The growth of “strategic” trade corridors, along with billion-dollar investments, rests on uncertain economic foundations.
Trade corridor announcements have become a fixture of great power summitry. At the 2023 G20 summit in New Delhi, leaders unveiled the India-Middle East-Europe Economic Corridor (IMEC) with considerable fanfare. President Donald Trump later called it “one of the greatest trade routes in all of history.” Since the intensity of the Gaza conflict has been reduced by recent agreements, there has been renewed hope that the project can move forward. Similar enthusiasm surrounds the Middle Corridor through Central Asia, Iraq’s Development Road, and the International North-South Transport Corridor linking Russia to India through Iran.
Massive connectivity investments are positioned as economic development, but they serve broader geopolitical objectives, including supply chain security, diplomatic influence, and the projection of state power. With the IMEC project, the United States and Europe hope to consolidate their alliance base across the Middle East and South Asia, while orienting supply chains and the economic activity of these countries in a westward direction. The project is both explicitly set up as a counterbalance to China’s Belt and Road Initiative while also mimicking its conflation of strategic and economic logic.
In an age of geoeconomics, economic and business decisions are increasingly being made by political actors. The announcement of a corridor generates diplomatic momentum, signals commitment to partners, and claims strategic space regardless of whether the infrastructure ever becomes operational or commercially sustainable. The fact that these projects keep being announced as political agreements between government leaders, well before any meaningful economic viability analysis is offered, makes this point stark. Governments may be committing billions to infrastructure projects driven by geopolitical ambition rather than economic fundamentals, a recipe for stranded assets and resource misallocation.
Is IMEC Commercially Viable?
IMEC offers the clearest illustration of this problem. The corridor would move goods from India by ship to the UAE, then by rail through Saudi Arabia and Jordan to Israeli ports, and finally by ship again to Europe. Proponents emphasize that it bypasses both the Suez Canal and Chinese-influenced routes, positioning it as a cornerstone of Western efforts to counter China’s Belt and Road Initiative. The strategic logic is attractive. But strategic logic is not the same as commercial viability, and IMEC’s economics are deeply problematic.
The fundamental challenge is straightforward: every time cargo shifts between ship and rail, it incurs costs such as port fees, loading and unloading, customs processing, and delays. IMEC requires at least two such transfers, plus extensive overland rail segments that must be built largely from scratch.
The Atlantic Council projects transit times roughly 40 percent faster than maritime routes. But speed advantages matter primarily for time-sensitive, high-value goods, a niche market. For bulk commodities and manufactured goods that constitute most of Asia-Europe trade, shippers will ask a simple question: why pay a premium for a complex, multi-modal journey when a single container ship can move goods door-to-door?
The Suez Canal handles the equivalent of roughly 12 percent of global trade precisely because direct maritime shipping offers unmatched cost efficiency. IMEC’s architects have not demonstrated how their corridor would attract meaningful commercial traffic away from this established route, absent sustained subsidies or a major Suez disruption.
The significantly lower cost of sea shipping means that overland routes are inherently undesirable to freight forwarders. Eighty percent of global trade is carried through the oceans, while less than 20 percent uses land routes. High-priority or high-value shipments like precious metals and semiconductors are typically transferred through air freight. Much of the share of road and rail shipments belongs to trade within continents, where sea routes may be unavailable.
Additionally, intermodal shipping presents additional security, logistical, and cost complications. In the IMEC context, shipments would be sent by sea from India to the UAE’s Jebel Ali Port. From there, they would be shipped by rail to Israel, where they would be placed on another ship for transport to a European port. These additional steps create penalties in the form of port fees and create possible delays and congestion.
One study on intermodal transit concluded that “the most critical parameters for the feasibility of such a system are the loading space utilization of the train and the cost for terminal handling,” and that transshipment costs restrict “Intermodal rail transport suffers from a number of problems that restrict its competitiveness over short distances.” Bringing ships and cargo into the waters of the famously complex security environment of the Strait of Hormuz and the Persian Gulf may also result in higher insurance premiums. The capacity mathematics presents an even more fundamental challenge. A single large container vessel carries approximately 24,000 TEUs, requiring well over 100 trains to clear one ship, given the standard train capacity of 150 TEUs.
