 9. This can be done by signing and depositing an instrument of ratification or by depositing an instrument of accession without signing, as explained in the information brochure for states intending to become parties to the United Nations Convention on Negotiable Cargo Documents, prepared by the UNCITRAL Secretariat (UNCITRAL 2026). 10. For example, although the unified CIM/SMGS consignment note was initially adopted in 2006, its deployment in CRE landbridge services was subject to pilot and testing programs through most of the 2010s even as its use became widespread, leading to periodic updates of the CIM/SMGS Consignment Note Manual. Today, similar pilot and testing programs are underway regarding the use of the e-CIM/SMGS consignment note.

References ADB (Asian Development Bank). 2024. Transit Trade Facilitation in Azerbaijan, Kazakhstan, and Uzbekistan. Manila: ADB. https://carecprogram.org/?publication=transit-trade-facilitation-in -azerbaijan-kazakhstan-and-uzbekistan. CargoX. 2025. “CargoX Enables Breakthrough FIATA Multimodal eFBL Pilot under Draft UN Convention on Negotiable Cargo Documents.” https://cargox.io/content-hub/cargox-powers -a-breakthrough-in-multimodal-transport-documentation-the-fiata-efbl. China Railway. 2025. “Helping Reduce National Logistics Costs and Supporting High-Quality Development of the Real Economy.” http://www.china-railway.com.cn/english/news/202503 /t20250310_143527.html.

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China Railway. 2026. “95306 China Railway” [in Chinese]. http://www.95306.cn/. Digital Trade Hub of Azerbaijan. 2019. “Azerbaijan Has Built an International Digital Marketplace and Is Inviting You to Join In: Come to Be Part of Our e-Trading Success Story and Enjoy All Advantages of the Convenient, Cross-Border e-Services We Provide.” https://dth.az/index. ESCAP (Economic and Social Commission for Asia and the Pacific). 2026. “Strengthening Performance, Interconnections and Multimodal Network Integration of Dry Ports in the Asia-Pacific Region.” Accessed June 1, 2026. https://www.unescap.org/projects/strengthening -dry-ports/pilot-projects. Karymshakov, Kamalbek, and Burulcha Sulaimanova. 2023. “Trade Facilitation, Infrastructure, and International Trade in Central Asian Countries.” ADB East Asia Working Paper No. 58, Asian Development Bank, Manila. https://doi.org/10.22617/WPS230053-2. Ministry of Digital Development and Transport of the Republic of Azerbaijan. 2022. “A Single Center for Management of Transit Freight Created.” https://mincom.gov.az/en/media-en/news/a-single -center-for-management-of-transit-freight-created1601. Moïsé, Evdokia, and Florian Le Bris. 2013. “Trade Costs—What Have We Learned?” OECD Trade Policy Paper No. 150. Paris: OECD Publishing. https://doi.org/10.1787/5k47x2hjfn48-en. OECD (Organisation for Economic Co-operation and Development). 2025. “The Digitalization of Trade Documents and Processes.” OECD Trade Policy Paper No. 297. Paris: OECD Publishing. https://doi .org/10.1787/64872f25-en. SNI. 2026. “Kazakhstan e-Waybill.” https://snitechnology.net/kazakhstan-e-waybill/. UNCITRAL (United Nations Convention on International Trade Law). 2001. “UNCITRAL Model Law on Electronic Signatures.” https://uncitral.un.org/en/texts/ecommerce/modellaw/electronic _signatures. UNCITRAL (United Nations Convention on International Trade Law). 2017. “UNCITRAL Model Law on Electric Transferable Records (2017).” https://uncitral.un.org/en/texts/ecommerce/modellaw /electronic_transferable_records. UNCITRAL (United Nations Convention on International Trade Law). 2022. “UNCITRAL Model Law on the Use and Cross-Border Recognition of Identity Management and Trust Services (2022).” https:// uncitral.un.org/en/mlit. UNCITRAL (United Nations Convention on International Trade Law). 2025. United Nations Convention on Negotiable Cargo Documents (New York, 2025) (the “Accra Convention on Negotiable Cargo Documents”). https://uncitral.un.org/en/ncdconvention. UNCITRAL (United Nations Convention on International Trade Law). 2026. Information Brochure: United Nations Convention on Negotiable Cargo Documents. Vienna: UNCITRAL. https://uncitral.un .org/sites/default/files/2026-03/information_brochure_ncd_convention_26_february_2026.pdf. UTLC ERA (United Transport and Logistics Company-Eurasian Rail Alliance). 2022. People as the Foundation: Annual Report 2022. Moscow: UTLC ERA. https://annreport2022.utlc.com/en/.

8 Bridging the Collaboration Gap in the Trans-Caspian Transport Corridor

Main Messages

• There is no shortage of Trans-Caspian Transport Corridor (TCTC)

institutional mechanisms devoted, at least in part, to facilitating crossborder inter-entity collaboration on corridor development and operations, with significant accomplishments to date.

• Yet perceptions remain on the part of private sector freight stakeholders

that the corridor lacks coordinated approaches and that this is ultimately reflected in poor logistics performance.

• To both better diagnose this and other challenges facing the corridor and to design, implement, and evaluate interventions to address them, a three-pronged TCTC Assessment and Response Structure (TARS) is proposed.

• TARS consists of (1) a Verifiable Measurement Function to establish a

single version of the truth regarding the nature of corridor activity and operational performance; (2) a Private Sector Advisory Committee to act as a sounding board and reality check for policy makers, based on a true partnership and resource commitment by participating private and public sector stakeholders; and (3) a periodic Intergovernmental Policy 163

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Dialogue Platform, where senior leaders and representatives of host countries can propose interventions and hold each other accountable for carrying them out.

• TARS is rooted in best international practices and, if adopted, could

transform the depth, responsiveness, and impact of TCTC cross-border collaboration.

Introduction Realizing the Trans-Caspian Transport Corridor’s (TCTC’s) transport, logistics, and economic potential entails transforming it into a world-class corridor. International experience suggests that this is unlikely to be achieved without cross-border collaboration. As previous chapters have highlighted, the TCTC’s infrastructure investments and reform initiatives reach all host countries, even if implemented strictly as national interventions. The nature of international transport and economic corridors is such that actions in one country are bound to pose implications for the others. This places a premium on international collaboration, defined for the purposes of this report as the pursuit of aligned, mutually reinforcing actions that produce cross-border spillovers, including (although not necessarily only) through jointly conceptualized or implemented interventions by entities domiciled in different countries. Corridor-building actions often emerge from collaboration among public agencies within countries. These typically include agencies responsible for infrastructure and service provision in ports, railways, roads, and border crossing points, as well as for the regulation of transport, customs, immigration, security, health, trade, and other services (Kunaka and Carruthers 2014). Interventions often ask for the inclusion of state-owned enterprises and private sector operators in the provision of services in areas spanning roads, ports, railways, terminal operators, freight forwarding, cargo clearing, and trade finance (Kunaka and Carruthers 2014). In cross-border contexts such as the TCTC, collaboration entails, in addition and necessarily, coordination and joint action among stakeholders in different countries. To add to the complexity, not all investments or measures require the same level of, or even approach to, collaboration, nor do they share the same temporal horizon, with some interventions representing an immediate need and others requiring the adoption of a shared long-term vision as a first step. This chapter discusses cross-border consensus building and decision-making approaches in the TCTC. To this end, it first takes stock of the TCTC’s collaboration

Bridging the Collaboration Gap in the Trans-Caspian Transport Corridor

landscape and identifies opportunities to strengthen collaboration mechanisms. It then suggests the adoption of what this chapter refers to as the TCTC Assessment and Response Structure (TARS) as a viable approach to bridge the identified collaboration gaps, facilitate joint action, and help refocus the TCTC’s collaboration trajectory.

Collaboration Achievements and Remaining Gaps in the TCTC There is no shortage of cross-border collaboration mechanisms in the TCTC. They include initiatives by intergovernmental organizations, ratified intergovernmental agreements, multilateral cooperation platforms, business cooperation initiatives, industry associations, and joint ventures. A nonexhaustive list of 21 of the most prominent cross-border collaboration mechanisms active in the TCTC is provided in appendix E. Although these entities have different geographic and thematic coverage, they share the goal of improving TCTC performance through coordination and joint action. Several important achievements stem from the work of these mechanisms. A few notable examples are as follows:

• Trans-Caspian International Transport Route (TITR). TITR, also known as the

Middle Corridor Association, is a coordination platform for service providers along the TCTC, including railway undertakings, shipping lines, maritime ports, and logistics service providers. Since its inception in 2017, TITR has hosted numerous working groups and discussions bringing together freight stakeholders in support of joint decision-making. TITR has also facilitated more integrated operations across service providers, including through joint tariffsetting mechanisms, data-sharing agreements, and the piloting of joint rail intermodal services. Of particular note is TITR’s role as a provider of key TCTCwide data on the corridor’s annual volumes (tons and 20-foot equivalent units [TEUs]) with a time series going back to 2017.

• Middle Corridor Multimodal Ltd. Middle Corridor Multimodal is an international

joint-venture non-asset-based rail intermodal operator established in October 2023 by the incumbent railway undertakings of Azerbaijan, Georgia, and Kazakhstan, later joined, in August 2025, by China Railway Container Transport Corporation, Ltd., the non-asset-based rail intermodal logistics subsidiary of China Railway. Although only recently established and therefore not yet having a solidified presence in the TCTC market, Middle Corridor Multimodal nevertheless marked a change in the TCTC’s collaboration trajectory by formally bringing together four of the most important railway undertakings in the corridor. Although details on its operations remain limited beyond its website (https://www.mcmultimodal.com/en), Middle Corridor

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Multimodal can become a game-changing operator in the TCTC, particularly if it is operationally empowered by deeper integration with its parent asset-based railway undertakings and if it adopts international best practices in corporate governance (refer to chapter 7).

• BTKI Railways LLC. BTKI Railways LLC is a joint venture between Georgian

Railway and Azerbaijan Railways established in August 2024 to coordinate and carry out infrastructure investments along the Baku-Tbilisi-Kars line within Georgia and to further promote the use and cargo capture of this line. BTKI Railways was instrumental in the 2024 expansion of the line’s cargocarrying capacity and is, along with the Uzbekistan-Kyrgyz Republic-China line, one of the best examples of joint cross-border infrastructure development in the TCTC.

• KPMC Ltd. KPMC is a joint venture between Kazakhstan Railways and PSA

International (port of Singapore) established in May 2023 to promote TCTC development and enhance connectivity and trade flows through digitalization. These efforts are underpinned by Global DTC, a Singaporean joint venture and part of the PSA Group, which offers digital services in the TCTC (refer to chapter 7).

• European Commission TCTC Coordination Platform. This EU-led platform, part of the European Union’s Global Gateway initiative, was established in October 2024 to coordinate TCTC investments in Central Asia, particularly those supported by EU funding.

• Trans-Caspian Trade Route (TCTR) Coordination Platform. This U.S.-led platform was established in 2023 to promote public-private dialogue for coordinated TCTC action in Central Asia, Azerbaijan, and Georgia.

