SEVEN THOUSAND KILOMETRES AROUND THE WORLD

The global importance of the transport potential of the South Caucasus has grown significantly die to recent geopolitical changes in the region. The plans of Baku and Moscow to expand the transit of goods along the international transport corridor (ITC) North-South can be supported by Iran as soon as the Western sanctions are softened. Tehran intends to expand the road infrastructure on the border with Azerbaijan and accelerate the construction of the final segment of ITC - the Rasht-Astara railway line. These initiatives are supported by India, which is ready to transfer part of the cargo from maritime routes to the North-South route. Thus, the route of the first container block train that departed Helsinki runs through the territory of Azerbaijan up until the Indian port of Nava Sheva.

New realities

Azerbaijan's victory in the Garabagh war had a large-scale multiplier effect not only on the geopolitical alignment in the region. Positive shifts are observed in the economic sphere, especially in the international transport projects implemented in the South Caucasus. This effect is important both in terms of strengthening the strategic positions of Azerbaijan - the key transport hub of the region, and due to the emergence of new opportunities for unblocking transport communications. In particular, there is a potential for the Zangezur corridor, which will significantly expand the geographic diversification of corridors for the transit of goods and passengers.

Experts believe that the post-war realities will have the most favourable effect on the development of the railway and road infrastructure of the North-South corridor, the growth of cargo traffic along the ITCs, taking into account the increase in their efficiency and safety.

“As to the plans on the operation of the Zangezur corridor, the importance of other regional transport projects is increasing. One of them is the North-South corridor stretching from Russia to India: the early implementation of this initiative is important for strengthening the strategic positions of Azerbaijan. But this project is even more important in terms of increasing the volume of international cargo transportation, as well as Azerbaijan’s non-oil revenues,” an Azerbaijani member of parliament Vugar Bayramov said. According to him, following the recent incident with a container ship that blocked traffic in the Suez Canal and posed serious threats to the global supply chain, the importance of the North-South corridor has increased even more. Both the regional countries and European states recognise the economic efficiency and strategic importance of the ITC route, considering it as an alternative to sea transportation.

First train

At the end of June, the first block train with 32 forty-foot containers with a cargo of paper products departed from Helsinki, Finland to the Indian port of Nava Sheva. The operator of this project is the Azerbaijani company ADY Container LLC. Its railway platforms were dispatched to Finland for loading. Russian RJD Logistics and Tarkib Trans Co. are also partners in this pilot initiative. The block train will go along the North-South corridor through the territories of Russia and Azerbaijan. After reloading containers onto heavy trailers at the Astara terminal, the cargo will proceed to Iran, and then from the ports of the Persian Gulf by sea vessels will be delivered to India. In total, a container train along this route will cover a distance of 7,200 km and will reduce travel time to 22-23 days - this is significantly less compared to transshipment of goods by traditional sea routes. Thus, the transfer of goods through North-South will reduce the travel time between India and Europe from 40 to 20 days and will reduce transport costs by 30%. At the same time, it will be possible to reduce the costs of cargo forwarders. The cost of transporting a standard 40-foot container from Mumbai to Moscow will be less than $3,000 and slightly more for delivery to the Nordic countries.

As to the advantages of the new project, Shankar Shinde, Chairman of the Federation of Cargo Forwarders Associations of India, noted that, despite the sanctions against Iran, it was possible to ensure the smooth movement of goods thanks to the TIR Convention (Customs Convention on the International Carriage of Goods) and the initiatives of the Indian government.

In general, European and Indian forwarders are showing a growing interest in the transfer of cargo sent to Europe and Russia to overland routes. This is due to a noticeable rise in prices since January 2021 for the services of container ships, as well as temporary losses and increased costs for the passage of the Suez Canal. Therefore, if the first pilot project is successful, the movement of container block trains can be established on an ongoing basis. Paper products, machinery and equipment will be sent from Finland to India, while pharmaceuticals, chemical food and textile products will be sent in the reverse direction. Since the EU is an important trading partner of India, the range of cargo will grow over time, forming a stable cargo base for the North-South corridor.

The benefits of Azerbaijan from these projects are quite obvious. When the North-South route reaches its full capacity, it will be possible to increase the cargo turnover through the territory of Azerbaijan to 6 million tons, and even double it in the future. “Taking into account the growing international interest in the North-South corridor, its support is increasing in Azerbaijan, which in recent years has done a lot in terms of developing infrastructure and attracting investments into the project,” V. Bayramov said.

Iranian segment

This work continues and becomes more active along the Azerbaijani-Iranian section of ITC. Thus, during the recent visit to Azerbaijan of the Minister of Roads and Urban Development of Iran, Mohammad Islami, the parties signed a bilateral protocol on the construction of a new bridge over the Astarachay River on the border of the two countries. The new bridge worth of 4.7 million euros is planned to be constructed on a parity basis within a year - it will become an essential component of the road infrastructure of the North-South corridor. Its role is especially important in transit cargo transportation due to the lack of a through railway communication between the countries. The agreement also provides for the construction of a road bridge across the Araz River on the territory liberated from Armenian occupation, as well as the connection of the Ardebil railway with the railway tracks of Azerbaijan. In turn, Azerbaijan Demiryollari CJSC continues the construction of the Astara cargo terminal near the Azerbaijani-Iranian border. “Currently, the construction of a railway line between the Iranian cities of Rasht and Astara continues. The ultimate goal of the project is to connect the railway lines of Azerbaijan and Iran, after which the North-South transport corridor will receive a direct rail link along its entire length. Our goal is to increase the volume of railway cargo traffic between Azerbaijan and Iran to 2 million tons annually," Iranian Ambassador to Azerbaijan Seyid Abbas Mousavi said. According to Mr. Ambassador, today the parties discuss the $500 million loan to Iran by Azerbaijan and the solution of a number of technical problems.

According to experts, given the expected lifting of sanctions against Iran, neighbouring countries will have a chance to finance joint projects in Iran. In particular, the provision of loans to Iran will make it possible to complete the construction of the 211-kilometre Rasht-Astara railway section and to join the railways in Azerbaijan's Astara.

Closer to the goal

Even the absence of a full-fledged railway connection with Iran does not prevent the implementation of the North-South project. Due to the combined railway-automobile transportation with a multimodal component, Baku and Tehran confidently increase the volume of cargo transportation. This work continued even in 2020. The volume of transit cargo transportation between Russia, Azerbaijan and Iran along the North-South corridor increased by 19%, reaching 23.5% in 1Q2021.

The coherence of operations of the Russian-Azerbaijani logistics and transport companies in the transport terminals in Astara (Azerbaijan) should be especially noted. There is an effective multimodal service there, where lumber, grain, container and other cargo is loaded onto Iranian trucks, and then sent to the ports of the Persian Gulf through Iran. In the near future the largest grain terminal in the region – Astara Grain Terminal – with a throughput capacity of 1 million tons of grain per year will be commissioned there, and will significantly increase the transit potential of the Astara transport hub.

Azerbaijan's long-term efforts to develop transport and logistics infrastructure in the southern direction were highly appreciated during an online forum Activation of the North-South International Transport Corridor: Role of Azerbaijan. This was also confirmed by Shankar Shinde, Chairman of the Federation of Forwarders' Associations of India: "With a developed transport infrastructure, including a railway component, Azerbaijan is a key player in the North-South corridor, and this potential opens up new opportunities for the growth of cargo traffic in a vast region."

Thus, Azerbaijan is very close to become one of the key transport hubs of global importance, turning the profit from transit and transportation of goods into a significant item of state revenue.