Georgian National Investment Agency 2013
REGIONAL LOGISTICS CORRIDORREGIONAL LOGISTICS CORRIDOR
IN IN GEO
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INREGIONAL LOGISTICS CORRIDOR
TRANS-CAUCASIAN ROUTETRANS-CAUCASIAN ROUTE
• Latent gateway between Europe and Central Asia
• Around 80% of port cargo and 60% of freight rail are transits
TRANSPORT INFRASTRUCTURETRANSPORT INFRASTRUCTURE
• Rapidly developing road infrastructure
• Ports are cost-compe ve vs. alterna ve routes
• FDI infl ows in the logis cs sector have primarily targeted transport infrastructure
OPPORTUNITIESOPPORTUNITIES
• Deep-sea port with PanaMax vessel
• Containeriza on and logis cal centers
• Direct connec on with European and Central Asian railway networks
VESTORGIA
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GEORGIA’S TRANSPORT INFRASTRUCTURE
MODE OF TRANSPORT MODE OF TRANSPORT EXISTING INFRASTRUCTURE EXISTING INFRASTRUCTURE AND FLOWSAND FLOWS
UPGRADESUPGRADES
RAILRAIL• 1,500 km (90% electrifi ed)• ~7,000 rolling stock, 180 locosROADROAD• 1,500 km interna onal road + 20,000 km internal and local roads
POTI SEAPORTPOTI SEAPORT• 13 berths, 8-10m depth• Container and bulk (210k TEU)• Owned/operated by Maersk/RAKIABATUMI SEAPORTBATUMI SEAPORT• 5 berths, 1 off shore mooring, 11m depth• 90% petroleum/oil, 10% containers (44k TEU) • Operated by JSC KazTransOilKUHLEVI SEAPORTKUHLEVI SEAPORT• Crude oil, petroleum, and lubricants• Owned/operated by State Oil Company Azerbaijan
TBILISI INTERNATIONAL AIRPORTTBILISI INTERNATIONAL AIRPORT• ~1 mn passengers (capacity: 3 mn)• Serving 28 des na onsBATUMI INTERNATIONAL AIRPORTBATUMI INTERNATIONAL AIRPORT• 100,000 passengers
RAILRAIL• BTK connec on to Turkey• Moderniza on• Tbilisi bypass• ~2500 new rolling stockROADROAD• East-West highway upgrade
POTI SEAPORTPOTI SEAPORT• New container berth (2014)
DEEP-SEA PORTDEEP-SEA PORT• Min. 2 berth of 20m depth (PanaMax)• First phase: Dry bulk (10m tons) and containers (200k TEU)• USD 200 mn investment volume
KUTAISI INTERNATIONAL KUTAISI INTERNATIONAL AIRPORTAIRPORT• Passenger, incl. low-cost airlines• Currently under construc on
RGIA
Road
/Rai
lRo
ad/R
ail
Mar
i m
eM
ari
me
Air
Air
IN IN GEO
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OVERVIEW OF GEORGIA’S LOGISTICS SECTOR
• Logis cs accounts for around 7% of GDP and ~ 3% of employment, contribu ng to 19% of all exports and 9% of all imports
• Strategic loca on: It serves as an entry gate to the Caucasus and Central Asia as well as a stepping stone to the region
• Leveraging its loca on, Georgia’s transport economy can benefi t from large addressable transit fl ows, growing economies and landlocked resources
• Georgia is already largely transshipment oriented, with transshipment values amoun ng to ~3x its GDP