Despite these achievements, and the substantial number of entities devoted to promoting collaboration in the TCTC (refer to appendix E), key gaps remain. Three collaboration gaps facing the TCTC stand out: 1. Lack of a single version of the truth. At present the TCTC lacks a common evidence base to inform assessments and decision-making by public and private actors alike. This includes the lack of a single, universally agreed-on, and trusted answer to fundamental questions about even the most basic aspects of TCTC activity, such as the volume transported on the corridor in any given year, and growing from there. For example, over the past few years several key sources of record, including TITR, the World Bank, the European Bank for Reconstruction and Development (EBRD), and the Organisation for Economic Co-operation and Development (OECD), have published data, including in this report, on the TCTC’s volume capture performance. According to TITR (Middle Corridor 2026), in 2021 the TCTC captured 586,000 tons and 25,200 TEU, presumably defined as volumes across the

Bridging the Collaboration Gap in the Trans-Caspian Transport Corridor

Caspian Sea; according to the World Bank (2023), the corresponding figures for 2021 were 3.7 million tons and approximately 45,000 TEU. According to TITR, in 2022 the TCTC captured 33,600 TEU; according to EBRD (2023), it captured 18,000 TEU in 2022, whereas according to OECD (2023), it captured 50,000 TEU. According to TITR, in 2023 the TCTC captured 1.6 million tons, whereas this report estimates 2023 TCTC nonoil tonnage as 3.5 million tons (refer to chapter 7). According to TITR, in 2024 the TCTC captured 1.8 million tons and 56,500 TEU; according to OECD (2025), it captured 4.5 million tons and 50,000 TEU in 2024. Three challenges emerge from this evidence. First, not only do the numbers differ depending on the source, due in no small part to the use of different methodologies and definitions, but in most cases they differ by a significant margin. Second, determining which source’s numbers are “correct” is not what is at stake here, and it misses the point; what matters is to generate the conditions for a single source or integrated group of sources to emerge as widely trusted—based on elements such as transparency, common and robust methodologies and definitions, and collaboration with regard to data sharing and validation. Third, these examples pertain to a relatively simple aggregate metric—total volumes—for which underlying data readings across jurisdictions are likely to be available and to facilitate data convergence; variation across sources on more technically nuanced metrics, such as door-to-door travel times, door-to-door multimodal transport costs, variability of door-to-door travel times at the specific origin-destination route level, and capacity utilization ratios for linear and nodal infrastructure and equipment, to name a few, is much larger still in the available TCTC literature than variations in reported total volumes. 2. Insufficiently meaningful collaboration between public and private sector stakeholders in TCTC planning and policy making. Several existing collaboration platforms, including TITR, the TCTC Coordination Platform, and the TCTR Coordination Platform, include public-private collaboration initiatives. Although these make important contributions to the development of the TCTC, testimony compiled by the World Bank from private sector stakeholders over the period 2022–25 suggests that perceptions remain among private sector entities that the TCTC is unreliable and that coordination efforts to address this are either insufficient or lacking (refer to box 8.1). One reason this may be the case is that existing efforts have yet to fully tap the private sector as a source of insight, market intelligence, and raw and processed data to inform decision-making, nor have private sector stakeholders been sufficiently involved in the decision-making process itself. International experience shows that these are the hallmarks of successful public-private collaboration efforts, such as freight advisory committees in the United States and freight quality partnerships in the United Kingdom (Blancas 2015).

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BOX 8.1 Private sector perceptions of public-private collaboration in the Trans-Caspian Transport Corridor Between 2022 and 2025, the World Bank compiled testimony from private sector representatives at Trans-Caspian Transport Corridor (TCTC)-themed events organized by the World Bank or by other international finance institutions or private sector entities and attended by representatives of the World Bank. The following are notable examples.

September 2022 “[TCTC] itineraries are highly unpredictable in terms of lead times; shippers need a commitment to the quoted lead time by their carriers, and we cannot promise this on the [TCTC].” (large Northern European railway undertaking) “The [TCTC] has no predictability right now.” (Northern European third-party logistics services provider)

April 2025 “We have to admit that, when it comes to developing the [TCTC], we are still at the stage of talking points. The railways don’t work with the private sector, particularly [small- and medium-size enterprises]. Trade routes are created by governments; we need to have more public-private dialogue, not just for the dialogue but for results. The [TCTC] is a solution, but we are seriously delayed with infrastructure and with helping everybody think in the same direction; I’m afraid the private sector’s patience may be running out.” (Northern European logistics service provider serving Asia via the TCTC) “My number one ask in the [TCTC] is a regional coordination mechanism; we have conferences, forums in Georgia, in Azerbaijan, in Kazakhstan, but they are one-off and lack a structural approach. Existing coordination mechanisms are railway and seaport oriented, but the [TCTC] is a multimodal solution, so we need to involve the rest of the chain, including shipping lines, dry ports, inland terminals, trucking companies, and logistics companies; this is necessary to understand the broad picture, identify bottlenecks, and define potential investments.” (top-three global container shipping line) “There is a lack of a clear policy over the [TCTC] route with all the countries, there is unclear decision-making that discourages private sector investment. Improving the regulatory coordination and standardization of regulation is a must. We, the private sector, are ready to engage, [governments and international finance institutions] just need to connect with us, please contact us to work together.” (national business association of a TCTC host country)

Bridging the Collaboration Gap in the Trans-Caspian Transport Corridor

3. Insufficient decision-making ownership by TCTC host countries. One notable aspect from the list of cross-border collaboration mechanisms listed in appendix E is that only a fraction of them are TCTC specific or fully conceptualized and owned by TCTC host countries or entities domiciled in those countries; TITR, Middle Corridor Multimodal, BTKI Railways, and KPMC are perhaps the only examples (less than 20 percent of the list). Many efforts are fully or substantially TCTC specific but led or housed by third parties, whether countries outside the TCTC or international institutions. Other mechanisms are, in addition, multipurpose, with TCTC support being indirect or among several other themes under their remit. This suggests the need for a mechanism fully owned and conceptualized by TCTC host countries, where they can come together to make plans, whether individually or jointly, and hold each other accountable over time for carrying them out.

TCTC Assessment and Response Structure To address these three collaboration gaps, this report proposes a three-pronged effort. This initiative would (1) develop a verifiable measurement function to establish a single version of the truth as to what goes on in the corridor, particularly as regards (but not necessarily limited to) corridor volumes, delivery lead times (transit time, dwell time at terminals, and border crossing time, on a route-specific and origin-destination basis), capacity bottlenecks, and tariffs, on which there is no shared clarity at present, thus hampering evidence-based policy and decision-making; (2) regularly convene a Private Sector Advisory Committee (PSAC) to act as a sounding board for policy makers, provide a reality check on corridor performance, and contribute as a critical source of insight, data and information, and advice to public sector planning and reform interventions, as well as a source of validation and insight into public sector planning for the private sector, with responsibilities shared on both sides; and (3) adopt a periodic intergovernmental policy dialogue platform where host countries, groups of host countries, or entities within those countries propose actions to improve corridor performance—and hold each other accountable for their completion and integration into the broader corridor. The World Bank refers to this framework as the TCTC Assessment and Response Structure (TARS). This TCTC host country–owned and –led initiative would create a system of common understanding, targets, and execution expectations for stakeholders to implement proposals, align incentives, and assess risks. The intention is for these activities to have a strong focus on implementation and action orientation, more so than technical exploration and research as a priority. It is designed to provide unified, authoritative measurement of corridor performance, create a structured platform for private sector inputs that fully captures private sector expertise, and enable periodic intergovernmental dialogue to drive accountability and coordinated action.

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TARS should find its place within the existing TCTC collaboration landscape, build on what exists, and have a laser focus on performance. The following sections discuss in more detail each of the proposed prongs under the TARS mechanism. Verifiable measurement function The TCTC needs a corridor performance measurement function that builds on both global best practice and what is already being done in the TCTC itself on this front. International experience in high-performance corridors shows that verifiable measurement functions, such as the Freight Analysis Framework (FAF) in the United States1 and Eurostat in the European Union,2 rely on publicly available methodologies, the resulting data are fully and freely available online for download by any interested user, and the measurement function is either fully government-owned or has a strong government presence, given its role as a public good. Another example of a verifiable measurement function closer to the TCTC, and corridor based, is the Eurasian Rail Alliance Index (ERAI)3 established by the United Transport and Logistics Company-Eurasian Rail Alliance (UTLC ERA), providing, inter alia, detailed data on freight volumes, transport costs, and delivery lead times for a subset of China-Europe Railway Express (CRE) services. The TCTC could build on what exists and empower, for example, TITR or one or more public universities or research centers, to play this role. This function should help design and validate the methodologies and mechanisms through which corridor performance can be monitored, including via structured data collection and processing; fit-for-purpose models and surveys; and designation of roles among multiple TCTC stakeholders in the data collection, processing, validation, and dissemination effort. The activity should also suggest a structured approach to aggregating granular data (for example, at the shipment level) into policy-relevant, corridorwide metrics at the right level of data aggregation to support decision-making while still providing access to granular data in ways that protect confidentiality. Modeling output has proven effective in the international experience as an input into research and knowledge generation, in addition to investment, policy, and commercial decision-making. Private sector advisory committee TCTC host countries have the opportunity to introduce a new approach to publicprivate collaboration in TCTC planning and policy making. This approach should be based on reciprocity and commitment on both the public and private sector sides of the collaboration, whereby private sector entities give of their time and expertise, share data, and distill front-line market insights that policy makers can in turn use to inform and better target investments and regulatory reform to improve TCTC performance. On their part, public sector leaders should commit not only to following up on agreements and keeping private sector stakeholders informed of progress but to involving them in the policy planning process itself.

Bridging the Collaboration Gap in the Trans-Caspian Transport Corridor

The private sector gathers data and is a source of ground truth. The PSAC intervention should help harness both and channel these inputs into planning and policy making in a structured manner that is transparent to private sector contributors. To be successful, the PSAC effort would need to close the feedback loop by validating and confirming with private sector participants the manner in which their data and insight were used and the outcomes that they facilitated. Periodic intergovernmental policy dialogue platform Intergovernmental gatherings are not new in the TCTC. Several such forums exist, and they vary widely in scope, action orientation, postgathering follow-up action, and links to outcomes. The considerable number of TCTC-linked forums, and thus their fragmentation, is itself a weakness. TARS proposes an intergovernmental dialogue platform that can address perceived gaps by establishing an effort owned and undertaken by TCTC host countries themselves and that is action oriented, champions built-in mechanisms for follow-up over time, and emphasizes crossborder outcomes. More important, such a platform would have the explicit goal of fostering accountability through trust and shared goals. An example of best practice in this regard can be to consider the way international river basin commissions work, such as the Central Commission for the Navigation of the Rhine, the Danube Commission, and the Mekong River Commission. As decisionmaking on the development and economic stewardship of international waterways such as the Rhine, Danube, and Mekong rivers as a shared resource is necessarily dependent on cross-border collaboration, the decades-long (and in the case of the Rhine, centuries-long) experience of these entities in forging collaborative approaches to policy making and development projects can be used as a benchmark for the TCTC Intergovernmental Policy Dialogue Platform.

