This OECD publication provides fresh analysis of regional integration with an in depth look at the development of trade and transport connectivity in Central Asia in the context of the region’s efforts to diversify production, employment and exports and to increase freight traffic along the Trans-Caspian Transport Corridor (TCTC). The TCTC has gained increasing attention as governments seek to expand connections to European and global markets. Governments are accelerating infrastructure development and regional dialogue has served to resolve remaining border disputes. They have also made significant progress in digitalising customs procedures and border controls. Nevertheless, persistent challenges remain. The report identifies options for further improving trade facilitation reforms in a co-ordinated way, and it addresses such challenges as widespread informal fees, warehousing capacity bottlenecks, and limited private investment, all of which continue to constrain the corridor’s potential. Longer term risks, such as the declining level of the Caspian Sea, also weigh on its outlook. Drawing on more than 150 interviews with businesses across the region, as well as extensive discussions with policy-makers and other officials, this report offers an updated overview of the Corridor’s development and the remaining bottlenecks, providing targeted policy recommendations for each country of Central Asia.
Enhancing the Competitiveness of the Trans‑Caspian Transport Corridor in Central Asia
Abstract
Executive summary
The Trans-Caspian Transport Corridor is key to enhancing Central Asia’s economic diversification and regional integration
The countries of Central Asia have experienced robust economic growth in recent years, driven by strong domestic demand, infrastructure investments, and a rebound in the services and industrial sectors. Despite the challenges posed by the COVID-19 pandemic and Russia’s full-scale invasion of Ukraine, the economies of the five Central Asian countries have displayed resilience and continue to grow. The region, however, remains largely dependent on exports of primary commodities, particularly hydrocarbons and metals. Distance to major centres of global demand also constrains trade diversification and the region’s integration into global value chains. As a result, Central Asian countries increasingly view the Trans-Caspian Transport Corridor (TCTC) not only as a transit route but also as a driver of economic modernisation, diversification and deeper regional integration. In line with this renewed focus, total cargo volumes along the TCTC rose by 62% in 2024 to reach 4.5 million tonnes, although this remains well below the capacity of the Northern Corridor. The modernisation of transport and logistics infrastructure is underway, but further targeted investments could greatly enhance the TCTC’s competitiveness
Across the region, hard infrastructure investment has progressed significantly. Investments include road extension and development, rail modernisation and electrification, and upgrades to Caspian port facilities. Kazakhstan, for example, is modernising and expanding its railway network through new east–west connections while the planned China–Kyrgyzstan–Uzbekistan (CKU) railway should provide an additional east–west corridor between China and the European Union. Nevertheless, the region faces significant infrastructure constraints, including congested roads, under-equipped border crossing points, and outdated, mainly single-track railways. Vessel shortages, limited container handling, harsh weather and the declining level of the Caspian Sea put into question the long-term viability of Caspian ports.
To enable the TCTC to operate at full capacity, targeted investments are required in port handling capacity, railway modernisation, and private-sector investments in warehouses. Priority actions in railways include electrifying lines, purchasing additional rolling stock, and completing the CKU railway to enhance east–west connectivity. In ports, shipping capacity and ferry availability in Aktau and Kuryk should be expanded. Addressing congestion factors at the most heavily trafficked border-crossing points such as Yallama-B. Konysbaev and Navoi-Kaplanbek between Uzbekistan and Kazakhstan and Dostyk–Alashankou between Kazakhstan and China will fasten trade. The development of modern warehouses with private-sector participation will also serve to improve the corridor’s performance but will require clearer rules for land access, faster permit issuance and access to financing with more realistic collateral requirements.
The OECD’s 2024 Trade Facilitation Indicators (TFIs) highlight that four Central Asian countries registered the most significant progress in trade facilitation across Europe and Central Asia. Regional trade ties have also strengthened in recent years, with intra-regional trade nearly quadrupling between 2010 and 2023—from USD 2.7 billion to USD 10.8 billion— yet it remains a relatively small share of the region’s total trade. Important steps have been taken, including the introduction of Single Window systems, pilot projects for the submission and exchange of digital transport documents, and initial data exchange mechanisms between customs of the region.
Yet, cross-border cooperation still needs to be fine-tuned to reap the benefits of these initiatives. Barriers include restrictive transit permit systems (dozvoly) which artificially constrain trade, a lengthy visa issuance process in Turkmenistan, incomplete digitalisation, and fragmented regulatory frameworks that hinder the mutual recognition of documents and the harmonisation of trade rules. A more systematically co-ordinated approach to trade facilitation reforms at regional level could offer substantial benefits at relatively low cost. Private sector stakeholders also highlight that insufficient regional co-operation reduces the efficiency gains from digitalisation, leading to the duplication of border procedures, unpredictable transit due to repeated checks, and frequent informal payment requests. Addressing these obstacles requires harmonised and simplified customs processes, transparent permit allocation, and interoperable digital platforms such as e-TIR and e-CMR.
Private sector participation in infrastructure financing remains limited, despite being essential for the development of transport and logistics in Central Asia. Financing has traditionally relied on state budgets and international financial institutions (IFIs). While governments have updated regulatory frameworks for Public-Private Partnerships (PPPs), private investment is still constrained by underdeveloped financial markets, the dominant role of state-owned enterprises (SOEs), and regulatory uncertainty. Increasing private sector investment in transport and logistics infrastructure, particularly in high-quality warehouses and logistics hubs, requires streamlined land access and licensing procedures, a level playing field, and more affordable domestic banking solutions.
The sustainable management of Caspian Sea infrastructure is needed considering declining water levels to ensure the viability of Caspian ports. While short-term measures such as dredging provide some relief, they cannot fully address this challenge. Caspian littoral states therefore need to adapt shipbuilding to shallower waters, continue dredging operations, and explore low-emission technologies for maritime transport. A co-ordinated regional strategy is also needed to embed environmental considerations in transport infrastructure planning. Implementing such a co-ordinated strategy will not only safeguard the long-term functionality of Caspian Sea ports but also strengthen regional cooperation and support the sustainable development of the TCTC.
