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The gradual revival of the global economy, as well as the stabilization of demand and global oil prices in the post-pandemic period increases the demand for the maritime transportation of dry, container and road cargo in the Caspian Sea. Azerbaijan's partners in large transit projects therefore plan to launch new rail-ferry routes between the ports of the Caspian Sea and increase the transportation of goods from China in the next few years. These factors increase the demand for dry cargo ships, ferries and other vessels. Thus, the Azerbaijan Caspian Shipping Company (ASCO) is gradually increasing its cargo fleet, placing most of the orders for the construction of ships at the Baku Shipyard.

Growing demand

According to the State Statistics Committee, in 2020, freight traffic in the Azerbaijani segment of the international Transport Corridor Europe-Caucasus-Asia (TRACECA) decreased by 27% due to a sharp decline in oil demand since the end of March 2020, as well as cross-border lockdown and sanitary restrictions. At the same time, a 3.5% increase in transit cargo transportation along the TRACECA corridor was recorded in the same year: 7.5 million tons, or 21.2% of all cargo handled.

Remarkably, the lion's share of transit cargo was fell on rail and sea transportation. At the same time, since the second half of last year, the number of container cargo began to increase again.

This mechanism was used most effectively between Azerbaijan and Kazakhstan: despite the global crisis and lockdown restrictions, transportation of railway wagons and containers by ferries and feeder ships along the Aktau-Baku line was maintained in the normal mode. Moreover, according to relevant agreements between the two littoral states, in 2021 the Beket Ata feeder vessel will transport containers between the ports of Kazakhstan and Azerbaijan twice a month.

By the end of last year, Azerbaijan and its partners in Central Asia and Georgia agreed to gradually increase the number of container trains from China amid the growing demand for Chinese products in Turkey and European countries. As part of the Trans-Caspian International Transport Route (TCITR), it was possible to resume the movement of container trains, which was suspended during the pandemic. So, at the end of last year, two block trains with 42 forty-foot containers were sent from Turkey to the largest Chinese transport hub - the city of Xian (in transit through Azerbaijan). The train arrived at destination in just 16 days. According to an agreement, container trains carrying Turkish goods to China will run regularly twice a month. These agreements were duly respected, despite the tangible increase in prices since the beginning of 2021 for container transportation in China. The first block train with 50 containers launched from Qingdao in 2021 has already proceeded from the port of Aktau to Baku and further to Tbilisi and Turkey.

Further plans to increase the transportation of non-oil cargo through the Caspian Sea are very ambitious, especially amid the difficulties in the global supply chain due to the COVID-19 pandemic, a shortage of containers and the rise in prices for sea container transportation in China. The problem became obvious at the end of 2020 and intensified at the beginning of 2021 due to a sharp increase in the export of Chinese goods to the USA, Europe, Russia, etc., and due to a reduction in the delivery of goods in the opposite direction. As a result of this imbalance, as well as the rise in the cost of services of container ships and the failure of supply chains due to lockdown restrictions, the cost of maritime freight of containers increased from $1,500-$3,000 to $5,000-$10,000 per container depending on the direction.

Under these circumstances, forwarders and large shipping companies are considering the advantages of the Trans-Caspian ferry-rail route. According to the Minister of Industry and Infrastructure Development of Kazakhstan, Beybut Atamkulov, by 2025, a twofold increase in the number of ship calls to the Kazakh sector of the Caspian Sea is expected (1283 ship calls in 2020). It is also planned to launch a railway ferry service with the Russian port of Makhachkala this year. In the coming years, transportation of dry and container cargo from the Caspian ports of Iran, as well as the ports of Turkmenbashi and Yeni Baki will increase.

New ferries

Remarkably, all ongoing and promising projects for the maritime transportation of goods will increase the load on the shipping companies of the Caspian countries, requiring the renewal and construction of dry cargo fleets. In this regard, Azerbaijan Caspian Shipping Company is upgrading and replenishing its dry cargo fleet with new vessels. In line with the existing market trends, the Baku Shipyard completed the construction of two Ro-Pax ferries recently. The yard also holds negotiations for the construction of other vessels.

On March 1, President of Azerbaijan Ilham Aliyev and First Vice-President Mehriban Aliyeva took part at the launching ceremony of a Ro-Pax ferry vessel Akademik Zarifa Aliyeva and the ferry vessel Azerbaijan.

New multifunctional Ro-Rax type ferries were designed at the Odessa Marine Engineering Bureau, which has been cooperating with the Baku Shipyard for several years. In terms of their carrying capacity, Ro-Pax exceeds all ferries existing in the Caspian. Each vessel is designed to carry 100 passengers, 56 tank wagons or 50 heavy vehicles (TIR camions). Thus, Ro-Pax vessels have maximum carrying capacity at minimum draft, equipped with a balance system in windy weather, as well as a freight elevator and a helipad.

The construction of these vessels was carried out by order and mainly at the expense of ASCO. It is expected that they will be put in operation along the TCITR routes.

Existing 13 ferries and 6 Ro-Ro vessels are used for the transportation of vehicles and wagons in transit through Azerbaijan. All of them belong to ASCO. Today the company is the only ferry operator in the Caspian.

Construction of new ships and the renewal of the ASCO flotilla is under the special control of the president. All measures in this direction are carried out in accordance with the Strategic Plan for the Development of Shipping. Attention to the activities of the shipping company has increased after President Aliyev signed an order, which transferred ASCO to the balance of Azerbaijan Investment Holding in order to increase the efficiency of commercial operations, increase profits and optimize the process of tax payments to the budget.

To ensure the successful implementation of these tasks, ASCO is consistently intensifying the process of integration into regional shipping projects, mastering new routes. Since 2013, ASCO has largely renewed its fleet and acquired two dozen new vessels of various types, including those for the transportation of non-raw materials.

According to plans, until 2025, the company plans to purchase over 50 ships, including cargo and passenger ships, ferries, tankers, boats and other floating facilities. Moreover, most of these ships will be constructed in Azerbaijan. In the near future Baku Shipyard will have a lot of work to do. It plans to build a second Ganja-type tanker with an improved design, while two more tankers with similar characteristics will be commissioned in 2021. About two years ago, ASCO also entered into promising contracts for the construction of new vessels, including a 100-ton crane vessel and a 50-ton DP1 crane vessel, etc.

ASCO also cooperates with another Azerbaijani enterprise - the Zykh Ship Repair and Construction Plant, where the construction of six multifunctional tugboats of the WSB01 (1547) project designed by ASCO’s KasmorNIIproekt Institute and the Caspian Marine Engineering Bureau began in 2019. These vessels are designed for towing non-self-propelled ships and floating structures used for extinguishing fires, transportation of industrial personnel to stationary offshore platforms, etc.

Statistically, any investment in such infrastructure projects is justified and has a high rate of return. Thanks to these investments, Azerbaijan has become a regional transport hub providing multimodal transportation of goods between Europe, Central Asia and China.