Mo S Pilot Projects for the Black Sea

Mo. S Pilot Projects for the Black Sea and Caspian Sea Ministry of Economy and Sustainable Development of Georgia Transport Policy Department 20. 05. 2011 Georgia, Tbilisi

General Information v A Motorway of the Sea (Mo. S) is a door-to-door intermodal freight transport chain using a maritime segment with sea-land (rail, road and possibly inland waterway) connections and interfaces. v The aim of this project is to increase modal shift or cohesion by means of traffic concentration on sea-based routes in improving existing maritime links or establishing new viable, regular and frequent maritime links. Project history v The Project was launched in January 2009 with the objective to facilitate trade and transport along the corridor Europe – Black Sea Region – Caucasus – Central Asia (TRACECA). v More specifically, the Project is to promote the "Motorways of the Sea" concept. 2 MOS Pilot Projects of the Black Sea and the Caspian Sea

Outputs of TRACECA Mo. S I Project/Extract from To. R Four main outputs will have to be achieved within the project duration: 1. Extensive review and analysis of transport systems in beneficiary countries (“pre-Mo. S” conditions in beneficiary countries and in other Black Sea/ Regional countries) 2. Awareness rising to promote economic potential of intermodal logistics chain (case demonstrations, exchange of best practices, training) and related recommendations. 3. Short and Medium term Road Map: Pilot projects to be identified and selected with beneficiary countries : • according to Mo. S standards and conditions • based on transport policies and market requirements 4. Pre-feasibility or feasibility studies for selected projects: • impact assessment (socio-economic, environmental, market benefits, obstacles, solutions, national and regional dimension) • coordination with international financing institutions • promotion/ communication 3 MOS Pilot Projects of the Black Sea and the Caspian Sea

The To. R of new TRACECA Mo. S II project The main results expected in the framework of the project are the following: 1. Implementation of activities focusing on the maritime dimension of the Motorways of the Seas pilot projects selected under the previous contract Motorways of the Sea I; 2. Implementation of activities focusing on the hinterland dimension of the Motorways of the Seas pilot projects selected under the previous contract Motorways of the Sea; 3. Identification, selection and, if possible, implementation of the pilot projects that are not yet mature under the previous contract Motorways of the Seas I and of new pilot projects (not yet identified during the previous contract) 4. Attracting funding for the implementation of Motorways of the Sea Projects; 4 MOS Pilot Projects of the Black Sea and the Caspian Sea

Mo. S Pilot Projects In the scope of the Motorways of the Sea for the Black Sea and the Caspian Sea the following Feasibility studies of Pilot projects were developed: v. POTI – BAKU Container Block Train v. VARNA – ILYICHEVSK – POTI v. ILYICHEVSK-SAMSUN-POTI 5 MOS Pilot Projects of the Black Sea and the Caspian Sea

Pilot Project POTI – BAKU Container Block Train Pilot-project key objective: v Interconnecting Black Sea and Caspian Sea with Block train service. In general, block trains are preferred to containerized conventional freight trains because of: v attractive tariffs v prompt delivery of goods from the original station to the destination station v safety v easy border crossing and customs procedures v environment–friendly transportation v high level communication system. 6 MOS Pilot Projects of the Black Sea and the Caspian Sea

7 MOS Pilot Projects of the Black Sea and the Caspian Sea

The Poti-Baku block train project- linking the Black and Caspian Sea for container trade flows. The relevant trades might be: v Any container potentially moving in transit along the Rail corridor via both ports of Poti and Baku v Loaded and empty containers carried between: v Eastern TRACECA: Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan and beyond in the East v Western TRACECA: Georgia, Turkey; Ukraine, Moldova, Bulgaria, Romania, plus other European Countries (non TRACECA and CIS). 8 MOS Pilot Projects of the Black Sea and the Caspian Sea

The Poti-Baku block train Pilot Project (Tons) Countries Partner Countries Georgia Kazakhstan Traceca South East Azerbaijan East bound West bound 19, 415 112, 604 1, 978 5, 233 Traceca/ CIS 811, 415 16, 956 Traceca West 33, 288 1, 328 Turkey 1, 052, 863 39, 592 Europe (non Traceca & Cis) 335, 513 24, 903 Traceca/Cis Kazakhstan 1, 007, 496 1, 649, 092 Traceca South East 597, 057 113, 366 Traceca West Kazakhstan 18, 795 32, 151 Traceca South East 34, 441 21, 984 Kazakhstan 334, 338 1, 416, 343 Traceca South East 609, 708 229, 058 (non Traceca & Cis) Kazakhstan 1, 110, 422 2, 550, 681 Traceca South East 635, 567 486, 653 6, 602, 297 6, 699, 943 Total 9 MOS Pilot Projects of the Black Sea and the Caspian Sea

