THERE is nothing silky about a heavy oil train rolling west through the Georgian capital Tbilisi laden with black gold from the Caspian Sea. The tank cars are caked with oil and dust and even the locomotive - a Vladimir Lenin 10-class - bears the patina of hard and heavy use.
The long train clanking through Tbilisi's main station is a reminder, however, that the tiny country of Georgia is at the centre of a trade route that has linked Asia and Europe for centuries and brought prosperity - if only sometimes fleeting - to many people and countries throughout history.
Silk, jade and spices may no longer come by camel caravan from the east but as an oil and general freight corridor, the Silk Road has never been more important.
"We are on the route to everywhere," says Georgia's ambassador to South Africa, Mr Beki Dvali. "Our strategy is to be the hub for Europe and Asia."
Georgia has not been idle in seeking that ambition. With comparatively few natural resources of its own, it has pinned its prosperity on being a transit state, building oil and gas pipelines to tap the wealth of the Caspian Basin oilfields and investing in rail capacity.
Georgia has also sought a free trade agreement with Europe - Dvali says travel between Europe and Georgia will be "visa-free" within the next two years - and the new government, staffed with young technocrats, has driven serious state reform with the goal of making the country an easy and transparent place to do business.
The competition is likely to be fierce. Other routes between Asia and the West bypass Georgia altogether, such as the Trans-Siberian corridor through Russia, and another to the south through Iran. There is also the ogre of maritime trade.
"Our main competition is maritime transport," Georgian Railway's general director Mr Mamuka Bakhtadze told IRJ in Tbilisi.
Georgian Railway (GR) is mainly a transit railway. "Around 80% of our revenue comes from transit cargo, and there is always some kind of geopolitical competition going on in the region to attract this freight," Bakhtadze explains. Transit traffic is split roughly 50:50 between liquids and dry bulk.
On the other corridors, Bakhtadze says there are elements of both competition and cooperation. "It's hard to say that these guys are 100% our competitors. We are partners with the northern corridor. There is also the southern corridor via Iran which is also pretty competitive - but, from another angle, the south corridor is an add-on of Traceca."
Traceca is the Transport Corridor Europe-Caucasus-Asia transport initiative involving the European Union and a number of states in east and central Asia, and is one of two corridors that GR is investing heavily in, the other being the Baku - Tbilisi - Kars railway project. Traceca is a vital, multi-modal trade route that holds the key to east-west trade linking Europe with Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Afghanistan, and ultimately reaching all the way to China.
"The West and China are becoming more interested in doing logistics via our corridor," Bakhtadze says. "Transport to Europe by sea [from China] is very time consuming - 70-75 days - while in our case they can do it in around 20 days."
Getting Traceca working has not been easy, however. The corridor crosses both the Black and Caspian seas, traverses half a dozen countries with their attendant tariff and border control issues, and suffers from a lack of port capacity.
According to Bakhtadze, the tariff regime was one of the biggest constraints. "It was very complicated for the ordinary customer," he says. "We have overcome this with a tariff committee comprising all the main players and we are now selling the entire corridor using the "one-window" principle. We now have an entire-corridor tariff for main cargoes."
Meanwhile, the Traceca nations are investing heavily in rail and port infrastructure. Azerbaijan is modernising its railway from Baku on the Caspian Sea to the Georgian border and building a $US 2bn port south of Baku at Alat. Kazakhstan is forging ahead with a 1200km railway to link it to the corridor, and energy-rich Turkmenistan - which sits on the world's fourth-largest natural gas reserves and an estimated 12 billion tonnes of oil in the Caspian - is building a $US 5.2bn port at Turkmenbashi on the Caspian Sea. According to Reuters, the new port, which is being built by Gap Unsaat, Turkey, will see freight traffic grow from 10 million tonnes today to 25 million tonnes by 2020.
In Georgia, where there is a lack of capacity at Black Sea ports, the government plans to build a deep-sea port at Anaklia which will significantly increase container throughput. Anaklia's capacity will be 7 million tones initially, rising to 40 million tonnes over 12 years.
