Challenges & Opportunities For Developing The Caspian Sea Multi-Modal Transport Routes

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North America’s Great Lakes have much experience to offer Caspian Sea planners

The Caspian Sea is one of the key elements of the transport and logistics network both for countries with direct access to the sea and for individual large states and regions. The Caspian Sea provides the opportunity to transport goods between Asia and Europe, the countries of Central Asia (including Kazakhstan), Russia, Iran, India and so on, supporting both the own foreign trade of the listed regions and countries, and the trade of states whose territories are located in different trade routes.

Among the routes passing through the Caspian Sea, the two main routes are the Trans-Caspian International Transport Route (TITR) and the North-South Transport Corridor.


The demand for the TITR and North-South corridors has been growing over the past few years, and is confirmed by the dynamics of cargo transportation and trade. From the moment of its launch until February 2022, a total of about 4.463 million tonnes of cargo were transported along the TITR. Container transportation, in turn, increased from 8.9 thousand containers in 2017 to 25.2 thousand containers in 2021 with a CAGR of 29.4%. In 2022, cargo transportation along the TITR increased 2.5 times compared to the previous year, to 1.5 million tonnes (with a 6-fold increase in cargo transportation projected at the beginning of 2022, to 3.2 million tonnes). The volume of cargo transportation along the Trans-Caspian International Transport Route in January–June 2023 amounted to 1.3 million tonnes, 1.8 times more than for the same period in 2022.

The North-South Route

Trade between Russia and Iran has also been growing rapidly over the past few years. Exports from Russia to Iran increased from US$1.3 billion in 2017 to US$4.9 billion in 2022, with a 20% growth over 2021’s figures.

According to the Eurasian Development Bank (EDB), up to 5 million tonnes of bulk cargo and 2 thousand container cargo passed annually through the North-South corridor in 2020.  In 2021, cargo turnover along the North-South corridor amounted to 13.8 million tonnes, and in 2022, 14.5 million tonnes. According to forecasts, by 2023 the cargo turnover along the route will be 17.6 million tonnes, and by 2024 20.5 million tonnes. Optimistic forecasts are largely associated with the completion of some construction and operational projects to optimize the route’s capacity, as well as the potential attraction of additional transit volumes of cargo flows from India, Iran, and the Persian Gulf countries to Europe.

It has also extended further south. The first direct freight train from Russia to Saudi Arabia arrived in Jeddah via Iran last month (August 2023).

The total cargo turnover along the North-South and TITR trade routes in 2022 amounted to 16 million tonnes, 14.5 million tonnes within the North-South route and 1.5 million tonnes via the TITR. According to one possible conservative estimate, cargo turnover on the above routes is expected to increase from a CAGR of 21% to 28.6 million tonnes by 2025.

Cargo transportation in the Caspian region is provided by various infrastructure facilities, primarily ports. Each of the five Caspian states (Azerbaijan, Iran, Kazakhstan, Russia, Turkmenistan) has one key port in the Caspian Sea, with varying, yet fast growing capacities.

On average, the throughput capacity of the largest ports of the Caspian Sea ranges from 5 to 17 million tonnes per year. The total throughput capacity of the 10 largest ports of the Caspian Sea is about 100 million tonnes per year.

For comparison: in the neighbouring Black Sea, which allows, among other things, cargo transportation with access to the world’s oceans, the volume of cargo transportation and port capacity are noticeably higher. For example, the throughput capacity of the Russian port of Novorossiysk is more than 208 million tonnes per year, and the Romanian port of Constanta is 100 million tonnes.

It is worth noting that the largest ports in the world are located in China. Eight of the top ten container ports in the world in terms of throughput are Chinese ports, which, on average, handle about 20-30 million TEU containers and 300-400 million tonnes of cargo per year. The Port of Shanghai, in turn, handled 47.28 million TEU containers in 2022, with a total cargo turnover of 513.7 million tonnes.

Despite the small capacity of the Caspian Sea ports, until recently this infrastructure was not used to its full extent. In 2021, the load on the largest ports of the Caspian Sea was at a low level the load on the ports of Kazakhstan was 31% (the least loaded were dry cargo (25%) and ferry (20%) terminals). The load on the port of Olya (Russia) did not exceed 10% in 2021.

Baku Port

At the same time, recent trends demonstrate an increase in demand and the commitment of the Caspian states to develop maritime infrastructure in the region. For example, cargo transhipment at  Azerbaijan’s Baku port has increased by an average of 13.8% annually over the past few years, reaching 5.6 million tonnes in 2021. The geopolitical events of 2022 served as an additional factor in the increase in cargo transportation through the Caspian Sea.

For example, in 2022, 6.314 million tonnes of cargo were transported through the Baku port, which is 13% more year-on-year. The number of wheeled vehicles transported during the year reached 51,000 units (+30.6% compared to 2021), the number of passing cars was 38,700 units (+27.2%), while the number of passenger cars transported was 12,000 units (+3-4 times).

Baku port is actively developing its infrastructure in the first stage, completed in 2018, the port’s nominal throughput increased to 15 million tonnes, including 100 thousand TEU. Active work is underway to implement the second stage and increase throughput to 25 million tonnes, including 500,000 TEU per year.

Aktau Port

A similar situation is observed in the ports of Kazakhstan. Container transhipment at the port of Aktau grew by an average of 38.9% annually from 2019 to 2021 and reached 27,600 TEU, of which 17,700 TEU were TITR. In 2022, there were 30,700 TEU containers through the Aktau port (+11.2 compared to 2021).

