“We are seeing a price increase of 10 to 15%,” stated Irakli Nemsadze, head of the Land Transport Association of Georgia, in a conversation with Businesspressnews.
According to him, the price hikes have been recorded mainly on freight routes heading to Russia and Central Asian countries, where Russian territory serves as a transit corridor.
Media outlets report that security risks within Russia, acute fuel shortages, and stricter supervisory controls by traffic police have created additional hurdles for Georgian carriers.
“All of these factors have driven up expenses and increased downtime for carriers operating through Russian territory, as well as heightened security risks, which has already been partially reflected in shipping rates. The price growth is ongoing.
As is well known, pricing is determined not only by the cost side—the balance of supply and demand is equally essential. No matter how high operational costs may be, if there is no demand for transportation, the price will not change either.
At this stage, we are observing a price increase of roughly 10 to 15%. This applies to shipments bound for Russia and routes where the Russian Federation is used for transit (namely Central Asian countries such as Kazakhstan, Uzbekistan, Kyrgyzstan, etc.). I believe that if the current status quo persists, the aforementioned fuel prices remain unchanged, and the described situation does not alter, a further increase of up to 10% is expected over the next two months.
This is also driven by seasonality. Autumn is the busiest period on this route. Demand for cargo transport rises, and prices were already increasing naturally and cyclically. Therefore, this component will compound the situation, and we believe prices will grow by another 10% in the coming two months.
As for the longer-term outlook, it will naturally depend on how these factors develop—for instance, whether fuel prices rise or fall, border queues clear up, security risks increase or diminish, and so on. All these components exert an influence.
In reality, we do not expect prices to decline, as new cost items are added over time. For example, for vehicles traveling toward Belarus through Russian territory, Russia has introduced a requirement for mandatory tracking via a so-called GPS navigator device.
This means that from the point of entry into the Russian Federation to the point of exit, a customs GPS tracking device is installed on the vehicle, entailing additional expenses of around $350–$400. This rule came into force on August 1. Naturally, the carrier absorbs these costs and factors them into the final price of transportation.
Such regulations are introduced constantly, which is why we anticipate further rate hikes. As I mentioned, we forecast a seasonal growth of about 10% by September; however, if additional factors emerge, the increase could be even higher,” stated Irakli Nemsadze.
