Azerbaijan, Turkmenistan strengthen rail cooperation across Caspian Review by Caliber.Az

Over the past two and a half years, Azerbaijan has intensified efforts to strengthen its transport links with Central Asian states, aiming to tap into the freight potential of Caspian countries and connect to Chinese and Turkish transit routes.

Azerbaijan and Turkmenistan play a significant role in expanding freight transport along the Middle Corridor, being partners in transport routes like Lapis Lazuli and CASCA+. The two countries are implementing joint projects to digitalize freight transport, simplify cross-border and customs procedures, and reduce tariffs. This has contributed to the growth of freight traffic; for instance, last year saw a significant increase in container shipments between the ports of the two countries. Recently, a delegation from Azerbaijan Railways CJSC discussed in Ashgabat the prospects for increasing volumes of multimodal freight transport via the railway segment.

Azerbaijan-Turkmenistan cooperation in raw material transit has a long history, and in recent years, approximately 33 million tons of Turkmen oil have been exported to global markets through the Baku-Tbilisi-Ceyhan pipeline. Additionally, Turkmen petroleum products and fuel were transported via ferry and railway through Azerbaijan to the Black Sea oil terminal in the Georgian port of Kulevi, and subsequently exported to the global market.

The energy cluster remains a key foundation of Azerbaijan-Turkmenistan transport cooperation today, progressively expanding through non-oil trade. Efforts in this direction yielded notable results in the past year, marking a significant breakthrough in Azerbaijani-Turkmen business relations. For instance, in the first 11 months of 2023, the trade turnover between the two countries amounted to $738.966 million, increasing by 73% compared to the corresponding figures of the previous year.

Moreover, Azerbaijan-Turkmenistan cooperation extends beyond the energy sector alone. In recent years, Turkmenistan has risen to sixth place among the countries to which Azerbaijan exports non-oil products, with Azerbaijani exports quadrupling in volume.

It is noteworthy that the two Caspian neighbours are steadily increasing the transshipment of non-oil goods, including transit shipments. A significant step in this direction was the launch in December 2018 of the Lapis Lazuli route initiated by Baku and Ashgabat, strengthening cooperation between the ports of Turkmenbashi and Alat. This project aimed to integrate transport lines from Afghanistan, Turkmenistan, Azerbaijan, Georgia, and Türkiye. Importantly, this combined route (railway, road, sea) primarily focuses on transshipping non-oil cargoes such as minerals, construction materials, nitrogen fertilizers, textiles, dried fruits, and other agricultural products.

A crucial component of freight transport between Turkmen and Azerbaijani ports has been various containerized cargoes with a multimodal transport scheme, including transshipment by heavy-duty trucks.

Azerbaijan has repeatedly introduced various initiatives to simplify cross-border procedures under the Lapis Lazuli project and the overall implementation of unified tariffs for transshipment of goods between the main trading ports of Azerbaijan and Turkmenistan. A significant step in this direction was the decision by Azerbaijan Caspian Shipping Company (ASCO) to reduce tariffs for maritime transport of freight vehicles in both directions on the Baku-Turkmenbashi-Baku route starting from March 1, 2023. ASCO's tariff reduction policy has created favourable conditions for automobile transportation across the Caspian Sea towards Turkmenistan.

Furthering this objective, both Baku and Ashgabat's adherence to the UN e-CMR protocol has eliminated the need for paper-based cargo documentation, reducing cargo processing costs, minimizing administrative delays, and streamlining invoicing procedures, among others. Thus, the implementation of the e-CMR system has enhanced the capabilities of digital freight mechanisms, providing a new impetus to trade and transportation development between the two countries.

The signed memorandum over a year ago between the subsidiary of Azerbaijan Railways CJSC, ADY Container, and the Transport and Logistics Center of Turkmenistan has made a significant contribution to expanding transshipment between the eastern and western shores of the Caspian Sea. This memorandum aims to optimize international container transport.

These initiatives have had a notably positive impact on the dynamics of freight transportation between the two Caspian neighbours. Specifically, in the first half of last year, the total number of TEU containers transported between the Baku International Sea Trade Port (BISTP) and the port of Turkmenbashi reached 2362 units, marking a growth of 2.9 times compared to previous periods.

However, Baku and Ashgabat are not resting on their laurels and, considering the significant untapped economic potential, they intend to increase freight volumes along the Middle Corridor. As part of a new concept for developing the transport sector, the Turkmenistan Railways Agency (Turkmendemirýollary) announced in February of this year the launch of new routes along major transit corridors aimed at organizing international freight transport. Turkmenistan aims to become a regional railway hub and plans to construct the Turkmenistan-Afghanistan-Tajikistan railway (TAT), as well as attract a portion of Chinese transit.

According to preliminary forecasts, Turkmenistan intends to redirect a substantial portion of its freight transport to rail, including goods currently transported by road. The project envisions expanding the geographic coverage of transit railway routes, encompassing Central Asian countries, as well as Russia, Iran, countries of the Persian Gulf, and India. Additionally, the plan aims to maximize transshipment through the Caspian Sea to Azerbaijan, Georgia, and Türkiye.

The prospective plans of Turkmendemirýollary align closely with the goals of Azerbaijan Railways CJSC, which also seeks to expand freight transportation in the Caspian region. Discussions on aspects of railway transshipment cooperation along the Middle Corridor were the focus of recent negotiations in Ashgabat, where a delegation from Azerbaijan Railways, led by Chairman Rovshan Rustamov, visited for a working visit.

During the negotiations with Turkmendemirýollary Chairman Azat Atamuradov, they addressed strengthening railway ties between the two countries and increasing freight turnover. Railway experts explored opportunities to enhance volumes of multimodal transit freight transport across Central Asia, China, and Europe, highlighting substantial potential for bilateral cooperation.

As part of the visit, the Chairman of Azerbaijan Railways held meetings with leaders of state corporations in Turkmenistan, including Turkmenneft, Turkmen Gas, Turkmen Chemicals, and the State Commodity and Raw Materials Exchange, all key producers and suppliers of goods for maritime-rail transshipment transit through Azerbaijan.

It is pertinent to note here that in addition to the traditional transshipment of energy cargoes and initiatives under the Lapis Lazuli route, railway structures of Azerbaijan and Turkmenistan have recently integrated into the international multimodal transport route "Central Asia - South Caucasus - Asia-Pacific Countries - China - Kyrgyzstan - Uzbekistan - Turkmenistan - Azerbaijan - Georgia - Türkiye - Europe" (CASCA+). This route spans three regions: Central Asia, the South Caucasus, and the Anatolian region in Türkiye, with the symbol "+" in its name indicating readiness to accept new participants.

Since December 2022, when the first container train carrying copper concentrate travelled from Uzbekistan to Bulgaria via the CASCA+ route, container transit volumes have steadily increased. The medium-term goal for operators is to achieve annual container transport volumes of 30-40,000 containers, ensuring the regular operation of block trains on this route.