Conclusions The three prongs of the proposed TARS mechanism were informed by taking stock of what exists, the achievements, and the remaining gaps in cross-border collaboration in the TCTC. Because several efforts already exist and have attained well-documented achievements, the aim of TARS is to address partial, not full, gaps in collaboration. For example, data about TCTC freight activity exist, but they vary in granularity and coverage, are duplicative, rely on opaque methodologies, and have thus far fallen short of being trusted and shared by a critical mass of end-user decision-makers. Similarly, public-private collaboration efforts in the TCTC exist, yet perceptions of insufficient (or even an outright lack of) collaboration persist on the part of private sector stakeholders, and current efforts seem to not make full use of the private sector’s potential as a source of data and actionable insight or of the public sector as a source of expectations management for private sector actors in a dynamic, uncertain market. The same

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is true of periodic gatherings of heads of state and policy makers in the TCTC— they exist, yet more could be done to promote ownership of these efforts by TCTC host countries, as well as accountability in planning and policy making at senior levels. TARS is not premised on the creation of new entities, which could further deepen the TCTC’s already fragmented institutional landscape. But it does aim to recognize gaps and propose actions to address them. Although some duplication of effort is likely inevitable in a corridor as fragmented as the TCTC, the intention of TARS is to target consensus-based shortcomings, to build on what exists, and to better align the TCTC with international good practice. Although not necessarily a quick win, all three of the TARS prongs could be implemented in the immediate term, even if they are likely to need to be perfected over time through trial and error and pilot programs.

Notes 1. https://www.bts.gov/faf 2. https://ec.europa.eu/eurostat/web/transport 3. https://index1520.com/en/

References Blancas, Luis C. 2015. Engaging the Private Sector in Transport and Logistics Planning and Policy Making: Options for Vietnam. Washington, DC: World Bank. http://documents.worldbank.org /curated/en/135561468319735241. EBRD (European Bank for Reconstruction and Development). 2023. Sustainable Transport Connections between Europe and Central Asia. London: EBRD. Kunaka, Charles, and Robin Carruthers. 2014. Trade and Transport Corridor Management Toolkit. Washington, DC: World Bank. https://doi.org/10.1596/978-1-4648-0143-3. Middle Corridor. 2026. “Trans-Caspian International Transport Route.” https://middlecorridor.com /en/. OECD (Organisation for Economic Co-operation and Development). 2023. Realising the Potential of the Middle Corridor. Paris: OECD Publishing. https://doi.org/10.1787/635ad854-en. OECD (Organisation for Economic Co-operation and Development). 2025. Enhancing the Competitiveness of the Trans-Caspian Transport Corridor in Central Asia. Paris: OECD Publishing. https://doi.org/10.1787/f261e7fa-en. World Bank. 2023. Middle Trade and Transport Corridor: Policies and Investments to Triple Freight Volumes and Halve Travel Time by 2030. Washington, DC: World Bank. http://documents.worldbank .org/curated/en/099111723122527465.

APPENDIX A

Trans-Caspian Transport Corridor Network Exposure to Natural Hazards in Central Asia and the South Caucasus

Transport systems across Europe and Central Asia—including the Trans-Caspian Transport Corridor (TCTC)—face mounting risks from both climate and nonclimate hazards. Natural threats such as floods, extreme heat, earthquakes, and landslides increasingly jeopardize infrastructure reliability, causing direct damage and service disruptions. For the TCTC, disruptions in any country can ripple across the region, affecting connectivity and trade. This appendix evaluates the adequacy of the TCTC’s infrastructure in Central Asia, the Caspian Sea, and the South Caucasus through the lens of resilience to natural hazards. Specifically, it conducts a three-step multihazard and criticality assessment of TCTC infrastructure (refer to box A.1), identifying segments most exposed to climate- and nonclimate-related shocks and most vital to regional supply chains. By quantifying expected physical damages and economic losses, the analysis highlights priority hotspots for resilienceenhancing investments that can protect supply chain business continuity, mitigate cross-border spillover effects, and enhance the corridor’s long-term competitiveness.

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BOX A.1 The three steps of the TCTC multihazard and criticality assessment methodology

• Step 1: exposure. This is a comprehensive assessment of the current and future

exposure and vulnerability of the transport networks of TCTC host countries. The assessment controls for exposure to floods (pluvial, fluvial, and coastal), landslides, earthquakes, and extreme heat. Following the approach developed by Koks et al. (2019) and using vulnerability estimates as provided by Nirandjan et al. (2024), we quantify and map the risk levels and potential direct losses for the transport networks due to the various hazards.

• Step 2: criticality. Criticality analysis assesses the significance of individual transport

infrastructure links for the functioning of entire supply chains. This analysis uses the DisruptSC model developed by Colon et al. (2021). This agent-based model incorporates multiregional input-output tables, firm-level data, and transport infrastructure data to model supply chains. The model simulates the disruption of individual railway and road segments, one by one, and estimates the resulting indirect economic costs of rerouting and production delays borne by end consumers and trade partners.

• Step 3: hotspot identification. This analysis combines the preceding two steps—

exposure and criticality—to identify hotspots, defined as segments that are both exposed to climate hazards and critical to supply chains. This helps address the question of where adaptation investments are likely to yield the highest benefits in terms of reducing physical damage and ensuring the continuity of economically significant transport flows.

The model developed for this analysis relies on a series of assumptions regarding the vulnerability of the infrastructure assets under consideration. In reality, the vulnerability of an asset depends on its technical design, maintenance history, and site-specific conditions, which are difficult to define consistently at a regional scale. To account for this uncertainty, we use a range of vulnerability curves and estimate asset values on the basis of reconstruction costs from multiple sources. For site-specific assessments, ad hoc data collection should be conducted to increase the accuracy of the results. The modeling of freight volumes used for the criticality analysis implements a simplified network assignment approach as developed by Colon et al. (2021), which is less detailed than the freight transport model presented in chapter 3. Although this network assignment model does not fully account for the detailed commodity-specific capacity and congestion dynamics along the corridor, it seeks to align to a large extent with the modeling results presented in chapter 3.

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Risks Posed by Natural Hazards to the TCTC in Central Asia, the Caspian Sea, and the South Caucasus Natural hazard risks to the railway and feeder road network The estimated annual direct damage (EAD)1 from multiple natural hazards across Central Asia and the South Caucasus amounts to $35 million for TCTC railway infrastructure (with a range from $20 million to $64 million)2 and to $93 million for roads feeding the TCTC (refer to figure A.1). Relevant takeaways are as follows:

• The largest risks are concentrated in the South Caucasus. Georgia faces the highest

risk to its road and railway networks, totaling $40 million in EAD, followed by Azerbaijan at $24 million and Armenia at $20 million. Map A.1 shows the spatial distribution of EAD to TCTC railways at subnational levels. The municipalities with the highest multihazard risks to railways are Lori in Armenia ($6.5 million), followed by Kharagauli ($1.9 million) and Zestaponi ($1.7 million) in Georgia.

FIGURE A.1 Estimated annual direct damage to the TCTC railway and road networks in Central Asia and the South Caucasus from multiple natural hazards a. EAD to TCTC railway and road network from multiple hazards

b. Absolute median risk from hazards

Expected annual damage ($, millions) 250

Georgia Azerbaijan

200

Armenia 150

Kazakhstan

100

Uzbekistan Kyrgyzstan

Turkmenistan Rail

Road

5.0

10.0

15.0

20.0

25.0

Expected annual damage ($, millions) Fluvial

Rainfall-triggered landslides

Coastal

Rail

Pluvial

Earthquake

Earthquarke-triggered landslides Road

Source: Original figure for this publication. Note: EAD = estimated annual direct damage; TCTC = Trans-Caspian Transport Corridor.

30.0

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MAP A.1 Distribution of estimated annual direct damage to TCTC railway network in Central Asia and the South Caucasus at the provincial level under current climate conditions

Source: Original map for this publication.

• Pluvial flooding is the dominant hazard, accounting for 45.9 percent of rail network risk and 46.2 percent of road network risk across all TCTC countries in Central Asia and the South Caucasus.3 This is followed by fluvial flooding that contributes 44.6 percent to rail risk and rainfall-triggered landslides that contribute 21.4 percent to road risk.

• For the TCTC railway network, flooding (fluvial or pluvial) is the primary source of risk

in Armenia, Azerbaijan, Georgia, Kazakhstan, the Kyrgyz Republic, and Turkmenistan. In contrast, earthquakes are the leading cause of risk in Uzbekistan (34 percent) and the second major contributor in the Kyrgyz Republic (36 percent). The Kyrgyz Republic and Uzbekistan also show the highest railway risk from landslides, at 20 percent and 15 percent, respectively.

• For the road network feeding the TCTC in this subregion, flooding (fluvial or pluvial) is the primary source of risk for most host countries. The exception is the Kyrgyz Republic, where the risk from landslides dominates (43 percent), closely followed by pluvial flooding (41 percent). Furthermore, earthquake-related

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risk on the road network is highest in Uzbekistan, accounting for 52.6 percent of the total road risk from earthquakes to the TCTC road network of Central Asia and the South Caucasus. Going forward, climate risks to TCTC infrastructure in Central Asia and the South Caucasus are projected to rise, underlining the need for proactive action (refer to figure A.2). Flooding, the leading hazard today, is expected to pose a higher risk under future climate scenarios, with EAD to TCTC railway and road infrastructure in Central Asia and the South Caucasus increasing from $92.3 million under FIGURE A.2 Relative change (%) in road and rail risk for the TCTC in Central Asia and the South Caucasus by 2050, according to risk type and climate scenario Pluvial

Coastal

Rainfall-triggered landslides

Uzbekistan

Turkmenistan

Kyrgyzstan

Kazakhstan

Georgia

Azerbaijan

Armenia

Fluvial

–50 –40 –30 –20 –10

–10

–20 –10

200

600

1,000 1,400

Change in risk (%) 2050 SSP3–7.0

2050 SSP5–8.5

SSP5–2.6

Road

2080 SSP3–7.0

2080 SSP5–8.5

SSP5–8.5

Railway

Source: Original figure for this publication.

