2017 can be described as a very successful year for the transport and logistics sector of Azerbaijan. Special attention of the country’s leadership to this sector – which has the potential to become the main locomotive of the non-oil sector’s development – played a decisive role here.
2017 was remembered by a number of important events and trends – the launch of the Baku-Tbilisi-Kars (BTK) railway, the progress in implementation of other major projects, the growth in freight traffic compared to last year, the work carried out to improve the transport infrastructure and the situation in public transport are the key ones.
The Baku-Tbilisi-Kars railway
The launch of BTK is certainly the main event of the year. A solemn ceremony to open the Baku-Tbilisi-Kars railway took place on October 30 at the Baku International Sea Trade Port with participation of President of Azerbaijan Ilham Aliyev, First Lady Mehriban Aliyeva, Turkish President Recep Tayyip Erdogan and his wife Emine Erdogan, heads of governments of Kazakhstan, Georgia, Uzbekistan, as well as the delegations of Tajikistan and Turkmenistan.
On the same day, the first freight train was sent along BTK. It carried 32 containers loaded with grain. The train was sent from Kazakhstan’s Kokshetau on Oct. 24 and its final destination was Turkish Mersin.
The first cargo transshipment operation along BTK took place at the Akhalkalaki station.
In November, Turkey announced its readiness to begin construction of a second railway line within the Baku-Tbilisi-Kars corridor in its territory.
Later, a protocol was signed in Baku, which approved the reduction of tariffs for transportation along BTK in 2018. The tariffs for cargo transportation between Azerbaijan and Turkey on the Baku-Tbilisi-Kars railway were announced in December.
In late November, the first freight train was launched along the corridor in the opposite direction – from Turkey to Central Asia.
The project receives a great and wide coverage – BTK is covered by media outlets of the US, South America, and Asia. A number of countries are interested in using BTK. Specific interest is expressed by Uzbekistan, Pakistan, Belarus, Afghanistan, Russia and even the Netherlands. This year, Azerbaijan will hold a presentation of BTK’s potential in China.
The main goal now is to increase the volume of cargo transportation from 6.5 to 17, then to 25 and subsequently to 50 million tons per year.
Trans-Caspian Transport Route (East-West)
In April, the Azerbaijan Caspian Shipping Company CJSC and Kazakhstan Railways JSC established a joint venture for cargo transportation along the Trans-Caspian International Transport Route (TCITR). Also, Azerbaijan, Georgia, Kazakhstan and Ukraine may create a joint venture to introduce the principle of a “single window” in the processing of goods carried through TCITR.
In June, the TCITR International Association signed a memorandum of cooperation with the Association of Transport and Communications of China during a meeting of the corridor participants in Astana.
In 2018, new competitive tariffs will be set for transportation along TCITR. At the same time, the 2018 plan of transportation via TCITR was approved at more than 3.5 million tons, while about 15,000 containers are planned to be transported from Turkey to Kazakhstan, Central Asia and China. Also all railway administrations and ports of the Caspian Sea and the Black Sea set preferential attractive tariffs. TCITR is planned to reach 7-8 million tons of cargo in transportation by 2020.
Also, the TCITR International Association plans to expand the range of transported goods. There are plans to transport 520,000 tons of oil products, 350,000 tons of grain, 364,000 tons of non-ferrous metals and 360,000 tons of coal from Kazakhstan along the route in 2018.
In addition, the TCITR International Association will open a representative office in Istanbul.
The North-South project also took quite big steps in 2017. The route is expected to be fully put into operation in two-three years. In March, a test train was successfully sent via the border railway bridge across the Astarachay River.
In February 2016, Iran began construction of the Qazvin-Rasht and Astara (Iran) – Astara (Azerbaijan) railroad sections.
The Astara-Astara railway, as well as a station and cargo terminals in Iranian Astara were expected to be put into operation on Dec. 25, but then this was postponed to January 2018. Azerbaijan will use railway facilities in Iranian Astara for at least 15 years.
For the Rasht-Astara railway – another important section of the corridor – Azerbaijan has allocated a $500 million loan for Iran to finance its construction. Construction will begin in the first half 2018. The opening of the 164-kilometer section is planned for 2020, making it possible to travel from Baku to Nakhchivan by train.
In early December, the Board of Directors of the Asian Development Bank (ADB) approved the granting of a loan for implementation of the North-South Transport Corridor Project, as well as for development of the railway sector of Azerbaijan. ADB itself will issue $400 million, and the French Development Agency (FDA) will provide another $175 million in co-financing.
Funds from ADB will be allocated in two tranches of $250 million and $150 million, respectively, while the funds of FDA will be allocated similarly in tranches of $75 million and $100 million. Also, the project provides for $1 million worth of technical assistance.
Cargo transportation along the route is currently being carried out multimodally. Cargoes are delivered from Iran by trucks to Azerbaijan’s Astara, and from there by rail to Russia and also to Georgia with the purpose of developing the South-West direction.
Already in January 2018, member countries of the North-South project will discuss the freight transportation to Europe with the operators and freight forwarders of India. Also in January, as expected, India will begin exporting container cargoes to Russia via Iran and Azerbaijan. Meanwhile, cargo transportation along the North-South international transport corridor for three quarters of 2017 exceeded 4.7 million tons, which is 21.6 percent more than the indicator for the same period of 2016.
Baku International Sea Trade Port and Free Trade Zone
In March 2016, President of Azerbaijan Ilham Aliyev signed an order on measures to establish a free trade zone type special economic zone in the Alat Settlement of the Garadagh District of Baku, including the territory of the new Baku International Sea Trade Port.
The work on the establishment of the FTZ is underway.
Furthermore, the first phase of construction is coming to an end in the port itself. The first phase is expected to be completed closer to the middle of 2018, after which the volume of cargo handling will be 1,280 tons per day.
After the completion of the first phase, the Baku International Sea Trade Port will be able to receive up to 10-11 million tons of cargo each year, and annually handle up to 50,000 TEU (standard 20-foot containers). However, as early as 2017, the Port showed a significant increase in cargo handling compared to 2016.
Roadmap for Development of Logistics and Trade
The Strategic Roadmap for the Development of Logistics and Trade, approved in December 2016 by President Ilham Aliyev, remains as a key factor in the development of transport and logistics sectors of Azerbaijan. Under the Road Map, until 2020 it is planned to create 18,900 new jobs, and GDP is planned to increase by 605 million manat.
Growth of cargo transportation
Throughout 2017, the State Statistics Committee of Azerbaijan recorded an increase in cargo transportation in Azerbaijan.
So, in January-November 2017, transportation sector of Azerbaijan transported 206.2 million tons of cargo, which is 1.8 percent more than the same period of 2016.
In general, the transportation and logistics sector of Azerbaijan is an extremely promising direction of economic development, and the work carried out by the state in this direction gives every reason to expect further success in this segment in 2018.
Originally authored by Maksim Tsurkov (Trend).