Introduction The Red Sea links the Indian Ocean with the Mediterranean and serves as an important trade route for Asia, Europe, and Africa. However, this strategic waterway faces ongoing geopolitical tensions and security issues. Hostile acts against vessels, including oil tankers and cargo ships, have raised concerns over maritime safety and potential environmental and economic impacts. These events have constrained container traffic, increased transit times and shipping costs, and disrupted global commerce, supply chains, trade, and development. The Red Sea shipping crisis calls for a united effort from the international community and regional players. One key strategy is to upgrade land transportation networks, infrastructure, and policies across the Central Asia Regional Economic Cooperation (CAREC) region. The untapped shipping capacity, along with reliable express container rail and truck services along the CAREC region’s transport corridors, could help counter current challenges testing global supply chain resilience. Analysis Challenges in ocean transport Navigating the Red Sea has become increasingly challenging due to persistent Houthis attacks on vessels transporting goods to Europe from various parts of the world. As a result, containership traffic through the Bab-el-Mandeb Strait fell by 67% in June, with more vessels opting for Africa's Cape of Good Hope. This longer route led to an estimated 30% increase in transit times from the People’s Republic of China (PRC) to Europe. Combined with delays from the drought-affected Panama Canal, global container shipping capacity dropped by around 10%, prompting vessel operators to raise shipping rates in all trade lanes worldwide. CAREC corridors as viable alternative The CAREC Program, launched by the Asian Development Bank (ADB) in 2001, fosters collaboration and connectivity among 11 member states: Afghanistan[1], Azerbaijan, PRC, Georgia, Kazakhstan, Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, and Uzbekistan. One of the core goals of the Program is establishing six expansive multimodal transport corridors that strengthen linkages between CAREC members, extending into the Middle East, Europe, and South Asia. This network includes 30,000 kilometers of roads and railways, along with ports, airports, and customs facilities. These CAREC routes offer alternate pathways for goods moving between CAREC member countries and the Red Sea area, reaching further into additional markets. Corridor 1 links East Asia to Europe. Corridor 2 of the network, extending from the PRC-Kazakhstan frontier to Azerbaijan’s Baku port, provides routes from the Caspian to the Black Sea, bypassing the Suez Canal and Red Sea. Corridor 3 is a north-south corridor linking the eastern part of Russia to the Middle East through Central Asia. Corridor 4 connects the People’s Republic of China, Mongolia, and the Russian Federation. Another, Corridor 5, links the PRC with the Kyrgyz Republic, Tajikistan, Afghanistan, and Pakistan, connecting to Gwadar Port, part of the China-Pakistan Economic Corridor with Arabian Sea access. Corridor 6 connects the PRC to Kazakhstan, Turkmenistan, Iran, and Türkiye, leading to the Iranian port of Bandar Abbas in the Persian Gulf. Advantages of CAREC corridors CAREC transport corridors present reliable, cost-effective alternatives to maritime chokepoints, especially for shorter distances and time-sensitive goods. The corridors aim to ensure seamless, efficient, and sustainable cross-border movement, supporting regional integration and economic development. Some benefits include: Reduced transit times and costs Improved infrastructure, border procedures, and logistics services speed up and reduce the cost of transporting goods. For instance, the transit time from Kashgar in the PRC to Almaty in Kazakhstan has decreased from 10 days to 3, and transport costs from $4,500 to $2,000 per container. Enhanced trade diversification and competitiveness The CAREC corridors open access to new markets, suppliers, and regional production networks. This enables exports like fresh produce from Uzbekistan and Kyrgyzstan to the PRC, Russia, and Europe and imports of machinery from the PRC to Central Asia. Increased resilience and sustainability CAREC corridors lower dependence on maritime routes, reducing disruption risks, delays, and price volatility. They also promote multimodal transport and green technology, like rail electrification and low-emission vehicles, reducing the environmental impact of transportation. Despite ocean freight rates tripling or quadrupling, train costs have risen less steeply. Container traffic on CAREC Corridor 1, covered by the Eurasian Rail Alliance, has grown significantly, with June 2024’s TEU volume 142% higher than the monthly average from October to December 2023, before the crisis. A notable example of express container service is the PRC-Europe Xian-Hamburg route along Corridor 1. Based on the CAREC Corridor Performance Monitoring and Measurement (CPMM) tool which tracks the time and cost of moving goods along CAREC transport corridors, the average journey without border delays was 236 hours (9.8 days) in 2024, close to the pre-crisis level of 234 hours in 2019. Including border delays, it was 269 hours (11.2 days), still far faster than the sea route, which can take up to 30 days. A CPMM survey of carrier partners shows that while train frequency hasn’t notably increased, the number of containers per train has risen from 41 to up to 55, demonstrating rail's flexibility between the PRC and Europe. Corridor 2, related