5 November 2024

Tuesday, 16:05

DIGITISING TRANSPORT

Baku's initiative to establish the International Association Eurasian Transport Route is supported by China, the EU, and Central Asian countries

Author:

01.10.2024

Over the past three years, Azerbaijan, positioned at the intersection of regional transport and logistics routes, has been enhancing cooperation with Central Asian countries, Türkiye, EU partners, and China to attract international carriers and boost cargo volumes in the Middle Corridor. The effectiveness of this strategy was affirmed during discussions at the International Conference "Black Sea-Caspian Logistics Forum-2024: Corridors, Cargo, Infrastructure," held in Baku. A significant advancement in this effort was the consultative meeting of heads of railway administrations from these nations, which led to the foundation of the International Association Eurasian Transport Route.

 

Goal: To Widen the Corridor

In light of the complex geopolitical processes resulting in a sanctions confrontation between Russia and the Western bloc, cargo transport via the Northern Corridor in the expansive Eurasian region has significantly diminished. Additionally, the escalating conflicts in the Middle East since last autumn present risks to shipping in the Suez Canal area. All these factors have resulted in heightened demand for cargo transshipment along the Middle Corridor, which is appealing due to its geographical advantages and security. Utilizing the Trans-Caspian route, trains take approximately 20-25 days to complete their journey. This duration is less than half of what it takes to ship goods from ports in China and Southeast Asia to Europe, circumventing the African continent or passing through the Suez Canal.

Azerbaijan's advantageous geographical location positions it as a crucial transit hub for nearly all combined rail-sea routes in the Middle Corridor. This encompasses several routes of the Great Silk Road, including the EU-initiated TRACECA (Europe-Caucasus-Asia), China's "One Belt, One Road" initiative, and the joint Lapis Lazuli project with Turkmenistan and Afghanistan. The most active and promising route is the Trans-Caspian International Transport Route (TITR), which Baku is advancing in partnership with Astana, Tbilisi, and Ankara. This route also involves transshipment of cargo through the modernized Baku-Tbilisi-Kars (BTC) railway line. Currently, the railway infrastructures of Azerbaijan and Central Asia are being integrated into the international multimodal transport route "Asia-Pacific Countries-China-Kyrgyzstan-Uzbekistan-Turkmenistan-Azerbaijan-Georgia-Türkiye-Europe" (CASCA+).

Key TITR partners Baku and Astana have been collaborating for several years to modernize port and railway infrastructure along this route. Specifically, they are implementing the Roadmap for synchronized debottlenecking and development of the Middle Corridor for 2022-2027. The modernization of the sea hub at the port of Aktau and the container terminal in Alat will enable the transport of more than 300,000 containers, with long-term prospects of reaching up to 600,000 containers. The capacity of BTC has seen an increase from 1 to 5 million tonnes of cargo, while the capacity of the international trade port in Alat is set to rise from 15 to 25 million tonnes. At this port, a terminal for fertilizers has commenced operations, work is ongoing to expand the container terminal, and plans are in place for future grain storage facilities. These efforts have already led to a 65% increase in cargo volumes along the Middle Corridor in 2023, amounting to almost 3 million tonnes, with projections suggesting that by the end of 2024, this figure could surpass 4.2 million tonnes.

"In 2025, our collaborative efforts on developing the Middle Corridor will be intensified: a primary goal is to initiate a new phase of corridor expansion by June, which will include elements of institutional development. This involves establishing new facilities, enhancing operational efficiency, and introducing a reliable and transparent policy regarding delivery times—all tasks that will be addressed within this ambitious project," stated Emil Mammadov, Advisor to the Chairman of Azerbaijan Railways CJSC (ADY), during the conference "Black Sea-Caspian Logistics Forum-2024: Corridors, Cargoes, Infrastructure" held in Baku.

He emphasized that particular attention will be directed towards developing port terminals that play a strategic role in the logistics chain. It is essential to boost railway capacities and construct large multimodal logistics centres along the transport arteries of the Middle Corridor.

 

Transition To e-Format

Simultaneously, transport standards will be harmonized; flexible tariff and customs policies will be introduced; cross-border and logistics procedures will be simplified; and electronic visas and other documents for road carriers will be initiated.

In this context, Azerbaijan and Kazakhstan have agreed to update the Roadmap for synchronized debottlenecking and development of the Middle Corridor for 2022-2027. This includes collaborative efforts on digitalizing TITR logistics and establishing a unified statistical base on cargo transshipment. They plan to achieve these objectives through the "Global Transit Document Concept" (GTrD), a universal solution utilizing blockchain technology that was presented back in June 2021. Baku, Astana, and Tbilisi have made progress in various areas of digitalization. The information systems of Azerbaijan's and Kazakhstan's railways have already been integrated with the customs module of the DTC (Digital Trade Corridor) platform—Tez Customs. Georgian railways are also expected to participate in these processes. The accession of Baku and Ashgabat to the UN protocol on electronic consignment notes (e-CMR) further supports these initiatives. Meanwhile, Uzbekistan and Türkiye utilize the E-PERMIT and E-TIR electronic system in collaboration with countries such as Kazakhstan, Kyrgyzstan, and Tajikistan. The first road haulage via the E-TIR system between Uzbekistan and Azerbaijan took place back in December 2022.