25 50 75 100 125 150

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historical climate conditions to $105.9 million by 2050 under the SSP3-7.0 scenario and to $107.8 million by 2050 under the SSP5-8.5 scenario. This is driven by an increase in the risk posed by pluvial flooding, which offsets the expected reduction in risks from fluvial floods. Rainfall-triggered landslide risk to road infrastructure is also projected to increase across Central Asia and the South Caucasus under both optimistic and pessimistic climate scenarios. For SSP1-2.6, the total risk rises from $20.6 million in the historical period to $22.0 million; under SSP5-8.5, it increases further to $25.4 million. Railway infrastructure along the TCTC, especially in Central Asia, is also subject to high temperatures that lead to temporary speed restrictions and, in the most extreme cases, to actual buckling, causing disruptions to train operations. Kazakhstan’s railway network, in particular, faces increasing heat exposure that poses risks to track integrity and operational safety through thermal-induced railway buckling. As railway tracks are increasingly exposed to higher temperature extremes, the risk of buckling may increase, causing additional repair needs and operational disruptions (refer to box A.2). Declining water levels in the Caspian Sea Caspian Sea water levels have been declining over the past 20 years, now affecting the operations of critical TCTC ports. The Caspian Sea, the world’s largest enclosed body of water, is fed by more than 130 rivers—most notably the Volga, which contributes 80 percent of total inflows. Its water balance is shaped by inflows and evaporation, with changes in climate exacerbating a long-term net deficit. After fluctuating historically, the sea level has declined steadily since 1995, reaching a historic low of −29.6 meters (Baltic datum) in 2025. This drop has already impaired port operations, with vessels unable to operate at full load due to reduced water depth—posing serious risks to TCTC ports such as Aktau, Kuryk, Turkmenbashi, and Baku.

BOX A.2 Heat exposure of Kazakhstan’s railway infrastructure This report examined heat exposure trends across Kazakhstan under two emission scenarios. Under the moderate SSP245 scenario, average heat exposure is projected to rise from approximately 25°C in 2020 to nearly 30°C by 2100. The high-emission SSP585 scenario shows steeper increases, with heat exposure potentially reaching 35°C by 2100—a 40 percent increase from current levels. The divergence between scenarios becomes particularly evident after 2060, when the SSP585 pathway shows accelerated warming that could challenge Kazakhstan’s railway system operations. Under both future scenarios, the climate models indicate late-century maximum temperatures that could reach 50°C.

Trans-Caspian Transport Corridor Network Exposure to Natural Hazards

Internal World Bank research conducted in 2025 projects a decline in water levels throughout this century, driven by increased temperatures leading to higher evaporation rates. These findings are based on an innovative climate-hydrological model to predict Caspian Sea water levels, incorporating both historical data and up-to-date climate and hydrological data. The projections indicate that even with potential increases in precipitation, the net effect will likely be a decrease in overall water levels. Projections under three climate scenarios show a consistent long-term decline in Caspian Sea water levels compared to the 1994–2014 baseline:

• SSP1-1.9 (Paris Agreement, approximately 1.5°C warming). A moderate decline of about −1.0 meters by the 2030s, reaching −2.4 meters by the 2090s, with levels remaining near 2025 values until mid-century

• SSP2-4.5 (intermediate, approximately 2.5°C warming). Declines of −0.8 meters by the 2030s and up to −2.9 meters by 2100, also staying close to 2025 levels until the 2050s

• SSP5-8.5 (high emissions, approximately 4.4°C warming). The steepest drop, with −1.7 meters by the 2030s and potentially −7.4 meters by 2090, or 5.5 meters below 2025 levels

In addition to the long-term risks posed by declining water levels in the Caspian Sea, the main ports on both shores of the Caspian Sea, and particularly those on the Caspian’s eastern shore (Aktau and Turkmenbashi), are regularly subject to adverse weather conditions. This includes, primarily, strong winds, as well as thunderstorms and heavy downpours, dust storms, fog, blizzards, and icy conditions. Although these events rarely result in physical damage to infrastructure and equipment, they routinely result in significant port closures. For example, operations at the port of Aktau were affected by some level of downtime 18.8 percent of the time between January 2023 and September 2024—or about two months per calendar year, roughly 40 percent of which is due to strong wind events alone. This led to operational inefficiencies and delays in cargo flows.

Indirect Economic Impact of Supply Chain Disruptions in Central Asia and the South Caucasus Railways are the backbone of the TCTC, and their disruption can have ripple effects across borders. Map A.2 shows the criticality of the railways and relevant roads along the TCTC in Central Asia and the South Caucasus, based on the estimated indirect costs of individual link disruptions to households and to trade partners.

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MAP A.2 Criticality of TCTC railway links and relevant roads in Central Asia and the South Caucasus a. Critical to TCTC households

b. Critical to trade partners

Railways Roads Source: Original maps for this publication. Note: The thicker the line, the more critical the road or railway is for TCTC households (panel a) or trade partners (non-TCTC countries) (panel b). Line width is proportional to the indirect cost to TCTC country households in the event of a 1-week disruption of that road or railway. The thickest line in panel a corresponds to a $70 million loss to TCTC households; in panel b, it corresponds to a $50 million loss to TCTC exporters or trade partners. TCTC = Trans-Caspian Transport Corridor.

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The impacts of these disruptions are not borne exclusively by the local economy of the country where the disruption takes place. Instead, as shown in figure A.3, single-link disruptions could have significant ripple effects across TCTC countries. Imagine, for instance, that a railway section between Baku port and Georgia gets disrupted. Volumes to be served by the Black Sea branch of the TCTC (refer to chapter 4 for details on TCTC branches and subbranches) would need to be transferred by truck to Poti port, even for low-value bulk commodities for which road-based transport is more expensive per unit transported compared with rail. Alternatively, volumes could be rerouted via the Türkiye branch of the TCTC, even if the final destination could be reached more competitively via the Black Sea under regular conditions. The additional transport costs would be borne not only by Georgia but by all the trading countries using the corridor. Figure A.3 shows that disruptions in Georgia’s railway network may have large consequences for Azerbaijan, making imports costlier. Similarly, disruptions in the railways of Kazakhstan affect Uzbekistan’s economy, especially via the supply of wheat. Modeling suggests that, for the average railway infrastructure disruption event, more than half of the indirect losses do not occur in the country that hosts the affected railway line. These results underline the importance of coordinated action across TCTC countries to implement adaptation measures that enhance the resilience of the entire corridor.

FIGURE A.3 Estimated indirect losses to households in Central Asia and the South Caucasus in 2030 due to 1-week disruptions of TCTC railway sections, grouped by destination Railways in Armenia Railways in Azerbaijan Railways in Georgia Railways in Kazakhstan Railways in Kyrgyz Republic Railways in Turkmenistan Railways in Uzbekistan 0

Supply chain losses ($, millions) Armenia Kyrgyz Republic Other countries Source: Original figure for this publication. Note: TCTC = Trans-Caspian Transport Corridor.

Azerbaijan Tajikistan

Georgia Turkmenistan

Kazakhstan Uzbekistan

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Georgia’s railways are both critical and highly exposed, making them a focus for adaptation. Although railways in Kazakhstan are the most critical to TCTC countries, whether along the southern subbranch (Khorgos-Almaty-Shymkent) or the northern subbranch (Dostyk-Moiynty-Zhezkazgan-Shalkar), they are only marginally exposed to floods, earthquakes, or landslides. The northern subbranch is slightly more exposed to flash floods, especially in springtime. In contrast, the most exposed rail sections are found in the South Caucasus segment of the TCTC, especially in Georgia. Railway sections in Georgia that are both critical and highly exposed include (1) specific sections west of Tbilisi (Dzegvi, Gori), which are exposed to floods from the Kura River; (2) the section between Surami and Shorapani, east of Kutaisi, which is particularly prone to landslides and pluvial floods; (3) the section south of Samtredia that grants access to the port of Batumi, which is exposed to floods from the Rioni River; and (4) railways just before Poti port that are also exposed to the Rioni River. In addition to floods and landslides, Georgian railways are also exposed to earthquakes. The frequent closures of the Caspian Sea ports can generate significant indirect losses to households, underscoring the urgent need for adaptive management strategies in the Caspian Sea basin. Modeling findings show that the impact of a 5-day closure of the port of Aktau on households in Central Asia and the South Caucasus would amount to almost $30 million, mostly borne by households in Azerbaijan and Kazakhstan (refer to figure A.4). This transport disruption translates into more expensive transport operations, either because of rerouting or because of added storage costs, ultimately translating into more expensive goods, especially imported ones. FIGURE A.4 Estimated daily losses to households in TCTC countries in Central Asia and the South Caucasus from a 5-day closure of the port of Aktau ($, millions) 7 6 5 4 3 2 1 0

Number of days since the start of the 5-day disruption Armenia Kazakhstan Uzbekistan Source: Original figure for this publication.

Azerbaijan Kyrgyz Republic Other countries

Georgia Tajikistan

Trans-Caspian Transport Corridor Network Exposure to Natural Hazards

Because water levels are projected to continue to decline, as corroborated by internal World Bank research, it is vital for policy makers, stakeholders, and regional authorities to develop sustainable water management practices to mitigate the environmental and socioeconomic impacts of these declines. For the short term, before 2030, adaptation measures for the port of Aktau are estimated to cost about $36 million, allowing for the recovery of 1 meter of water depth. By 2050, to account for a more significant drop in sea water level (2 more meters), the required adaptation measures would amount to $190 million. Although the TCTC infrastructure backbone consists of railways and ports, the road network in TCTC countries plays a fundamental role in connecting producers and consumers with the main railway network, increasing the capillarity and catchment area of the corridor. Hence, the resilience of the road network that supports the TCTC is also relevant. Box A.3 presents a summary of identified critical roads that are also exposed to climate-related or geophysical hazards.

BOX A.3 Critical roads exposed to climate-related hazards that are relevant for the TCTC in Central Asia and the South Caucasus Modeling findings identified several critical roads for local economies in Central Asia and the South Caucasus that are also exposed to the assessed hazards:

• The Tashkent-Osh international highway (A373) in eastern Uzbekistan, which

connects the Fergana Valley with Tashkent via the Kamchik mountain pass, which is critical for the delivery of food, manufactured goods, and fuel and is the most exposed to landslides in the country, making it a hotspot for intervention

• The A-15 highway in southern Kazakhstan, exposed to pluvial and fluvial floods,

which connects the district of Maktaaral, with significant agricultural activity, to the rest of the country

• The M34 road north of Dushanbe, highly exposed to both landslides, pluvial and fluvial floods, and which connects the capital of Tajikistan to Samarkand and Tashkent in Uzbekistan

Other relevant links include (1) sections of the A2 road in Kazakhstan west of Almaty, which have moderate exposure to pluvial floods; (2) sections of feeder roads to Kazakh railways, especially the M32 around Shalkar, which have moderate exposure to pluvial floods; and (3) some other mountainous sections of roads south of Ganja in Azerbaijan and in Armenia and South Georgia, which are exposed to landslides and fluvial floods. Roads that also are critical for exports in Central Asia and the South Caucasus, and exposed to the studied hazards, include (1) roads connecting Oskemen and the surrounding firms to railways in Kazakhstan, especially the A3 road; (2) sections of the A17 road (Kazakhstan) linking Pavlodar to Karaganda, which are relevant for mining and exposed to fluvial floods; and (3) the M36 road (Kazakhstan) on the western coastline of the Balkhash Lake, which is important for coal mining and subject to pluvial floods.

