Georgia’s transit monopoly is eroding, yet the region’s future may largely depend on cooperation, not competition

For decades, Georgia operated as a solid transit route, largely due to its location, as well as pure luck. Unresolved neighbourhood conflicts, leading to closed borders, and weak infrastructure elsewhere left little alternative: goods moving between Central Asia, Russia, Turkey, and Europe passed through Georgian roads, railways, and ports almost by default.

Yet now, as new corridors, a fragile Armenia–Azerbaijan peace process, and disruptions through Iran are reshaping logistics across the region, Georgia’s role is changing. The question is no longer who controls regional transit, but whether the region’s smaller states can coordinate well enough to compete at all.

While the shift is unlikely to eliminate Georgia’s importance, it threatens the passive advantages on which its transit dominance has long depended. The question facing Tbilisi is therefore strategic rather than existential: can Georgia remain the South Caucasus’ preferred corridor once it is no longer the only viable one?

Shifting cargo flows

Despite the concern, at a recent regional transport conference in Yerevan, many analysts argued that predictions Georgia would ‘lose everything’ were exaggerated. In many ways, geography, infrastructure, and existing trade networks still strongly favour Georgia over its neighbours. Yet some cargo flows are already beginning to shift.

Armenia imports 400,000–450,000 tonnes of grain annually from Russia, shipments that have increasingly begun moving through Azerbaijan’s rail network, bypassing Georgia’s Upper Lars corridor (though still travelling briefly through Georgia by rail for the final leg of the journey, for now). For grain transportation alone, Georgia receives only minimal transit revenue because of the relatively short transit distance involved. The greater concern is whether this trend could similarly expand to Armenia’s higher-value cargo — liquid gas, fertilisers, and petroleum products — using the same alternative route through Azerbaijan.

‘The Georgian government appears to believe that the proposed TRIPP corridor and the Middle Corridor will complement one another. I am not convinced that will be the case’, transport corridor analyst Paata Tsagareishvili told OC Media. ‘As soon as the corridor becomes operational, Azerbaijan is likely to act very aggressively, while Armenia remains less prepared. In such a scenario, Georgia could lose up to 2 million tonnes of cargo annually — roughly 15–17% of total transit volumes.’

Tsagareishvili implied that Azerbaijan would effectively control the ‘tap’ of regional cargo flows, and could direct freight traffic toward whichever route best served its own strategic interests — either through TRIPP or Georgia.

The figures are significant, though far from catastrophic. In the first quarter of 2026, Georgia’s rail network transported 3 million tonnes of cargo. More than half of this was transit shipments, with petroleum products the single largest freight category.

As Tsagareishvili has emphasised, while there was a clear growth in transit post-2023 — in large part due to Russia’s full-scale invasion of Ukraine — this war-driven surge could not be sustained.

The data reflects both Georgia’s continued importance and its underlying vulnerability. Much of the country’s transit economy remains concentrated in a narrow set of cargo flows that could gradually diversify toward competing routes if regional connectivity improves.

Armenia’s ambitions collide with infrastructure reality

For years, Armenia has tried to position itself within emerging Eurasian transport networks, including the North–South Transport Corridor and the Trans-Caspian International Transport Route. Recent disruptions through Iran have sharpened those discussions — and exposed the gap between aspiration and reality.

Before the escalation of the Middle East crisis, a substantial portion of Chinese cargo entered Armenia through Iran, arriving in the port of Bandar Abbas on the Persian Gulf before heading north to the Meghri–Nordooz crossing. Those flows have now largely rerouted through Georgian ports. In April, Georgia responded to the increased traffic by launching a new Poti–Tbilisi Dry Port logistics route, allowing Armenian freight forwarders to collect containers in Tbilisi rather than travelling to Poti directly.

The episode illustrates both the opportunity Armenia senses and the constraints it faces. For one, the country’s railway network — operated under concession by Russian Railways since 2008 — remains slow.

‘In practice, no real unblocking of transport communications has occurred so far’, Laura Sarkisyan, a journalist and founder of the Telegram channel Armenian Crossroads tells OC Media. ‘Yerevan has the desire and intention’, she says, ‘but the ball is now in Baku and Ankara’s court. Without their political will, no unblocking will happen no matter how hard Yerevan tries.’