• Latent demand for transport infrastructure
– The current capacity compared to poten al fl ows on the East-West corridor present a latent opportunity to Georgia as a transshipment economy
–However, current infrastructure not suffi cient
• Strategic loca on and latent demand for infrastructure off er poten ally huge economic opportunity/ geostrategic stake for Georgia (direct GDP impact, economic integra on, connec on of the economy)
Value genera on through transit service provision
There is latent demand for transport infrastructure in Georgia
Upgrading infra-structure off ers huge economic and geo-strategic poten al
Georgia is in a highly strategic loca on for transshipment
VESTORGIA
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VESTRG
GEORGIA SERVES AS THE ENTRY GATE TO A LANDLOCKED REGION BOOSTING SIGNIFICANT RESOURCE RESERVES
FOR COMPARISON:
REGION REPRESENTSONLY ~1.6% OF
GLOBAL POPULATION
FOR FOR COMPARISON:COMPARISON:
REGION REPRESENTSREGION REPRESENTSONLY ~1.6% OF ONLY ~1.6% OF
GLOBAL GLOBAL POPULATIONPOPULATION
IN IN GEO
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GEORGIA IS IN A HIGHLY STRATEGIC LOCATION: IT SERVES AS AN ENTRY GATE TO THE CAUCASUS AND CENTRAL ASIA AS WELL AS A STEPPING STONE TO THE REGION
INN GEOGeorgia
Armenia Azerbaijan
Kazakhstan
Uzbekistan
Turkmenistan
Iran Iraq
Syria
Cyprus
Ukraine
Moldova
Turkey
2
3
4
1
1 Popula on and GDP, numbers cumula ve (apart from stepping stone countries)
2 Includes Russia’s Southern Federal District and North Caucasian Federal District
mn1GDPUSD bn1
Georgia 4.5 14
Caucasus 17 88
Land locked 121 356countries
Steppingstone
Russia 23 154South2
Turkey 74 773 Iran 75 331EU 504 17,330
1
234
VESTORGIA
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CARGO TURNOVER
TRANSIT FLOWS THROUGH THE CORRIDOR (MILLION TONS PER YEAR)
CENTRAL ASIACENTRAL ASIA
KazakhstanUzbekistanTajikistanKirgizstanTurkmenistan
CAUCASUS:CAUCASUS:AzerbaijanArmenia
Europe+TurkeyEurope+TurkeySender - 2.6Sender - 2.6
Destination - 4.1Destination - 4.1Total - 6.7Total - 6.7
Central Asia+CaucasusCentral Asia+CaucasusSender - 9.6Sender - 9.6
Destination - 4.7Destination - 4.7Total - 14.3Total - 14.3
APPROXIMATELY 80% ARE TRANSIT FLOWSAPPROXIMATELY 80% ARE TRANSIT FLOWS
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GEORGIA CAN UTILIZE ITS LOCATION TO ADDRESS SEVERAL FLOWS ON THE MAJOR EUROPEAN-CENTRAL ASIAN TRADING ROUTES
1 Including Eastern Europe, Balkans and Turkey
2 Excluding Central Asia, Asia and Middle East
3 Es mated using total export volume by province
NO
1
2
3
Caucasus – Europe1/RoW2
~44 mn tons p.a. Central Asia – Europe1/RoW2
~79 mn tons p.a.
Western China3 – Europe~3 mn tons p.a.
