Azerbaijan becoming more attractive as international transit hub - ANALYSIS

Deputy Minister of Digital Development and Transport of Azerbaijan Rahman Hummatov, speaking at an event dedicated to the prospects for the development of the North-South Transport Corridor, said that along the North-South corridor, the transportation of goods per year is 500,000 million tons, and in the future it’s planned to increase this figure to four million tons. By rail, in the medium term, the volume of cargo flow is planned to be increased to six million tons, and in the long term - up to 20 million tons.

Azerbaijan in the center of the international transport corridor

With the growing international attention to the North-South and East-West transport corridors passing through the territory of Azerbaijan, and the Baku-Tbilisi-Kars railway line, cargo transportation through the territory of the country significantly increases annually. Deputy Prime Minister Shahin Mustafayev noted at a trilateral meeting in Baku that from January through August this year, transit cargo transportation through Azerbaijan increased by 47 percent compared to the same period last year. In just six months of this year, the volume of transit traffic increased by more than 50 percent.

On August 26, Azerbaijani Prime Minister Ali Asadov, speaking as a guest at a meeting of the Eurasian Intergovernmental Council in Cholpon-Ata, Kyrgyzstan, noted that the volume of transit traffic through the new international sea trade port of Alat in the Caspian Sea is increasing.

Asadov stressed that the port’s infrastructure allows handling up to 15 million tons of cargo, including 100,000 TEU containers per year. However, the growth in freight traffic and the associated forecasts require an increase in its capacity. Taking this into account, the foundation was laid for the second phase to expand the port's throughput capacity to 25 million tons of cargo and 500,000 TEU containers.

Due to the increase in the volume of traffic, design work is currently underway at the Baku International Sea Trade Port as part of the second phase. Upon completion of the project, the port's throughput will be increased to 25 million tons.

Reasons for attractiveness of Azerbaijan in terms of international cargo transportation

1. One of the main goals of transnational companies is the safe delivery of their products to the consumer. The geopolitical situation in the world is such that most countries cannot give companies security guarantees. In this issue, the position of transnational companies in relation to Azerbaijan is completely different.

Large corporations fully trust the security guarantees provided by Azerbaijan. Because the country, against the backdrop of political upheavals, wars and revolutions taking place in the world, was able to maintain the status of the most stable state in the region. This makes Azerbaijan an attractive state for transnational transport companies.

2. Transit traffic through Azerbaijan, located at the intersection of the North-South and East-West transport corridors, is very beneficial in terms of distance and time of cargo transportation between the EU countries and China, India and other eastern countries.

3. Besides, the attention of transnational companies is attracted by the high-quality transport infrastructure of Azerbaijan - a network of railways and roads that meets modern standards. In particular, the Baku-Tbilisi-Kars railway, the Baku International Sea Trade Port, Azerbaijan's largest merchant fleet in the Caspian Sea, and a modern shipbuilding plant further increase the transport capabilities of the country. Azerbaijan also completed the construction of a number of roads, airports and other infrastructure facilities in a short time, which will become part of the Zangazur corridor.

4. Azerbaijan's victory in the 2020 second Karabakh war created new reality both in the South Caucasus region and in the geopolitical panorama of the world. The implementation of the Zangazur Corridor project will significantly increase the transit capabilities of the country. The Zangazur corridor creates additional opportunities for the transit of five-eight million tons of cargo through Azerbaijan.

Moreover, the 3+3 format can lead to the creation of a new transport hub in the region. Naturally, Azerbaijan is the main participant in the transport network that is planned to be created between the countries of the region. This is due to the country’s location in the center of this transport network and bordering on all states included in the 3+3 format.

5. With the outbreak of armed conflict in Ukraine on February 24, 2022, the world entered a new geopolitical and economic era. Tough sanctions of European states and the US against Russia lead to a fundamental change in the transport map of the world. This is due to the fact that the states with large economies, such as China, Japan and South Korea, located in the east and having extensive trade relations with Europe, carried out cargo transportation to the West mainly from the territory of Russia. However the sanctions imposed on Russia have drastically reduced cargo transportation across it.

Most companies aren’t interested in transporting goods through Russia, as they want to avoid Western sanctions. Both Western and Eastern companies are forced to look for new, alternative routes for intensive and safe cargo transportation.

The northern corridor passing through Russia is practically closed for well-known reasons. The southern corridor, most of which runs through Afghanistan, Iran, Syria and Iraq, is dangerous, and the fact that Afghanistan, Syria and Iraq are the main field for terrorist groups, as well as the sanctions imposed by the West on Iran, deter companies from using this corridor.

As the Northern and Southern Corridors lose their effectiveness, the importance of the Middle Corridor, where Azerbaijan is located, becomes more important. The corridor from China to Europe through Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, Armenia and Türkiye, as well as the Black Sea attracts the attention of multinational companies with its stability and reliability.

The peace talks between Azerbaijan and Armenia that began after the second Karabakh war, and the discussions of opening transport lines passing through the region, inspire even greater hopes for the future of the Middle Corridor. This increases the interest of international players in Azerbaijan.

Speaking at various international economic forums and conferences, Azerbaijani President Ilham Aliyev stated that programs to diversify the economy are being implemented in the country. Naturally, the increase in Azerbaijan's transport capabilities is very important in terms of diversifying the country's economy, and is a great contribution to the economy.

The processes show that under the leadership of President Ilham Aliyev, Azerbaijan manages to attract the attention of the world's leading companies, along with the oil and gas sector, and in connection with transport corridors, to receive economic and political dividends from the geopolitical processes taking place both in the South Caucasus region and in the world.