An important factor in ensuring the capacity of transport routes in the Caspian Sea is the presence of a sufficient sea fleet. At the beginning of August 2023, about 128 cargo ships of various types were observed in the Caspian Sea. Of these, 43.8% are flying the Russian flag, 25.8% are flying the Iranian flag, 18% are flying Azerbaijani flag, 7.8% are flying Kazakh flag and 4.7% are flying Turkmenistan flag. Regarding usage, it is worth noting that 63.3% of the vessels are dry cargo ships, 24.2% are tankers, 9.4% are roll-on/roll-off vessels (Ro-Ro), 3.1% are vessels for other purposes.

The focus of states on developing transport capabilities in the region is reflected in the number of planned and implemented investment projects. At the end of 2022, the Eurasian Development Bank (EDB) noted more than 100 projects for the development of infrastructure on the North-South route in the Caspian countries (Azerbaijan, Armenia, Georgia, Iran, Kazakhstan, Russia and Turkmenistan) with a total value of US$38.2 billion. of which US$10.7 billion falls on projects classified as the highest priority. Regarding the development of TITR, a five-year roadmap was signed between the countries of the Caspian region in November 2022, within the framework of which it is planned to implement infrastructure projects worth about US$6.4 billion.

Caspian Challenges

Despite the presence of a significant number of investment projects, the reorientation of cargo flows and the dynamic growth of cargo transportation across the Caspian Sea in 2022 and 2023. created additional pressure on the existing infrastructure and identified the most pressing challenges facing the transport industry in the region:

  • Limitations of the associated and accompanying infrastructure (in some areas lack of locomotives, low capacity of warehouses, non-electrified railway lines, different track gauges, etc.);
  • Lack of infrastructure for servicing containers, general and dry cargo (ships, transport logistics centres, terminals, dry ports);
  • Lack of coordination/single transport operator, lack of a unified ship schedule and end-to-end tariff formation at the stages of transportation and ship calls at ports;
  • Low level of predictability of cargo throughput/possibility of uninterrupted supply;
  • Shortage of the fleet of containers and wagons for various purposes;
  • Shortage of ferries for rail and road freight transportation;
  • Long lead times for customs procedures (repeated customs procedures at border checkpoints, lack of an effective coordination mechanism for managing cargo transportation and joint customs control based on the single window principle, low level of digitalisation of transit documents and cargo clearance procedures).

The prospects for the development of the Caspian Sea as the most important transport and logistics element in the region have high potential based on the experience of other large closed water bodies.

Comparison with the North American Great Lakes Network

One such example is the Great Lakes on the border of Canada and the United States, which are a series of five interconnected freshwater bodies of water Superior, Michigan, Huron, Ontario and Erie. The Great Lakes were used as a trade route for hundreds of years, playing an important role for the region’s indigenous peoples.

There are more than 100 ports of various capacities and configurations operating on these lakes. However, in each case, ports serve as multimodal connecting elements between land transport modes (road and rail) and water transport.

The development of waterborne transport is one of the drivers of economic growth and trade development in the Great Lakes region. This region is home to more than 100 million people, about half of the volume of foreign trade between the United States and Canada (about US$300 billion) passes through it, and transportation by water transport averages more than 160 million tonnes annually.

It is worth noting that the Great Lakes on the border of Canada and the United States also faced a number of challenges, for example, difficulties with the automation of transport and logistics processes, customs procedures, and digitalisation of documents, which are currently relevant for the Caspian Sea. The key approaches to resolving them were:

  • Modernisation of port infrastructure in the Great Lakes region in the United States, implemented through government programs including the US Administration’s port infrastructure development program (MARAD), which began providing funding for port infrastructure facilities in 2019, the Port Infrastructure Development Program and others;
  • Implementation of many projects related to port infrastructure in the United States in the form of public-private partnerships (PPP), which helped attract additional investments in logistics infrastructure, including the Great Lakes;
  • The United States-Mexico-Canada Regional Trade Agreement (USMCA), which entered into force on July 2, 2020, regulates trade relations between countries, providing a mechanism for the protection of intellectual property, resolving controversial trade issues, as well as ease of customs procedures;
  • Improving the operation of distribution centres and warehouses in the USA, within the framework of which warehouse automation technologies are being introduced in order to increase the operational efficiency of cargo transportation.

Developing The Caspian From The Great Lakes Lessons

Thus, the following directions for the development of the transport and logistics potential of the Caspian Sea can be noted:

  • Effective use of the existing potential of transport infrastructure against the background of the observed reorientation of cargo flows (development of cargo transportation along the North-South and TITR routes, work with potential shippers);
  • Expanding the capacity of the associated infrastructure, including the further development and creation of warehouse and terminal infrastructure for servicing cargo;
  • Ensuring a sufficient number of containers, ships and various types of wagons;
  • Ensuring transparency of the cargo transportation process for all participants (transportation conditions, travel times for individual sections of the route and procedures, tariffs and costs), ports, railways, customs services, shippers, consignees, and so on. For example, by forming a structured joint venture between the parties.

*Formation of a joint venture for TITR participants (the creation of a joint venture is planned until the end of 2023.

  • Organisation of uninterrupted container transportation, including with predictable throughput, for example, by creating multimodal and intercountry teams/groups that regulate at the tactical level the timely delivery of goods along various routes;
  • Introduction of the “single” window principle into customs processes on the TITR and North-South routes between related countries, implementation of digital solutions to improve the level of customer experience for shippers.

Source: Evgeniy Kosachev for Kapital 

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