Baku, Ashgabat at the peak of a container boom Review by Caliber.Az

Since last year Azerbaijan has stepped up efforts to build a transport bridge with the Turkic states to enhance its transit potential in the Caspian region. Turkmenistan plays an important role in expanding freight transportation: last year traffic between neighboring countries' ports on the western and eastern coasts of the Caspian Sea noticeably increased and made up 3.359 million tons. This trend has further intensified this year.

Baku and Ashgabat are implementing joint initiatives to digitise cargo transportation, simplify cross-border procedures and reduce tariffs. The other day ADY Container, a subsidiary of CJSC Azerbaijan Railways, and the Transport and Logistics Centre of Turkmenistan signed a memorandum aimed at optimising international container transportation.

In recent years the member countries of the Organisation of Turkic States (OTS) have been striving to form a strategic alliance based on a solid economic foundation and, above all, forging cooperation in energy and transport projects. Baku, Ankara, and Ashgabat have been particularly successful in this direction: in mid-December last year, during the trilateral summit of the heads of states in the Turkmen tourist zone "Avaza" the most important vectors of trade and economic cooperation, increasing mutual transshipment and transit of goods from third countries were outlined.

It is worth noting that the Azerbaijani-Turkmen cooperation on the transit of raw materials has a long history and is based on a solid foundation of mutually beneficial relations. For instance, in recent years, a total of 32 million tons of Turkmen oil has been exported to world markets through the Baku-Tbilisi-Ceyhan pipeline.

Moreover, the Turkmen oil products and fuel were transshipped via Azerbaijan to the Black Sea oil terminal in the Georgian port of Kulevi and exported to the world market. However, since January 2022, Baku and Ashgabat have established successful swap operations, transshipping an average of 5-6 million cubic metres of Turkmen gas to north-eastern Iran, while a corresponding volume of Iranian gas comes to Azerbaijan through a cross-border pipeline.

Today, however, Azerbaijan-Turkmen cooperation is not limited mainly to the energy sector as the two Caspian neighbours intend to multiply the transshipment of non-oil cargo. As a reminder, the first step in this direction was the LapisLazuli route, initiated by Baku and Ashgabat and launched in December 2018, which strengthened cooperation between the ports of Turkmenbashi and Alat.

The LapisLazuli initiative aimed to connect the transport lines of Afghanistan, Turkmenistan, Azerbaijan, Georgia, and Türkiye. This route is also mainly oriented at transshipment of non-oil cargo - minerals, construction materials, fertilizers, textiles, dried fruits, and other agricultural products, and various containerised cargoes with a multimodal transport scheme, including those transported by heavy vehicles.

Azerbaijan has repeatedly taken various initiatives to simplify cross-border procedures in the framework of the LapisLazuli project and, in general, to introduce feed-through tariffs for transhipment between the main trade ports of Azerbaijan and Turkmenistan. Another step in this direction was the decision of the Azerbaijan Caspian Shipping Company, which reduced the tariffs for sea transport of goods in both directions on the Baku-Turkmenbashi-Baku line from March 1, 2023.

Tariff for single direction carriage (Baku-Turkmenbashi or Turkmenbashi-Baku) of a road train consisting of 16.5 m tractor-trailer and semi-trailer is set at $1,000, which reduced the price by $72 or almost 7%. If tickets are purchased in advance for a round-trip, the fare will be $1,600, rather than $1,716 as previously.

According to ASCO, tariffs for wheeled vehicles longer or shorter than 16.5 metres will be determined in proportion to the size of the vehicle. It should be also noted that from February this year the sea carriage of cars on the route Baku-Turkmenbashi-Baku is also carried out with a significant discount: $200 instead of $325, which is 38.5% less than the previous tariff. Thus, ASCO's tariff reduction policy is aimed at creating favourable conditions for ferry transportation of motor vehicles across the Caspian Sea in the direction of Turkmenistan.

The success of the integration efforts of the two countries is evidenced by the dynamic growth of trade: last year the mutual trade turnover increased markedly and totaled $535.3 million. Moreover, according to the State Customs Committee of Azerbaijan, in the first quarter of this year, trade turnover between Azerbaijan and Turkmenistan increased 5.4 times (compared with January-March 2022), reaching $211.88 million.

The main trade flow between the countries is realized through the sea gateway - Turkmenbashi Port and the Baku International Sea Trade Port (BISTP): last year, the total volume of cargo through the BISTP was 6.314 million tons, with the share of Turkmen cargo exceeding 53%, reaching 3.359 million tons.

Thus, Baku and Ashgabat are already successfully coordinating the process of expanding the logistics and transit potential of the Middle Corridor, the basic elements of the transport and communication system of the Caspian Sea region. However, the countries do not intend to stop there and implement new steps to increase freight traffic. These include expansion of sea, road, and rail transhipment infrastructure, joint measures to implement the Agreement on Competitive Tariffs for Rail Freight Carriers, harmonisation and simplification of cross-border and visa regulations for road transport, as well as the development of unified transit and tariffing mechanisms for combined rail-sea container traffic.

It should be noted that in 2023, Azerbaijan and Turkmenistan joined the e-CMR (electronic version of the consignment note) protocol, which will contribute to the further digitalisation of freight transport, as well as help the countries to better manage the growing flow of goods and transit along changing routes.

It is safe to say that the two countries are now purposefully simplifying and optimising cross-border transport procedures, and ADY Container, a subsidiary of Azerbaijan Railways, and the Transport and Logistics Centre of Turkmenistan recently signed a Memorandum of Understanding, under which the partners are preparing to expand cooperation in international container transportation.

As the steps envisaged in the memorandum are implemented, the new cooperation platform will make an important contribution to the efficient and dynamic organisation of container transportation in Eurasia. The document was signed in Ashgabat within the framework of the II International Exhibition and Conference "International Transport and Transit Corridors: Connectivity and Development - 2023". The forum also included a regular meeting of railway operators of the CASCA+ international multimodal route, where prospects for the development of transit opportunities were discussed.

Multimodal container traffic is recognised as the most promising and flexible type of freight traffic in the Caspian region, especially taking into account the huge transit potential of China, Türkiye, and the European Union's plans to expand container traffic.

In this regard, Kazakhstan is about to start work on the establishment of a container hub at the Aktau Sea Port FEZ, which will involve international consultants and investors in the project. Similar processes are underway in Turkmenistan, where there are plans to build a container terminal with an annual capacity of 1 million tonnes of cargo in the special economic zone of the port of Turkmenbashi.

At the same time, today the capacity of port facilities commissioned as part of the first phase of construction of the Alat port in Azerbaijan is 100 thousand TEU containers. And in the medium term transshipment of containers in the main port of the country will reach 200,000-250,000 TEUs per year.

A new specialized terminal for the transportation of containers is also expected to be commissioned in the near future. In its final phase, the capacity of the BISTP will reach 25 million tonnes of cargo a year, including the ability to handle 1 million containers.