1. MoS 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

2.  A Motorway of the Sea (MoS) 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.  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  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).  More specifically, the Project is to promote the "Motorways of the Sea" concept. General Information MOS Pilot Projects of the Black Sea and the Caspian Sea 2

3. Four main outputs will have to be achieved within the project duration: 1. Extensive review and analysis of transport systems in beneficiary countries (“pre-MoS” 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 MoS 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 Outputs of TRACECA MoS I Project/Extract from ToR MOS Pilot Projects of the Black Sea and the Caspian Sea 3

4. 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; The ToR of new TRACECA MoS II project MOS Pilot Projects of the Black Sea and the Caspian Sea 4

5. 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:  POTI – BAKU Container Block Train  VARNA – ILYICHEVSK – POTI  ILYICHEVSK-SAMSUN-POTI MoS Pilot Projects MOS Pilot Projects of the Black Sea and the Caspian Sea 5

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

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

9. CountriesPartner CountriesEast boundWest bound GeorgiaKazakhstan19,415112,604 Traceca South East1,9785,233 AzerbaijanTraceca/ CIS811,41516,956 Traceca West33,2881,328 Turkey1,052,86339,592 Europe (non Traceca & Cis)335,51324,903 Traceca/CisKazakhstan1,007,4961,649,092 Traceca South East597,057113,366 Traceca WestKazakhstan18,79532,151 Traceca South East34,44121,984 Kazakhstan334,3381,416,343 Traceca South East609,708229,058 (non Traceca & Cis)Kazakhstan1,110,4222,550,681 Traceca South East635,567486,653 Total 6,602,2976,699,943 The Poti-Baku block train Pilot Project (Tons) MOS Pilot Projects of the Black Sea and the Caspian Sea 9

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

11. Loaded TruckTons equiv.(*) Border Georgia-Azerbaijan Red Bridge46,240878,560 Lago dekhi5,297100,643 Total51,537979,203 Direct Bilateral trade Export1,27424,206 Import1,93936,841 Transit From/To Azerbaijan43,534827,146 Transit through and (to central Asia)4,79091,010 Total Transit48,324918,156 Road Truck Flow Georgia / Azerbaijan - 2008 MOS Pilot Projects of the Black Sea and the Caspian Sea 11

12. Rail Container Flow Georgia / Azerbaijan - 2008 Container (TEU)Tons equiv. (*) Transit From/To Poti to Azerbaijan4,09240,920 to Central Asia562.05,620 Transit From/To Batumi to Azerbaijan1,118.011,180 to Central Asia56560 Transit From/To Azerbaijan5,21052,100 Transit From/To Central Asia6186,180 Total Transit5,82858,280 MOS Pilot Projects of the Black Sea and the Caspian Sea 12

13.  Lack of fitting platforms for container transportation  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  Lack of LPG Tank container  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.  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 Investment Needs MOS Pilot Projects of the Black Sea and the Caspian Sea 13

14.  Improvement and acceleration of awareness to develop trade with an interests of public and private participants of the project.  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) MOS Pilot Projects of the Black Sea and the Caspian Sea Investment Needs 14

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

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

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

18. Volume in Tons East - North West AxePartner Countries WestboundEastbound Ukraine/Belarus/Moldova with: 1,649,0921,007,496 Traceca South East113,366597,057 123,6271,493,875 Total East - North West 1,886,0853,098,428 East - South West Axe Partner CountriesWestboundEastbound Turkey with: 1,416,343334,338 Traceca South East229,058609,708 344,1191,889,426 Total East -South West 1,989,5202,833,472 North - South Axe Partner CountriesSouthboundNorthbound Turkey with: Ukraine / Moldova / Belarus6,247,9061,404,889 Aggregated trade potential of Ilyichevsk – Samsun - Poti Pilot Project (Tons) MOS Pilot Projects of the Black Sea and the Caspian Sea 18

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

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

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

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

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

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

25. CountriesPartner Countries Westbound/ SouthboundEastbound/ Northbound Bulgaria TRACECA/Cis North West (Ukraine, Belarus, Moldova)1,257,343111,810 Caucasus 28,84954,570 Kazakhstan 125,841 TRACECA South East12,8648,327 TRACECA/CIS North West Georgia / Armenia106,671682,460 Azerbaijan 16,956811,415 Kazakhstan 1,649,0921,007,496 TRACECA South East 113,366597,057 Europe (non-TRACECA/ CIS)Georgia / Armenia 282,808425,497 Azerbaijan 24,903335,513 Kazakhstan 2,550,6811,110,422 TRACECA South East 486,653635,567 Total 6,530,1985,785,975 Trade potential Varna – Ilyichevsk – Kerch - Poti Pilot Project (Tons) MOS Pilot Projects of the Black Sea and the Caspian Sea 25

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

27. The Varna-Ilyichevsk-(Kerch)-Poti-Batumi pilot project implies:  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”.  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 - 2.000.000 euro Investment Needs MOS Pilot Projects of the Black Sea and the Caspian Sea 27

28.  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:  Constanta-Ilyichevsk/Odessa-Poti/Batumi-Istanbul/Derinje; Possible framework of new TRACECA MoS II project MOS Pilot Projects of the Black Sea and the Caspian Sea 28

29.  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 MoU, NATO PBOS, BSPA, Istanbul Commission, IACS etc.)  Port Public Private partnerships were concluded in 2007 – 2008;  Legal instruments regulate trade transport. Legal Environment in Georgia MOS Pilot Projects of the Black Sea and the Caspian Sea 29

30.  The Presentation demonstrates the key features of the TRACECA MoS 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. Conclusion MOS Pilot Projects of the Black Sea and the Caspian Sea 30

31. Thank You for Attention MOS Pilot Projects of the Black Sea and the Caspian Sea31