However, overall, countries participating in the TITR route and their partners have not yet established unified electronic mechanisms for managing multimodal trains and vehicles nor have they adopted consistent digital solutions to optimize logistics processes. "The early digitalization of the Middle Corridor represents one of the most pressing challenges for its operation. A unified digital platform for TITR—which is vital for integrating systems among participating countries that currently exhibit significantly different levels of digitalization—has yet to be developed. This situation complicates efforts to implement a cohesive information exchange system and cargo tracking," remarked Arif Aghaev, Advisor to the Chairman of ADY on Digitalization and International Investments. It is anticipated that in 2025, a unified platform called "Block Digital Corridor" will be launched, capable of integrating various electronic systems and combining document management, customs clearance, and cargo tracking into a single eco-platform.

 

New Association

Partners from Azerbaijan and Central Asian states in Europe and China are highly interested in optimizing port and railway infrastructure while promptly introducing comprehensive digital solutions to eliminate bottlenecks along the Trans-Caspian Crossing. Specifically, Belgian company Camco Technology is negotiating with Central Asian countries regarding projects aimed at automating container operations in ports. "The digitalization of container terminals is a necessity for future growth, and we are exploring the feasibility of implementing Camco Technology solutions at Azerbaijan's Hovsan port," stated Werner Peters, a representative from the Belgian company who participated in the conference held in Baku.

To enhance cargo traffic along the Middle Corridor, it is crucial to expedite operations at ports and increase vessel availability, according to Stephan Blaas, regional manager at German company TOUAX Rail: "In the past year, our company has increased cargo traffic along the Middle Corridor by nearly 50% thanks to shipments from Kazakhstan and Uzbekistan to the European Union and vice versa. We primarily transport agricultural machinery and make active use of Azerbaijan's and Georgia's seaports; however, there is a vessel shortage at these ports, which hampers their ability to accommodate current cargo flows.

China is undeniably keen on expanding capacity along the Middle Corridor. Following the launch of its first container train in 2019, Chinese container multimodal transit has significantly broadened in terms of both cargo variety and geographic reach among Chinese shipper cities where block trains are formed. Since April 2022, China has been dispatching goods trains from Xi'an through Kazakhstan, Azerbaijan, Georgia, Türkiye, Romania, Hungary, Slovakia, and Czech Republic to Germany.

Minister of Digital Development and Transport of Azerbaijan Rashad Nabiyev and Chairman of China's State Railway Administration Liu Renfang have discussed further cooperation in railways concerning multimodal transport along the Middle Corridor. It was highlighted that from January to August 2024, transportation volumes between Azerbaijan and China surged by 275 percent compared to the same time-frame last year. Chinese partners expressed interest in participating in developing the Southern route of the Middle Corridor as well as joining the Middle Corridor Multimodal Company established jointly by Azerbaijan, Kazakhstan, and Georgia.

"In March this year, the first container train from Xi'an reached Baku in just 11 days; typically trains travel from China to Azerbaijan within 8-10 days while reaching Georgian ports within 12 days. In total, between January and August this year, 212 such trains were dispatched from China via the Middle Corridor—equating to approximately 420 thousand tonnes of cargo—and by year-end it is expected that around 300 container trains will be transshipped. The potential for this route is substantial; up to 1,000 container trains could be dispatched annually from China along the Middle Corridor," stated Rovshan Rustamov, chairman of Azerbaijan Railways.

On September 20th, Baku hosted a consultative meeting among heads of railway administrations regarding establishing the International Association "Eurasian Transport Route." Its mission includes enhancing coordination for international transport within Central Asia, Azerbaijan, Türkiye while involving Austria and China.

The European Union has also expressed interest in supporting the Eurasian Transport Route. This plan includes integrating states from the Black Sea-Caspian Sea region into Trans-European Transport Network (TENs) while creating a southeastern axis aimed at increasing multimodal transport. In an eastern direction, it envisions convergence between TENs infrastructure with TRACECA's and TITR's potential. Austrian Federal Railways has indicated its readiness to partner with Baku and Caspian region countries on this front. Eniko Györfl, Head of Eurasia and Central Asia Relations at Austrian Federal Railways emphasized that given rapid shifts in global geopolitics, it is crucial to strengthen collaboration in transport and logistics; hence initiatives like creating an Eurasian Transport Route are critically significant.



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