Turan Research Center

As global geopolitics reshape traditional trade routes, Central Asia and the Caucasus are emerging as pivotal regions in overland cargo transit. The fallout from Russia’s war in Ukraine, compounded by sweeping Western sanctions, has dealt a heavy blow to the once-dominant Northern Corridor— the key artery that channeled much of the China--Europe trade via Russian territory.

Despite its strategic location, Iran remains largely sidelined from emerging overland transit networks, hampered by political isolation and underdeveloped infrastructure. This void has created a rare opening for smaller regional nations. Countries such as Azerbaijan, Kazakhstan, and Georgia are racing to modernize their transportation systems, positioning themselves as vital conduits between East Asia and Europe. Driving this shift is the Trans-Caspian International Transport Route--widely known as the Middle Corridor--which is rapidly gaining traction as a flexible, resilient alternative to traditional routes.

Shorter, Sanctions-Free Alternative

The Middle Corridor links western China to Europe via a multimodal route that threads through Central Asia, crosses the Caspian Sea, traverses the Caucasus, and continues onward through Turkey. Crucially, this corridor shaves off roughly 2,000 kilometers compared to the traditional Northern Corridor through Russia, while sidestepping the geopolitical complications of sanctioned or diplomatically isolated countries.

These geographic and political advantages have propelled the Middle Corridor to the forefront of regional strategy, as countries and blocs–most notably the European Union–increasingly prioritize resilient, Russia-free alternatives for east-west trade.

Azerbaijan: Middle Corridor’s Powerhouse

Azerbaijan plays a pivotal role in shaping this emerging transcontinental trade corridor. Since the completion of the Baku–Tbilisi–Kars railway in 2017, the country has significantly boosted its foreign transit capacity. The railway currently handles around 5 million tons of cargo annually--a figure projected to more than double, reaching 11 million tons by 2030.

Complementing its rail infrastructure, Azerbaijan also launched the Baku International Sea Trade Port in 2018. Strategically positioned to accommodate increasing cargo shipments from Kazakhstan, the port has become a cornerstone of the Trans-Caspian route, with maritime freight volumes soaring sixfold over the past five years.

In 2024, Azerbaijan handled over 33 million tons of foreign cargo in, nearly half of which moved along the east--west axis. The Middle Corridor alone accounted for 4.5 million tons, reflecting a 68% rise compared to 2023. Projections for 2025 estimate 5.2 million tons, with expectations of doubling to 10 million tons by 2027.

Data from the State Statistical Committee of the Republic of Azerbaijan

Regional Ripple Effect

Azerbaijan's momentum is prompting neighboring countries to accelerate their own transit ambitions. Most recently, Turkmenistan unveiled plans for a new freight corridor linking China’s Xinjiang province through Turkmenistan to Azerbaijan—adding yet another critical piece to the Middle Corridor framework.

Kazakhstan, meanwhile, is also making major strides, channeling substantial investment into expanding its rail infrastructure along the Chinese border. Key projects include the nearly completed Dostyk–Moyynty rail line, as well as future links such as Darbaza--Maktaaral, Moyynty–Kyzylzhar, and Bakhty–Ayagoz lines.

Meanwhile, in Central Asia, the long-anticipated China–Kyrgyzstan–Uzbekistan (CKU) railway is finally taking shape. With an estimated cost of $4.7 billion -- funded primarily by China at 51%, including a $2.3 billion loan – the project will see Kyrgyzstan and Uzbekistan share the remaining costs. Upon completion, the CKU line is expected to further enhance connectivity with the Middle Corridor.

Uzbekistan, underscoring its strategic intent, launched a five-year national plan in January 2025 to overhaul and modernize its transit network—signaling how regional governments increasingly view trade infrastructure as a cornerstone of economic and geopolitical strategy.

 Caucasus Crossroads

While Azerbaijan and Georgia currently serve as the primary transit gateways in the Caucasus, Armenia has the potential to emerge as a pivotal player —if it moves forward with the opening of the Zangezur Corridor. Spanning 45 kilometers, this strategic strip would directly connect mainland Azerbaijan to its Nakhichevan exclave and onward to Turkey, providing a shorter alternative to the established Georgia route. This corridor’s development, however, remains highly contentious. Iran opposes its development, viewing the project as a threat to its influence in the region. Armenia, meanwhile, has resisted what it perceives as external pressure to concede sovereignty, despite Clause 9 of the 2020 Nagorno-Karabakh ceasefire agreement, which implies Yerevan should facilitate its opening.

Recent diplomatic overtures offer a glimmer of hope.  For the first time, the presidents of Armenia and Azerbaijan held direct talks in the United Arab Emirates, signaling a possible thaw in relations. Unconfirmed reports suggest Armenia may even consider leasing the corridor to the United States for 99 years – an unexpected twist that, if true, would mark a major diplomatic breakthrough and dramatically accelerate east-west transit development in the Caucasus.

Azerbaijan has already built road and rail infrastructure up to its border with Armenia and estimates the corridor’s initial capacity at 15 million tons annually. At the same time, Turkey, a key stakeholder in the Middle Corridor, continues to pressure Yerevan to greenlight the project.

 Europe's Strategic Shift

Though the Middle Corridor might initially appear to be a Chinese-led endeavor, the European Union has emerged as a key stakeholder in its development. At the 2024 Europe–Central Asia Investor Forum in Brussels, senior EU officials underscored their commitment to funding sustainable infrastructure along the route.

Vice President of the European Commission Valdis Dombrovskis announced a €10 billion support package – jointly backed by the European Commission and the European Investment Bank, and other international partners -- to enhance transport connectivity across Central Asia.

The EU’s investment goes beyond bypassing Russia. It reflects a strategic push to deepen economic integration with Central Asia while responding to mounting instability in global maritime routes, particularly in the Red Sea, where Houthi attacks near the Bab el-Mandeb Strait have disrupted shipping flows. In this context, the Middle Corridor stands out not only for its promises of logistical resilience but also as a vital alternative in an increasingly volatile global trade environment.

 Outlook:  From Overlooked Crossroads to Indispensable players

Despite its rapid growth, the Middle Corridor still represents a small fraction of China–Europe trade. Yet its long-term potential is increasingly impossible to ignore.

Russia’s Northern Corridor is in sharp decline. In 2023, westbound cargo plunged by 51%, while eastbound volumes to China fell 44%. With Western sanctions intensifying and diplomatic rifts deepening in 2024, the slide is likely to accelerate.

If current trends hold, the Middle Corridor could outpace the Northern Corridor in freight volume within just a few years—a dramatic reversal that promises to reconfigure Eurasian trade for a generation.

By diversifying their transit options, nations across Central Asia and the Caucasus aren’t merely seeking improved infrastructure. They’re asserting regional autonomy while attracting deeper economic and diplomatic engagement from the West.

In the evolving equation of global trade, these once-overlooked nations are rapidly becoming indispensable players.

Dalga Khatinoglu is an expert on Iran’s energy and macroeconomics, and a researcher on energy in Azerbaijan, Central Asia and Arab countries.