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Monday, April 30, 2012
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The FINANCIAL - Region's Logistics Centres' Gravity to Shift toward.
Region's Logistics Centres' Gravity to Shift towards
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The FINANCIAL -- Yesterday's Silk Road has left traces in various transport connections in the
air and by sea, road or rail to Tbilisi . Suffice to say, over 10% of Georgia's 14 bil ion GDP comes
from the transport and communications sector.
With Poti and Batumi, the two main Western
cities of the country, having vast sea terminals,
there emerges a need for logistics centres with
hinterland connection capable to accommodate
such amounts of cargo carried from the West to
the East of Georgia. In addition cargo coming
from Azerbaijan, Armenia or from Central Asian
countries require a logistics passageway in order
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to be distributed to Western countries or the
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of old renovated Soviet-era storage facilities
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Located near Avchala Railway Station and lyingon the Tbilisi Railway Bypass Project TLC isplanned to stand as a centre for multi-modaltransport in the region. The project wasdeveloped as a result of a joint venture betweenGerman-based consulting and projectmanagement company TransCare AG and TLCProperty Management. The latter being alandowner and co-investor.
With 26-38 mil ion USD invested, the centre isplanned to generate a return of 25-35% in thecoming 7-8 years. The main shareholder isTLCPM, that of 45%, whilst 5% of the fundingwas secured by TransCare AG. The ownershipcompany will keep 50% for an operationalcompany to ensure neutrality of the services forthird parties. The project is supported by the USGovernment's Economic Prosperity Initiative
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(EPI) in terms of expansion, investment
Distribution and Logistics
facilitation and consulting.
Warehouse Logistics
Ralf Jahncke, the founder and CEO of TransCare
Logistics Company
AG believe that the project wil facilitate goodsmovement within the country and supportincrease of Georgia's exports.
"Out of 4.5 million tons of containerized cargowhich moves in Georgia - 50% have arelationship with Tbilisi , and this is the cargowhich will have an increased requirement forhandling it. The demand for first class
The FINANCIAL - Region's Logistics Centres' Gravity to Shift toward.
warehouses which is emerging will be catered forby Tbilisi Logistics Centre (TLC) who wil fil this gap. It wil be focused on import warehousingand commissioning / distribution of consumer goods. The centre has a direct railwayconnection to Georgia Black Sea Ports - direct railway connection to neighbouring countriesAzerbaijan and Armenia, which wil cut transporting costs and consolidate different types ofcargo storage into one facility," said Jahncke.
"TransCare AG, established in Germany in 1993, has offices in India, Russia, Spain andheadquarters in Germany. TransCare has undertaken several logistics projects in Georgia andAzerbaijan - namely warehousing and transport of cargo. So we know the market," he noted.
"Georgia as a transport corridor in the region is equal to Switzerland and Germany in Europe -thus it's a good place for logistics development. Tbilisi is actual y a place to coordinatedistribution and the col ection of logistics in the region which is why it's becoming a hub," saidJahncke.
Initial bids on storage facilities have been made already. McDonald's signed a memorandum ofcooperation with TLC last week and there are also another 2-3 companies which are interestedin getting their needed part of the warehouse. "Once the three other contracts wil be signed thewhole area wil be instantly constructed," claim TLC representatives.
According to George Doborjginidze, senior representative at TransCare AG, TLC wil providecompanies with a portfolio of: Customs Clearance, Cross-docking, Warehousing,Assembling/label ing/finishing of cargo, manufacturing support, order taking, picking,commissioning, final distribution, col ecting/reverse. A temperature control system will also beinstal ed in the warehouse which wil reduce last mile cost dramatical y because you have amuch higher stop factor.
"26-38 mil ion USD of investments has been apportioned for warehouses of food, fast movingand consumer goods and also include building of the terminal. About the safety of the centre -we are taking security precautions and at this stage the keeping of chemicals will not beal owed," said Doborjginidze.
Out of a total 91,500 square meters of land at TLC, 25,000 m2 are for storage facilities with a7,800 m2 extension possibility and 16,000 m2 integrated two-storey office area, a containerterminal with rail and road access with a starting capacity of 26.500 TEU (twenty-footequivalent unit) per year, container depot and TIR parking. The TLC warehouse includes 56inbound and outbound truck gates and provides over 30,000 pal et locations. Annualthroughput capacity of the warehouse wil be 450,000 pal ets (about 270 tons).
"There are negotiations currently going on with operation companies of logistics centres. Thething is that we want one company to take care of the warehouse as well as inter-modelterminal operation in order to create efficiency which is why we are looking for high levellogistics service operation. The target for putting the terminal in operation is summer of 2013,"said Doborjginidze.
"At the moment there are only old logistics centres which were last renovated at the end of theSoviet times. The largest one in Tbilisi is cal ed Lilo 1. Even after the opening of TLC, the needfor such logistics centres wil remain as there is huge demand on the market."
"The price for the old logistics centre and the new one wil be about the same and the advantageof the new centre is that it has temperature control, easy access via road or rail, al proceduresincluding customs taken there and many other advantages," noted Doborjginidze.
Zurab Shengelia, head of the Expeditor's Association, also outlined the importance of theproject saying "The building of such a top notch centre is very important for Georgia due to itbeing a transport corridor for neighbouring countries as wel as Europe. This is just thebeginning and it wil be no wonder if we see such centres open in Karsi-Akhalkalaki which wilprovide the Southern part of Georgia with high level logistics or Kutaisi, Khashuri, etc. As youknow in logistics there two main processes: collection and distribution."
"In addition there is a perspective of assembling certain products which can then be exported toCentral Asian markets. There is no integrated terminal and storage facility in the region, that iswhy this centre wil fil this niche," Shengelia told The FINANCIAL.
Cost of Service -- The cost of keeping goods in TLC will be 9 USD per 24 hours. Different priceswil apply to palettes and their cost per 24 days wil be 15 USD. A container of 320 kg wil be 30USD.
"There are companies in Georgia who have built storage facilities, their own logistics centres,themselves like Aversi, but they don't have integrated terminals and various other advantages.
There are 2-3 western companies who are interested in taking their share of TLC. 1,200 squaremeters is the minimal requirement which the companies have to purchase. We anticipatereturn from investment within 7-8 years, an optimistic outlook. It will be 25-35% of investedmoney on average," Said Doborjginidze.
The FINANCIAL - Region's Logistics Centres' Gravity to Shift toward.
George Doborjginidze also summarized the statistics saying, "Out of total cargo transits 75%comes to Georgia on regional transit lines. As long as 95% of imports come to Tbilisi fromWestern Georgia it's clear that our logistics centre will fill that niche."
"MAF Carrefour is for example in the process of building a central logistics centre in Tbilisiwhilst it has representative offices and centres in Azerbaijan and Armenia.
The Tbilisi Logistics Centre will also be cost effective and the reason is simple - if a trailer (withcontainers) coming to Tbilisi has to detour to "Lilo's Bazroba" (35 km) for example and pay 185USD for it (average price) - by choosing TLC it wil be exempt from such financial burden. Inaddition Avchala is useful in terms of distribution of goods. 30% of Tbilisi 's population isspread within a 5 km radius from there," concluded Doborjginidze.
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