Azerbaijan's North-South Corridor: Key driver of regional trade and economic growth

By Shams Agayeva

Azerbaijan is successfully implementing the diversification of its economy, particularly by modernizing service infrastructures across all sectors of transportation. Significant road reconstruction projects are underway, including the construction of overpasses, bridges, tunnels, and pedestrian crossings. A major focus is on the realization of the North-South International Transport Corridor, a pivotal infrastructure project aimed at enhancing regional connectivity.

Notably, the volume of transit goods entering Iran from Astara via the North-South Corridor has increased threefold. Javad Hedayati, director general of the Transit and International Transport Department of Iran's Road and Transport Organization, highlighted this growth in a recent media statement.

Hedayati noted that transporting economically advantageous products through the International North-South Corridor is increasingly appealing. He pointed out that Russia and India have partnered with the Fesco company to create a route designed to lower freight costs, with expenses estimated at around $4,000. This cost is generally lower than shipping via sea routes, making maritime transport more economically favorable for cargo owners.

He emphasized that any initiatives in the North-South Corridor must focus on maintaining competitive freight costs, which are unlikely to dip below $4,000. Consequently, Iran should prioritize the transportation of goods that are more economically viable within this framework, taking into account both cost and transit time.

There are proposals to transport various products, including potassium hydroxide and other chemicals, through the North-South Corridor. Hedayati stressed the need for enhanced efforts in the transportation and transit of cargo containers.

In the last Iranian year (March 21, 2023 - March 19, 2024), 1.08 million tons of cargo entered Iran for transit through Astara as part of the International North-South Corridor. This marks a significant increase from approximately 320,000 tons in the previous year, illustrating a growth rate of about threefold. The current Iranian year (March 20, 2024 - March 20, 2025) is projected to see further increases in cargo transportation along this route.

The North-South Transport Corridor was established under an intergovernmental agreement signed on September 12, 2000, by Russia, Iran, and India. Several countries, including Azerbaijan, Belarus, Bulgaria, Kazakhstan, Kyrgyzstan, Oman, Tajikistan, Turkiye, and Ukraine, have ratified this agreement. The corridor aims to reduce delivery times for goods traveling from India to Russia and further into Northern and Western Europe, cutting the delivery time from over six weeks to an anticipated three weeks.

The Ghazvin-Rasht railway (175 km), which became operational on March 6, 2019, connects Azerbaijani railways with Iran's railway network as part of this corridor. Future plans include constructing the Rasht-Astara railway within Iran.

The North-South Corridor offers three main directions in Iran: the eastern route towards Turkmenistan and Central Asian countries, the central route through Russia via the Caspian Sea, and the western route connecting Azerbaijan, Georgia, Russia, and Eastern Europe.

It should be noted that encouraging intermodal transport solutions that utilize rail, road, and maritime routes could further reduce costs and improve efficiency for goods traveling through the corridor. Developing seamless transitions between different modes of transport will enhance competitiveness.

On the other hand continued investment in infrastructure, particularly in the Rasht-Astara railway project, is crucial to enhance connectivity and support the expected increase in cargo volumes. Upgrading facilities at key transit points can facilitate smoother operations.

In conclusion, Azerbaijan's ongoing efforts to diversify its economy through the development of the North-South International Transport Corridor represent a significant step towards enhancing regional connectivity and trade. The remarkable increase in transit goods entering Iran from Astara highlights the corridor's growing importance as a viable route for economic cooperation among participating countries. By focusing on competitive freight costs, improving infrastructure, and promoting intermodal transportation, Azerbaijan and its partners can further capitalize on this opportunity. Additionally, engaging in trade agreements and sustainability initiatives will not only attract more businesses but also ensure the corridor's long-term viability. As the North-South Corridor continues to evolve, it has the potential to transform the logistics landscape and foster economic growth in the region, making it a key player in international trade networks.