When compared to normal sea shipping through the Suez Canal, this process only presents an attractive proposition for a small group of shippers: time-sensitive, high-value cargo where the premium over maritime shipping is justified; supply chain diversification for shippers seeking alternatives to a single route; specific bilateral trade flows where geographic or political factors make direct maritime routes impractical; and regional connectivity within the Middle East. Under normal circumstances, IMEC is likely to have only a niche use, which would complicate its financial viability and investment rationale.
IMEC’s boosters might respond that strategic considerations justify the investment even if commercial returns are modest. Diversifying trade routes enhances resilience. Offering an alternative to Chinese-dominated corridors serves Western interests. These arguments have merit. But they obscure a critical vulnerability: infrastructure investments have payback horizons of 30 to 50 years, while the geopolitical conditions that justify them can shift overnight.
IMEC’s viability depends on a specific constellation of factors: continued Gulf-Israeli normalization, sustained Western commitment to containing Chinese influence, and ongoing concerns about Suez reliability. If any of these conditions could challenge the commercial case for IMEC, it could dissipate. The billions invested become stranded assets, monuments to yesterday’s strategic priorities.
China’s Belt and Road Initiative Faces Similar Problems
Proponents of new corridors often invoke China’s Belt and Road Initiative as proof that ambitious infrastructure projects can succeed. The comparison is instructive. China’s rail links to Europe required years of heavy subsidies to attract traffic. According to the Center for Strategic and International Studies, the Chinese government provided $1,000 to $5,000 per container in support, covering up to half the transport cost. Even with this backing, and despite operating along a relatively simple single-mode rail corridor, China-Europe rail captured only a small fraction of bilateral trade.
For China, the so-called “Malacca Dilemma,” referring to the chokepoint for sea shipping in the Malacca Strait, provides an ample security-based reason to be willing to make that investment. If China, with its manufacturing scale, state capacity, and willingness to absorb losses, achieved such modest results on a less complex route, what realistic prospects do multi-modal corridors like IMEC hold? Without comparable subsidies sustained over decades, these projects will struggle to attract the traffic volumes needed to justify their construction costs.
IMEC is not unique. The Middle Corridor through Central Asia and the Caucasus faces similar structural limitations. Despite strong Western political support since Russia’s invasion of Ukraine, the route’s cargo volumes remain a fraction of Russian transit—reflecting the inherent cost disadvantages of crossing the Caspian Sea by ferry and navigating multiple national rail systems. Research shows the Middle Corridor costs $700–1,300 more per container than the Russian alternative, while the sea route would cost less than half as much.
Iraq’s Development Road is projected to cost $17–20 billion with completion slated for 2050. It also promises to reduce shipping times but is subject to roughly the same viability concerns as IMEC. Its viability is also premised on stability in the Persian Gulf and in Iraq itself. The International North-South Transport Corridor remains hamstrung by sanctions on both Iran and Russia. Each project shares the same fundamental flaw: strategic rationale substituting for commercial analysis.
The broader West Asia region, lying between Europe and East Asia, is where both the legacy center of the global economy and its new thriving players are located. So it’s no wonder that it has become a focus for infrastructure projects. This even matches historical patterns, as many experts have observed. One analysis argued that “As was the case in ancient and medieval times, actors able to control trade routes in the Middle East are poised to play a major geopolitical role.” But this historical framing obscures a crucial discontinuity. The maritime revolution of the fifteenth and sixteenth centuries fundamentally marginalized overland routes.
Is IMEC Strategic or Commercial?
None of this means infrastructure diplomacy lacks value. Diversified trade routes genuinely enhance supply chain resilience, as the Red Sea crisis demonstrated. Transit states gain leverage and development opportunities. Sponsoring powers project influence and offer alternatives to rivals.
But policymakers should be honest about what they are purchasing. If a corridor’s primary value is strategic rather than commercial, it should be evaluated accordingly, as a defense or foreign policy expenditure, not a trade investment with expected returns.
More importantly, decision-makers should demand rigorous feasibility analysis before committing billions to infrastructure that commercial shippers may never voluntarily use. They should stress-test assumptions against scenarios where current geopolitical conditions change. And they should consider whether strategic objectives might be achieved more efficiently through other means, such as diplomatic engagement, port security investments, or maintaining multiple maritime options.
About the Author: Alireza Ahmadi
Alireza Ahmadi is an expert on geoeconomics at the Geneva Centre for Security. He previously worked as an External Research Fellow at Vocal Europe and an Analyst at Gulf State Analytics. He studies geoeconomics and US foreign policy. Follow or contact him on X or LinkedIn.
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