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The analysis in this appendix shows that critical segments of the TCTC in Central Asia and the South Caucasus are increasingly exposed to climate-related risks, threatening the reliability of regional and transcontinental supply chains. The largest direct damages across the countries analyzed are expected in the South Caucasus, particularly from flooding (roads and rail) and landslides (for roads). Climate-related disruptions are expected to cause indirect economic losses that span beyond national boundaries, with more than half of the losses from railway disruptions being borne by households outside the country of the failed section. Identifying hotspots is essential but not sufficient—reducing future risk requires a structured, forward-looking approach that accommodates uncertainty and aligns with long-term development goals. Climate adaptation should consider a range of options that can be deployed incrementally or in combination as conditions evolve, allowing for flexibility and least-regrets decision-making. This is especially relevant for large, interconnected transport networks such as the TCTC, where today’s investments shape infrastructure for decades. Adaptation measures span physical upgrades, policy reforms, business preparedness, and cross-border coordination, emphasizing not only robustness but also organizational capacity and recovery ability. A range of railway adaptation measures across prevention, preparation, response, and recovery stages—from elevating track beds and improving drainage to emergency protocols and automated monitoring systems—can be used to address these risks. For ports, particularly those on the Caspian Sea, adaptation should focus on both fleet redesign and infrastructure upgrades. Ultimately, safeguarding the TCTC against climate vulnerability is not only a matter of protecting infrastructure—it is a prerequisite for sustaining regional connectivity, economic development, and cross-border cooperation in the face of a changing climate.

Notes 1. Direct EAD expresses the expected average yearly financial losses due to direct physical damage from hazards, considering both the severity and the frequency of natural disasters. Direct EAD is calculated as the sum, over all possible hazard scenarios, of the product of the expected damage and the probability of occurrence of each scenario. 2. The range of the estimated EAD reflects uncertainty in the vulnerability of the exposed assets to the different hazards, because this depends on their design and site-specific conditions. 3. These percentages are computed by dividing the length of railways exposed to each individual hazard by the sum of the lengths exposed across all the hazards.

References Colon, Célian, Stéphane Hallegatte, and Julie Rozenberg. 2021. “Criticality Analysis of a Country’s Transport Network Via an Agent-Based Supply Chain Model.” Nature Sustainability 4 (3): 209–15.

Trans-Caspian Transport Corridor Network Exposure to Natural Hazards

Koks, Elco E., Julie Rozenberg, and Conrad Zorn. 2019. “A Global Multi-Hazard Risk Analysis of Road and Railway Infrastructure Assets.” Nature Communications 10: 2677. Nirandjan, Sadhana, Elco E. Koks, and Mengqi Ye. 2024. “Review Article: Physical Vulnerability Database for Critical Infrastructure Hazard Risk Assessments—A Systematic Review and Data Collection.” Natural Hazards and Earth System Sciences 24 (2): 4341–68.

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APPENDIX B

Trade and Transport Model and Modeling Scenarios

The report’s scenario-based projections are based on a trade and transport model of global scope, with detailed granularity applied to Eurasian logistics. The model operates on two levels of territorial units. Larger units, such as countries or groups of countries, are used to forecast trade flows, and smaller units, referred to as transport zones, facilitate further decomposition of trade flows and assignment of cargo flows to the transport network. The model spans 180 countries and 526 regions, using historic UN Comtrade data (https:// comtradeplus.un.org/)1 to model trade flows between them, and considers a total of 23 commodity types.2 The trade model is estimated in two steps. First, trade volumes between countries or groups of countries are estimated using a gravity model, which employs sector-specific supply and demand factors instead of gross domestic product and population. These models use ordinary least squares regression and incorporate total transportation costs from the previous year as a key explanatory variable, acknowledging a time lag in trade’s response to cost changes. The model forecasts are then balanced to ensure supply-demand equilibrium, accounting for production capacities and trade restrictions using a bicriteria optimization approach that weighs balance constraints against deviations from initial gravity model estimates. In the second step, the resulting trade flows are decomposed and assigned to transport zones, proportionally derived from country-level flows using various statistical indicators reflecting regional economic activity. Data on transport network parameters, tariffs, and logistic costs are taken from a variety of sources across different modes of transport. For road transport,

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information is gathered from national transport authorities, toll road operators, road transport aggregator websites, national road authorities, and the Global Roads Inventory Project database (https://www.globio.info/download-grip -dataset). Railway transport data are derived from railway tariff guidelines, railway undertakings, aggregator websites, and OpenRailwayMap (https://www .openrailwaymap.org/). Maritime transport information is collected from aggregator sources such as SeaRates (https://www.searates.com/), Drewry, and Marine Traffic (https://www.marinetraffic.com/en/ais/home/centerx:-12.0 /centery:25.0/zoom:4), as well as major shipping company websites and port authorities. The value of time is assessed using freight unit values (dollars per ton) derived from UN Comtrade. Agent-based modeling is used to conduct a Transport Network Assignment algorithm to simulate cargo flows across a detailed transport network. The network is represented as a directed graph incorporating various transport modes (road, rail, sea, inland waterway, air) with associated tariffs, capacities, and logistic costs. The resulting origin-destination (OD) matrices are transformed into individual cargo agents, which are grouped into vehicles according to capacity and allowed cargo types. A Dijkstra algorithm finds optimal routes, initially based on free-flow speeds, but these routes are iteratively updated on the basis of simulation feedback, reflecting delays and congestion (Horni et al. 2016). The simulation considers queuing, capacity constraints, and vehicle types. A calibration process adjusts network capacities to match modeled and actual traffic volumes. Total logistics costs are calculated for each commodity group and OD pair, incorporating direct out-of-pocket costs (transport costs and handling fees) and indirect costs (inventory carrying costs to account for the value of time). The value of time is calculated on the basis of commodity price, transportation time, and opportunity cost of capital data.

Model Scenarios Seven scenarios were conceptualized to control for key policy-relevant dimensions that are likely to influence the Trans-Caspian Transport Corridor (TCTC) going forward, such as infrastructure investments, operational improvements, macroeconomic shocks, and changes to the competitiveness of alternative options, most critically the Asia-Europe sea freight routes. Two temporal horizons are considered: short term (2030) and medium term (2040). The model’s base year is 2023. Base year 2023

• Reflects all available infrastructure and services as of that year, using actual or as-reported data to calibrate model output.

Trade and Transport Model and Modeling Scenarios

• Why this matters. The model’s 2023 output attempts to describe as accurately as possible the current situation in TCTC and Eurasian logistics.

For 2030 Scenario 1: status quo scenario 2030 (SQ 2030)

• Existing transportation infrastructure across the corridor as of 2025 is

maintained, and no new infrastructure investments in ports or railway lines are undertaken beyond investments ongoing or firmly planned for immediate implementation as of early 2025, most notably including the following:

Kazakhstan 1. Dostyk-Moyinty railway line double-tracked, expanded to approximately 60 trains per day 2. Darbaza-Maktaraal greenfield railway line completed (approximately 30 trains per day) 3. Port of Aktau expanded to 240,000 20-foot equivalent units (TEU), in addition to existing 70,000 TEU capacity at Aktau Marine North Terminal, for a total of 310,000 TEU throughput capacity; deepening of access channel and berthing areas completed. Azerbaijan 1. Modernization and upgrade of the Baku-Alat-Boyuk Kasik railway line in Azerbaijan completed, allowing approximately 53 trains per day, including full conversion to alternating current power 2. Capacity expansion of port of Baku to 260,000 TEU and deepening of existing access channel and berthing areas completed. Trans-Caspian shipping 1. Trans-Caspian vessel capacity expanded to 500,000 TEU and 30 million tons of general cargo, based on new vessel deployment.

• Modal pricing assumptions. (1) Shanghai-Rotterdam = $2,900 per 40-foot

equivalent unit (FEU); (2) China-Europe Railway Express (CRE): Dostyk-Brest = $3,300 per FEU; and (3) TCTC: Khorgos-Constanţa = $3,800 per FEU and Khorgos-Istanbul = $4,500 per FEU.

• Why this scenario matters. This scenario shows what can be expected if conditions remain generally unchanged from the current context. Market forces are such that the TCTC is expected to grow and develop even under “do-minimum” conditions; this scenario helps understand what that would look like.

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Scenario 2: TCTC development scenario 2030 (TD 2030)

• In addition to Scenario 1, the following investments are completed by 2030: Kazakhstan 1. Khorgos-Almaty railway line expanded to 60 trains per day, including modernization of the existing Altynkol-Zhetigen railway line and construction of the greenfield Almaty bypass railway line 2. New Bakhty border crossing point and greenfield Bakhty-Ayagoz line opened 3. Greenfield Moiynty-Kyzylzhar railway line built (approximately 30 trains per day) 4. Zharyk-Saksaul railway line upgraded to carry approximately 23 trains per day 5. Arys-Saksaul railway line upgraded to carry approximately 60 trains per day 6. Shalkar-Beineu railway line upgraded to carry approximately 15 trains per day 7. Beineu-Mangistau railway line (connection to the port of Aktau) expanded to approximately 18 trains per day 8. Port of Kuryk’s Sarzha Multipurpose Marine Terminal develops dedicated container terminal with 150,000 TEU capacity. Uzbekistan 1. Tashkent-Bukhara railway line upgraded to carry approximately 30 trains per day. Turkmenistan 1. Port of Turkmenbashi expanded to effective capacity of 400,000 TEU through measures such as widening and dredging of the access channel and berthing areas. Central Asia regional infrastructure 1. Uzbekistan-Kyrgyz Republic-China railway line built (from Kashgar, China, to Andijan, Uzbekistan). Azerbaijan 1. Rail link port of Baku-Alat expanded to approximately 23 trains per day. Georgia 1. Gardabani border crossing point (Azerbaijan-Georgia) expanded to approximately 40 trains per day 2. Rail connections to Poti and Batumi ports expanded to approximately 12 trains per day

Trade and Transport Model and Modeling Scenarios

3. Tbilisi-Akhalkalaki-Türkiye border line (Georgia) expanded to approximately 12 trains per day 4. Port of Poti expands its container handling capacity by approximately 200,000 TEUs, to approximately 800,000 TEUs, through in situ measures. Türkiye 1. Divriği-Kars-Georgia border railway line expanded to approximately 12 trains per day 2. Halkali-Kapikule railway line expanded and modernized to approximately 60 trains per day. Southeast Europe 1. Targeted improvements in Southeast Europe railway network.

• Modal pricing assumptions. (1) Shanghai-Rotterdam = $2,900 per FEU; (2) CRE:

Dostyk-Brest = $3,300 per FEU; and (3) TCTC: Khorgos-Constanţa = $3,800 per FEU, Khorgos-Istanbul = $4,500 per FEU, and Torugart-Istanbul-Trieste = $7,000 per FEU.

• Why this scenario matters. The scenario shows how volumes can be expected to

change in the short term if several key infrastructure and service delivery investments (as outlined for the TD scenario) are undertaken. None of these investments are in place at present (early 2026). Most of them are ongoing, and a few have yet to commence. All are expected to be at least partially if not fully operational by 2030.

Scenario 3: TCTC development stress test (TD-ST 2030)

• Same investments as in TD 2030 but with lower global economic and trade growth and lower fossil fuel prices.