~126Total trade on all 3 routes (mn tons)
2010
VESTORGIA
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IN TOTAL, THE ADDRESSABLE FLOWS RELEVANT FOR TRANSIT THROUGH GEORGIA AMOUNT TO ~126 MILLION TONS
Origin
Caucasus
Central Asia
Europe
Total ad-dressable
Total ad-dressable
Million tons, 2010 Desti nati on Addressable fl ows Other fl ows
WesternChina
RoW
Caucasus Central Asia
Europe WesternChina
RoW
2 1 21 0 14
2 12 60 1 11
3 2 N/A 2
0 1 1 4
4 4 22
N/A
N/A
N/A N/A
11 7 82 2 25
38
73
7
1
8
126
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LIQUID BULK – MOST RELEVANT ADDRESSABLE FLOWS ARE BETWEEN CAUCASUS AND EUROPE AND CENTRAL ASIA AND EUROPE
Origin
Caucasus
Central Asia
Europe
Total ad-dressable
Total ad-dressable
Million tons, 2010 Desti nati on Addressable fl ows Other fl ows
WesternChina
RoW
Caucasus Central Asia
Europe WesternChina
RoW
1 0 21 0 13
0 4 55 1 6
1 1 N/A 0
0 0 0 0
1 1 8
N/A
N/A
N/A N/A
3 2 76 0 19
35
61
2
0
2
100
Liquid bulk
VESTORGIA
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DRY BULK – MOST RELEVANT ADDRESSABLE FLOWS ARE BETWEEN CENTRAL ASIA AND EUROPE/ROW
Origin
Caucasus
Central Asia
Europe
Total ad-dressable
Total ad-dressable
Million tons, 2010 Desti nati on Addressable fl ows Other fl ows
WesternChina
RoW
Caucasus Central Asia
Europe WesternChina
RoW
0.5 0.5
0.5
0.5
0.5
0 0
1.5 6.5
1.5
3.5 5.5
1.0
1.0
1.0
1.0 N/A
0 0 0
11.5
N/A
N/A
N/A N/A
4.5 1.5 4.5 0.5 6.0
2.0
10.5
2.5
0
2.0
17.0
Dry bulk
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CONTAINER – MOST RELEVANT ADDRESSABLE FLOWS ARE BETWEEN CENTRAL ASIA AND EUROPE/ROW
Origin
Caucasus
Central Asia
Europe
Total ad-dressable
Total ad-dressable
Million tons, 2010 Desti nati on
WesternChina
RoW
Caucasus Central Asia
Europe WesternChina
RoW
0.1 0.2
0.0
0.8
1.5
0.0 0.0
0.0 1.4
1.5
0.7 0.1
0.8
2.3
0.2
1.6 N/A
0.0 0.1 1.0
1.6
N/A
N/A
N/A N/A
2.4 3.1 1.9 0.8 0.3
0.5
0.8
3.2
1.0
3.0
8.5
Container
Addressable fl ows Other fl ows
VESTORGIA
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ANSWERING THIS DEMAND, GEORGIA’S EXISTING TRANSPORT ECONOMY IS ALREADY TRANSSHIPMENT BASED – RAIL AND PORTS HAVE TRANSSHIPMENT RATIOS OF >70%
2.0 0.1
1.4 3.5
12.6 1.63.0 17.2
17.5 1.63.0 22.1
57%
73%
79%
Mode of transport Transport volume by purpose Million tons
Transshipment rati o and commodity fl owsPercent
RGRGTransit Import Export
Road
Rail
Ports
• Containers
• Individual trade fl ows, such as manufactured goods, food
• Oil (KZ) and oil products
• Grain (Central Asia)
• Metals and minerals (Central Asia)
• Containers
• Oil and oil products from KZ and AZ (Batumi, Kuhlevi, Supsa)
• Containers (Po )
• Dry bulk (Po )
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NEVERTHELESS, THE MARKET SHARE OF GEORGIA IN ADDRESSABLE FLOWS IS STILL QUITE LOW – PARTICULARLY IN CENTRAL ASIA
mn tons, 2010/11 Georgia & Caucasus Transcaspian Market share
Liquid bulk
Dry bulk
Containers
Addressable fl ows
Transit Georgia
99.3
4.5
2.8
12.3
5.7
3.6
2.3
2.6
0.4
53.0
Addressable fl ows1
Transit Georgia
Addressable fl ows1
Transit Georgia
80%
82%
21%
7%
53%
...
