Perhaps the most famous traveler of all times, Marco Polo, marveled about the vast Asian trading network more than 800 years ago, in particular, the thriving silk, iron and salt industries. His descriptions gave rise to the legendary Great Silk Road and a new generation of European explorers, seeking trade and prosperity in the East.
However, since the demise of the Silk Road in the early 16th century, goods between Asia and Europe have been exchanged mainly by sea, a safer, quicker and cheaper option. In fact, today over 90% of the nearly $800 billion trade volume between the EU and China is conducted by sea.
But economics and geo-politics are once again changing the dynamics, placing enormous momentum behind the development of the so-called “Middle Corridor”, which links Europe and Asia via the key connectivity hub of Azerbaijan.
Security issues are part of the reason. Maritime trade has become vulnerable following hostilities in the Middle East. With Houthi militia in Yemen sporadically attacking vessels in the Red Sea, ships are forced to re-route around southern Africa’s Cape of Good Hope, a detour of 6,000 nautical miles, costing about $1 million in additional fuel.
Speed is another. A maritime shipment between Asia and Europe takes about 30-45 days through the Suez Canal. The detour around Africa can add another two weeks. Meanwhile, in January of this year, a train from Xian, China, arrived in Baku, Azerbaijan, in just 11 days following infrastructure improvements, a trip that could have taken up to 50 days just a few years ago. The entire route from China to Europe can now be completed in well under one month.
However, it was Russia’s invasion of Ukraine – an event that disrupted global supply chains and weakened economies worldwide – that truly gave a boost to the “Middle Corridor”, officially called the Trans-Caspian International Transport Route, or TITR. New solutions had to be found quickly to circumvent the principal East-West overland connectivity passing through Belarus and Russia, referred to as the Northern Corridor. Stepping up to the challenge: Central Asian and South Caucasus countries, especially Azerbaijan. At the crossroads between Europe and Asia, it is the only country bordering heavily sanctioned Russia and Iran, thereby making it critical to the viability of the Middle Corridor.
The TITR was officially established in 2013 as a consortium of companies from Azerbaijan, Kazakhstan, Turkey and Georgia to transport goods and commodities through the Caucasus. However, until the war in Ukraine broke out, its trading volume dwarfed that of the established route via Russia.
In the wake of the 2022 invasion, Azerbaijan became increasingly important to the EU beyond energy cooperation, now also as a strategic supply chain link with the East. During a visit to Baku during the summer of that year, the President of the European Commission, Ursula von der Leyen, expressed strong support for the corridor: “The European Union wants to work with Azerbaijan to build connections with Central Asia and beyond. So we follow with great interest the discussions and the ideas about trans-Caspian connections. We will deepen these discussions.” The EU has since allocated €10 billion through its Global Gateway Initiative and is considering expanding its involvement.
Azerbaijan and its regional neighbors seized the opportunity to increase their international relevance and clout. Geographically, the Middle Corridor is already the shortest route between China and Europe. Yet it also comprises more border crossings than the Northern Corridor, which can lead to delays due to tariffs, customs or the varying levels of infrastructure.
But the corridor’s members have begun to make good progress, modernizing their transportation network, automating freight services, coordinating customs and harmonizing regulations. The stakes are high and so is the investment of the stakeholders in order to optimize transit, enhance capacity and attract new customers. The opening of the so-called “Zangezur Corridor” connecting Azerbaijan’s Zangilan district to the Nakhchivan Autonomous Republic via Armenia would further smoothen transport, reducing bottlenecks and delays. Following Azerbaijan’s liberation of Karabakh, Russia’s withdrawal from the territory and advanced peace talks between Armenia and Azerbaijan, this prospect would be a win-win opportunity. Besides commercial benefits, this route would foster confidence, trust and inter-dependence between Armenia and Azerbaijan, important aspects given their long-lasting hostilities.
In fact, robust bi-lateral relations and the expansion of regional trade are positive side effects of the initiative for the entire region. A 2023 World Bank report projected a 37 percent increase in trade between Azerbaijan, Georgia and Kazakhstan and a 28 percent increase between those three countries and the EU by 2030. Meanwhile trade volume through the Middle Corridor is expected to grow exponentially, with projections of up to 11 million tons annually by 2030. Shipping companies such as Denmark’s Maersk or Finland’s Nurminen Logisitics have already begun running container trains along the route.
Against the backdrop of geopolitical instability, the rise of the Middle Corridor has ironically contributed to stability and cooperation. The re-direction of goods is of economic benefit to all countries involved, deepening integration and enhancing peace and prosperity in the region. Traders will appreciate the safe alternative route, not subject to international sanctions. And the EU has successfully found a viable alternative to Russian trade routes, effectively shielding the Sino-European connectivity from potential disruptions. The block now needs to continue fostering the development of this new Silk Road in order to harness its full potential.
