30% Rise in Iran's Trade With Azerbaijan

EghtesadOnline: Iran’s trade with Azerbaijan totaled $422.68 million during January-October 2019 to register a 30.7% growth compared with the corresponding period of 2018.

News ID: ۷۸۵۰۴۱

23 November 2019

Iran’s exports to Azerbaijan stood at $391.69 million during the 10 months, indicating a 30.1% rise year-on-year, IRNA reported, citing data from State Customs Committee of Azerbaijan Republic.

Azerbaijan exported $30.99 million worth of commodities to Iran during the same period, up 39% YOY.

Accordingly, Azerbaijan registered a trade deficit worth $360.69 million with Iran during the 10-month period, up by 29.3% YOY, Financial Tribune reported.

INSCT on Iran, Azerbaijan Agenda

Azerbaijani Economy Minister and Co-Chairman of Azerbaijan-Iran State Commission for Economic, Commercial and Humanitarian Cooperation Shahin Mustafayev visited Iran for talks in August, including the development of the International North-South Transport Corridor (INSTC).

The delegation held discussions with President Hassan Rouhani’s Chief of Staff Mahmoud Vaezi and Iran’s Economy Minister Farhad Dejpasand.

Both countries are keen to integrate regional transport networks, increase the competitiveness of INSTC and deepen relations in regional terms.

An expansion of cooperation in the transport sector will strengthen the transport-transit and trade-economic potential between the two countries, by increasing the volume of cargo traffic.

The meetings also discussed the implementation of e-TIR pilot project, which provides for the complete electronic transit operations between the countries to improve the operation of border crossing points.

The system offers benefits to all players in the TIR system and brings additional security and risk management opportunities, thus reducing the risk of fraud.

The first phase of Iran-Azerbaijan e-TIR project officially started on May 22, 2019.

INSTC is a 7,200-km long multimodal network of ship, rail, and road routes for the transport of freight between India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe. The objective of the corridor is to increase trade connectivity between major cities such as Mumbai, Moscow, Baku, Astrakhan, Tehran, Bandar Abbas and Bandar Anzali.

The aim of the corridor is not just to increase trade between member countries, but also to standardize tariffs and customs duties.

Baku Port also serves as a link to transport corridors that target European markets.

Azerbaijan to Build 4 Terminals on Iran's Border

Azerbaijan Railways will build four terminals in the Iranian city of Astara, Elkhan Asadov, the head of Tariff Regulation Department of Azerbaijan Railways, said at the Fourth SOCAR International Caspian and Central Asia Downstream Forum on Trading, Logistics, Refining and Petrochemicals in Baku back in April.

According to the Azerbaijan official, these include oil and grain terminals, a terminal for checking containers and a general-purpose terminal.

Speaking about the activities of Azerbaijan Railways, Asadov said a great deal of work is being done for modernizing the trains and repairing railroads. In particular, seven of the 50 locomotives purchased by Azerbaijan have already been delivered to the country.

Also, work continues on the simplification and processing of customs procedures.

A cargo terminal was built in the Iranian city of Astara with the support of Azerbaijan during the first quarter of this year. The Azerbaijani side took the terminal for a 25-year lease. The capacity of the terminal, built as part of the International North-South Transport Corridor project, is 2 million tons annually, and is planned to reach 5 million tons in the future.

The long-awaited Qazvin-Rasht railroad project was officially inaugurated by Iranian President Hassan Rouhani in the northern city of Rasht, Gilan Province, in March.

This rail route was one of the main missing links along the International North-South Transport Corridor.

A rail route connecting Rasht to Astara on the border with Azerbaijan is another missing link along INSTC.

The railroad has the capacity to transport 1.4 million passengers and around 5.1 million tons of cargos in the first year.

Plans are to increase these figures to 2.8 million passengers and 7 million tons in a 20-year vision plan.

According to Minister of Roads and Urban Development Mohammad Eslami, passenger and cargo trains can speed up to 160 kilometers per hour and 120 km/ph respectively on this route, which has 53 tunnels and 45 bridges along the way, collectively stretching for 22 kilometers and 8.4 kilometers respectively.

Nine train stations have been built along the Qazvin-Rasht railroad with a total area of 39,455 square meters.

According to Kheirollah Khademi, the head of Construction and Development of Transportation Infrastructure Company of Iran, the inauguration of Qazvin-Rasht railroad will cut cargo transportation time from India to Suez Canal from 36 days to 18 days, and reduce costs by around 35%.

Since the INSTC rail route has yet to be completed for full operationalization, multimodal transportation will be used (by road and sea as well as rail) until the missing links come on stream.

Abbas Khatibi, the deputy head of Construction and Development of Transportation Infrastructure Company of Iran, says the transportation of cargo and passengers via Qazvin-Rasht railroad will save up to 20 million liters of fuel per year.

“It will reduce air pollution and save up to 157 billion rials [$1.23 million] every year. Using this rail route will reduce road accidents and save around 352 billion rials [$2.76 million] annually. The project will create around 165 jobs,” he was quoted as saying by ILNA.

“The economic ties between Azerbaijan and Iran will be strengthened through joint rail projects,” Javid Gurbanov, chairman of Azerbaijan Railways CJSC, told reporters in Rasht at the inauguration of the Qazvin-Rasht railroad.

"The presidents of both countries attach special importance to the development of economic ties and rail links," he added.

Gurbanov also said the rail links are highly beneficial for ensuring the welfare of the two countries.

10-Fold Rise in Two-Way Transport via INSTC

A total of 270,000 tons of goods were transported between Iran and Azerbaijan via the International North-South Transportation Corridor in 2018, 10 times more compared to the year before.

“During the first two months of 2019, some 80,000 tons of freight were transported through the corridor [between Iran and Azerbaijan]. We expect the figure to increase to 600,000 tons by the end of the year,” Gurbanov said.

The Azeri official noted that transportation along INSTC has the capacity to reach millions of tons per year once the countries along the route join their efforts.