Seamless Border-Crossing: Strengthening the Eurasian Transport Framework
Almaty, July 9, 2024. Regional governments, international organizations and multilateral development banks are faced with the task of building the Eurasian Transport Framework that should help the sustainable socio-economic development of Central Asia.
The main result of the development of the Eurasian Transport Framework corridors and routes will be the increased connectivity of the countries of the region, the improved infrastructure quality, the reduced time of goods delivery, as well as the expanded logistics capabilities and trade geography. Removing barriers and ensuring seamless transport services will give businesses the opportunity to discover new production niches and improve business climate. These were the key topics discussed at “The Eurasian Transport Framework: Potential, Problems, Solutions” session organized by the Eurasian Development Bank (EDB).
The session opened with the presentation of the new EDB Analytical Report focusing on the concept of the Eurasian Transport Framework and the potential for its development.
Ten system components of the Eurasian Transport Framework concept were presented by Evgeny Vinokurov who noted that “... inner regions of Eurasia suffer from the lack of direct access to the sea. International practice shows that this imposes a 40% "penalty" on economic growth. It is important that the East-West transport arteries that have traditionally been most in-demand in our countries, have now begun to be complemented by North-South corridors and routes. This is a historic breakthrough and a unique opportunity, especially for Central Asia. The region gets a chance to reduce the "penalty" – and to become a transport crossroads. And people living by a crossroads are usually rich.”
If North-South and East-West corridors and routes of the Eurasian Transport Framework are efficiently interlinked, substantial synergies will arise: they will make the cargo flow increase by up to 40%. Another important effect will be the impetus for the realization of the agro-industrial potential of Central Asian countries. Soft infrastructure improvements will also contribute to the increased efficiency of transport corridors and logistics. The reduction in downtime of goods and vehicles at borders achieved through improved and digitalized procedures will allow Central Asian countries to increase their exports by 18%.
Miroslav Antonovich, Chairman of the Committee of the Organization for Cooperation of Railways (OSJD) comprising 30 Eurasian member states, told the session participants about the ways to realize the potential of cargo transportation in the territory of Central Asian countries.
OSJD is focused on the comprehensive advancement of railway corridors in Eurasia: the organization plans their infrastructural development, as well as improves their logistics and procedures. Mr. Antonovich gave high assessment of the logistics potential in the region, but pointed out a number of deterrents. For example, the containerized shipments here get hampered by the railway tracks being of varying sizes. In view of this, the introduction of modern border crossing technologies is of high importance, and OSJD pays close attention to the issue. Evgeny Nadorshin, the session moderator, wondered whether the regional governments themselves are ready to increase cargo flow, and Mr. Antonovich noted that the governments, businesses and international organizations do express interest in the issue. However, local governmental bodies have to intensify the process of a “one-stop-shop” service introduction and work on the implementation of the digital transit concept. The improvement of transportation safety is yet another important aspect.
Alevtina Kirillova, General Director of ANO Eurasian Agrologistics, spoke in detail about the project that focuses on accelerated multimodal transportation of agricultural products to China, India and the Middle East. The volume of such shipments is growing annually: 800 thousand tons of products, including perishable ones, have been transported over the past two years.
An important competition-boosting factor is the increase in the speed of delivery of agricultural products. For example, it takes the Eurasian Agroexpress service only 5 days to deliver perishable products between Moscow and Tashkent, and 16 days to do it between Moscow and Chengdu/Chongqing (China).
The project encompasses the plans to create a network of transport and logistics centers that will function in line with the unified quality standards, to launch a digital platform for the integrated organization of product supplies, and to purchase a fleet of modern refrigerated containers.
“The availability of infrastructure, the reduced delivery times and the synchronous actions of all participants in the transport chain” are, according to Alevtina Kirillova, the key to success in strengthening the logistics component of the business.
Aliya Murzagaliyeva, Managing Director for Assets and Project Management at Baiterek National Management Holding JSC, told the session participants about the logistics project financing and insurance methods, purchases of freight and passenger railway cars and containers, as well as dwelled on the ways to eliminate “bottlenecks.”
Baiterek is paying great attention to the development of the Kuryk port (Caspian Sea) capacity. The company is also actively financing the repair and modernization of highways. Answering Evgeny Nadorshin’s question about a possible range of goods that will be in demand in the process of further development of logistics chains, Aliya Murzagaliyeva noted that “this will contribute to the growth of cargo transit – grain, oil, equipment, parts and components.”
