AT SPEED OF SOUTHWEST WINDS

For many years, Azerbaijan has strengthened its role as a transit and logistics hub for rail and sea routes in the Caspian region. This year was a milestone in terms of completion of infrastructure construction for TRACECA and North-South transport corridors. It was possible to achieve significant progress in establishing attractive tariffs and simplifying cross-border procedures to ensure transit of commercial goods through these routes. At the same time, Azerbaijan and its regional partners are trying to open new transport corridors, one of which should be the South-West project. The supply chain of this route assumes delivery of goods from India through the Persian Gulf, Iran, Azerbaijan, Georgia, and the Black Sea to Europe.

The development of cross-border transport routes, providing for the transshipment of cargo between Indochina and Europe through the transit infrastructure available in Central Asia, Azerbaijan, Georgia, Turkey, Russia and Ukraine, has significantly accelerated in the past two years. The states participating in Silk Road and North-South projects have agreed to streamline customs and border procedures, to establish mechanisms for rapid passage of goods in transit, to unify tariffs, including the adoption of common through rates. These measures, as well as large-scale initiatives on the establishment of railway and port infrastructure have helped to strengthen the implementation of new logistic schemes for trans-regional multimodal cargo transportation with a long-term vision of maximizing the loading of transport infrastructure projects of participant states.

The first container train Nomand Express passing through the Trans-Caspian International Transport Route (TCITR) arrived to Azerbaijan from China in August 2015. Over the past period, several container trains moving in both directions have arrived to destination points in 8-11 days, which is two and a half times less than the period required on alternative routes. In mid-January 2016, Azerbaijan, Kazakhstan, Georgia, and Ukraine signed a protocol on the approval of competitive tariffs on the route China, Central Asia, Black Sea, Ukraine and further to Europe. Over the past period, participants of the project have held several meetings with TCITR operators in Baku, Tbilisi, Ashgabat and other cities to coordinate logistics and the possibility of increasing transshipment between the West and the East.

In this context, Azerbaijan plays a special role being the key element of TCITR, and makes every effort to simplify and accelerate the transit. With the construction of the new port Yeni Baki and a special economic zone in the nearby Alat settlement, as well as the completion of the Baku-Tbilisi-Kars (BTK) railway, it is now possible to establish a convenient, fast and highly competitive land-sea route connecting Europe with Asia. Thanks to the simplification of border and customs procedures, approval of competitive transit tariffs, Azerbaijan was able to increase 6-7 times the volume of transshipment from Turkey to the eastern shore of the Caspian Sea during the first half of 2016.

The common initiative of Azerbaijan, Turkey, Georgia and Kazakhstan to expand the trans-Caspian transportation through the East-West corridor has an increasing number of supporters throughout the region and the world. Not only the Central Asian states, China and Turkey but also Ukraine, the Nordic and Baltic countries show a genuine interest in the project. The agreement signed in Ashgabat on September 5, 2016 between Azerbaijan, Turkey and Turkmenistan further confirms the sustainability of this trend, providing for the establishment of a transport corridor between Beijing and London. “We need to promote the development of high-capacity and high-speed transport corridors for the export of products manufactured in the Asian region to the West. Since 2003, Turkey has been implementing projects for the construction of roads, railways, and sea and air transport routes. In particular, the Yavuz Sultan Selim Bridge has been recently commissioned for this purpose. The construction of the third airport (in Istanbul) is ongoing. The construction works on the Turkish segment of Baku-Tbilisi-Kars is nearing completion. The implementation of these projects will help us to integrate with the international transport routes and to implement the national development plan regarding the Silk Road. One of such projects should be the new route connecting London with Beijing. We are one step closer to this goal after the signing of the Ashgabat Declaration”, said Ahmet Arslan, the Turkish Minister of Transport, Shipping and Communications at the signing ceremony. The signing of the Ashgabat Agreement was also highly appreciated in Azerbaijan: the relevant authorities ascertain the practical start of cargo shipment along the Beijing-London transport corridor. “Upon instruction of the President of Turkmenistan, 20 thousand tons of Turkmen oil products will soon be delivered via Azerbaijan to Europe. Currently, the volume of Turkmen goods going through the territory of Azerbaijan (in both directions) reaches about 2 million tons per year. The Ashgabat Agreement will significantly increase the transit volumes passing through the territory of Azerbaijan”, said Javid Gurbanov, Chairman of CJSC Azerbaijani Railways (ADY).

Turkmenistan is not interested in shipping through Iran due to complex topography of the country. Therefore, they prefer the supply of oil and petroleum products through the territory of our country. According to the head of ADY, in subsequent phases, it is planned that Uzbekistan, Afghanistan and other countries also join the transport of goods through the territory of Azerbaijan. Mr. Gurbanov believes that this will increase the volumes of transit cargo along the Silk Road and, in particular, along the Beijing-London route up to 50 million tons per year, providing for considerable dividends for the national economy. “If we can reach this level, we will earn about $50 per ton of transited goods. In the future, the annual income of Azerbaijan from transportation of goods will reach to about $2.5 billion”, says Gurbanov, adding that we need years of efforts to attract the attention of international carriers to Azerbaijan.

According to Shahin Mustafayev, Minister of Economy of Azerbaijan, new projects for the development of transit potential of Azerbaijan are important for the sustainable development of the country and diversification of geographic vectors of transport corridors. The implementation of the joint Iranian-Russian transport project North-South helps the transformation of our country into a regional transport hub. As part of this project, the laying of rails and the construction of a bridge connecting Iran with Azerbaijan at the border city of Astara commenced at the beginning of this year. Over the past period, relevant officials of Azerbaijan, Russia and Iran have held a series of meetings and agreed on the expansion and development of the North-South corridor, as well as the establishment of a coordinating committee to accelerate the development of the route. Finland has also expressed readiness to join this project. “By the end of this year, the construction of the railway up to the border with Iran and the bridge over the Astarachai River will be completed. In the future, when we connect with the Iranian section of railway route, we will have an access to the ports of the Persian Gulf, which would be a significant step to increase the transit potential of Azerbaijan”, said Mr. Mustafayev.

It is noteworthy that the accelerated process of construction of the infrastructure corridor North-South will serve as a basis for building yet another international transport route, South-West. The respective agreement was already signed in 2016 in Baku between Azerbaijan, Georgia, Iran and Ukraine. The corridor will allow reducing the delivery period for cargo transportation from India to Europe by 2-3 times. The location of the new corridor at the initial stage of the project is similar to the North-South: it originates in India and passes through the Persian Gulf, Iran and Azerbaijan. Then, the cargo will be routed through Georgia to the Ukrainian or other ports of the Black Sea and further to Europe bypassing the Baltic ports of Russia.

Azerbaijan is also trying to attract cargo carriers to South-West. The local company ADY Ekspress intends to start testing the route by shipping the first two tanks with 90 tons of light petroleum distillate. It is scheduled to transport 10 thousand tons of cargo at the first stage of the South-West project, but in the future, this volume will increase by several times.

In short, it is very likely that the South-West route will pass through the territory of Azerbaijan thanks to recently introduced customs and tax tariff preferences for carriers from Iran and Turkey.