TRANSIT THROUGH AZERBAIJAN

Thanks to its contribution to the development of main land and maritime cargo corridors, Azerbaijan is looking for additional opportunities to expand the transit of goods between Europe and Asia. Ramin Guluzade, Azerbaijani Minister of Transport, Communications and High Technologies, noted at the opening ceremony of the 18th international exhibition TransCaspian 2019 that the development of transport and logistics is extremely important for the country's economy, which is interested in strengthening private entrepreneurship and expanding non-oil exports.

New investments

By and large, the main topic of discussions at the Trans-Caspian International Transport Route conference was focused on the development of international transport routes passing through the territory of Azerbaijan. It is not surprising if we take into account that in terms of the level of involvement in transit cargo transportation, Azerbaijan is the leading country in the region.

"In the first quarter of 2019, Azerbaijan’s revenues from cargo transportation through the international transport corridor TRACECA increased by 4.3% reaching ₼156.5 million," Akif Mustafayev, Secretary of TRACECA-Azerbaijan, an expert in transport and logistics said.

This positive trend demonstrates the success of Azerbaijan’s efforts in its search for new opportunities to expand transit cargo transportation between Europe and Asia and to attract investment in transport infrastructure. Azerbaijan has improved its participation in EU projects to expand the Trans-European Transport Network (TEN-T). In January 2019, an important decision was made to expand TEN-T beyond the EU, which will also cover the Eastern Partnership countries, including Azerbaijan. This decision was made by the European Commission at the legislative level and also implies cooperation in the field of finance. For example, transport projects proposed for Azerbaijan include investments and loans worth €1.1 billion. It is planned to implement these projects as part of the Indicative TEN-T Investment Action Plan, prepared by the EU in cooperation with the World Bank. The plan includes a project to create 5 logistics centres (€369 million), establishment of a free trade zone in Alat (€410 million) and the upgrade of the East-West railway (€328 million).

Readiness of the EU to invest considerable funds in the development of the transport infrastructure of Azerbaijan is explained not only by its unique geographical location at the crossroads of international routes, but also by the presence of the infrastructure base created in recent years: modern highways, Baku International Sea Trade Port in Alat, Baku-Tbilisi-Kars railway corridor. Moreover, the government intends to further increase investments in the development of transport and logistics infrastructure in Azerbaijan. "It is planned to create new logistics centres in Ganja and at the Girmizi Korpu customs post. In general, we plan to create transit and logistics centres in each region of the country: for example, a free economic zone is already created in Alat," Rufat Bayramov, Secretary of the Coordinating Council of Azerbaijan for Transit Cargo Shipment, said at the transport exhibition.

Maritime cargo transportation

Cargo transportation along the Trans-Caspian International Transport Route (TCITR), which includes national transport companies of Kazakhstan and Azerbaijan with the active partnership of Georgia, Turkey and Ukraine, is developing most successfully. TCITR participants ensure transportation of goods between China and the markets of Turkey and Europe, including through several container trains Nomad Express. An important moment of bilateral cooperation is the work of the seaports of Aktau, Kuryk and Alat, which are mainly involved in the transportation of petroleum products, grain, chemicals, fertilizers and other goods. In order to reduce time for the processing of ferry cargoes between the Kazakh and Azerbaijani ports, a new single-window procedure for issuing transportation documents has been introduced. As a result, the processing time has been reduced from 10-12 hours on average to 4 hours, with customs and border services, temporary storage warehouses working around the clock.

TCITR participants signed a protocol on approval of competitive preferential tariffs, and also created the Trans-Caspian International Transport Consortium. Joining of the Turkmenbashi maritime port (Turkmenistan) to the ferry transportation of commodities, as well as the signing of an agreement between Afghanistan, Turkmenistan, Azerbaijan, Georgia and Turkey last November on the estalishment of the international transport corridor Lapis Lazuli is an important milestone in increasing the transit flow through the port of Alat in Azerbaijan. The first cargo on this route has already arrived at the port of Alat in December 2018.

Due to the growth of cargo volumes along the TCITR, in the first quarter of 2019, the volume of cargo transported through the Yeni Baki port exceeded 1 million tons, while transit accounted for 861 thousand tons, or 86% of the total shipment volume. Moreover, the largest growth was observed in container transportation: during this period, 7,253 containers (in TEU equivalent) were handled, which is 55.2% more than the same period last year.

Another diversification

Shipment of cargo along the TCITR, which is part of the TRACECA transport corridor, provides the main transit volumes for Azerbaijan. At the same time, according to A. Mustafayev, a new trend has emerged today, which envisages the diversification of routes within the TRACECA corridor and the delivery of goods in various directions. “The Baku-Tbilisi-Kars railway means going directly to the Black Sea, through which some European countries can be connected to this corridor. In addition, some Nordic countries and Scandinavian states are interested in entering the territory of Azerbaijan via the North-South corridor through Russia", Mustafayev said.

MOU signed in May 2019 between Russian Railways OJSC (RZhD) and Azerbaijan Railways CJSC (ADY) proves the possibility of effective convergence (unification) of the West-East and North-South corridors. The parties agreed on joint implementation of measures that will contribute to the growth of cargo traffic on Iran-Azerbaijan-Russia-Europe routes within the North-South project, as well as the Russia-Azerbaijan-Turkey route using the potential of the BTK corridor. In particular, Russian Railways and Azerbaijan Railways have agreed to jointly attract additional cargo for container shipments along the western route of the North-South corridor. At the same time, Baku and Moscow will also focus their efforts on the development of transit traffic in the East-West-East direction, primarily between Azerbaijan and China in transit through Russia, as well as between China and other countries in transit through Russia and Azerbaijan. To reduce the time of cargo delivery, it is planned to streamline border and customs procedures, including electronic data interchange. "Russia plans to switch part of the cargo traffic, including containers, via the Trans-Siberian railway through Azerbaijan and Georgia to Turkey for further exports to Europe. This project will be implemented through the BTK corridor," Alexander Misharin, First Deputy General Director of Russian Railways.

Turkey fully supports Russian-Azerbaijani agreements, as evidenced by the Memorandum of Understanding signed in May between Ankara, Baku and Moscow on the development of cargo transportation on the Baku-Tbilisi-Kars railway. The joint venture created on the basis of these agreements is targeting transport and logistics activities and the expansion of trade between Russia and Turkey.

Over the past two years, Azerbaijan has also been working on the upgrade of the railway infrastructure from the Russian to the Iranian borders for the speedy implementation of a joint project with Moscow and Tehran to form the North-South international transport corridor. At the same time, this route currently ensures the transportation of cargo from Russia to Iran and back in transit through Azerbaijan using combined rail-road transportation.

"Last year, cargo turnover along the North-South route increased by more than eight times. In the first quarter of 2019, cargo turnover increased by almost twice. We believe that the untapped potential is even higher," Minister of Economy of Azerbaijan Shahin Mustafayev said at the St. Petersburg International Economic Forum held recently.

Thanks to investments in such infrastructure projects, Azerbaijan turns into a regional transport hub, providing multimodal transportation of commodities between Europe, Central Asia and China.