Dauren Kabiyev, Vice President for External Relations at TAV Kazakhstan-Almaty International Airport, draw the audience's attention to the fact that the Eurasian Transport Framework is vital not only for cargo transportation: it serves an important tool for sustainable mobility, too. Mr. Kabiyev noted that the country's largest aviation harbor has been successfully integrated into the Silk Road project and is now a major linking point between China and the EU. He also demonstrated effective visuals of a network of aviation routes connecting continents via Almaty airport and called it the “transport center of the Eurasian continent.”
Almaty Airport surpassed the pre-pandemic level of 9.5 million passengers already in 2022, and the redirection of passenger flows played its role in this achievement. The number of destinations serviced by the airport has increased from 38 to 67, and the number of flights has gone up from 64 thousand in 2019 to 79 thousand in 2023.
In addition, the visa-free regime with China and Vietnam, the possible simplification of the visa regime with the EU, as well as the opening of direct flights to the United States will contribute to an increase in international traffic, Mr. Kabiyev noted. According to his estimates, the airport will welcome more than 11 million passengers this year.
Ms. Olga Revzina (Melo Zanelli), Partner and Head of Paris CIS and CEE Desk at Herbert Smith Freehills, spoke about the prospects for expanding the use of the public-private partnership (PPP) mechanism for the implementation of transport infrastructure projects in the region. She highlighted the importance of developing institutional environment and improving legislation (including the laws that regulate various aspects of infrastructure usage fees, concessions and other forms of PPP in the transport sector).
Kabir Jurazoda, Director of the Central Asia Regional Economic Cooperation (CAREC) Institute, informed the participants about the effort taken by CAREC to develop transport corridors and improve transport connectivity in the region as part of the CAREC 2030 Strategy implementation. Mr. Jurazoda focused on the need for cooperation between various international organizations and international development banks in order to better realize the transport potential of Central Asian countries.
Vladimir Kazbekov, Vice President and Chief Operating Officer of the New Development Bank (NDB), also addressed the issue of passenger traffic growth and air transport infrastructure development in the region. He stated that the NDB has a portfolio of issue-related projects worth $26 billion, of which 18 billion have already been received by the businesses. Being a development institution, NDB implements projects in its member countries. The bank is planning to allocate another $6 billion for implementing infrastructure projects to be added to its portfolio; among them is the reconstruction of three airports in China. This will contribute to the growth of trade turnover in Central Asian countries, too. “Our clients are showing more and more interest in lending in national currencies, in yuan, for example, due to the stronger dollar,” Vladimir Kazbekov concluded.
Yaroslav Mandron, Deputy Chairman of the EDB Board, spoke about the promising investment projects in the field of transport that are vital for the development of the Eurasian Transport Framework, and described the tools necessary for these projects' support. He noted that, over the next 3 years, the EDB is planning to invest about $2 billion in the Eurasian Transport Framework projects. The key focus for the EDB will be the rolling stock renewal projects, the construction of the Bakhty-Ayagoz railway route and border crossing (the EDB has already funded the preparation of a feasibility study for this project), and the construction of the Kochkor-Kara–Keche-Makmal railway route (the bank is planning to finance the preparation of a feasibility study for this project as well).
Let us recall that the Eurasian Transport Framework includes five international transport corridors – the Northern, Central and Southern Eurasian Corridors, MTK TRACECA and MTK North–South, complemented by branches and regional routes. By the end of 2023, the total volume of international cargo transportation along the five corridors of the Eurasian Transport Framework was estimated by EDB analysts at 260 million tons (of them 3.6 million being container load). Compared to 2013, the volume of international container traffic has increased by more than 3 times. For example, the number of container trains crossing the EAEU and Central Asian countries on their way from and to China has increased by as much as 200 times.
The Annual Meeting and the EDB Business Forum were held on June 27-28, 2024 in Almaty, Republic of Kazakhstan
The videos of the Annual Meeting and the EDB Business Forum sessions are available at https://am.eabr.org/.
Additional Information:
The Eurasian Development Bank (EDB) is a multilateral development bank investing in Eurasia. For more than 18 years, the Bank has worked to strengthen and expand economic ties and foster comprehensive development in its member countries. The EDB's charter capital totals $7 bln. Its portfolio consists principally of projects with an integration effect in transport infrastructure, digital systems, green energy, agriculture, manufacturing, and mechanical engineering. The Bank’s operations are guided by the UN Sustainable Development Goals and ESG principles.
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