Azernews.Az

By Aynur Karimova

Azerbaijan, a historical transit center of the Eurasian continent located at the crossroads of Europe and Asia, will demonstrate its transit potential in Tbilisi on February 12.

The managers of railways of Azerbaijan, Georgia and Turkey will assemble in Tbilisi to discuss the construction of the Baku-Tbilisi-Kars railway, and adopt an important decision for its completion in a short term.

During the meeting the sides will also consider the cargo transportation through the railways among the three countries, and prospects for future cooperation in this field.

The Tbilisi meeting will be a good venue to exhibit Azerbaijan's transport plans.

On the background of current economic situation in the world - decreasing oil prices and divergent monetary policies globally, it is a high time for Azerbaijan to realize its transit potential in the full capacity.

Azerbaijan enjoys favorable transportation opportunities, which can help it diversify the national economy.

The country has established good partner relations with regional countries - Iran, Russia and Turkey, has developed transport infrastructure, which paves the way for the country to become a regional transport hub, and is keen to pay significant attention to the development of railway transport and the implementation of major projects of international importance.

Thanks to its favorable geographical position, Azerbaijan is ready to bind the northern countries to the southern and western countries with the eastern. In this regard, development of the western segment of the North-South transport corridor is of significant importance. The North-South railway, which is a part of the North-South corridor, is expected to serve as a bridge to connect the railways of Iran, Azerbaijan and Russia as well.

Iran has started construction of the Gazvin-Rasht and Astara (Iran) - Astara (Azerbaijan) railway, which is a part of the international North-South corridor.

The North-South corridor, originating in India and stretching to Helsinki, is one of the most important routes for the region. It is a multimodal route for transportation of passengers and cargo from Russia's St. Petersburg to the Mumbai (Bombay) port. It is designed to carry transit cargo from India, Iran and other Persian Gulf countries to the territory of Russia (the Caspian Sea) and further - to Northern and Western Europe.

The North-South corridor with the length of 5,000 kilometers is designed to carry more than 20 million tons per year, which is quite a significant figure to make it significant.

The annual transit of goods from Iran to Russia via Azerbaijan is about 10 million tons, while between Europe and India it reaches about 25 million tons. The major part of these goods is exported by sea transport, which takes about 45-60 days. Implementation of the North-South project will reduce this time by 2-3 times, so the handling of cargo through the territory of Azerbaijan is more acceptable, and this route is more optimal.

Azerbaijan lacks a railway link with Iran and implements the vast majority of cargo traffic with this country by road transport. That greatly limits the possibilities of development of trade and economic relations between the two countries and their transit potential.

The construction of Iranian portion of the railway with a length of 8.5 kilometers will become an important step towards the realization of the North-South project. Its construction will be completed by the end of 2016.

The railway communication between Azerbaijan and Iran and the development of the North-South transport corridor is expected to open significant prospects for the development of cargo and passenger traffic between Europe and Asia.

Another important project is the Trans-Caspian international transport route. It connects China with Europe via the territory of Kazakhstan, Azerbaijan and Georgia. This is a multimodal corridor which uses railway, maritime and road transport for transportation of goods.

The Trans-Caspian route enjoys an opportunity to become attractive and profitable for consignors from European countries. This route will transport approximately 300,000-400,000 containers by 2020, bringing hundreds of millions of manats in profit to Azerbaijan.

Three test container trains have already been sent from China to Europe via this corridor. This project, being very profitable, has involved even Ukraine, the territory of which will make the delivery of goods to customers even faster. The test train from Ukraine to China journeyed 18 days, and Kiev is working on reducing this period to 10 days.

Azerbaijan, Kazakhstan, Georgia and Ukraine have signed a protocol on setting preferential tariffs for cargo transportation via this route, and the final document on resolving the technical problems is expected to be signed this February. Signing of this document will likely lead to full commercial operation of the Trans-Caspian route in March.

The Baku-Tbilisi-Kars railway will become the major component of this corridor. The railway, constructed based on the Georgia-Azerbaijan-Turkish interstate agreement, will have the capacity of 17 million tons per year. At the initial stage, the figure will be one million passengers and 6.5 million tons of cargo.

The Georgian section of the railway is completely ready, and Turkey has accelerated the construction works and promised to complete them in 2016. With the launch of this railway, cargoes can be delivered to the European consumers via Turkey as well.

Azerbaijan has already invested billions of dollars in the development of sea, railway, road and social infrastructure. Developed infrastructure and good business climate has paved the way to attract foreign direct investment in the country's transport sector.

Azerbaijan also applies the principle of "single window" for transport of transit cargoes through its territory via the railways, maritime transport, ports and terminals.

Azerbaijan has reduced transit costs by around 40 percent for foreign carriers heading to the Kazakh port of Aktau and Turkmenbashi port of Turkmenistan. The government applies a 30-percent discount on the services of transit of oil and oil products by railway and transshipment via the sea terminals.

It is believed that expansion of transport routes will further increase Azerbaijan's attractiveness for investors in terms of easy delivery processes.

Taking all these factors and taken steps into account, it is obvious that Azerbaijan reasonably expects to significantly increase the volume of cargo transportation through its territory. In 2015, the transport sector of the country transported 222.4 million tons of cargo, which is 0.2 percent higher than in 2014, but now the growth will be more significant.

With the operation of the corridors with full capacity, Azerbaijan's revenues can reach $1 billion by 2025, with a subsequent increase. And all the measures and reforms implemented by the government suggest that Azerbaijan is set to fully realize its transit and transport potential.

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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova

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