to the Middle Corridor, has fewer services due to the Red Sea crisis. Additional traffic has caused congestion at Caspian and Black Sea ports, with delays pushing shippers to favor other routes. For instance, an Urumqi-based tomato paste producer opted for ocean routes, like the Suez Canal, over rail, due to time and cost advantages. While the Middle Corridor remains viable, infrastructure constraints limit its competitiveness, highlighting the need for further enhancements. To meet rising demand for faster, more attentive services, Transports Internationaux Routiers (TIR) trucks with two-driver teams are being deployed, ensuring rapid transport for high-value, time-sensitive cargo. CPMM data for a European carrier using expedited trucks along Corridor 1 via Alashankou/Dostyk show that despite substantial ocean rate increases, team truck rates remain stable, offering shippers consistent, flexible alternatives spanning sea, express rail, and expedited truck transport. TIR Trucks East PRC to West Europe Speed Without Delay (SWOD), km/hr Speed With Delay (SWD), km/hr Average Transport Rate, US$/km Month-on-month Change in Ave. Transport Rate, % Sep 2023 89 57 3.57 - Oct 2023 89 58 3.72 4.20 Nov 2023 88 57 3.83 2.96 Dec 2023 89 59 4.31 12.53 Jan 2024 89 59 4.31 0 Feb 2024 87 59 4.31 0 Note: The speed statistics above reflect a sizable percentage of travel on the PRC’s high-quality roads. No additional data was released given the sensitive nature of the issue. Corridor 1 is emerging as an effective "relief valve" for PRC-European trade during this challenging period. Notable CAREC projects include upgrades to trade routes like the Guzar-Bukhara-Nukus-Beyneu highways in Karakalpakstan (part of Corridor 2), advanced customs-to-customs cooperation; bolstered sanitary and phytosanitary measures, and strengthened institutions for trade. The CPMM mechanism has been instrumental in identifying bottlenecks and assessing the impact of regional cooperation initiatives. This has helped authorities pinpoint solutions, streamlining the trade process. Implications As the Red Sea becomes increasingly unsafe, it is crucial to promote CAREC corridors as viable alternatives. Improving infrastructure and efficiency along these routes and offering incentives for shippers to switch to land-based transport can help absorb the shift from maritime routes. Along with this, CAREC can further boost trade and supply chain resilience through the following. Invest in multimodal transport. Encourage more rail and road networks within multimodal solutions for resilient, flexible logistics options, particularly for time-sensitive, high-value cargo. Infrastructure development and streamlined customs procedures can boost route efficiency and appeal. Adapt to market dynamics. With the shifting situation in the Red Sea, continuous monitoring of market conditions is vital. Policymakers should be prepared to adjust strategies, implement contingency plans, and support affected industries as needed. The CAREC corridors have immense potential to reshape regional trade. Enhancing infrastructure and logistics can mitigate global crises' impacts and open new economic growth avenues. These corridors go beyond trade—they are vital links connecting economies, cultures, and communities, supporting regional prosperity and integration. [1] ADB placed its assistance in Afghanistan on hold, effective 15 August 2021. Ask the Experts Lyaziza Sabyrova Regional Head, Regional Cooperation and Integration, ADB Central and West Asia Department After earning her PhD in Economics from Indiana University, Lyaziza joined ADB in 2000. She has worked on infrastructure projects across PRC, Central Asia, and South Caucasus and served in the Kyrgyz Republic Resident Mission. During a special leave, she was Deputy Director of Kazakhstan's RAKURS Center for Economic Analysis. Recently, she led ADB’s Country Partnership Strategies for Central Asia and South Caucasus, contributed to the CAREC Institute, and supported analytical work and knowledge management. Andy Sze Transport and Logistics Consultant Andy Sze is the founder of the Fastraxx Group consulting firm. He has more than 35 years of senior management experience in global transportation and logistics. Since 2007, Mr. Sze has actively worked with East Asian countries on the “New Silk Road” Project. He has a BS in Industrial and Systems Engineering from Illinois Institute of Technology, an MBA from University of Chicago, and an MS/ABD in Industrial Engineering and Management Science from Northwestern University. Follow Andy Sze on Zulfia Khamitovna Karimova Principal Regional Cooperation Specialist, Central and West Asia Department, Asian Development Bank Zufia Karimova is an international development professional with diverse experience, having worked with multilateral organizations such as ADB, IMF, World Bank, and the UN, as well as in the private sector, international NGOs, and think tanks/academia. She has extensive experience managing policy dialogue with senior government officials and overseeing complex programs in regional cooperation and integration (RCI), with a focus on trade policy, trade facilitation, sustainable tourism, gender, corporate finance, and social sectors. Follow Zulfia Khamitovna Karimova on Asian Development Bank (ADB) The Asian Development Bank is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region. Its main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance. Follow Asian Development Bank (ADB) on Leave your question or comment in the section below: View the discussion thread.