Middle Corridor Could Boost Competitiveness Of Georgian Businesses Study

(MENAFN- Trend News Agency) BAKU, Azerbaijan, November 13. The development of the Middle Corridor could strengthen the competitiveness of Georgian businesses, according to a study conducted by Georgian research company ACT LLC with support from the European Union (EU) and the United Nations Development Programme (UNDP).

The study highlighted that Georgia can expand intermodal transport along the Baku-Tbilisi-Kars (BTK) corridor to improve the efficiency of export logistics and increase access to European markets for small and medium-sized enterprises (SMEs).

Developing rail-to-port transport along the BTK route is among the medium-term recommendations for improving Georgia's transport system.

"In the medium term, it's recommended to modernize the freight vehicle fleet through leasing and subsidy programs, develop intermodal rail-to-port transport along the BTK corridor, and establish public-private partnership mechanisms to invest in regional warehousing capacity and cold-storage infrastructure," the study said.

The study provided a comprehensive analysis of Georgia's transport system as it relates to exports, identifying key logistical challenges that limit the ability of SMEs to enter European markets.

According to the study, one of the primary issues is the disproportionately high transport costs faced by SMEs. Specifically, the cost of transporting one ton of cargo is 20–40% higher for small enterprises than for large companies, a disparity driven by smaller shipment volumes.

"Key challenges include an aging fleet of trucks that fails to meet EU standards, indirect and lengthy overland routes, reliance on ferry transport, limited regional access to air freight services, and congestion at border crossings, compounded by delays in customs clearance, particularly along the border with Türkiye," the document said.

Furthermore, a lack of temperature-controlled infrastructure for the storage and transport of goods, the fragmentation of cargo flows, insufficient capacity for consolidating shipments, and a shortage of professional expertise and skills in the logistics sector were highlighted.

"The mentioned constraints create an uneven playing field for participants in the export market: large companies are better equipped to manage logistics costs thanks to their scale of operations and available resources, whereas small and medium-sized enterprises (SMEs) struggle to compete in EU markets.

Georgia's export challenges are increasingly becoming issues of transport connectivity. A significant portion of the costs and delays faced by exporters stems not from physical distance, but from so-called 'soft' connectivity, customs and border procedures, documentation, digital systems, regulatory frameworks, and logistics services," the study noted.

In the short term (0–12 months), the authors recommend developing a digital platform to connect cargo owners with carriers, which would enable SMEs to consolidate shipments and reduce per-unit transport costs. Other proposals include establishing regional cargo consolidation centers for shared road and container transport, organizing seasonal chartered cargo flights from regional airports, and accelerating customs clearance for SME shipments through 'green corridor' procedures. Moreover, the use of mobile refrigeration units in key production regions, subsidies for SMEs to access high-quality warehousing facilities, and the establishment of a logistics association for small and medium-sized enterprises were proposed.

The study also placed special emphasis on the environmental sustainability of transport operations, noting that, in the context of the European Green Deal, European buyers are increasingly requesting information regarding the carbon footprint of supply chains.

"This transforms issues such as an aging truck fleet, empty return trips, and the insufficient utilization of rail transport from purely environmental concerns into factors that directly affect market access," the study pointed out.

The need for the simultaneous development of digital systems and the professional skills of market participants was also stressed.

"In particular, the implementation of electronic consignment notes (e-CMR) will only be effective if freight forwarders and intermediaries possess the necessary competencies to work with such tools," the study explained.

Addressing these limitations and leveraging growing regional transit flows will enable Georgia to gradually transition from a transit country into a regional logistics and manufacturing hub, connecting Asia and Europe.

"The Middle Corridor could evolve into an economic corridor, fostering greater competitiveness for Georgian businesses and deepening economic integration with the EU," the study added.

Inclusive Access to Markets project, valued at 5.16 million euro, is funded by the European Union and implemented by the UNDP in partnership with the Estonian Centre for International Development (ESTDEV). The initiative aims to support small and medium-sized enterprises in Georgia, develop value chains, and expand companies' access to EU and European markets.

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