A CASPIAN TRANSIT

Joint projects implemented by Azerbaijan, Turkey, Georgia and Kazakhstan to expand trans-Caspian cargo transportation and transit between China and Europe contribute to strengthening Azerbaijan's position as a key regional transit hub. Cargo transportation between the Caspian ports plays the most important role in the development of new transport corridors. In recent years, Azerbaijan has been implementing a large-scale program to establish the modern port infrastructure and to build the cargo fleet of Azerbaijan Caspian Shipping Company CJSC.

The last two or three years have been marked as a breakthrough for the development of sea freight traffic in the Caspian Sea. A number of factors such as the completion of long-term infrastructure projects, testing of new logistics corridors along the Great Silk Route, replenishment of the fleet of the littoral states, and sharp geopolitical changes in the region have prompted transport companies to search for new routes in the Caspian.

The most important factor contributing to the increased dynamics of sea transportation was the radical reconstruction of seaports in Aktau and Turkmenbashi, as well as the launch of the first stage of the Baku International Sea Trade Port in Alat (Yeni Baki). The facilities of the Yeni Baki port constructed since 2010 to the south of Baku are commissioned in stages: in 2014, the infrastructure of the ferry terminal was put in operation to ensure an annual turnover of about 10 million tons of cargo, including handling of 40,000 containers. It is expected to deliver a universal terminal for dry cargo and containers, as well as a quay including four berths for Ro-Ro vessels. With the completion of the third stage, it is planned to increase the port's cargo turnover to 25 million tons and about 1 million containers.

In parallel with the development of the Alat port, Azerbaijan Caspian Shipping Company CJSC (ASCS) is implementing a project to expand the infrastructure of the dry cargo port Zykh built in 2010. It is planned to build a new transport and logistics center over there. There are seven berths in the Zykh port located in the Baku bay, which can simultaneously receive 14 vessels. It also has three sheds for cargo storage, a breakwater and railway branch line.

Currently, the port receives and ships mainly ferries with trucks, dry cargo ships with containers, piles, and pipes. In the future, the range of cargo and transshipment volumes will increase significantly.

"The modern transport infrastructure for transit transport in Azerbaijan contributes to turning investments into income," said Minister of Transport, Communications and High Technologies of Azerbaijan Ramin Guluzade at the opening of the TransCaspian / Translogistica 2017. "The construction of the largest international sea trade port in the Caspian Sea and the adjacent free economic zone will expand the opportunities for investing in the Azerbaijani economy."

Since 2015, in parallel with the upgrade of the infrastructure and increasing the cargo capacity of the ports, Azerbaijan, Kazakhstan and Turkmenistan have been active in negotiations that contributed to the optimisation of tariffs for railway and sea transshipment of commodities and accelerated the processing of goods, as well as the border and customs procedures in ports.

A little more than two years ago, with the active partnership of Ankara and Kiev, Baku, Astana, Tbilisi established the Trans-Caspian International Transport Route (TCITR), which is designed for the shipment of goods between China and the markets of Turkey and Europe including several container trains Nomad Express. Over the past two years, the cooperation between TCITR partners has only increased: in early 2016, Azerbaijan, Kazakhstan, Georgia and Ukraine signed a protocol on the approval of competitive preferential tariffs, and in April, the Trans-Caspian International Transport Consortium was established. Member companies include: ADY Express LLC and ACSC Logistics (Azerbaijan), KTZ Express JSC (Kazakhstan) and Trans Caucasus Terminals LLC (Georgia).

The process of institutionalization of TCITR continued in the current year as well. In early April 2017, railway and sea operators of Azerbaijan, Kazakhstan and Georgia signed an agreement on the establishment of the Commonwealth of Legal Entities of the International Association Trans-Caspian Transport Corridor, which aims at attracting transit and foreign trade cargo, as well as developing integrated logistics products along the TCITR. In April, the ASCS and Kazakhstan Railways JSC signed an agreement on the establishment of a joint venture on a parity basis, which will cover ferry and rail transportation and will play an important role in attracting container cargoes from Europe, Central Asia and China to the TCITR.

The cooling of Russian-Turkish relations was the most important factor that stimulated the development of trans-Caspian transportations. Thus, since the end of 2015, the route of container and road cargo from Turkey to the Central Asian states shifted to the Baku port and increased the loading of Ro-Ro type ferries and vessels. Previously, Baku-Aktau-Baku direction had about one thousand heavy-duty trucks annually, while the last year this volume was reached in just a month.

