Azerbaijan’s focus on improving transportation infrastructure has been central to its role in enhancing regional connectivity, especially in the broader context of linking Europe and Asia. As part of the effort to revive the historic Silk Road, significant progress has been made in expanding trade and transportation networks—particularly rail and maritime routes that facilitate intercontinental trade along the east-west corridor. This expansion is a critical aspect of Baku’s long-term socio-economic growth strategy. Azerbaijan has consistently prioritized unlocking the trade potential of the Trans-Caspian routes, investing in advanced logistics and transportation infrastructure, including rail lines, highways, and seaports, supported by both domestic and international development initiatives.
Azerbaijan has long been acknowledged as a major energy producer, particularly in oil and natural gas, with its Caspian Sea basin resources forming a fundamental part of its economic base. In terms of regional connectivity, Azerbaijan has been instrumental in creating energy corridors linking Central Asia, the Caspian region, and Europe. Recognizing the need for economic diversification, the Azerbaijani government is actively working to reduce the country’s dependence on revenue from hydrocarbons. This effort is focused on enhancing Azerbaijan’s capacity to manage trans-Eurasian rail transport, thereby boosting its role in global trade.
In recent years, Baku has been seeking new areas of collaboration aimed at enhancing the country’s interconnectivity to spur the development of its non-hydrocarbon sectors. Through multilateral agreements, a variety of transportation and logistics projects across Azerbaijan have received both technical and financial support from several international financial institutions (IFIs), such as the Asian Development Bank (ADB), the World Bank, the European Bank for Reconstruction and Development (EBRD), and the Asian Infrastructure Investment Bank (AIIB). In addition to these IFIs, the $40 billion Silk Road Fund, a Chinese financial initiative focused on supporting infrastructure projects along the Belt and Road Initiative’s economic corridors, has recently expressed interest in investing heavily in Azerbaijan’s transportation sector. However, it is important to note that the Azerbaijani government had already initiated large-scale infrastructure projects prior to garnering international attention. Given the increasing volume of transit traffic from various markets, the need for advanced, large-scale facilities has grown, prompting the government to leverage multilateral transport initiatives, attract foreign investment, and involve additional countries in these efforts.
The Baku-Tbilisi-Kars railway (BTK) and the Port of Baku, located on the Caspian Sea coast (also known as the Port of Alat or the Baku International Sea Trade Port), serve as significant examples of transportation and logistics infrastructure development in the region. In partnership with Türkiye and Georgia, the long-awaited BTK began operations in 2017, creating a new transit route along the Trans-Caspian International Transportation Route (TITR), also known as the Middle Corridor Initiative (MCI). This railway is initially designed to handle an annual capacity of 6.5 million tons of cargo and 1 million passengers, with long-term goals set at 17 million tons of freight and 3 million passengers annually. Spanning over 800 kilometers, this intra-regional project aims to further integrate the countries of the region and establish new direct, land-based transport links between the EU and China.
Another significant initiative is the Port of Baku, which opened in 2016 and is situated at the western end of the trans-Caspian section of the TITR. Initially, the port has an annual capacity of 15 million tons of cargo, including up to 100,000 containers per year. Once fully developed, its capacity will expand to handle up to 25 million tons of general cargo and 1 million containers annually. To enhance its transit capabilities, Baku has made substantial investments in transforming the Port of Baku into a versatile international seaport within the broader Caspian region. This includes building the necessary infrastructure to increase container handling capacity and establishing a free trade zone to streamline operations for importers, exporters, and freight forwarders. The first roll-on/roll-off (Ro-Ro) cargo terminal was launched in 2018. Additionally, port authorities have reached agreements with transportation agencies from Kazakhstan and Türkiye to jointly develop transshipment terminal facilities and increase cargo storage capacity at what is becoming the largest and most promising seaport in the Caspian Sea. As part of ongoing efforts to enhance the port’s functionality within the Middle Corridor framework, the Baku port authority plans to introduce new logistics hubs, such as truck parking (TIR parks), containerization facilities, bulk cargo terminals, and warehouses for handling mineral fertilizers, all of which are expected to be completed by the end of the year.
The central government aims to enhance the strategic importance of the Caspian coastal port in global shipping by implementing large-scale modernization and development initiatives. The Alat Free Economic Zone (AFEZ), which is currently under construction, serves as another example of this effort. AFEZ is designed to create a business-friendly environment that caters to the needs of international companies, adhering to global standards and practices. The development of essential infrastructure to optimize the management and operations of this economic zone is progressing rapidly. However, Azerbaijan is not the only transit country working on transportation and logistics projects in the Caspian basin with the aim of attracting international cargo shipments. As the Caspian Sea becomes increasingly containerized, other coastal states, such as Russia (with ports in Makhachkala, Astrakhan, Olya, and Lagan), Kazakhstan (including the ports of Kuryk and Aktau), and Turkmenistan (home to the Turkmenbashi International Seaport), are actively developing new ports or upgrading existing facilities to enhance their transshipment capacity.
