TRANSPORT HUB

Increased tensions between Russia on the one hand and Turkey and Ukraine on the other have led to an economic war. In addition to sanctions on the procurement of goods, the parties block cargo transportation through the territory of their countries.

In such circumstances, Baku is trying to maintain good neighbourly relations with Turkey, Russia and Ukraine and become an alternative connecting transport hub, attracting cargoes on the East-West and North-South international transport corridors.

As a result, Ukraine and Turkey are stepping up the route through Georgia and Azerbaijan for the transportation of goods to Central Asia and China. But it is clear that any war, including an economic one, will eventually end. And here the first priority is to optimize the route and attract cargo for a long period.

The first trial train travelled from the Ukrainian port of Ilyichevsk via Georgia and Azerbaijan to Kazakhstan and the Chinese border in 15 days and cost 5,500 per container on average.

At the same time, Ukraine wants to reduce the travel time of the train from 15 to 10 days and reduce container transportation to 5,000 dollars and lower, which will be comparable to the cost of transportation by the Russian railway. Incidentally, the Ukrainian side is now waiting for the results of the passage of the second trial train, which they decided to send to Central Asia through Turkmenistan this time.

According to the results of the trial trains, the heads of the railway administrations of Ukraine, Georgia, Azerbaijan, Kazakhstan, representatives of the Caspian Shipping Company, as well as the ports of Baku and Aktau will try to adopt a common tariff for goods from Ukraine to China.

In general, the question may arise: is the game worth the candle given the necessary approvals and discounts by the leaders of transport companies in different countries? The answer to this question comes from the fact that in 2015 alone the volume of traffic from Ukraine and China alone exceeded 25m tonnes, which was a record figure for the last decade. The Baltic countries are also interested in the Trans-Caspian transport route. At the beginning of February, a preliminary memorandum was signed with Lithuanian partners in Kiev regarding the merger of the Silk Road and the Viking train. This combined route is a joint project of the railways and ports of Lithuania, Ukraine and Belarus. The route passes through Ukraine, Belarus and Lithuania, connecting the chain of maritime container and contrailer lines of the Baltic region with the similar systems of the Black, Mediterranean and Caspian Seas.

One can imagine that in view of the Baltic countries, Scandinavia, Turkey, Ukraine, as well as Eastern Europe the freight corridor via Georgia and Azerbaijan to Central Asian countries with access to China will become a real "full-flowing river".

According to the calculations of the Caspian Strategy Institute, the trade volume between China and the EU in 2020 will grow to 800bn dollars. "If you involve 10 per cent of this turnover in the Trans-Caspian transport route, then cargo worth 80bn dollars will pass through the corridor. This will have a significant impact on the economic development of member countries," the coordinator of the Institute, Rucan Kaya, said.

It is noteworthy that work is under way in Azerbaijan, Kazakhstan and Turkmenistan to increase port facilities, and in order to attract and retain goods on the Europe-China route, there is a need for coordinated work between all countries on this path.

In this regard, a large share of the responsibility rests directly with the Turkish leadership, which enjoys a reputation among the leaders of Central Asian countries. We are talking about the visit of Turkish Prime Minister Ahmet Davutoglu to Astana at the beginning of February. In meetings with President Nursultan Nazarbayev, Davutoglu drew special attention to the issue of transit and problems of Turkish goods at the port of Aktau.

The government of Kazakhstan very promptly responded to Turkey's requests. First Deputy Prime Minister Bakytzhan Sagintayev got acquainted with problems of hauliers at the port of Aktau and gave a week for simplifying cargo clearance procedures. As a result, if earlier one vehicle spent 15 hours to leave the port of Aktau, going through all registration procedures (customs, phytosanitary procedures and so on), now it takes only 48 minutes.

Within the framework of the visit to Georgia, Sagintayev noted that the railway departments of Georgia, Azerbaijan and Kazakhstan have agreed to create a consortium that would provide the movement of goods from Chinese ports to the port of Batumi and then to Turkey and Europe.

"This is a very convenient transit route for everyone, and we are all seriously interested in creating such a consortium," the first deputy prime minister of Kazakhstan said.

He noted that Kazakhstan is not going to give up its assets in the port of Batumi and the Batumi oil terminal, since it is connected with the trans-Caspian transit route.

According to him, Minister of Economy and Sustainable Development Dmitriy Kumsishvili convinced him that the government of Georgia will ensure the protection of these assets, as it wishes Kazakhstan to be an investor in this business.

According to Dmitriy Kumsishvili, the Kazakh side guaranteed that it will not leave the Batumi port and oil terminal and that it plans new investments in these facilities.

"We raised the question of the Kazakh goods also passing through this corridor and this corridor involving as much cargo as possible from Kazakhstan," Kumsishvili added.

President of JSC Kazakhstan Temir Zholy (Kazakhstan Railways) Askar Mamin noted that freight traffic on the route will increase after the launch of the Baku-Tbilisi-Kars railway. "We expect that the flow of containers in this area will be about 300,000 by 2020, which is ten times more than what we have today. By the end of the year, we plan to put into operation the first starting complex in the port of Kuryk, and the load will thus be distributed between the ports of Aktau and Kuryk," he said.

We shall hope that the leadership of Turkmenistan will make every effort to grab as "a bigger piece of cake" of transit cargo transportation as possible, because the Turkmen path is the shortest in the direction of China. If the transportation of one container by the Caspian Shipping Company from Alat to the port of Aktau costs 1,200 dollars, to the port of Turkmenbashi it costs 1,000 dollars. It is clear that the Turkmen route has very complicated cargo logistics in view of the fact that it passes through several Central Asian countries, although Turkmenistan is beyond competition in the delivery of goods to Afghanistan as it is the shortest route.

On the other hand, Azerbaijan is also actively using the North-South transport corridor for the transportation of goods from Russia to India. Thus, the railway departments of Azerbaijan and Russia have already agreed the through tariff for the passage of goods by the North-South route. Logistical operators of the project are JSC Russian Railways Logistics and ADY Express LTD. The first shipment by the routes is planned before the end of March 2016.

Currently, cargo traffic from India to the European part of the Russian Federation is provided by maritime transport, and the estimated travel time from the Jawaharlal Nehru Port (Mumbai) to Moscow is about 40 days. The new multi-modal route will include the use of marine, rail and road transport and will make it possible to halve the time of transportation. In the long-term, it is planned to optimize the route to 14 days. As part of the negotiations, the parties agreed on competitive rates: the tariff for the transportation of a 40-foot container from Mumbai to Moscow will be no more than 3,000 dollars, according to the press service of Russian Railways.

And this is given that the Russian and Azerbaijani railways are not directly linked with the railways of Iran. At the end of this year, construction work on the Astara (Azerbaijan) - Astara (Iran) railroad is expected to be completed. We are talking about the construction of an 8.3-km railway line on the territory of Azerbaijan, a border bridge and the construction of 1.7 km of railroads in Iran.

As you can see, in the North-South project, the transport workers are faced with challenging tasks to keep to the tariff and deliver the goods from the shipper to the customer as soon as possible.

As a result of the launch of the North-South corridor, it will be possible to organize the transportation of goods from Finland to India via Russia, Azerbaijan and Iran. In the long-term, it is possible that Ukraine and Eastern European countries will decide to transport their cargo through Azerbaijan to Iran and India and back.

Thus, in the coming years Azerbaijan has very seductive prospects for the transit of goods by the West-East and North-South international transport corridors, which can bring not only multi-billion dollar revenues and reduce dependence on the oil and gas sector, but also create tens of thousands of new jobs.