The war in Ukraine, started by Russia, is having a significant impact on trade routes in Eurasia, creating new challenges and opportunities for countries in the region. Amid the conflict, Russia and Ukraine – key transport hubs for goods between Europe and Asia – face supply disruptions and increased logistics costs. This leads to the need to find alternative routes and increases the importance of the Middle Corridor through Kazakhstan and the Caspian Sea.
The Middle Corridor (Trans-Caspian Transport Route), according to Radio Azatlyk, is a 6,500-kilometer trade route through Central Asia and the Caucasus connecting China with Europe – expanded after Russia’s full-scale invasion of Ukraine.
The Middle Corridor, connecting China to Europe through Central Asia, Azerbaijan and Turkey, is becoming increasingly attractive to countries seeking to diversify their routes and reduce dependence on Russia. However, the route faces challenges such as a lack of infrastructure and vessels, as well as unpredictable delays on the Caspian Sea. For example, Kazakhstan and its neighboring countries are actively investing in the development of Middle Corridor infrastructure, seeking to strengthen their role in Eurasian trade. For example, Kazakhstan and the UAE have invested millions of dollars in the development of ports and logistics centers.
One of the key aspects of the changes is the redirection of cargo flows, which now more often go through Central Asia and the Caucasus, bypassing conflict areas. This creates new economic opportunities for countries in the region, but also requires them to solve numerous logistics and infrastructure problems.
Changing transport routes: what you should know!
- Middle Corridor: Passing through Central Asia, the Caspian Sea, the Caucasus and Turkey, this route is becoming increasingly popular as it avoids conflict-ridden areas. In 2023, traffic along the Middle Corridor increased by 35% compared to the previous year.
- Investment in infrastructure: Kazakhstan and Azerbaijan are actively developing infrastructure to support increasing cargo flows. Kazakhstan plans to invest $20 billion in the development of transport infrastructure until 2025. Azerbaijan is also modernizing its ports and railways to cope with increasing traffic volumes.
What is the impact on the economy?
- Transport costs: Increasing costs of transporting goods via traditional routes through Russia are encouraging businesses to look for more cost-effective solutions. The cost of transporting a container through the Middle Corridor has decreased by 15% over the past year.
- The role of China and the EU: China is actively using new routes to promote its Belt and Road Initiative, which promotes the development of trade relations with Europe through Central Asia. In 2023, trade turnover between China and Central Asian countries increased by 20%.
Thus, we conclude that the war in Ukraine stimulates the development of alternative transport routes and strengthening ties between the countries of Central Asia and the Caucasus, which could in the long term change the balance of power in Eurasian trade and increase the region’s independence from traditional routes through Russia.