Consistency with national transport policies Georgia v Development of Poti as Deep Sea Container Port in the Black Sea v Improvement of railway services / modal shift from road to rail. Azerbaijan v Improvement of railway services. v Development of Baku International Sea Port (BISP) (also consistent with planned construction of / role assigned to new BISP at Alyat as Caspian Regional Hub). v Modal shift from road to rail. 10 MOS Pilot Projects of the Black Sea and the Caspian Sea

Road Truck Flow Georgia / Azerbaijan - 2008 Loaded Truck Border Georgia-Azerbaijan Tons equiv. (*) Red Bridge 46, 240 878, 560 Lago dekhi 5, 297 100, 643 51, 537 979, 203 Export 1, 274 24, 206 Import 1, 939 36, 841 43, 534 827, 146 4, 790 91, 010 48, 324 918, 156 Total Direct Bilateral trade Transit From/To Azerbaijan Transit through and (to central Asia) Total Transit 11 MOS Pilot Projects of the Black Sea and the Caspian Sea

Rail Container Flow Georgia / Azerbaijan - 2008 Container (TEU) Tons equiv. (*) Transit From/To Poti to Azerbaijan 4, 092 40, 920 to Central Asia 562. 0 5, 620 1, 118. 0 11, 180 56 560 5, 210 52, 100 618 6, 180 5, 828 58, 280 Transit From/To Batumi to Azerbaijan to Central Asia Transit From/To Azerbaijan Transit From/To Central Asia Total Transit 12 MOS Pilot Projects of the Black Sea and the Caspian Sea

Investment Needs v Lack of fitting platforms for container transportation v 100 fitting platform (with capacity of three TEU) for three block train is needed for the successful implementation of Container train project. The Cost of the one fitting: 80 000 USD v Lack of LPG Tank container v 100 of each or by combination for Georgian R/W, due to planned construction of LPG (LNG) terminals in Aktau port, Constansa and Batumi ports. v Today Georgia have capacity of 3000 MT storage in Batumi port (Terminal 1) The Cost of one 20 t LPG tank container is about 35 000 -40 000 USD 13 MOS Pilot Projects of the Black Sea and the Caspian Sea

Investment Needs v Improvement and acceleration of awareness to develop trade with an interests of public and private participants of the project. v To increase the shipping quality and to reduce the delays of interconnected pilot projects of MOS and between the members of the central railway corridor of TRACECA. The Cost to purchase and develop the staff education and to provide program introduction is 250 000 euro. The Exact budget will be determined according to the number of the equipment. ( The number of staff which will handle and keep equipment) 14 MOS Pilot Projects of the Black Sea and the Caspian Sea

ILYICHEVSK-SAMSUN-POTI General Objectives v Shifting Trucks from Road between Europe, Turkey and Caucasus; v Propose alternative short routes and replace auto transport on the roads between Europe/ west party of TRACECA, Turkey, Caucasus middle east; v Connect Black and Mediterranean Sea (Mersin & Iskenderun – Samsun rail & road connection); v (Odesa) - Ilychevsk – Samsun – Poti maritime Link 15 MOS Pilot Projects of the Black Sea and the Caspian Sea

16 MOS Pilot Projects of the Black Sea and the Caspian Sea

Target market and facilities v Direct mutual shipping - Turkey, Ukraine, Georgia; v Direct regional shipping - TRACECA ( west part); v Transit shipping - in scopes of sea motorway routes Transport Service market / Technical aspects: Bulk cargo; Rail Ferries; Ro-Ro, Ro-pax; Containers; Viking Train. 17 MOS Pilot Projects of the Black Sea and the Caspian Sea

Aggregated trade potential of Ilyichevsk – Samsun - Poti Pilot Project (Tons) Volume in Tons East - North West Axe Partner Countries Westbound Eastbound Traceca South East 1, 649, 092 113, 366 123, 627 1, 007, 496 597, 057 1, 493, 875 Total East - North West 1, 886, 085 3, 098, 428 East - South West Axe Partner Countries Ukraine/Belarus/Moldova with: Westbound Eastbound 1, 416, 343 229, 058 Total East -South West North - South Axe Partner Countries Turkey with: Ukraine / Moldova / Belarus 1, 889, 426 1, 989, 520 Turkey with: 334, 338 609, 708 344, 119 Traceca South East 2, 833, 472 Southbound Northbound 6, 247, 906 18 MOS Pilot Projects of the Black Sea and the Caspian Sea 1, 404, 889

Stakeholders Key stakeholders and target groups: Institutions v Ministries of transport and relevant State organizations, v Port and Maritime Administrations, v Customs and Border Authorities Operators v Ports and terminals v Shipping companies / agents v Forwarding companies v Transport associations v Business communities (users) 19 MOS Pilot Projects of the Black Sea and the Caspian Sea

Investment Needs Investments needed for: § Development of Infrastructure to be more competitive; § Satisfy Operators and Customers and ensure that the characteristics are appropriate of the Mo. S project; Types of needed Investments: v Rehabilitation of relevant Ports infrastructures and intermodal terminals; v Development or renewal of transport units and equipments; v Land Buildings: dry ports, container warehouse, related with logistic centers; v Information systems and decision - technical and program insurance; v Assistance in organization of appropriate studies. 20 MOS Pilot Projects of the Black Sea and the Caspian Sea

