Newsroom / News / Media / Info Magazine LGP NEWS 01/2020 / Azerbaijan is turning into hub for transport and logistics

Azerbaijan is turning into hub for transport and logistics

Azerbaijan is turning into hub for transport and logistics

Thanks to its geographic location at the crossroads of several international transport corridors, Azerbaijan is increasingly developing into an attractive hub for international transit goods traffic. Various large-scale projects have already been made a reality as part of the expansion of its infrastructure, particularly in the transport sector. 

The completion of the new Baku-Tbilisi-Kars (BTK) rail link in autumn 2017 marked the creation of an 849-kilometre direct rail link with Turkey, via Georgia. This means that BTK closes an important gap in international rail transport by enabling the unimodal transportation of cargo from Central Asia and Russia to Europe. As this rail link is an important addition to the busy northern route that passes via Russia, 300,000 tons of goods could be carried via this new route as soon as the end of 2019. The line’s current capacity is approximately 5 million tonnes of goods, but this can be increased in the medium and long term. 

In parallel to this, Azerbaijan is working on its international transport corridor travelling from north to south. In 2018, a section of the line between two border towns that share the same name, Astara (Iran) and Astara (Azerbaijan), was put into operation, including a railway bridge over the river Astarachay. For the time being, Azerbaijani Railways will operate the rail and freight terminals in Astara (Iran) for a period of 25 years, with the total investment in this project amounting to USD 60 million. The last section missing on the north to south corridor covering a total of 7,000 km is the Rasht-Astara line within Iran. The Azerbaijani government is also prepared to provide financial support for the construction of this section, which stretches for 170 km. Indeed, closing this gap would provide a direct rail link between Russia, the ports in the Persian Gulf and the Indian rail network. In addition, Azerbaijan is currently modernising its railway lines to the Iranian and Russian borders. The latter, namely, the 167-kilometre route from Sumqayit to Yalama, is co-financed by the Asian Development Bank ADB (USD 150 million) and the French development agency AFD (USD 100 million). 

Land routes and sea transport are both expanding

A new motorway stretching from Baku to the Russian border has also been under construction since 2018, and should be completed by the end of 2020. The government provided funds of USD 150 million for this ambitious project. The second major project concerns the four-lane extension of the western Azerbaijani section of road from the country’s second largest city, Ganja, to the Georgian border (131 kilometres). The project is largely financed by the European Bank for Reconstruction and Development and is scheduled for completion by the end of 2021. The 200-kilometre highway from Baku to Astara was commissioned in autumn 2018, and a new expressway from Astara to the Iranian border is also currently under construction. It is no wonder that, according to the 2019 Global Competitiveness Index by the World Economic Forum, Azerbaijan is now ranked 27th in terms of the quality of its road infrastructure, and with it, takes first place among the CIS states. 

In addition to the above road and rail projects, maritime transport infrastructure is also developing apace. The state-owned Azerbaijan Caspian Shipping Company (ASCO) has purchased twenty new ships in the last five years and plans to acquire more than 70 additional vessels over the course of the next ten years, with an investment volume of USD 1.5 billion. Currently, the ferries operated by this shipping company call at the ports of Aktau, Kuryk (both Kazakhstan) and Turkmenbashi (Turkmenistan). Two RoRo ships (i.e. transport ships for rolling cargo) serve routes to Aktau and Turkmenbashi. ASCO formed a consortium with partners from Romania and Georgia which has recently started operating liner shipping services between the ports of Constanța (Romania) and Batumi/Poti (Georgia). 

At the same time, the largest port on the Caspian Sea is being built in Alat, 65 kilometres south of Baku. The port is also strategically located for road and rail traffic, being situated at the intersection between the international transport corridors travelling both from east to west and north to south. The first expansion phase was completed in May 2018 and was financed entirely by the state, with a project volume of USD 500 million. Each year, it can currently handle 15 million tonnes of freight, including 100,000 standard containers (TEU). The next phases of expansion aim to boost this handling capacity up to 25 million tonnes, including 500,000 TEUs. They depend on the development of freight volumes and will, in the future, be based on a public-private partnership model. In 2019, the port handled more than 4 million tonnes of cargo, including 35,152 TEUs. In addition, a free economic zone (FEZ) is to be established on a section of the port covering 120 hectares.

Indeed, there is also a lot going on in the field of aviation, too: since 2005, Heydar Aliyev International Airport has been one of six international airports in Azerbaijan with a cargo terminal of 12,000 m2 (apron area: 163,000 m2 ). The second terminal was opened in 2013. It covers an area of 8,000 m2 , making it ideally suited to handling perishable goods. The Silk Way cargo airline group’s current route network comprises more than 50 destinations around the globe, including major hubs such as Hong Kong, Seoul, Shanghai, Singapore, Dubai, London, Amsterdam and Chicago. The fleet operated by its subsidiary Silk Way West Airlines, which consists of ten Boeing cargo craft, is also to be expanded soon. 

Author:

Mag. Orkhan Ismayilov, Legal Consultant and Regional Manager Azerbaijan at LANSKY, GANZGER + partner

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