Baku, Tashkent ramp up transport projects along Middle Corridor Review by Caliber.Az

On 27 December, the Balkan, a feeder vessel carrying a trainload of copper concentrate, transiting from Uzbekistan to Europe, arrived at Baku port. This is not the first container train with the products of Uzbek industrial enterprises, heading through Azerbaijan and further along the Baku-Tbilisi-Kars railway line to Türkiye and Europe. This year, transport cooperation between Tashkent and Baku has strengthened markedly in view of the increased demand for alternative transport routes along the Middle Corridor, which connects Europe and Asia through Azerbaijan.

Against the background of the energy and food crises, shortages of fertilizers and other mineral and chemical raw materials, metal concentrates, rolled steel, and building materials in European countries, the demand for such cargoes from Central Asian (CA) countries using alternative routes, including via the Middle Corridor that passes through Azerbaijan, has increased manifold.

According to a recent study by the European Bank for Reconstruction and Development (EBRD), transit through the Middle Corridor is the most viable project to connect Europe with Central Asia, bypassing Russian transport links. At the same time, the EBRD believes that the success of the route depends to a large extent on the determination of the Trans-Caspian International Transport Route (TITM) countries - Kazakhstan, Azerbaijan, Georgia, and Türkiye - to invest around 3.5 billion euros in corridor infrastructure and cooperation with the EU in this regard. In this case, according to experts in the EU and Central Asia, the throughput capacity of the Middle Corridor could increase to 10 million tonnes already by 2025.

In order to realise this vision, a Road Map for the development of the Middle Corridor for 2022-2027 was adopted about a month ago, providing for synchronised removal of bottlenecks, harmonisation of corridor operating principles, implementation of specific projects with precise parameters, as well as expansion of opportunities to attract additional cargo to the route. The TMTM project participants will have to agree on recent tariff changes for transit cargo, discuss aspects of further simplification of cross-border and customs procedures and application of unified IT solutions, and consolidate transit cargo on the route. There is also a need to optimise the purchase and lease of wagon platforms, to consider new schedules for ferries, and feeder vessels between ports on the eastern and western shores of the Caspian Sea.

In order to expand cargo flow along the Middle Corridor, Kazakhstan has started work on the creation of a container hub at the Aktau Sea Port FEZ, and international consultants and investors will be involved in this project. In turn, four ferries will be added to Kazakhstan's merchant fleet on the Caspian Sea, and the construction of second tracks and electrification of the Dostyk-Moyinty railway section is planned for 2022-2025. All this will increase the speed of container trains and multiply the throughput capacity of seaports and the volume of cargo handled by ferries.

Similar work is planned in Azerbaijan, where work has already started on the gradual increase of capacity of the Baku International Sea Trade Port (BISTP) in Alat from 15 to 25 million tonnes per year, and next year will begin financing the process of increasing the capacity of the railway infrastructure of the Baku-Tbilisi-Kars corridor to 5 million tons. Among others, the work on the completion of the Georgian section Marabda-Turkish border will soon be accelerated, and the construction of a logistics terminal in the Georgian town of Akhalkalaki will be completed.

All these initiatives are primarily aimed at improving the logistics potential of the Middle Corridor, expanding opportunities for other landlocked countries in the region (Uzbekistan, Kyrgyzstan, Afghanistan) to increase the transit of non-oil cargo to Turkish and European markets, including through the launch of container multimodal shipments.

It is noteworthy that Uzbekistan, which eyes to participate in Western transit routes through Azerbaijan, is among the countries most interested in the development of the new corridor. In recent years, Uzbek cargo carriers have been actively using the potential of the Baku-Tbilisi-Kars railway corridor (BTC) and the Baku International Sea Trade Port in Alat. Among other things, Uzbek freight forwarders have been transiting through our country as part of the international transport project "Asia-Pacific Countries - China - Kyrgyzstan - Uzbekistan - Turkmenistan - Azerbaijan - Georgia - Türkiye - Europe" with a route length of about 4,000 km, and last year the volume of freight traffic along this route already doubled. This year the railway authorities of Azerbaijan, Georgia, Kyrgyzstan, Turkmenistan, Türkiye, and Uzbekistan agreed to localise freight handling as part of another regional undertaking: the CASCA+ multimodal transport route (Central Asia, South Caucasus and Anatolia) was created to increase freight traffic, primarily by container trains. The project is being implemented as part of joint cooperation between the route operators "O`ztemiryo`lkonteyner" (Uzbekistan), JSC "TULM" (Turkmenistan), "ADY Konteyner" LLC (Azerbaijan), and "GR Logistics and Terminals" (Georgia).

In particular, as part of this endeavour, Uzbekistan's industrial cargo transited through Azerbaijan to Türkiye: in January 2022 a block train with half a hundred 40-foot containers of car parts from the Asaka logistics centre followed the route and in February 62 containers of chemical industry products and fertilizers from Bukhara.

On the previous day, another block train consisting of 91 containers, 20 feet each, loaded with copper concentrate from the Almalyk Mining and Metallurgical Plant, was delivered from Turkmenbashi Port to Alat by a Balkan feeder vessel owned by "ADY Konteyner" LLC (a subsidiary of Azerbaijan Railways). At the Baku International Sea Trade Port, these containers will be loaded onto platforms and transported along the BTC steel lines to Georgia, Türkiye, and then on to the Bulgarian port of Burgas. Moreover, according to experts, the delivery of cargo from Uzbekistan through the CASCA+ container block train along the Middle Corridor will only increase in view of the transport and logistics confrontation between Russia and Europe and the ongoing war in Ukraine.

The Ministry of Transport of the Republic of Uzbekistan notes that this year Tashkent has consistently increased the volume of freight traffic through the transit corridor across the Caspian Sea and onwards through Azerbaijan. In order to expand cross-border freight traffic, the railway authorities of Azerbaijan, Kyrgyzstan, Georgia, Türkiye, Uzbekistan, and Turkmenistan have already granted discounts of up to 70 per cent for container block trains. In their turn, Baku and Tashkent aim to facilitate and expand cargo transshipment also by road using PO-PO vessels. To this end, an intergovernmental agreement on international road transport was signed between the two countries in June 2022, providing for the introduction of the practice of organising international freight traffic on the basis of "permit forms", and the creation of a Joint Commission on International Transport was also agreed upon.

It is noteworthy that as transit traffic grows, so does direct trade between Uzbekistan and Azerbaijan. Thus, in 2021 the trade turnover between the countries has grown by 42.0 per cent to $118.9 million, and in the eleven months of this year, it reached $162.2 million, which is 36.5 per cent higher than last year's figures. Over the next five years, the governments of the two friendly countries plan to increase mutual trade to $1 billion. Apparently, this is a feasible task given the current plans for transport cooperation, as well as agreements to establish joint silk and textile clusters, implement investment projects in the automotive, chemical, petrochemical and jewelry industries, energy, agriculture, etc.