Investment Needs Support by national stakeholders v. Samsun Port administration; v. Ukr. Ferry; v. Bulgar Sea Fleet. Approximately cost: 3 000 Euro 21 MOS Pilot Projects of the Black Sea and the Caspian Sea

VARNA – ILYICHEVSK – POTI General objectives ØImproving rail / Ro-Ro / container intermodal transport on existing maritime services by: v. Up-grading existing transport means and facilities; v. Changing other existing technical conditions of transport, reducing vessel’s handling operations and increasing volumes; 22 MOS Pilot Projects of the Black Sea and the Caspian Sea

23 MOS Pilot Projects of the Black Sea and the Caspian Sea

Existing Transport Service The Varna-Ilyichevsk-(Kerch)-Poti-Batumi pilot-project relates to goods carried: v in rail wagons, v in trucks/trailers, v in containers: lines and merchants (incl. last-voyage), v in break-bulk: packed or unpacked, including heavy lifts and rolling cargoes, new or secondhand cars and trucks. Ø It therefore encompasses a large range of trades and the wide geographical scope. Ø The customer base includes all the private and public export / import trading and industrial companies, as well as transport operators (rail, shipping) 24 MOS Pilot Projects of the Black Sea and the Caspian Sea

Trade potential Varna – Ilyichevsk – Kerch - Poti Pilot Project (Tons) Countries Bulgaria Partner Countries Westbound/ Southbound TRACECA/Cis North West (Ukraine, Belarus, Moldova) Europe (non-TRACECA/ CIS) 25 MOS Pilot Projects of the Black Sea and the Caspian Sea 335, 513 1, 110, 422 486, 653 6, 530, 198 TRACECA South East 425, 497 2, 550, 681 Total 597, 057 24, 903 Kazakhstan 1, 007, 496 282, 808 Azerbaijan 811, 415 113, 366 Georgia / Armenia 682, 460 1, 649, 092 TRACECA South East 8, 327 16, 956 Kazakhstan 5, 841 106, 671 Azerbaijan 54, 570 12, 864 Georgia / Armenia 111, 810 12 TRACECA South East 1, 257, 343 28, 849 Caucasus Kazakhstan TRACECA/CIS North West Eastbound/ Northbound 635, 567 5, 785, 975

Stakeholders and Partners v Ministries in charge of transport, customs; v Professional associations. Especially: Associations of Freight Forwarders in West TRACECA and Caucasus countries; v Port authorities / Terminal operators; v National state railway companies; Partners: § Ukr Ferry (Railferry private Ukrainian Shipping Company with status of National Carrier). § BMF (Railferry private Bulgarian Shipping Company). 26 MOS Pilot Projects of the Black Sea and the Caspian Sea

Investment Needs The Varna-Ilyichevsk-(Kerch)-Poti-Batumi pilot project implies: v five (5) (container handling) toploaders (1 per vessel) are purchased and placed all at once on board of the vessels § In this respect it is suggested to consider “Mobicon Flexible Container Handling System”. v about 150 -200 rail wagons of 918 type owned by Georgian railways and/or Ukrzalisnytsia are modernized and put in operation at the rate of 10 units per month, Indicative cost of the project - 2. 000 euro 27 MOS Pilot Projects of the Black Sea and the Caspian Sea

Possible framework of new TRACECA Mo. S II project The possibility of creating a circular shipping container line on the Black Sea is in process, using the Lo-Lo vessel which may offer cheaper port disbursement costs than railferry and cheaper transportation costs as a result; It is suggested to establish a Lo-Lo/pax circular container line on the following route: Ø Constanta-Ilyichevsk/Odessa-Poti/Batumi-Istanbul/Derinje; 28 MOS Pilot Projects of the Black Sea and the Caspian Sea

Legal Environment in Georgia The World Bank 2010 “Doing Business Report” upgraded the Country rank 45 to rank 11. The Georgian Maritime Administration cooperates with a number of international organizations (IMO, BS Mo. U, NATO PBOS, BSPA, Istanbul Commission, IACS etc. ) Port Public Private partnerships were concluded in 2007 – 2008; Legal instruments regulate trade transport. 29 MOS Pilot Projects of the Black Sea and the Caspian Sea

Conclusion The Presentation demonstrates the key features of the TRACECA Mo. S project makes clear for evaluators the basic information about the need of such new alternative routes and the chances to make real this project; The project will support the efficient interoperability and further development of logistic processes between EU Countries, Caucasus and middle Asia countries; The project will improve the trade relationships and multimodal transport system. The Service in TRACECA corridor will be more competitive in which will have direct effects to trade and transport development in Black Sea and Caspian sea Region. 30 MOS Pilot Projects of the Black Sea and the Caspian Sea

Thank You for Attention MOS Pilot Projects of the Black Sea and the Caspian Sea 31