At the centre of the dispute is a proposed railway route through southern Armenia along the Iranian border. The line largely follows Soviet-era infrastructure along the River Araks through mountainous terrain where alternative alignments are technically difficult and prohibitively expensive. Much of the existing infrastructure — bridges, tunnels, utilities — no longer meets modern standards and would require extensive reconstruction before international freight could use it.

Timing is also critical. Turkey is already building the Nakhchivan–Kars railway segment on its side of the border. If Ankara completes its section before Armenia modernises its own, Armenia risks becoming a marginal transit link rather than a central one — with transit revenues potentially falling five-fold and only a fraction of its territory actively integrated into the route.

The geopolitical stakes extend well beyond logistics. A fully operational corridor linking Central Asia, the South Caucasus, and Turkey would reduce dependence on both Russian and Iranian transit while deepening east–west connectivity.

‘Armenia’s population has not yet recovered from the war and the forced exodus from Artsakh [Nagorno-Karabakh]’, Sarkisyan said, her perspective underscoring the widely held understanding that, in the wake of the conflict, Armenia can no longer depend on Russia for either security guarantees or economic stability.

‘We are still living with a post-war syndrome, even if it may not always be visible on the surface’, she added.

A new Gyumri Dry Port project near the Turkish border — now involving Hamburg Port management — could become a significant logistics hub linking Armenia, Turkey, and Azerbaijan if the Armenia–Turkey border reopens. That would strengthen Armenia’s position in regional trade, but it would also draw cargo away from Georgian road corridors. More competition, less complementary — unless the two countries choose a different approach.

Competition vs collaboration

Regional analysts increasingly argue that treating transit as zero-sum is strategically self-defeating. The South Caucasus as a whole competes against larger, better-funded corridors elsewhere in Eurasia. Internal fragmentation — overlapping projects, political rivalry, and inconsistent regulation — could weaken every country’s position, not just the losers of any given bilateral dispute.

‘The Trans-Caspian Middle Corridor should not be understood as an infrastructure project confined to a single country, but as a complex, interconnected chain spanning Central Asia, the Caspian Sea, the South Caucasus, and onward to Europe’, Lekso Aleksishvili, the CEO of the Policy and Management Consulting Group (PMCG), tells OC Media. ‘Without strong integration among participating countries — on customs, logistics, digitalisation, and regulatory frameworks — bottlenecks emerge at every border, undermining both efficiency and competitiveness’, he says.

That logic applies directly to Georgia and Armenia. Georgian Prime Minister Irakli Kobakhidze has pushed back against narratives that frame Armenia as a rival corridor to Georgia, arguing that outside forces are deliberately trying to drive a wedge between Yerevan and Tbilisi. Despite this, however, the risk of rivalry is real regardless of who is promoting it.

Georgia may need more than inertia: infrastructure investment, stronger logistics policy, deeper EU integration, and active economic diplomacy could all help the country remain competitive. For Armenia, hurdles remain surrounding control of its rail network, a need for major tunnel projects, and a politically fraught normalisation process — hurdles it must overcome all while managing an uncertain relationship with both Baku and Tehran.

As former central banker and economist Roman Gotsiridze puts it, Armenia needs road and railway modernisation and Georgia needs the Anaklia port project — in other words, ‘we need to rely on ourselves’.

Speaking to Imedi on 24 May, Georgian Economy Minister Mariam Kvrivishvili insisted that the Anaklia Port remained on track, adding that 2029 would remain the target for completion — a claim disputed by many local experts and opposition figures.

‘First they said 2028, then 2029, even 2032, which was later retracted’, Gotsiridze notes. ‘Highly unlikely, as the land infrastructure projects are not even underway.’

For many observers, however, neither Armenia nor Georgia can succeed by treating the other as an obstacle.

Aleksishvili says that Georgia did not truly build its role as a transit hub, it just happened.

‘These two neighbours [Armenia and Azerbaijan] were at war — what should we do now, tell them why are you at peace?’, he says.

Now, the peace process (which Tbilisi publicly supports) is slowly removing the conditions that made its transit advantage possible. But can Georgia stay competitive on its own merits, rather than relying on regional instability?

Most experts give a straight forward answer: Georgia needs to step up. It needs to complete major projects like Anaklia, push faster toward EU integration, and treat proximity to Europe as a practical tool rather than an abstract goal.

And as Georgia’s advantage from regional conflicts fades, what may matter more now is no longer what its neighbours fail to do, but what Georgia itself manages to build.