1 No growth assump on
VESTORGIA
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VTHIS TRANSLATES INTO A LATENT DEMAND FOR TRANSIT AND LOGISTICSINFRASTRUCTURE IN GEORGIA, PARTICULARLY IN DRY BULK AND CONTAINERS
Liquid bulk
Dry bulk
Con
tainersssssssss
1 Caucasus – Europe/Row; Central Asia – Europe/Row; Western China – Europe 2 Projec ons based on current growth trajectory 3 Transshipment only, not including /imports/exports 4 Rolling stock not included (might be addi onal bo leneck 5 Full capacity a er fi naliza on of railway moderniza on project
Latent need for infra-structure
■ Ports as capacity and economic bott le-necks
■ Additi onal rail/road capacity may be needed
■ Loading/ off -loading capacity has to be extended (e.g., terminals)
Capacity
Current load
mn tons
Available infrastructure by mode of transportati on
Addressable transshipment fl ows1
Port (for inter-modal and RoRo) Pipeline RoRo ferry Pure rail3,4 Pure road3
Suffi -cient capacityESE[ ] + OR ST+ OR [ ] +
~100
20-25
12-15
99
17
60
405
39
2 2
27
8-20 TBD
15 2
14
7
6
5
4
5
2
3
1
8
2010
2010
2010
20162
20162
20162
Focus desti nati on
Suffi cient capacity
Pipeline to terminal
Pure pipeline
Only includes Black sea RoRo Pure rail Pure road
Rail inter-modal & RoRo
Addi onal capacity on Kars-link to Turkey
Road inter-modal & RoRo
OverseasOverseas/Regional Regional Regional Regional
IN IN GEO
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THE OPPORTUNITY SPACE – GEORGIA NEEDS TO BUILD A DEEP-SEA GATEWAY TO ITS ECONOMY AND TO ORGANIZE TRADE FLOWS OF ITS NATURAL HINTERLANDS
Geographic scope
Deep sea-gate for Georgia
CaucasusTranscaspian
Suffi cient pipelines and train capacity availableLiquid bulk
Con-tainer
Dry
bulk
RoRo
Flow types
Deep-sea port Container network
Organizing dry bulk fl ows
Organizing RoRo fl ows
Extension
Extension
Extension
Flagship projects
I
II
III
IV
VESTORGIA
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THE VISION FOR THE LOGISTICS CORRIDOR NEEDS TO BE BACKED BY SIZING THE ASPIRATION FOR ADDITIONAL FLOWS
Deep-sea port
Geographicscope
Deep sea-gate for Georgia
CaucasusTranscaspian
Container network
III
dry bulk corridor
III
RoRo corridor
IV
Infrastruc-ture vision
Sizing the
aspirati on1
Additi onal
fl ows in mn tons
Dry bulk
Container
RoRo
Scenarioassumpti ons
• Capacity of deep-sea port
– 10 mn t dry bulk p.a.
– and 200k TEU p.a.
• 10 t/TEU on average
• 80% u liza on
• Increase Georgia’s trade
• Increase market share1
– 90% container (current: 82%)
– 90% dry bulk (current: 80%)
• Increase container/dry bulk fl ow by 50%/30%1
• Increase market share1
– 60% container (current: 7%)
– 50% dry bulk (current: 21%)
• Increase container/dry bulk fl ow by 50%/30%1
+8.0 mt
Included in above volumes
+1.6 mt +1.5 mt
+1.6 mt +5.4 mt
+4.8 mt
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ASPIRATION NEEDS TO BE TRANSLATED INTO CONCRETE FLOWS TO JUSTIFY DEEP-SEA PORT AND TRANSPORT CORRIDOR INFRASTRUCTURE INVESTMENTS
Pre-conditi on/aspirati on for fl ows
Potenti al ways to secure required fl ows
• Large dry bulk and/or container fl ows that exceed current port capacity
• Suffi cient interest for Panamax/ capesize vessel traffi c
• Container: addi onal containeriza on of goods on relevant routs
• Dry bulk: large fl ows to jus fy infrastructure investments
• Ro-Ro: Capacity limits on current network
• Involve current port owners to evaluate actual market demand for
– Increased capacity
– Improved port economics
• Involve owners of commodity fl ows (container, bulk) in superstructure investment to secure baseload fl ows
• Involve owners of commodity fl ows (container, bulk) in infrastructure investments to secure baseload fl ows
Deep-sea portI
II
III
IV
Transportati on corridors
VESTORGIA
VESTVV TTRGIAVV
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THE INFRASTRUCTURE VISION – A DEEP-SEA PORT OPENS UP A GATE FOR GEORGIA’S AND THE CORRIDOR’S TRADE FLOWS
The vision – a deep-sea port1 Required infrastructure
• Deep sea port
– Min. 2 berths for PanaMax size
– 20 m depths2
• Handling capacity/equipment
– Dry bulk terminals, storage, and handling equipment for 10 million tons
– Container terminals, storage, and handling equipment for 200k TEU
• Railway connec on (only ~17 km to main railway line)
• Poten al extension by a liquid terminal3
■ Adds capacity to existi ng ports
■ Changes port economics
USD
200-250 mn
1 New locati on (earmarked) or alternati vely extension of existi ng port 2 Can also serve Capesize 3 Not included in investment size esti mati on
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DEEP-SEA PORT WILL ADD SIGNIFICANT CAPACITY TO CURRENT PORTS …
Million tons
New deep-sea portCurrent port capacity
Container Dry bulk Liquid bulk Container Dry bulk Total capacityExisti ng capacity Deep-sea port
58
27 210 52
INININContainer Dry bulk
Liquid bulk Ownership
Depth
Deep-sea port Main advantages• Economics (able to accept larger vessels)• Strategic loca on• Geology (20 m depths very close to shore)
2.02.0(≈200 k TEU)
10.0 ?
