Tbilisi: Georgia’s long-envisaged Anaklia deep-sea port construction project, which recently attracted major US companies, can strengthen role of the country as an important trade bridge between Asia and Europe, as well facilitate creating new economic opportunities for other countries in the Black Sea basin, including Ukraine. Ambition behind this project and its status are covered in special report of Front News International.
China's new “Silk Road”
China annually exports to Europe goods in total value of 600-800 billion dollars, with more than 90% of supply going to Western European countries. As of today, these products are being delivered to Europe by long-haul maritime rotes, with transportation period of 36-40 days. Stretched maritime routes are now seen as deterrent to the growth of Chinese exports, while the delivery of goods by rail or road through Central Asia and Russia could significantly reduce time and costs of trade logistics.
In 2013, China's President Xi Jinping announced the ambition to create a new “Silk Road”, which was soon formalized as “Belt and Road” initiative. Chinese ambitious economic program unites plans to create the “Silk Road of the 21st century” and involve a number of countries along these trade routes in closer economic cooperation.
The Chinese initiative aims to connect Europe, the Middle East, Asia and Africa through trade rotes. Infrastructure programs under this initiative were discussed in May this year in Beijing at the "Belt and Road" Summit. Later, Chinese President Xi Jinping said that China is ready to allocate $142 billion for infrastructure projects in the countries involved.
This strategic initiative of China envisages creation of several new transport corridors, one of which can become a land route from China to the Black Sea. The first direct cargo delivery by rail from China to Georgia has arrived to it’s capital city Tbilisi on 13 December 2015.
Full concept of Anaklia port / Source: Agenda.ge
Sea gates of Georgia
Construction of the deep-sea port of Anaklia can potentially create a new hub for transshipment of valuable container cargo from China and unlock trading opportunities in Caucasus region and the Black Sea.
According to the experts of the Ukrainian NGO "Center for Transport Strategies", Black Sea ports of Ukraine will be able to service container cargo from Anaklia within the framework of a new transport route from China to Europe.
“The capacities of Ukrainian container terminals in ports are loaded by about a third of capacity, so they will be able to take on additional cargo. Another question is who will attract this traffic to Anaklia and how much more profitable the new route will be compared to the already established logistics chains”, – consultant of the “Center for Transport Strategies” Andrei Isayev told Front News International.
Currently existing ports of Georgia can service only ships with small and medium draft. The depth of the harbor in Poti is 8 meters, in Batumi – up to 14 meters. The new port of Anaklia will have a depth of 17 meters and will be able to accommodate large Panamax and Postpanamax container vessels, each carrying up to 10 000 TEU.
This will allow to expand Georgia’s capacity for servicing of container cargo deliveries. Existing capacity can accommodate only small container vessels with limited range. Due to low demand on such shipments existing terminal run only on quarter of their capacity.
“At the moment, Georgia has a container terminal in Poti, owned by APM Terminals, subsidiary of AP Moller-Maersk. The capacity of this terminal is 600 thousand TEU per year. In 2013, the volume of transshipment amounted to about 331 thousand TEU - the maximum achieved during the entire operation of the terminal. In 2016, the transshipment volume was 153 thousand TEU, i.е. the terminal capacity is loaded by a quarter”, – the expert said.
The first phase of the construction of the port of Anaklia, which is set to begin this year, provides for the creation of a new container terminal. The project is initiated by partnership of the Georgian TBC Holding and the Conti International, member of ContiGroup. Jointly they established the Anaklia Development Consortium. Soon later, SSA Marine, the largest operator of container terminals in the US, joined them.
Container terminal / Source: ADC
New cargo port
According to the plans of Anaklia Development Consortium, the first phase of construction will be completed in 2020-2021. The container terminal will consist of 2 berths and will be able to receive vessels up to 300 m long and with a capacity of up to 10,000 standard containers. It will be able to handle 8 million tons of cargo, which corresponds to 790 thousand TEU. Thus, the construction of a new terminal in Anaklia can expand the capacity of Georgian ports for container transportation by factor of two.
Until 2020, together with the first container terminal, the main maritime infrastructure of the port should be commissioned, including deepening the harbor bottom and building a breakwater with a berth for servicing vessels and an access road to it. Also, the base will for cost guard vessels will be built.
Next phases of the project envisage gradual expansion of the port and construction of additional infrastructure, which should provide for a total turnover of up to 100 million tons. In total, the port project provides for the construction of seven container terminals and three other terminals for handling bulk or liquid cargo.
In addition to the construction of the port, the project also presupposes creation of a special economic zone at 600 hectares in the adjoining territory for placement of industrial enterprises.
Georgian government has committed to invest $110 million of public funds in developing high standard transport infrastructure the area. Tender for selection of international company for design and implementation Railway and Road project to provide land connectivity to Anaklia port is expected within next 2 month. New modern railway station will be constructed as well to insure smooth operation of the port.
Signing an Investment Agreement between the ADC and the Government of Georgia, October 3, 2016 / Photo: Agenda.ge
Push to start the project
The US company SSA Marine, whose headquarters is located in Seattle, will become the operator of new container terminal in Anaklia. The official agreement of project developers with SSA Marine was signed on August 1 in Tbilisi. At the same time, SSA Marine will invest its capital in shares of the Anaklia Development Consortium.
“Attracting a "big name" in the project is a big plus. Large players with a good reputation even at the construction stage have an advantage even at the cost of borrowed funds, not to mention the expertise and knowledge of the industry, which makes it possible to make the project more efficient. And then to attract customers to large players with a broad customer base is much easier”, – said Andrey Isaev of “Center for transport strategies”.
As the expert noted, participation in the project by SSA Marine implies that the operator will try to attract its customers to work through the terminal in Anaklia, as the construction of new capacities alone cannot attract significant additional cargo traffic.
The overall economic factor that plays in favor of the traffic expansion is the expected high growth rates of Georgia's GDP. According to the IMF forecasts in 2018, GDP growth in the country should accelerate to 3.6%, compared to 3.1% in 2016.
However, according to Andrei Isaev, it is hard to expect expansion to the announced volume of transshipment of 100 million tons in Georgia in the near future. He pointed to limited capacity of the existing land transportation infrastructure in the region and difficulties for its expansion, since new roads and rail projects in the mountainous areas are time-consuming and expensive.
Role of USA
US Vice President Mike Pence, who visited Tbilisi during official mission in early August, welcomed the signing of an agreement between Anaklia Development Consortium and SSA Marine. He also noted, that strengthening of cooperation between the US and Georgia in the implementation of the project of deep-sea port of Anaklia could significantly contribute to regional and international economic development.
Further political and economic support from the US will be important for Georgia’s efforts to increase its economic potential and create an important regional gateway, which fits the strategic initiative of China to create the “New Silk Road”.
Noteworthy, vice premier of the People's Republic of China Wang Yang in his speech at the opening of the meeting of the “U.S. - China Comprehensive Economic Dialogue”, which took place in Washington on July 19, stressed that successful business cooperation between China and the United States is possible thanks to market drivers – people and business communities.
Oleg Savitsky, Front News International