To make best use of that extra port capacity, GR is also busy with a number of projects to remove a severe bottleneck on its east-west main line. In a 2008 report on the Caucasus rail corridor, the World Bank noted that while the railway from Baku in Azerbaijan was double-track all the way to Samtredia in western Georgia except for a 6km single-track section, the lines from there to the Black Sea ports at Batumi and Poti were single track, causing bottlenecks on those sections when traffic was heavy.
The terrain is also a factor. While the track can handle train speeds of up to 80km/h for freight, the steep gradients and curves on the mountain section between Khashuri and Zestaponi, along with frequent stops by downhill trains to cool their brakes, mean overall train speeds are much lower.
"We have a modernisation project aimed at tripling the capacity of our corridor from 30 million tonnes per year to 100 million tonnes," Bakhtadze says. "The main disadvantage of that link is a single-track tunnel, but we are constructing a double-track tunnel. The project will cost around $US 400m, so it's pretty large."
The Tbilisi bypass project should also increase capacity. The scheme, which will see the main line, together with the capital's main station, re-routed around the city, has had its share of criticism, but will free up about 74 hectares for development.
GR has been given an 18-month deadline by the government to sort out the project. Bakhtadze says Austrian company M C Mobility had been contracted to redesign the project after GR officials picked-up "design mistakes."
While the railway will bypass the city, there is an option to leave one of the existing tracks in place and use it for passenger services and dry bulk.
Given the current pressures on the main line, it is no surprise that Georgia is a keen supporter of what Georgian officials call "the new Silk Road" - the 826km Baku - Tbilisi - Kars railway project. When it is completed next year, it will connect Azerbaijan, Georgia and Turkey through the construction of a new line from Akhalaki, Georgia to Kars, Turkey which will provide for the first time a fast, rail-only route all the way to Western Europe.
The $US 650m project aims to tap into booming trade - growing at an estimated 10-15% per year - between Turkey and the countries huddled around the Caspian Sea. But the line, which is being built by Marabda-Kartsakhi Railway, has suffered repeated construction delays. A dream of late former Georgian president Eduard Shevardnadze, the railway was due to open in 2010 but is unlikely to see its first train before 2015.
"The Baku - Tbilisi - Kars (BTK) project is not only about the Georgian section," Bakhtadze says. "The main challenge is the construction of a tunnel between Turkey and Georgia - that is the bottleneck. The idea is to finish this tunnel as soon as possible and our Turkish colleagues are trying their best."
Only when the railway is complete will it be transferred to GR, Bakhtadze says. "From a legal perspective this railway does not belong to Georgian Railway." Initial freight volumes on the BTK are estimated at 5 million tonnes per year.
GR also hopes to boost volumes of originating traffic from current levels of about 3-3.5 million tonnes per year. "It has a positive trend," Bakhtadze says. "We believe it will increase by 10-12% a year, especially taking into consideration our free trade agreement with Europe."
Solid freight revenues are important for GR's passenger business. Like many railways in the region that were once part of the former Soviet State Railways, GR runs passenger trains as an unprofitable social obligation, and its passenger business is entirely cross-subsidised by freight operations.
"That's a big pressure," Bakhtadze says. "Our goal is to cut the subsidy by as much as 50% in the next 24 months."
Right now, GR carries about 4 million passengers a year. "The trend is positive but we are a small country and it is very hard to compete with cars," Bakhtadze says.
To help fund its various projects, GR went to market in 2012 with a $US 500m corporate bond issue on the London Stock Exchange. Bakhtadze says GR is monitoring funding issues closely and would be ready if, for example, the government decided GR should become a shareholder in a new port, to raise further capital via bonds.
Meanwhile, GR continues to invest heavily in rolling stock and containers, and negotiations continue with rolling stock manufacturers for new technology which Bakhtadze reckons would reduce GR's electricity consumption by as much as 40% per year.
If GR succeeds in its ambitions to be a lynchpin between east and west, it could lead the railway down the privatisation path via a minority IPO.
"Sometime in the future, we will do an IPO," Bakhtadze says. "But it is also a political decision and at the end of the day, the main shareholder - in our case the Georgian government - should decide."