Trans-Caspian Corridor Advances, Yet Regulatory Friction Continues to Slow Progress

The OECD report finds that Central Asia is rapidly upgrading infrastructure and trade systems to boost the Trans-Caspian Transport Corridor, but regulatory fragmentation, logistics bottlenecks and limited private investment still hinder its full potential. Overall, the corridor is rising in strategic importance but requires far better coordination and harmonisation to become globally competitive.

The latest OECD analysis, supported by research from the Observatory of Economic Complexity, UNCTAD, the World Bank, UNECE, and several Central Asian institutes, depicts a region racing to reposition itself in global trade. Central Asia’s renewed focus on the Trans-Caspian Transport Corridor (TCTC) reflects a strategic push to overcome its dependency on hydrocarbons and metals, diversify export structures, and reduce its vulnerability to shocks. Russia’s full-scale invasion of Ukraine and the resulting disruptions in Eurasian logistics have elevated the TCTC from a secondary transit option to a central pillar of national development strategies. Yet these ambitions collide with geography, history, and fragmented institutions, all of which constrain the region’s trade potential and integration into global value chains.

A Corridor Accelerated by Geopolitical Upheaval

Amid shifting global supply chains, the TCTC, linking China to Europe through Kazakhstan, the Kyrgyz Republic, Uzbekistan, Turkmenistan, the Caspian Sea, Azerbaijan, and the South Caucasus, has experienced a surge in use. Cargo volumes rose by 62% in 2024, reaching 4.5 million tonnes. Despite this momentum, the corridor’s performance still lags far behind the heavily established Northern Corridor. Capacity constraints are immediate and visible: congested roads, under-equipped border posts, and aging Soviet-era single-track railways limit efficiency. Caspian Sea ports grapple with weather-related delays, shallow water levels, and insufficient modern handling equipment, all contributing to unpredictable transit times. What emerges is a corridor with enormous promise but structural weaknesses that governments are still struggling to address.

Governments Build Big, But Gaps Persist

Central Asian countries have undertaken major infrastructure modernisation drives. Kazakhstan is expanding its rail network, upgrading port facilities at Aktau and Kuryk, and introducing digital rail-tracking systems. The long-anticipated China–Kyrgyzstan–Uzbekistan railway could redefine east-west trade flows if completed. Uzbekistan is scaling warehouse space at an unprecedented pace, up 165% in 2024, while simultaneously upgrading airports, roads, and logistics hubs. Tajikistan is accelerating road rehabilitation along its key East-West corridor, and Turkmenistan continues to invest in new city-ports and cross-border road networks. Yet the pace of soft-infrastructure reform has not kept up. Digitalisation remains inconsistent. Document standards differ widely. Customs rules lack transparency. These gaps continue to undermine the value of the billions poured into physical infrastructure.

Regulatory Frictions Slow Down the Private Sector

Trade facilitation is where the corridor repeatedly stumbles. Kazakhstan and Uzbekistan have made notable advances, introducing e-TIR systems, electronic consignment notes, and data-sharing platforms across customs agencies. But elsewhere, deep friction persists. Tajikistan’s private sector complains of unclear legal texts, overlapping regulations, and inconsistent requirements for courier and cargo certifications. The Kyrgyz Republic struggles with border delays, document inconsistency, and the dominance of manual procedures. Turkmenistan remains opaque in setting tariffs and issuing transport permits, creating unpredictability for foreign operators. Across all five countries, arbitrary transit-permit limits, informal fees at borders, and a lack of mutual recognition of certifications force transporters into unnecessary delays and higher operational costs. The corridor’s regulatory fragmentation remains one of its biggest obstacles.

Investment, Storage, and the Long Road to Competitiveness

Another critical bottleneck lies in warehousing and storage. Demand is outpacing supply despite rapid construction, leaving vacancy rates at or near zero in Tajikistan and the Kyrgyz Republic. Costs for Class A and B storage facilities in Kazakhstan and Uzbekistan now exceed average EU prices. The shortage of cold storage is especially damaging, leading to seasonal spoilage of agricultural goods and inflating costs for exporters. Infrastructure financing also remains heavily skewed toward development banks, bilateral lenders, and public budgets. Private investors remain cautious due to regulatory unpredictability, limited PPP experience, and perceived political risks. China continues to play a dominant role as financier and builder, while the European Union, through its Global Gateway programme, has committed over EUR 10 billion to boosting connectivity with Central Asia.