• Why this scenario matters. The scenario assesses demand capture by the TCTC

under more unfavorable macroeconomic conditions compared with TD 2030, which allows for testing of the robustness of the TD results.

Scenario 4: TCTC development with higher sea freight rates 2030 (TD-HR 2030)

• Same as TD 2030, but Shanghai-Rotterdam = $5,000 per FEU in the 2030s (instead of $2,900 per FEU).

• Why this scenario matters. Higher sea freight rates, all else being equal, are

expected to make overland routes such as the TCTC more attractive relative to alternatives. This scenario tests the validity of this expectation and the magnitude of its effect.

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Scenario 5: TCTC development with lower sea freight rates 2030 (TD-LR 2030)

• Same as TD 2030, but Shanghai-Rotterdam = $2,000 per FEU in the 2030s (instead of $2,900 per FEU).

• Why this scenario matters. Lower sea freight rates, all else being equal, are

expected to make overland routes such as the TCTC less attractive relative to alternatives. This scenario tests the validity of this expectation and the magnitude of its effect.

For 2040 Scenario 1: status quo 2040 (SQ 2040)

• Same as in 2030. • Why scenario matters. This scenario shows the expected evolution of volumes if current conditions persist for longer.

Scenario 2: TCTC development 2040 (TD 2040)

• In addition to the investments under TD 2030, the following investments are completed by 2040:

Kazakhstan 1. Rail connection Beineu-Mangistau (connection to port of Aktau) further expanded to approximately 22 trains per day. South Caucasus regional infrastructure 1. Azerbaijan-Armenia-Türkiye railway connection built. Azerbaijan 1. Port of Baku further expanded to at least 500,000 TEU. Georgia 1. Anaklia port built 2. Tbilisi-Akhalkalaki-Türkiye border line further expanded to approximately 20 trains per day. Türkiye 1. Divriği-Kars-Georgia border railway line (Türkiye) further expanded to approximately 20 trains per day 2. Alternative railway link across the Istanbul Strait (Bosphorus) built.

Trade and Transport Model and Modeling Scenarios

• Modal pricing assumptions. (1) Shanghai-Rotterdam = $2,900 per FEU; (2) CRE: Dostyk-Brest = $3,300 per FEU; and (3) TCTC: KhorgosConstanţa = $3,600 per FEU, Khorgos-Istanbul = $4,400 per FEU, and Torugart-Istanbul-Trieste = $7,000 per FEU.

• Why this scenario matters. This scenario controls for investments that are

expected to take longer than the short term to gestate or materialize, to be completed in the 2030s, for technical, economic, or geopolitical reasons. Considering that logistics markets tend to take time to develop, the TD 2040 scenario is considered the base case or most likely projection of TCTC volumes and operations if investments are undertaken. All investments included under TD 2030 and TD 2040 are either ongoing or included in formal plans by TCTC host countries.

Scenario 3: TCTC development stress test 2040 (TD-ST 2040)

• Same investments as in TD 2040, but with lower global economic and trade growth and lower fossil fuel prices.

• Why this scenario matters. It assesses demand capture by the TCTC under more unfavorable macroeconomic conditions compared with TD 2040. It is a test of the robustness of the TD results.

Scenario 4: TCTC development with higher sea freight rates 2040 (TD-HR 2040)

• Same as TD 2040, but Shanghai-Rotterdam = $5,000 per FEU in the 2030s (instead of $2,900 per FEU).

• Why this scenario matters. Because of the discretionary nature of landbridge

markets such as those served by CRE services and the TCTC, the volume capture prospects of both routes are highly exposed to their relative competitiveness not only to each other but to the sea freight routes as well. For example, one of the reasons the Eurasian rail landbridge grew 95 percent year on year in 2024 across all routes was the impact of more expensive East Asia-Europe sea freight services that had to be temporarily routed around the Cape of Good Hope instead of via the Suez Canal. The opposite effect was seen in 2025, with landbridge volumes projected to drop by 18 percent year on year as, inter alia, sea freight rates dropped, making sea freight routes more attractive. This scenario makes TCTC landbridge volume projections assuming sea freight rates are significantly higher than the model’s baseline pricing assumptions under the TD 2040 scenario. Keeping all else equal, higher East Asia-Europe sea freight rates are generally expected to result in larger volumes for the Eurasian containerized rail landbridge routes. This scenario assesses the magnitude of that impact.

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Scenario 5: TCTC development with lower sea freight rates 2040 (TD-LR 2040)

• Same as TD 2040, but Shanghai-Rotterdam = $2,000 per FEU in the 2030s (instead of $2,900 per FEU).

• Why this scenario matters. Keeping all else constant, lower East Asia-Europe sea freight rates are generally expected to result in lower volume capture by the Eurasian containerized landbridge. This scenario assesses the magnitude of that impact. In this respect, TD-LR 2040 can be considered a volume floor for the TCTC, controlling for key investments materializing.

Scenario 6: TCTC stretch 2040 (TS 2040)

• No infrastructure capacity constraints after 2030; in addition, cross-border

collaboration, digitalization, and operational improvements are in place throughout the 2030s, based on solutions that may include transport, transit, and trade documentation consolidation; deeper and more widely used document digitalization; and more integrated provision of transportation, cargo handling, and storage services, such as through joint operational approaches across carriers. This would result in the following by 2040, compared with TD 2040: faster train speeds across the network; higher railway undertaking productivity leading to lower costs to serve; lower dwell times at all ports across the network; and faster border crossing times across the network.

• Modal pricing assumptions. (1) Shanghai-Rotterdam = $2,900 per FEU; (2) CRE:

Dostyk-Brest = $3,300 per FEU; and (3) TCTC: Khorgos-Constanţa = $3,500 per FEU, Khorgos-Istanbul = $3,600 per FEU, and Torugart-Istanbul-Trieste = $7,000 per FEU.

• Why this scenario matters. This capacity-unconstrained scenario assumes, in

addition, significant operational improvements in service delivery. Its output lets us project what the TCTC could achieve if its competitiveness were to closely match global best practices.

Scenario 7: TCTC stretch with higher sea freight rates 2040 (TS-HR 2040)

• Same as TS 2040, but Shanghai-Rotterdam = $5,000 per FEU in the 2030s. • Why this scenario matters. This scenario combines the reinforcing effects of

unconstrained capacity, higher service levels, and high sea freight rates, all of which are, ceteris paribus, expected to lead to volume gains for the TCTC. In this respect, TS-HR 2040 can be considered a projection of the maximum amount of landbridge volumes the TCTC can reasonably be expected to capture through the medium term. Among other things, this can shed light on the question of whether current capacity addition plans could accommodate this volume ceiling or whether additional investments would need to be considered.

Trade and Transport Model and Modeling Scenarios

Notes 1. The methodology includes a robust process for cleaning and correcting UN Comtrade data, addressing anomalies in physical and nominal trade volumes. This involves identifying and correcting outliers, filling data gaps using mirror data or average prices, and handling situations with anomalous changes in trade volumes or price levels. 2. The model considers the following commodity types: animal and vegetable products, grains, prepared food products, construction materials, ferrous metal ores, nonferrous metal ores, coal and lignite, crude oil, natural gas, petroleum products, chemicals, fertilizers, plastics and rubbers, wood and wood products, pulp and paper products, light industry products, ferrous metals, nonferrous metals, metals and articles thereof, machinery and equipment, vehicles, other products, and steel consumption.

Reference Horni, Andreas, Kai Nagel, and Kay W. Axhausen, eds. 2016. The Multi-Agent Transport Simulation MATSim. London: Ubiquity Press. https://doi.org/10.5334/baw.

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APPENDIX C

Wider Economic Benefits Modeling Framework Introduction The analysis of the economic impacts of reductions in transport costs associated with development of the Trans-Caspian Transport Corridor (TCTC) was undertaken using a Computable General Equilibrium framework based on the Global Trade Analysis Project (GTAP) model (version 12.0; https://www.gtap.agecon.purdue .edu/databases/v12/v12_doco.aspx). GTAP is a multicountry, multisector model that captures interactions among producers, households, governments, and international trade, allowing for the assessment of economy-wide and crosssectoral effects of policy or cost shocks. The model is used to estimate changes in gross domestic product (GDP), trade (imports and exports), production, employment, consumption, and investment resulting from (1) reductions in international land transport costs, and (2) associated infrastructure investment. Countries are aggregated into 10 regions, and 65 sectors were aggregated into 40 sectors, retaining those most relevant to transport, trade, and infrastructure.

Key Data Sources The modeling draws on the following primary data sources:

• GTAP 12.0 database (benchmarked to 2019)

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• World Bank World Development Indicators (https://databank.worldbank.org /source/world-development-indicators) for GDP and macroeconomic aggregates (calibrated to 2023)

• World Bank growth estimates for baseline projections beyond the GTAP benchmark year

• UN Comtrade (https://comtradeplus.un.org/) for merchandise trade flows • International Monetary Fund Balance of Payments (https://data.imf.org/en /datasets/IMF.STA:BOP), Organisation for Economic Co-operation and Development (OECD), and Eurostat (https://ec.europa.eu/eurostat/data /database) for services trade

• International Energy Agency for energy prices and tax data • International Labor Organization for labor data • OECD Producer Support Estimates and World Trade Organization subsidy data • Market Access Map (https://www.macmap.org/) for tariff data • Penn World Tables (https://cid.ucdavis.edu/pwt) for capital stock data. Core Modeling Assumptions The analysis relies on standard GTAP assumptions, including:

• Perfect competition in all markets • Constant returns to scale in production • Armington assumption for trade (imperfect substitution between domestic and imported goods)

• Full market clearing with flexible prices • Fixed production technologies with substitution governed by standard GTAP elasticities

• Infrastructure investment treated as an increase in demand for construction and land transport services

• Reductions in transport costs modeled as efficiency (technological) shocks to

international land transport margins, applied bilaterally by commodity and trading partner, and capital expenditure associated with transport investments introduced as an exogenous shock to the construction and land transport sectors.

Wider Economic Benefits Modeling Framework

Nature of the Results The model produces static results, reporting differences between a baseline equilibrium and a counterfactual equilibrium with lower transport costs and higher investment. Results represent long-run, economy-wide adjustments once markets have fully responded to the shocks.

Key Limitations

• Static framework. The model does not capture dynamic adjustment paths, sequencing of investments, or the timing over which gains accrue.

• No project-level phasing. Infrastructure investments are introduced as aggregate shocks rather than phased over time.

• No endogenous productivity or agglomeration effects. Dynamic productivity

gains, firm entry, or agglomeration economies are not explicitly modeled.

• Results are indicative rather than forecasts. Results should be interpreted as orders of magnitude and relative impacts.

Interpretation The results provide an illustrative, economy-wide estimate of potential gains from improved transport efficiency under the TCTC.

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APPENDIX D

Enabling Investments in the Trans-Caspian Transport Corridor through 2040 • For each country, investments are listed in descending order of priority (that is, a higher position in each table denotes greater priority, urgency, or impact).

