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What’s Wrong with Georgia’s Transport Policy

The role of logistics is of crucial importance for Georgian economy development. Consequently, development of efficient transport and logistics system is one of the key and necessary factors for enhancing competitive capacity of Georgia.

Thanks to geopolitical location, Georgia has real chances to transit and handle additional volumes of cargo and increase revenues and improve conditions for development of entrepreneurship and commerce. Development of logistic infrastructure is of crucial importance for revival of Georgia’s most perspective fields such as agriculture, production, trade and tourism.

Specialists say that today the domestic market lacks for qualified logistics operators that would provide complex logistics services.

As a result, according to the logistics performance index (LPI), which is published by World Bank every second year, Georgia ranks 130th among 160 countries. According to experts, the is the result of appraisals by international, national and regional operators, transport-expeditionary companies and logistics operators. This rating signifies  the confidence in Georgian routes  is very low. Regretfully, this appraisal signifies that the country cannot satisfy international standards and occupies unfavorable positions in Big Silk Road Corridor.

Experts suppose that Georgia’s 130th position in the LPI signifies that over the past period turnover volume declined because of domestic reasons as a result of transport policy failure.

What specific reasons precondition the current situation, will the current situation change after Anaklia deepwater seaport construction and what are Georgia’s chances to advance positions in LPI rating and grow into a regional logistics hub?

Giorgi Doborjginidze, head of Georgian Logistics Association, says that motorroad development level is satisfactory in Georgia, the East-West highway is being developed, but we cannot say the same about seaports.

“In 2016 Poti Seaport was closed for 120 days and this fact signifies the seaport is not reliable. This factor makes Georgia an unreliable corridor. Shipping companies do not care about reasons of closing the seaport. The fact is that problems with infrastructure or weather conditions hinder reception of ships and carrying out operations.

At the same time, despite container terminals have been arranged in Poti, the seaport does not have enough space to efficiently unload ships and supply containers to consumers at efficient value. Therefore, the railway also faces problems and containers are mainly transported by automobiles to Tbilisi or transit directions. Consequently, this traffic makes pressure on motor roads and creates problems at the Narrow Throats, Passes. Expensive tariffs represent another problem at seaports. Poti Seaport is one of the most expensive seaports in the Black Sea region and, in terms of tariffs, it is not competitive compared to Turkish seaports, Novorosiisk and other competitor seaports, including Bander-Abass seaport in Iran, which is a direct competitor to Poti Seaport in terms of transportation of Asian consignments.

There are certain problems in the direction of Azerbaijan and Central Asia and this factor is reflected in LPI indicator too – We have lost a considerable part of transit cargo from Asia to Azerbaijan”, Doborjginidze said.

In the period of inauguration of the first phase of Anaklia seaport, that is 3-4 years, the mentioned problems cannot be resolved, however, Anaklia seaport will bring positive effects anyway, he added.