Transport And Logistics At A Turning Point
The future holds more and more goods to be transported, and upgrading its logistics and transport infrastructure Azerbaijan seeks to take advantage of this. The expansion of regional transport routes also increases the country’s attractiveness for investors in terms of ease of delivery processes.
2016 became a successful year for the transportation sector regardless global economic slowdown, negative external factors, as well as a sharp reduction in the volume of world freight traffic. Azerbaijan succeeded in the implementation of large-scale projects on the creation of international corridors and modernization of relevant infrastructure within the country, as well as the development of public transport.
East-West transport Corridor
Early 2016 marked the first weighty step in the realization of the East-West transport Corridor, as Ukraine launched the first test container train, moving along the route from Ukraine to China.
Simultaneously, Azerbaijan, Kazakhstan, Georgia and Ukraine signed a protocol on reduced fare for freight transportation via the Trans-Caspian International Transport Route (TITR).
TITR, is a multimodal corridor using railway, maritime and roadways for transporting goods, runs through China, Kazakhstan, Azerbaijan, Georgia and then to Europe via Turkey and Ukraine. Nearly 300,000-400,000 containers are expected to be transported via the route by 2020, bringing huge financial profits to Azerbaijan.
A single competitive rate was introduced in the framework of the route starting from June 1, 2016 with the view to reduce the costs of international cargo transportation.
Further, railway agencies of Azerbaijan, Georgia and Kazakhstan agreed to create the International Trans-Caspian Transport Consortium, while Azerbaijani companies ADY Express and ACSC Logistics, Kazakh KTZ Express JSC and Georgian Trans Caucasus Terminals LLC became the members of the syndicate.
Later on, Ukrainian Railways (Ukrzaliznytsia), Ukrferry, Moldovan Translogistic, Polish PKP LHS, as well as Hungarian Rail Cargo Hungaria Zrt joined the Coordination Committee.
The year-end also became efficient for the project as heads of railway authorities of Azerbaijan, Kazakhstan, Turkey and Georgia signed a MoU on prospects of TITR development.
The last year also gave a strong push for the implementation of the highly-ambitious North-South project. The main trigger came following the February visit of President Ilham Aliyev to the Islamic Republic of Iran.
In August, Azerbaijan, Iran and Russia signed a joint declaration to affirm their intent to develop deep and comprehensive cooperation in various areas, including the implementation of the North-South project, launching a new trilateral format of cooperation.
An 8.5-kilometer long section from Astara (Azerbaijan) till the border with Iran, as well as a railroad bridge over the Astarachay River were practically constructed within a year.
In February, the Islamic Republic launched construction of Qazvin-Rasht and Astara (Iran) and Astara (Azerbaijan) sections, while railway authorities of Azerbaijan and Russia agreed on the settlement of competitive tariffs on cargo transportation along the route.
As for the Rasht-Astara section of the corridor, Azerbaijan agreed to issue a credit worth $500 million to implement the project. Besides, Russia may also render its financial assistance to Iran in the financing of the project.
Once the railway is completed, it will play a key role in developing the International North–South Transport Corridor. Rasht-Astara (Iran) section will be built with the participation of Russia and Iran, while the Astara (Iran)-Astara (Azerbaijan) line is expected to be built with the participation of Russia, Iran and Azerbaijan.
The route, part of which will pass along the western coast of the Caspian Sea, from Russia to Iran through Azerbaijan enjoys several advantages compared to other transport such as Suez Canal-the Mediterranean Sea-Northern Europe and the Turkmenistan-Kazakhstan-Russia-Northern Europe routes.
Baku International Sea trade port and Free Trade Zone
The establishment of the Free Trade Zone at the territory of Baku International Sea trade port came in the spotlight following the presidential decree dated March 17, 2016 on the measures to create a special economic area of a free trade zone type in the Alat settlement of Baku’s Garadagh district.
Just a few months later, DP World one of the world’s largest port operators agreed to provide consulting services for the establishment of FTZ in Alat. Creating a free trade zone is considered to be a milestone of Azerbaijan’s policy to strengthen the country’s position as a regional logistics and transportation hub.
The free trade zone is expected to bring up to $1 billion just in the first few years. Special tax and customs policy, which will be pursued in the territory of the FTZ, will also stipulate further development and simplification of a number of procedures. The FTZ is expected to become operational in the first half of 2017.
Besides, the construction of the Port is currently underway in accordance with the schedule, while all operations within the first stage are expected to be completed by late 2017.
Moreover, the Port signed different memos with Bulgarian Ports Infrastructure Company, Antwerp, Panama, Aktau and Poti ports, Djibouti Ports & Free Zones Authority. Also, the Port maintains close cooperation with Qatar and Singapore ports.
The Strategic Road Map for the development of logistics and trade in Azerbaijan is expected to ensure a GDP growth by roughly 605 million manats ($ 342.5 million). Nearly 18,900 new working places will be created in the country till 2020.
The document defined three strategic objectives to be reached in the sphere of logistics and trade.
The objectives include the creation of a favorable environment for the increase of trade turnover, getting of higher value added from transit operations, as well as the introduction of a mechanism for the implementation of measures in the sphere.
Under the Road Map, successful implementation of the measures envisaged in the document will up the share of Azerbaijan in marine cargo transshipments en route Central Asia – the Black Sea by some 40 percent. An increase of 25 percent is expected en route Central Asia – Europe, up to 3 percent on China-Europe, 40 percent on Russia – Iran and some 25 percent on Iran –the Black Sea route. Besides, revenues from air operations will increase by 5 percent till 2020.
Nearly 5 logistics and trade centers will be constructed in the country by that period
Also, the government intends to increase the share of the private sector in the sphere of logistics in 2017-2020.
Relevant structures will prepare short-term and long-term plans on the modernization of international and domestic airports’ infrastructure, as well as will develop plans on expanding infrastructure opportunities of the Heydar Aliyev International Airport. As for the railway transportation, relevant measures will be taken to attract foreign investments or create joint enterprises in those spheres, where there is a great demand for investments.
Moreover, relevant steps will be taken in the sphere of maritime traffic to ensure the participation of private maritime operators, which will allow effectively transporting transit cargoes through the Caspian Sea.