• In nearly all Trans-Caspian Transport Corridor (TCTC) host countries, rolling stock modernization and fleet renewal is a strategic priority.

• In all TCTC host countries, modernization of road sector asset management with a focus on resilience and maintenance methods is a strategic priority.

• Investment tables should be understood as strictly evolving; host countries should evaluate the opportunities identified and add new opportunities as market conditions allow.

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TABLE D.1 Uzbekistan Investment description

Category

Rationale

Estimated size ($, millions)

Status

Time horizon

Private sector?

New dry ports and expansion/ consolidation of existing ones in Tashkent area

Nodal infrastructure

Lack of dry ports of sufficient capacity and scope serving the Tashkent area

300

Short term

Yes, with UTY

Tashkent– Andijan toll road

Linear infrastructure

New 340-km highway expected to cut travel time in half, boost Fergana Valley trade, and improve safety and logistics efficiency; under PPP in tender stage

5,300

Procurement

Short term

Yes

TashkentSamarkand toll road

Linear infrastructure

New 300-km road connecting Uzbekistan’s two main cities, reducing congestion; to be executed as PPP

1,400

Short term

Yes

Upgrade and development of new rail border crossing points with dry port capability

Nodal infrastructure

New Andijan rail BCP and dry port (connecting with UKC line)Alat rail BCP and dry port (border with Turkmenistan)Syrdarya rail BCP and dry port (alternate access to Kazakhstan)

500

Pre-FS

Short term

Yes, with UTY

Replacement and modernization of rolling stock fleet

Logistics equipment

Significant share of the fleet needs to be replaced due to aging and axle load limitations; local production targeted at 10,000 wagons until 2030 by UTY, expected to be produced domestically; purchase of 38 locomotives is also planned

1,000

Pre-FS

Short term

Yes

New dry port in Jizzakh focused on automotive sector

Nodal infrastructure

Supports automotive suppliers and vehicle exports in the context of national production target of 1 million vehicles by 2030

300

No study yet

Short term

Yes, with UTY

Rail signaling system modernization

Linear infrastructure

Existing signaling system on large parts of the network is outdated and requires upgrades; an updated signaling system would increase reliability and capacity

500

Pre-FS

Short term

Noa

New dry port in Samarkand

Nodal infrastructure

Second largest city of Uzbekistan currently lacks a sizeable, rail-enabled dry port that can serve the local demand

150

No study yet

Short term

Yes, with UTY

New dry port in Navoi

Nodal infrastructure

New terminal within the Navoi logistics-industrial hub, near Navoi International Airport and Navoi Free Economic Zone

No study yet

Short term

Yes, with UTY Continued

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Enabling Investments in the Trans-Caspian Transport Corridor through 2040

TABLE D.1 Uzbekistan (Continued) Investment description

Category

Rationale

Estimated size ($, millions)

Status

Time horizon

Private sector?

Samarkand– Bukhara toll road

Linear infrastructure

New 270-km road connecting two of Uzbekistan’s main tourism hubs, reducing travel distance, and improving safety; intended to be executed as PPP

1,000

Short term

Yes

Railway network capacity expansion

Linear infrastructure

Increase in capacity and improvement in operations of existing lines needed to better serve TCTC

1,000

No study yet

Short term

Noa

Total

11,500

Source: Original table for this publication. Note: Short term = through 2030. BCP = border crossing point; FS = feasibility study; km = kilometer; PPP = private-public partnership; UKC = Uzbekistan-Kyrgyz Republic-China; TCTC = Trans-Caspian Transport Corridor; UTY = Uzbekistan Railways. a

Public investment could mobilize commercial financing depending on state-owned enterprise and project bankability.

TABLE D.2 Kazakhstan Investment description

Category

New dry ports and expansion of existing dry ports in Almaty area

Nodal infrastructure

Expansion of Caspian Sea vessel fleet

Rationale

Estimated size ($, millions)

Status

Time horizon

Private sector?

Expected cargo growth and role of Almaty as cargo hub for the TCTC

500

Short term

Yes, with KTZ

Logistics equipment

Current vessel shortage in Caspian Sea market reduces TCTC effective capacity

1,000

Pre-FS

Short term

Yes

Expansion and modernization of BeineuShalkar road

Linear infrastructure

Project would bridge the largest gap (560 km) in the road component of the TCTC in Kazakhstan, while improving multimodality and enhancing connectivity between the central, eastern, and western parts of the country

1,300

Short term

Yes, toll

Full build-out of Sarzha Multipurpose Terminal at port of Kuryk

Nodal infrastructure

Port of Kuryk focused on ferries and grain needs to expand service offering

500

Procurement

Short term

Yes

Continued

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TABLE D.2 Kazakhstan (Continued) Investment description

Category

Rationale

Estimated size ($, millions)

Status

Time horizon

Private sector?

Replacement and modernization of rolling stock fleet

Logistics equipment

60 percent of current wagon fleet subject to renewal due to aging and axle load limitations; 450+ new locomotives are expected to be acquired to service the increased demand, which will require domestic manufacturing through JVs with foreign producers

2,000

Pre-FS

Short term

Yes, with KTZ

New dry port at Astana

Nodal infrastructure

Less availability of logistics clusters compared with Almaty

100

No study yet

Short term

Yes, with KTZ

New dry port at Beineu

Nodal infrastructure

Current rail freight station capacity insufficient to accommodate expected growth

No study yet

Short term

Yes, with KTZ

Expansion of AktobeUlgaisyn road

Linear infrastructure

Upgrade of the existing road connecting Aktobe and Ulgaisyn, increasing number of lanes from 2 to 4, and upgrading bridges, culverts, and interchanges (234 km)

1,100

Procurement

Short term

Yes, toll

Doubletracking of KhorgosAlmaty railway line

Linear infrastructure

Expected to be needed to increase corridor capacity for cargo to and from East Asia

1,000

Medium term

Noa

Total

7,530

Source: Original table for this publication. Note: Kazakhstan’s ongoing highway expansion plan is likely to result in new investment opportunities in the TCTC feeder road network, with potential for private sector participation. Short term = through 2030; medium term = through 2040 (that is, for implementation in the 2030s). FS = feasibility study; JVs = joint ventures; km = kilometer; KTZ = Kazakhstan Temir Zholy (Kazakhstan Railways); TCTC = Trans-Caspian Transport Corridor. a

Public investment could mobilize commercial financing depending on state-owned enterprise and project bankability.

● 205

Enabling Investments in the Trans-Caspian Transport Corridor through 2040

TABLE D.3 Turkmenistan Investment description

Category

Rationale

Estimated size ($, millions)

Status

Time horizon

Private sector?

New dry port at Ashgabat

Nodal infrastructure

New inland terminal to concentrate east–west freight flows around the capital, which lacks a modern logistics center that can support economic diversification

100

No study yet

Short term

Expansion of Caspian Sea vessel fleet

Logistics equipment

Acquisition of three new vessels has been announced by the Turkmenistan national shipping line (two ferries for railway wagons and one dry bulk vessel)

150

Pre-FS

Short term

Replacement and modernization of rolling stock fleet

Logistics equipment

Around 50 percent of TDY locomotives require replacement or overhaul to continue operating beyond 2030; wagon fleet (12,000–14,000 wagons) is obsolete and requires replacement

700

Pre-FS

Short term

Limited

Turkmenbashi– Ashgabat railway line modernization

Linear infrastructure

Key section of the TCTC, allowing for faster access to the port of Turkmenbashi

1,700

Medium term

Noª

Dushak–Mary– Turkmenabad railway line modernization

Linear infrastructure

Key section of the TCTC, allowing for faster access to the port of Turkmenbashi

1,125

Medium term

Noª

Total

3,775

Source: Original table for this publication. Note: Short term = through 2030; medium term = through 2040 (that is, for implementation in the 2030s). FS = feasibility study; TCTC = Trans-Caspian Transport Corridor; TDY = Turkmenistan Railways (Demirýollary open joint-stock company). a

Public investment could mobilize commercial financing depending on state-owned enterprise and project bankability.

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TABLE D.4 Türkiye Investment description

Category

Rationale

Estimated size ($, millions)

Status

Time horizon

Private sector?

Development of Mersin dry port

Nodal infrastructure

Inland, customs-banded node to decongest Mersin port and organize hinterland rail/road flows; project will act as extended gateway of Mersin port

100

Procurement

Short term

Yes, with TCDD

Kocaeli dry port upgrade

Nodal infrastructure

Upgrade of the existing Köseköy Logistics Center into a customs-bonded, railenabled dry port to serve Kocaeli’s port cluster and the TCTC

100

No study yet

Short term

Yes, with TCDD

New Yeşilbayır Istanbul dry port

Nodal infrastructure

Urban dry port/logistics platform to decongest Istanbul nodes and integrate rail last-mile; part of Türkiye’s National Transport Master Plan

100

No study yet

Short term

Yes, with TCDD

Expansion and modernization of Alsancak Port in Izmir

Nodal infrastructure

Izmir’s main port has plans to expand and redevelop the existing terminals, positioning itself as an alternative to Aliaga, Mersin, Iskenderun and other Aegean/Mediterranean ports; sponsor seeking partners

500

Procurement

Short term

Yes, with TCDD

Malatya-Narli High-Standard Railway

Linear infrastructure

155-km new modern railway line with high standards and capacity to replace an old and earthquake-damaged 182-km railway line with significant domestic freight volume; the line would support TCTC as a southern connection to the ports of Mersin and Iskenderun

1,750

FS completed, preliminary design ongoing

Short term

Noa

Rehabilitation of KarsGyumri railway line

Linear infrastructure

Track rehabilitation, electrification, signaling, and telecom of a 60-km existing railway line closed since 1993; includes operationalization of the Akhuryk-Akyaka section (~20-km) and rehabilitation of the full line

150

No study yet

Short to medium term

Noa

Expansion of Kars Logistics Center

Nodal infrastructure

Development and expansion of the existing center needed to support TCTC freight flows in the early 2030s, include gaugechanging operations, customs, and warehousing facilities

No study yet

Short to medium term

Yes, with TCDD

Total

2,750

Source: Original table for this publication. Note: Short term = through 2030; medium term = through 2040 (that is, for implementation in the 2030s). FS = feasibility study; km = kilometer; TCDD = Turkish State Railways; TCTC = Trans-Caspian Transport Corridor. a

Public investment could mobilize commercial financing depending on state-owned enterprise and project bankability.

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Enabling Investments in the Trans-Caspian Transport Corridor through 2040

TABLE D.5 Georgia Investment description

Category

Rationale

Estimated size ($, millions)

Status

Time horizon

Private sector?

