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By Trend

Baku-Tbilisi-Kars (BTK) railway has made the Trans-Caspian International Transport Route China’s preferred option for transshipment to Europe, according to the special report titled “China's belt & road initiative: risk insights” released by Global Risk Insights (GRI).

Transit volumes through Russia have limited room to grow, while the growth outlook is much rosier for China’s Trans-Caspian route.

“The recent completion of work on the Baku-Tbilisi-Kars (BTK) railway in the South Caucasus has made rail shipments through Kazakhstan and Turkmenistan much more attractive. Iran’s expanding rail links with the South Caucasus and Central Asia are also set to create trade opportunities. Rail turnover through Kazakhstan to Europe reached 102,000 containers by the start of November 2017. Current plans aim to hit 2 million containers by 2020,” said the report.

The authors believe that the opening of BTK will surely help boost transit turnover volumes, but there’s no good means of judging whether 2 million is realistically attainable.

“For one, growing transit volumes should first be assessed in terms of China’s export turnover with the South Caucasus and Turkey since the route is multimodal. For example, China has become Turkey’s leading source of imports, worth $2.1 billion for the year at the end of November 2017. As of September 2017, trade with Georgia was worth $640 million for the year with hopes in Tbilisi that this year’s free trade agreement will bring that total to $1 billion annually on average. Work remains to increase turnover between the states along the route,” said the report.

Expansions of capacity in Central Asia are needed given the growing strain on Russia’s rail system, the analysts believe.

“Azerbaijan expects the BTK railway’s initial capacity of 5-6.5 million tons of cargo is expected to grow to 17.5 million tons. BTK railway has made the Trans Caspian route China’s preferred option for transshipment to Europe,” said the report.

The Trans-Caspian International Transport Route runs from China through Kazakhstan, Azerbaijan, Georgia and further through Turkey or Ukraine to Europe.

The BTK railway was constructed on the basis a Georgian-Azerbaijani-Turkish intergovernmental agreement.

The railway’s peak capacity will be 17 million tons of cargo per year. At an initial stage, this figure will be one million passengers and 6.5 million tons of cargo.

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