BAKU, Azerbaijan, January 22. The establishment of the business council and TRACECA Fund is under discussion, Permanent Representative (National Secretary) of the IGC TRACECA in Azerbaijan Rufat Bayramov told Trend.
The international program TRACECA, which celebrated its 30th anniversary in 2023, has a solid action plan for 2024-2026. The plan is designed to summarize the results of the second long-term Strategy (covering the period of 2016-2026) for the development of the Europe-South Caucasus-Central Asia transport corridor and create a basis for further effective steps.
Bayramov noted that the matter involved responding to new global challenges and increasing the attractiveness of the international corridor by improving the hard infrastructure (economic entities - railroads, ports, containers, rolling stock) and soft infrastructure (legal and information base, automation issues).
He added that there is no doubt about the demand for this corridor; the interest in the corridor is not waning, even though its development is going through various stages (1993–2016: direct financing of projects by the European Commission; 2016–2026: self-sufficiency and financing in the form of contributions from member states).
He also mentioned that TRACECA's ranks were joined by a new member - Turkmenistan - in the fall of 2023, which opens up prospects for increasing cargo traffic and attracting new cargo from both China and Central Asian countries, which have a huge potential for economic growth.
"Interest in TRACECA has increased due to Russia's war with Ukraine; our corridor and region are more topical than ever. There was a big surge of activity on TRACECA in 2019, but it is quite possible to bring it back now. Various programs and projects aimed at making this route even more competitive are being worked out for this purpose," Bayramov noted.
He added that Azerbaijan's action plan to increase transit transportation for 2024–2026 fits into the framework of TRACECA development and will give the international corridor an additional 'boost'.
"Azerbaijan has a developed infrastructure, and steps have been outlined to improve this infrastructure. The country is integrated into numerous international trade and transportation projects. This is both positive and significant for the development of the entire Europe-South Caucasus-Central Asia corridor," Bayramov said.
He stressed that it is beneficial for the TRACECA member states that this program supports cooperation with the UN, the World Bank (WB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), CAREC, TITR, the Organization of Turkic Speaking States, and other entities.
"Globally, 96 percent of transportation was carried out by sea; however, it takes 30-40 days. TRACECA can hardly compete with sea freight transportation in terms of price, but in terms of time, it is quite achievable. Thus, cargo delivery from Asia to Europe along our corridor under ideal conditions takes 12-14 days (verified data). The West understands this, as do Kazakhstan and Uzbekistan (the endpoints of the corridor), and they are taking real steps to improve the performance of the corridor," said the TRACECA representative.
He named the introduction of digital solutions to ensure the passage of cargo, an increase in the container and ferry fleet, and the development of port infrastructure on the Caspian Sea among the priorities for 2024-2026.
"We have a concept of the TRACECA digital corridor until 2030. We want digitalization to cover all types of transport, the work of shippers, cargo carriers, and all inspection structures. There are several working groups within TRACECA. We are moving thoughtfully as we want to develop an optimal solution to improve the efficiency of our corridor," Bayramov said.
According to Bayramov, considering the digitalization process in 2024, a single universal electronic consignment note between Türkiye, Georgia, Azerbaijan, Ukraine, and Kazakhstan (CIM/SMGS) may become officially operational. The experts from a specialized UN program have greatly assisted in the development of the consignment.
"The digitalization of the corridor will increase containerization, which in the future can transport up to 600,000 containers per year (10 times more than the current limit). Many shippers prefer container transportation, and this aspect will be taken into account in the work for the period 2024-2026," he added.
Touching upon the current year, he noted that it is expected to agree on the creation of the TRACECA Business Council by mid-2024, which will include representatives of business, government agencies, cargo carriers, customs, border authorities, and other participants in the process of cargo transportation.
"The creation of such a council is very important as it will allow for the prompt and well-coordinated resolution of current issues and increase the efficiency of TRACECA along the entire length of this corridor," noted Bayramov.
Additionally, discussions are underway among the 14 participating countries of the program regarding the creation of the TRACECA Fund this year, with the participation of both public and private capital.
"The idea is that within the budget of this fund, priority projects of a regional nature covering several corridor participant countries will be considered and selected. Discussions are ongoing on how the decisions will be made, how the work will be financed, and who will be part of the fund's management board. These issues may be agreed upon by mid-2024," said the TRACECA representative.
The most important task of 2024, according to Bayramov, is the commencement of actual operations by the Middle Corridor Multimodal unified operator company agreed upon by Georgia, Azerbaijan, and Kazakhstan in November 2023 – active participants in TRACECA.
"This company has been registered in the Astana FEZ (Free Economic Zone) in Kazakhstan. A business plan is being prepared for the operation of the company and the development of an optimal tariff policy. Hopefully, this unified operator will start operating in the first half of 2024 and will be able to successfully negotiate with China, whose cargo is of great interest to TRACECA," he said.
The TRACECA representative expressed satisfaction with the coordination efforts of the working groups of corridor participant countries on customs issues, CIM/SMGS (Uniform Rules Concerning the Contract for International Carriage of Goods by Rail/ Agreement on International Goods Transport by Rail), the Fund, and the Business Council, which, in his opinion, is the key to the success of the steps planned for 2024.
Moreover, as part of this program, there is an understanding of the importance of integrating the Zangezur corridor into it, the representative said.
"Within the framework of our international program, immediately after the end of the Second Karabakh war, a small analysis was conducted, the results of which demonstrated that TRACECA as an international organization is interested in the inclusion of the Zangezur Corridor in the network of its routes," Bayramov stressed.