The development of the TCITR can be best illustrated by the statistics of cargo handling at the Yeni Baky port in 2016. Last year, the volume of cargo transportation increased by 47% (up to 4.5 million tons), with 87% of cargo in transit traffic. During the reporting period, the volume of transportation by large vehicles (TIR) ​​increased three-fold. In total, during the past year, the port handled 23.4 thousand trucks compared to 8.7 thousand in 2015. About 60% of cargo was shipped through the Baku-Aktau-Baku route, the rest of the shipment passed through the Baku-Turkmenbashi-Baku route. Equally important is the growth of container shipments: compared to 2015, the handling of twenty-foot containers (TEU) increased by 28.5% reaching 17,100 TEU.

In parallel with the development of a cluster of container and dry cargoes in the Caspian, the development of infrastructure for the expansion of oil transportation continues. Thus, at the end of March 2017, Azerbaijan started receiving transit supplies of oil tanks from the newly commissioned Kuryk port in Kazakhstan. ASCS, which is the only ferry operator in the Caspian Sea, plays the leading role in this process. Over time, the significance of this port for the development of TCITR will increase even more, given that another berth for Ro-Ro and Ro-Pax vessels is being constructed in Kuryk.

Meanwhile, the main volumes of transit transshipment of oil and oil products to Azerbaijan come from the ports of Aktau and Turkmenbashi. In particular, last year oil transshipment increased by 87.5% reaching 1.575 million tons.

In general, the seaports of Azerbaijan in the first quarter of 2017 increased the tendency observed last year and the volume of transshipment by 26%.

It is noteworthy that in 2015, after lifting international sanctions from Iran, the transit through the Caspian became intriguing. In 2018, Iran plans to open the largest port in the Caspian (Amirabad) equipped with a large ferry terminal and a special free economic zone. Amirabad will contribute to the development of maritime component of the North-South corridor and may also become an additional source of dry and container cargo for the South-West direction.

Thus, a fundamentally new situation is emerging in the Caspian Sea, where tanker shipments have only recently dominated: the sharp increase in the need for transshipment of dry, horse-drawn and truckloads has increased the need for Ro-Ro ferries and vessels and in the relevant port infrastructure.

Meanwhile, Azerbaijan has put maximum efforts for the development of its port infrastructure and fleet given the new trends in the Caspian. Currently, ASCS has 13 working ferries, two of which are Ro-Ro type vessels. Seven ferries are capable of getting 28 wagons, the remaining six - 52-54 wagons. "In general, over the past three years, the ASCS fleet has replenished with 15 new vessels. Total investments for their construction was $139 million," said the head of ACSC, Rauf Veliyev.

However, given the maximum involvement of the ferry fleet and the prospect of growth in orders from transport companies, Kaspar is building up this type of vessels.

“Baku Shipyard is starting to build two new unique Ro-Pax / ferry vessels designed by the Ukrainian Maritime Engineering Bureau LLC,” said Shahin Mustafayev, the Azerbaijani Minister of Economy. The vessels with a deadweight of 5540 tons are the most suitable for operation in the Caspian. Depending on the nature of the cargo, they will be able to take onboard 56 railway tanks, 46 open wagons or 44 freight cars. The vessel configuration also allows the loading of 50 wheeled trucks (TIRs), and 100 passengers. It is expected that the vessels will be commissioned by the end of 2018.

However, in order to meet the growing demand for ferries, ASCS does not rule out a possibility of acquiring ready-made vessels in neighbouring countries. Thus, the shipping company considers purchasing or renting Ukrainian ferries "Geroi Shipki" and "Geroi Plevny".

In 2016, ASCS earned ₼493.4 million, which is 34% more than in 2015. "Today, our company has no arrears or unpaid obligations on loans borrowed from the foreign banks under state guarantees," said the ASCS president  Rauf Veliyev. "Within the next five years, the available loans and liabilities will amount to only 1.5% of ASCS's annual income". That is, the growth of cargo transportation over the past two years provided ASCS with a decent profit, which allows the shipping company to purchase new vessels, upgrade its fleet, and invest in port and ship repair infrastructure.