Kazakhstan Moving In All Directions.

New/Same Outlets. 

Since the onset of Russia’s invasion of Ukraine, Kazakhstan has explored alternative logistic routes. Among them is the “Trans-Caspian International Transport Route (TITR), known colloquially as “The Middle Corridor.” The route bypasses Russia, the country’s well-known ally, having increased exports 2.7x in the first 9 months of 2022 compared to the same period in 2021.

This route has gained more and more attention, though issues with it persist and the corridor is unlikely to absorb the total capacity of routes that have traditionally flown through Russia. 

Despite the corridor’s smaller capacity, the nations involved continue to press on in their commitment to the route’s development. In fact, on 22-25 November, Ministers from Türkiye, Kazakhstan, Azerbaijan, and Georgia met in Aktay to develop and sign a road map for 2022-2027. 

The countries also intend to spend a whopping $7.5 billion to increase the corridor’s current throughput threefold while Toqayev has announced that Kazakhstan will commit $20 billion come 2025 for developing Kazakhstan’s internal logistics and transportation infrastructure.

Aside from the logistical issues with bottlenecks and bureaucracy, the Caspian Sea’s water level is projected to drop. This could dampen the sea’s use in the corridor much further down the road, though is unlikely to have an effect in the immediate or medium future.

Look South

Kazakhstan also seeks to develop the flow of goods through the “North-South/INSTC” corridor. The corridor presents a legitimate alternative to the Suez Canal, for it decreases both transit time and cost. Countries that wish to utilize the INSTC are keen on the route, as it opens up new markets to Iran, India and other parts of Southern Asia.

On the eastern side of the corridor lies the route Kazakhstan-Turkmenistan-Iran; to the west lies Russia-Azerbaijan-Iran. The remaining route known as the “Middle Route” runs via the Caspian Sea and involves the Russian ports in Astrakhan, Olya, and Makhachkala, along with the Iranian ports in Bender-Enzeli, Amirabad and Nowshehr.

Iran, unlike Kazakhstan, is not in any mutual economic blocks with Russia. Yet Moscow and Tehran have purportedly ironed out almost all the details in their agreement about a free economic trade zone. Iran, Kazakhstan, Russia, and Turkmenistan have also tried to encourage further trade via the INSTC’s eastern route by introducing “discounts” for 2023: 

• 20% discount if transportation of containers passing through the checkpoint "Bolashak/Serkhetyaka" on the border of Kazakhstan and Turkmenistan
• Kazakhstan: $0.15 per TEU-km (with a gross container weight of up to 24 tons)
• Turkmenistan: $0.18 per TEU-km (with a gross container weight of over 24 tons)
• Iran: $0.24 per FEU-km

Thus far, sanctions do not seem to have had any effect on the route’s potential, but this does not rule out future sanctions. Routes via Azerbaijan saw a 7.5 million ton increase in 2022. Yet the key link, via Rasht-Astara railway section, remains incomplete. Conflicting information about its completion has the "finale" set for 2023 or 2025. Without it, Moscow will find it difficult to reach their ambitious goal of increasing the route’s capacity to 32 million tons per year according to RailFreight.com. The Eurasian Development Bank (EBD) capped this number, issuing the following statement:

“If the INSTC connects with the Eurasian east-west latitudinal transport corridors, the impact might be equivalent to 127,000–246,000 TEU (2.3–4.4 million tons [sic]), or about 40 per cent of total potential container freight traffic.”

The need to update roads and infrastructure along with the shortage of ferries for the route via the Caspian, complicated documentation and issues with payments between cargo providers and shippers further dampen Moscow’s goals.

At the same time, Iran’s Shakr Bank and Russia’s VTB Bank will reportedly lead a project to link 158 banks and facilitate payments between the two nations. Transit from Russia via Turkmenistan doubled: 130 thousand tons of cargo were reportedly sent from the stations of the Northern Railway along the INSTC’s eastern branch that runs through Turkmenistan and Kazakhstan. The volume of cargo transportation through the Caspian Sea also increased 14x, amounting to 26.6 thousand tons.

Other plans are in the works to have goods in transit via Turkmenistan onwards to the United Arab Emirates, giving reason to Serdar Berdimuhamedow’s recent visit with UAE’s Prime Minister on 20 February. Serdar’s Kazakh counterpart also boasted about Astana’s active part in the North-South Corridor to Abu Dhabi Sports Group CEO Mohammed, Al-Shamisiy on 16 January, 2023. 

A couple of months prior in November, The Kazakhstani Minister of Trade and Integration, Serik Zhumangarin, agreed with representatives of the Islamic Republic of Iran to launch its own transhipment facilities on the Persian Gulf coast, a key component in the North-South Corridor. The Iranian side agreed to reserve 15 hectares for the construction of a dry terminal in the port of Bandar Abbas. Serik Zhumangarin also signed a trilateral road map with Turkmen and Iranian officials for the removal of infrastructure bottlenecks and development of the Corridor’s capacity for 2022-25 on October 31, 2022. 

At a Cross-Roads

While a substantial amount of attention is on the “Middle Corridor” and its bypassing of Russia, the North-South Corridor seems to have missed the chance for the limelight. This statement, however, does not extend to the nations involved in North-South Corridor’s development. 

President Toqayev and other Kazakh authorities have spoken about the essentialness of both transport routes, but deciding which one has a higher priority boils down to one statement made by the Kazakh leader:

“Kazakhstan intends to become a full-fledged transport hub in the region.”

– President Toqayev

Moscow’s efforts to expand the corridor to the desired capacity are more or less irrelevant. The corridor will probably increase capacity as multiple states have a vested interest in the outcome. The Middle Corridor, on the other hand, will see much of the same attention but does not have the constant threat of sanctions looming over it. Astana will continue to diversify their portfolio as opposed to restricting bets.