Another promising intra-regional transit infrastructure project on the horizon is the Zangezur Corridor, which emerged as a result of the agreements that ended the Second Karabakh War. This overland route is part of a broader set of transport initiatives aimed at re-establishing a direct connection between mainland Azerbaijan and its long-isolated Nakhchivan exclave, ultimately linking to Türkiye via the southern Armenia. The concept of reopening the Soviet-era rail lines as part of the Zangezur Corridor initiative dates back to late 2020. As stipulated in the November 10, 2020 agreement, all regional economic and transport links are to be restored. While there is some uncertainty about the plan’s realization due to Armenia’s ambiguous stance on its implementation, the creation of the Zangezur Corridor would offer significant advantages for improving connectivity along the TITR. Moreover, the development of new trade and communication routes, integrated into global trade networks, holds substantial economic importance and could contribute to fostering a more peaceful and stable regional security environment in the post-war era.
In addition to its strategic investments in strong land and sea infrastructure, Azerbaijan has been consistently investing in digital infrastructure and emerging technologies to diversify logistics services, improve domestic communication networks, remove digital barriers to cross-border data flows, and enhance the measurement of the digital economy and trade. By embracing comprehensive digitalization, Baku aims to speed up the transformation of Azerbaijan into a transnational digital hub along the Asia-Europe telecommunications corridor. Alongside physical infrastructure, the digitalization and automation of the entire transportation network are essential for the long-term success and sustainability of the Middle Corridor.
The widespread adoption of advanced technologies designed to integrate various services and automate tasks and workflows along the trade route can significantly enhance the connectivity, efficiency, synchronization, security, and digitalization of border crossings and customs systems. In this context, in 2019, Azerbaijan’s State Customs Committee signed an agreement with the Chinese telecommunications company Huawei to modernize and automate the entire customs system by implementing “Single Window” systems. Furthermore, on July 22, 2022, Azerbaijan launched a unified center for managing transit freight, aiming to simplify and digitalize border crossing procedures and transit operations through a single dispatch method, as part of broader efforts to optimize the Middle Corridor.
In addition, Baku has been working to align all of its freight transportation projects with the Beijinng-backed Belt and Road Initiative (BRI). Since its launch in 2013, bilateral cooperation and regional integration between China and Azerbaijan have progressed significantly. Several official visits by the incumbent president Ilham Aliyev to Beijing have been highly productive, leading to a series of important follow-up meetings. Most notably, in addition to strengthening political and commercial ties, the two nations agreed to collaborate extensively on the development of BRI’s inland routes by signing a Memorandum of Understanding on the Economic Belt of the Silk Road in 2015. This led to the signing of several key agreements between various ministries of both countries, establishing a broad framework for transnational cooperation across multiple sectors during the Second Belt and Road International Forum in Beijing in 2019. Furthermore, the forum also resulted in the creation of a document to establish an Asia-Europe telecommunications corridor as part of the Azerbaijan Digital Hub program. This agreement, signed by AzerTelecom and China Telecom, aims to enhance cooperation and coordination in managing cross-border internet traffic and to develop a digital telecommunications corridor linking the two continents.
The projects mentioned above are anticipated to foster a knowledge-driven, globally competitive economy while enhancing transregional trade, investment, and cultural exchanges, contributing to the broader development of the region. In this context, Azerbaijan and several neighboring countries are already collaborating effectively through Middle Corridor agreements, which are poised to strengthen regional market connectivity and commercial partnerships. Given the importance of transportation initiatives, the development of numerous large-scale logistics and transit facilities along the corridor is expected to usher in a new era of cross-regional transportation and bridge the gap in market connectivity.
In conclusion, Azerbaijan’s comprehensive investments in transportation infrastructure, coupled with its strategic geographical location, have solidified its role as a vital player in regional connectivity. The country’s focus on enhancing both land and maritime trade routes, such as the Baku-Tbilisi-Kars railway and the Port of Baku, positions Azerbaijan as a central hub in the revival of the Silk Road and the Middle Corridor. With the ongoing development of trans-Eurasian rail networks, digital infrastructure, and logistics facilities, Azerbaijan is not only enhancing its own economic diversification but also contributing to the broader goal of interconnecting Europe, Asia, and the Middle East. Moreover, Azerbaijan’s proactive involvement in multilateral cooperation with regional and global powers underscores its commitment to fostering peace, stability, and prosperity through strengthened trade and transportation networks. As the country continues to integrate these physical and digital infrastructure projects, it is poised to play an even more pivotal role in shaping the future of transregional trade and connectivity, opening new opportunities for growth and collaboration across the Caspian and beyond.
AzVision.az
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