Container Dry bulk
Liquid bulk Ownership
Depth Poti
4.5 5.6 2.0
8-10 m
Kulevi oil terminal
4.0
Supsa oil terminal
6.3
Batumi 0.9 2.0 15.0
11 m Kulievi oil terminal
Supsa oil twrminal
Batumi
Poti
VESTORGIA
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… AND CAN CHANGE THE ECONOMICS OF TRANSPORTATION, REDUCING THE COST OF TRADE AND BENEFITING THE ECONOMY OF GEORGIA
Imports
Exports
Deep-sea port reduces cost of trade Benefi ts to Georgia’s economy
Total cost of marine shipmentUSD mn
Total cost of marine shipmentUSD mn
ILLUSTRATIVE
ILLUSTRATIVE
Current With deep-sea port1
115-140
Current With deep-sea port1
60-70120
p p
1 Assump ons: Total imports through ports 3.0 mn tons; total exports through ports 1.6 mn tons (current volumes); 70% bulk/30% containers; average travel distance 2000 miles; current port capacity for Handymax ships, deep-sea port for Capesize
Increase purchasing power by decreasing prices of everyday consumer goods
S mulate investmentby decreasing cost of investment goods
Improve balance of payments and decrease FX ou lows
Increase compe veness of Georgian exporters
Improve balance of payments and decrease FX ou lows
-40-50%
-40-50%
IN IN GEO
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THE INFRASTRUCTURE VISION – ORGANIZING CONTAINER FLOWS REQUIRES THE BUILDUP OF A NETWORK OF TERMINALS
The vision – a terminal network Required infrastructure for terminals
• Sea ports & port opera ons
– Exis ng (see I)
• Network of 3-5 container terminal pla orms to handle ~1 mn TEU including
– Terminal land and construc on
– Railway connec ons and shun ng yards
– Motorways connec ons
– Rail rolling stock upgrade
• Extension of network into other countries of the corridor1
USD 500-
1,000 mn
1 Not included in investment size esti mati on
+ extension throughout corridor
VESTORGIA
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ORGANIZING THE CONTAINER CORRIDOR COULD PROVIDE ADDITIONAL OPPORTUNITIES FOR INVESTORS TO ENGAGE
Containertransportfl ow
Shipment company/ freight forwarder
Infra-structure operators
Logisti c service providers
Organize reverse fl ows or containers redistributi onESTERail Port
Inter-national shipping
Inland terminals
Road transit
Ware-housing
Distri-bution
Opportunity for investors to engage into corridor development & coordinati on
GIA
INVESTIN GEORGIA
GEORGIAN NATIONALINVESTMENT AGENCY
Portf olio Manager: Mamuka Chikhladze
E-mail: enquiry@investi ngeorgia.org
E-mail: mchikhladze@investi ngeorgia.org
www.investi ngeorgia.org
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