According to Bayramov, the emergence of transport corridors with the involvement of the Nakhchivan Autonomous Republic of Azerbaijan is important both from the point of view of the development of the Autonomous Republic itself and from the point of view of stimulating cargo transportation and trade of regional and international importance.
The permanent representative considers that the corridor can give a great impulse to transportation in the Türkiye - Central Asia and Türkiye - Azerbaijan directions, in the northern and other directions.
In his opinion, Azerbaijan's discussion of transport projects with Iran and increasing the capacity of the Baku-Tbilisi-Kars railway route (one of the official routes of the TRACECA program) testify to the important transit role of the region.
"There is no such thing as too many roads. There is demand for the routes being discussed and implemented," he stated.
Bayramov noted that in 2024 TRACECA will be chaired by Iran, which is vitally interested in developing routes through Azerbaijan and further in various directions.
"Iran and Russia have reached an agreement that Russia will contribute to the construction of a 160-kilometer-long section of the Resht (IRI)-Astara (Iran-Azerbaijan border) railroad within the framework of an interstate loan. This road could be completed in 2027 and will become an important component of the international North-South corridor as well as the regional transportation networks," Bayramov said.
Russia has agreed to provide Iran with a $1.3 billion soft loan to build the Resht-Astara railroad over four years at the end of 2023 (starting construction in 2024).
Bayramov also shared his expert opinion regarding the situation in the Red Sea.
"Due to problems with the security of cargo transportation through the Red Sea and the Suez Canal, the attractiveness of alternative routes and transportation projects, including the East-West and North-South international transport corridors (ITC) passing through the territory of Azerbaijan, is growing," he said.
He noted that the EU and Asian countries, which previously actively used the route for cargo transit through the Red Sea and the Suez Canal, are now studying the possibilities of diversifying transport flows.
"Objectively, the situation now is such that our region and international transportation corridors in it are becoming more relevant than ever, and I think that many cargo suppliers and their recipients will be even more active in interaction with the countries participating in the East-West and North-South projects," Bayramov said.
According to him, cargoes from India to Europe, bypassing the Red Sea, could be more directed through one of the segments of the "North-South" international transport corridor, whose implementation would allow for a 50 percent reduction in delivery time.
"All the necessary infrastructure is being created in Azerbaijan. Iran has also become active in the construction of the Rasht-Astara railroad (part of the North-South route) after receiving guarantees from the Russian Federation on financing this section and has already started specific work. I think that in the case of forced implementation of the North-South project, about 10 million tons of cargo can be transported through it per year, thus unloading the route through the Suez Canal," Bayramov stressed.
Pirate attacks on ships in the Red Sea and the Gulf of Suez, as well as the unsettled situation in the Middle East (in Gaza), have led to the fact that the Suez Canal, according to Flexport, has already lost 20 percent of global traffic.
New trends
States participating in the international TRACECA program are responding quickly to global climate requirements, Bayramov said.
For example, a semi-trailer transportation initiative was implemented in experimental mode on the TRACECA route to reduce environmental pollution during freight transportation, which also helped to cut transportation costs. The semi-trailers were headed from Poland to the Georgian Poti Sea Port in the Black Sea, then to the Azerbaijani Alyat Port for further transport to Central Asia via the Caspian Sea.
"Ferry transportation of a truck with a semi-trailer is nearly twice as expensive as transporting a semi-trailer separately." The experimental initiative also sought to minimize pollution in nations along the freight route. "The pilot project was a success, and this mode of transportation will be used actively in 2024 and beyond," Bayramov added.
According to Bayramov, another important point concerning the compliance of TRACECA member countries with international environmental norms is the growth of container transportation.
"As part of the international 'Green Deal' around the world, containerized transportation allows for more environmentally friendly delivery of cargo and food products from producers to customers," he said.
According to the national secretary of TRACECA in Azerbaijan, the mentioned two projects (transportation of semi-trailers and transportation of containers) will help in the realization of the concept of a green transport corridor.
In addition, Baku International Sea Trade Port situated next to the Alat Free Economic Zone (AFEZ) is being developed precisely taking into account the "green trends".
"Azerbaijan Caspian Shipping Company (ASCO) has also strengthened environmental control over ballast water, which corresponds not only to Azerbaijan's environmental obligations but also to global trends," Bayramov added.
Taking into account the fact that Azerbaijan will host the COP 29 climate summit in November 2024, Bayramov considers such steps important.
Bayramov also spoke about the current project of the Caspian littoral states participating in the international TRACECA program - the creation of an optimal vessel for transportation across the Caspian Sea.
"This issue came up due to the need to optimize the cost of transportation across the water reservoir. Many vessels involved in cargo transportation through the Caspian Sea are outdated. There is a need for new vessels that would meet the current conditions of work in this basin. Specialists, including those from ASCO and similar companies of the Caspian countries, have started consultations and are making calculations as to what characteristics the "optimal vessel" should have (length, width, cargo capacity). Each side presents its recommendations. Perhaps, next year they will be summarized, as the construction and operation of such vessels is one of the topical issues to increase the attractiveness of transportation corridors across the Caspian Sea," Bayramov said.
At present, due to the Caspian Sea shoaling, ports can only serve light-tonnage vessels (draft not more than four meters), and sometimes these vehicles can be loaded only 70-75 percent.
Baku Shipyard takes these realities into account and is open to accepting orders for the construction of optimal vessels.
ASCO has the largest fleet in the Caspian Sea (more than 50 vessels) and continues to replenish it with vessels for various purposes.
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