Replacement and modernization of rolling stock fleet

Logistics equipment

Aging locomotive and wagon fleet needs replacement

550

Short term

Yes, with GR

Completion of Kakheti Highway as feeder road into TCTC trunk network

Linear infrastructure

Kakheti Highway will channel TCTC cargo, connect eastern Georgia with leading regions to the west, and provide additional cross-border road link to Azerbaijan/ TCTC

600

Procurement

Short term

Upgrading of asset management systems for the road and railway networks

Linear infrastructure

Asset management systems can be modernized to incorporate more data granularity, including climate data, to increase network resilience

Pre-FS

Short term

New dry port at Kutaisi

Nodal infrastructure

Kutaisi dry port could specialize in agrologistics, in close proximity to Kutaisi Airport, positioning itself as an extended gateway of Georgia’s maritime ports and as a hub for western Georgia and South Caucasus distribution chains

Short term

Yes, with GR

Dual-gauge railway line between Akhalkalaki and the Türkiye border

Linear infrastructure

dual-gauge provision will increase TCTC operational resilience by enabling change-of-gauge operations at either Akhalkalaki or Kars

Pre-FS

Short term

Development of road and rail hinterland connection to/from port of Anaklia

Linear infrastructure

Port of Anaklia will need to be multimodally connected to the national transport network

165

Pre-FS

Medium term

Noa

Terminal expansion and modernization at Akhalkalaki gaugechange station

Nodal infrastructure

More capable dry port and change-of-gauge facility at Akhalkalaki to increase the competitiveness of the TCTC Türkiye branch

150

Pre-FS

Medium term

Noa

Further expansion of BTK line

Linear infrastructure

BTK line will need continued expansion over time to accommodate increasing TCTC volume

300

Pre-FS

Medium term

Total

1,915

Source: Original table for this publication. Note: Short term = through 2030; medium term = through 2040 (that is, for implementation in the 2030s). BTK = BakuTbilisi-Kars; FS = feasibility study; GR = Georgian Railway; TCTC = Trans-Caspian Transport Corridor. a

Public investment could mobilize commercial financing depending on state-owned enterprise and project bankability.

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TABLE D.6 Tajikistan Investment description

Category

Rationale

Estimated size ($, millions)

Status

Time horizon

Private sector?

New dry port at Khujand

Nodal infrastructure

New rail freight station at Khujand, anticipating increased volumes as China advances corridor development in the region

Pre-FS

Short term

Yes, with ROT

Replacement and modernization of rolling stock fleet

Logistics equipment

ROT owns around 50 locomotives (aged) and around 3,000 wagons (of which 70 percent are more than 30 years old); most fleet requires replacement within short to medium term (40 locomotives and 2,000 wagons); rail sector reform may support a certain level of private sector participation in the rolling stock sector

400

Pre-FS

Short term

Yes, with ROT

Kokand (UZ)Khujand (TJ)Bekobod (UZ) railway line modernization

Linear infrastructure

Line would allow transit traffic to bypass a congested railway section around Tashkent, a more direct access to the rest of Uzbekistan and beyond

250

Pre-FS

Short term

Yes, with ROT

Rehabilitation of sections of M34 road north of Dushanbe

Linear infrastructure

Connects Dushanbe with Samarkand and Tashkent; current conditions highly unsafe and exposed to landslides, avalanche, pluvial and fluvial floods

100

Short term

Yes, toll

Rehabilitation of sections of KhujandKanibadam road corridor in Sughd

Linear infrastructure

Building this section will complete the east-west corridor in the north of the country, as a gateway to Uzbekistan and TCTC

Short term

Upgrade of GulistonKulob road section in Khatlon

Linear infrastructure

Connects main agricultural region to Dushanbe, and on to the TCTC; key exports (for example, cotton, fruits) and imports (for example, machinery) originate in or are destined for this region

Short term

Rehabilitation of Khorog to Kulma Pass section of the Dushanbe to Kashgar (China) Highway

Linear infrastructure

Urgent need for rehabilitation

442

Short term

Yes, toll

Total

1,402

Source: Original table for this publication. Note: Short term = through 2030; medium term = through 2040 (that is, for implementation in the 2030s). FS = feasibility study; ROT = Tajik Railways; TCTC = Trans-Caspian Transport Corridor; TJ = Tajikistan; UZ = Uzbekistan.

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Enabling Investments in the Trans-Caspian Transport Corridor through 2040

TABLE D.7 Azerbaijan Investment description

Category

Rationale

Estimated size ($, millions)

Status

Time horizon

Private sector?

Completion of ongoing modernization of Baku-AlatBoyuk Kasik railway line

Linear infrastructure

Line forms the backbone of the TCTC in Azerbaijan; it is currently being modernized with new electrification system and upgraded signalization

260

Ongoing

Short term

Development of national network of dry ports

Nodal infrastructure

Develop new dry ports at BoyukKasik BCP (TCTC Black Sea and Türkiye branches), Baku (as extended gateway of Baku port and in support of TCTC), and a southern hub to support proposed new TCTC route reaching Kars via Azerbaijan and Armenia

300

Pre-FS

Short term

Yes, with ADY

Future increase of tonnage capacity of Baku-AlatBoyuk Kasik railway line

Linear infrastructure

Line is likely to need further expansion and upgrades in the 2030s in support of TCTC volumes

600

Pre-FS

Medium term

Noa

Total

1,160

Source: Original table for this publication. Note: Short term = through 2030; medium term = through 2040 (i.e., for implementation in the 2030s). ADY = Azerbaijan Railways; BCP = border crossing point; FS = feasibility study; TCTC = TCTC = Trans-Caspian Transport Corridor. a

Public investment could mobilize commercial financing depending on state-owned enterprise and project bankability.

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TABLE D.8 Kyrgyz Republic Investment description

Category

Rationale

Estimated size ($, millions)

Status

Time horizon

Private sector?

New Makmal change-ofgauge station and dry port for the UKC line

Nodal infrastructure

New gauge-change/ transshipment terminal on the mid-UKC section

150

Procurement

Short term

Yes

Nodal infrastructure

New ICD/yard for Kyrgyz Republic’s northern hub, with a dedicated rail freight station required to handle regional volumes

No study yet

Short term

Yes, with KTJ

New dry port at Manas

Nodal infrastructure

New ICD/yard for the southern hub to accommodate UKC volumes

No study yet

Short term

Yes, with KTJ

Replacement and modernization of rolling stock fleet

Logistics equipment

KTJ owns around 25 locomotives (aged) and around 1,000 wagons (~80 percent nonoperational); full renewal of the fleet is needed

300

Short term

Yes, with KTJ

Total

510

Source: Original table for this publication. Note: Short term = through 2030. FS = feasibility study; ICD = inland container depot; KTJ = Kyrgyz Railways; UKC = Uzbekistan-Kyrgyz Republic-China.

APPENDIX E

Examples of International Collaboration Entities Active in the Trans-Caspian Transport Corridor

211

TABLE E.1 Examples of International Collaboration Entities Active in the Trans-Caspian Transport Corridor Name World Trade Organization (WTO)

Type

Armenia Azerbaijan Georgia Kazakhstan

Intergovernmental organization

Eurasian Intergovernmental Economic Union organization, (EAEU) supranational

Commonwealth Intergovernmental of Independent organization States (CIS)

Organization of Intergovernmental Turkic States organization (formerly Turkic Council) Black Sea Economic Cooperation (BSEC)

Intergovernmental organization

Shanghai Cooperation Organization (SCO)

Intergovernmental organization

Economic Cooperation Organization (ECO), including agreements: ECO Transit Transport Framework Agreement (TTFA), ECO Trade Agreement (ECOTA)

Intergovernmental organization

Kyrgyz Tajikistan Turkmenistan Uzbekistan Republic

Seeking membership

Associate member and founder

Observer

Türkiye China European Union X

U.S.

Observer

Continued

TABLE E.1 Examples of International Collaboration Entities Active in the Trans-Caspian Transport Corridor (Continued) Name Transport Corridor EuropeCaucasus-Asia (TRACECA)

Type

Armenia Azerbaijan Georgia Kazakhstan

Kyrgyz Tajikistan Turkmenistan Uzbekistan Republic

Türkiye China European Union

U.S.

Intergovernmental program

UNESCAP Trans- Intergovernmental agreement Asian Railway Network

UNESCAP Trans- Intergovernmental Asian Highway agreement Network

Belt and Road Intergovernmental cooperation Initiative, including Digital initiative Silk Road

EU-Central Asia Intergovernmental Transport cooperation Connectivity initiative Initiative (including Coordination Platform for the Trans-Caspian Transport Corridor) TCTR Coordination Platform

Intergovernmental cooperation initiative

Central Asia Regional Economic Cooperation (CAREC) Program

Multilateral cooperation initiative

Continued

TABLE E.1 Examples of International Collaboration Entities Active in the Trans-Caspian Transport Corridor (Continued) Name International Coordination Council for Trans-Eurasian Transportation (CCTT)

Type Type

Armenia Azerbaijan Georgia Kazakhstan

Business cooperation initiative

Business Trans-Caspian International cooperation Transport Route initiative (TITR)/Middle Corridor Association

Business Central AsiaSouth Caucasus- cooperation Anatolia initiative (CASCA+)

Kyrgyz Tajikistan Turkmenistan Uzbekistan Republic

International Union of Railways (UIC)

Association of companies

Middle Corridor Multimodal Ltd.

JV for business operations

BTKI Railways LLC

JV for rail infrastructure management

KPMC Ltd.

JV for digitalization of business operations

Türkiye China European Union

U.S.

Source: Original table for this publication. Note: List is illustrative and not exhaustive. An X indicates that the country is a member of that row’s organization. JV = joint venture; TCTR = Trans-Caspian Trade Route; UNESCAP = United Nations Economic and Social Commission for Asia and the Pacific.

The Trans-Caspian Transport Corridor (TCTC), also known as the Middle Corridor, is a developing network of rail freight, maritime shipping, and cargo handling connections linking markets in East Asia, Central Asia, the South Caucasus, Türkiye, and the rest of Europe. Considering the TCTC’s unique length and multimodal, multipurpose nature; the large number of host and terminus countries that comprise it; and the significant economic opportunity that the integration of these markets represents, transforming the TCTC into an efficient economic corridor is among the world’s most consequential—and complex—challenges in global trade logistics today. Integration: World-Class Trade Logistics Along the Trans-Caspian Transport Corridor provides an indepth assessment of the TCTC’s value proposition; its current status and performance gaps; the magnitude of the economic impacts that can be expected from addressing these gaps; and both the investments and the reimagined, transformational solutions that are needed to attain these improvements. The report makes the case that transforming the TCTC into an economic corridor will take more than investments in infrastructure; it will require integration-driven approaches to trade facilitation, logistics service delivery, and cross-border collaboration. What is at stake is the opportunity to more closely integrate the nations of Eurasia through trade and investment; to boost the economic and job creation performance of TCTC host countries; to facilitate the delivery of more efficient and more cost-competitive logistics services to a diverse range of shippers; and to make Eurasian trade more resilient to market and nonmarket disruptions. Global experience in corridor building, including from the TCTC host and terminus countries themselves, and these countries’ own plans and aspirations suggest that this momentous opportunity in intercontinental logistics is achievable—with fit-for-purpose measures that can be sustained over time. Through its structured narrative, the report seeks to contribute to the multi-country, multi-stakeholder task of enabling world-class trade logistics in the TCTC.