Transport framework of Eurasia
The North-South route will unload traditional transport corridors and increase the transit potential of the participating countries.
Recently, the East-West and Western Europe-Western China routes have been actively discussed by experts; these corridors have become a good success story over the past 10 years. Container traffic has increased 80 times along this axis in 10 years. The question arises, can this success story be repeated on the North-South route?
Recall that the North-South corridor connects the northwestern part of the Eurasian Economic Union (EAEU) and the countries of Scandinavia with the states of Central Asia, the Persian Gulf and the Indian Ocean. From Helsinki, the path goes to Astrakhan, where three routes open: the Western branch (goes from the Caspian by land, these are railways and roads), the Trans-Caspian branch (ferry crossings across the Caspian from the Russian ports of Makhachkala and Olya to Iranian ports) and the Eastern the branch goes through the territory of Kazakhstan and Turkmenistan with a call to Iran by land, and then there is an opportunity to carry cargo to the Persian Gulf ports of Bandar Abbas and Chabahar and further to Indian Mumbai.
The agreement on the North-South corridor was signed 10 years ago and 10 countries are participants. According to EDB experts, up to 5 million tons of bulk cargo and 2,000 container cargo annually pass through the North-South branch. It has been calculated that if the cargo flow is established, then in 10 years we can already talk about 15-25 million tons of non-containerized cargo and 300-600 thousand containers – the volumes will be comparable to the current transportation along the West-East corridor.
By strengthening the North-South, the EAEU countries will be able to connect transport routes in the Eurasian space, which will turn this space into a crossroads, and the crossroads is an increase in traffic that allows realizing the transit potential, said Nikolay Podguzov, Chairman of the Board of the EDB, speaking at the Second Eurasian Congress at the meeting of the session “Transport corridors “West-East” and “North-South”: infrastructure, digitalization, transit”.
According to the speaker, the main advantage of the North-South route over other routes, including the sea route through the Suez Canal, is a significant reduction in transit time and an increase in the volume of rail container traffic in the Europe-China/China-Europe traffic. In addition, in terms of carbon footprint, such a route – a combination of road and rail – is at least 25% better and more efficient than traditional routes by sea or air due to shortening of the path. In addition, container transit along the China-EAEU-Europe axis will grow by 77%. This indicates the fundamental possibility of the success of the “North-South”.
“This route will give a twofold reduction in the delivery time of goods from India to Europe compared to the sea route through the Suez Canal. The explosive growth of container traffic in recent years along the West-East corridor can also be achieved through the North-South. We estimate that by 2030 traffic growth here may be at least 30 times, from the current 20,000 20-foot containers to 600,000 20-foot containers.” Nikolay Podguzov
In addition to the growth of container traffic, the head of the EDB believes that it is possible to increase the non-container traffic at least three times. The effect of conjugation and intersection is also important: at least 40-50% of traffic growth can be achieved through the synergy of routes along individual axes.
“Since we receive a cargo base of 75% from the EAEU countries, almost all of them should be interested in these routes, since some of them have no access to the sea. By joining the “North-South”, they will increase the transit potential” Nikolai Podguzov
“The North-South transport corridor contains a big idea of the need for Eurasia to have its own land transport framework, which will make it possible to realize the transit potential and the potential of domestic transportation,” EDB Chief Economist Evgeny Vinokurov
According to him, over the past 10 years, along the West-East axis, the number of containers transported from China to the European Union through Kazakhstan and Russia and back has skyrocketed from 7,000 containers to 600,000. “History must be repeated on the North-South axis “, – says Evgeny Vinokurov. – And then, by combining both axes, to create a transport framework for Eurasia and an alternative to sea transportation, reduce the transport shoulder and reduce the cost of entering the markets of countries that have no access to the sea: this is the whole of Central Asia, Belarus and Armenia. These countries are losing about 1.5% of growth per year due to the high cost of entering foreign markets.”
Apparently, Kazakhstan is interested in more active use of its transit potential. Speaking at the forum, Vice Minister of Industry and Infrastructure Development of Kazakhstan Dinara Shcheglova noted that the favorable geographical location of Kazakhstan in the center of the Eurasian continent represents a great transit potential for Kazakhstan. According to her, over the past 15 years, about 30 billion US dollars have been invested in the transport industry of Kazakhstan, 2.5 thousand new railways have been built, more than 13 thousand km of roads have been reconstructed. Today, the length of highways of republican, regional and district significance is 100 thousand km, the total length of railways is 21 thousand km. The western gates of Kazakhstan are represented by seaports (the capacity of sea pores is about 20 million tons per year), the eastern gates are dry ports, which are in technological connection with two railway crossings on the border with China and the Western Europe-Western China highway.
There are 21 airports in the field of civil aviation. Despite the pandemic, the total volume of transit for 2020 amounted to 22.7 million tons, 17% more than in 2019. Container transit for 2020 amounted to 876 thousand tons in 20-foot equivalent. In 2021, there is also a positive growth trend in these indicators, Dinara Shcheglova noted.
As for railway transport, 342 million tons of cargo were transported in 10 months of 2021, an increase of 340 million tons compared to 2019, and major infrastructure projects are planned for the railway infrastructure. Currently, measures are being taken to create a container hub on the basis of the port of Aktau – the predicted growth in container traffic by 2025 will be about 100 thousand 20-foot equivalent per year. Work is underway to develop ferry traffic, a ferry line from the port of Anzeli (Iran) to the Russian port of Makhachkala will be opened this year.
As for digitalization in the field of transport, in order to create conditions for simplifying clearance and speeding up the delivery of goods, the Ministry of Industry and Infrastructure Development is implementing a project for a unified management of transport documents. The system has already been launched in pilot mode, and from January 1, 2022, the system will start working in combat mode. The system is designed for issuing bills of lading and waybills for the transportation of goods and passengers in electronic form.
“It is planned to create integration services for information interaction with the logistics and financial systems of companies, as well as ecosystems of digital transport corridors of the EAEU countries. To date, the number of companies participating in the pilot project is about 4 thousand participants. Electronic documents are already generated in the system, permits have also been converted into electronic format and are provided through the licensing system,” the Vice Minister specified during her speech.
At the moment, the main commodity delivered along the North-South corridor is grain. According to the forecast estimates of the EDB, the flow of grain cargo along the “North-South” can be from 8.7 to 12.8 million tons by 2030. Taking into account other types of goods, the total potential of freight traffic along the North-South can range from 14.6 to 24.7 million tons in the perspective of 2030.
An additional volume of cargo flows can be provided by achieving the “seamlessness” of transport communications through digitalization and improvement of soft infrastructure. This will open up new opportunities to simplify border crossing procedures, reduce the delivery time of goods, reduce transport costs and improve traffic safety along the corridor.
The unique direction of the North-South axis creates connectivity with other global and regional transport corridors running from east to west, including China’s Belt and Road Initiative. The development of the North-South corridor will contribute to the formation of a macro-regional transport and logistics system – the “Eurasian transport framework”, which, in turn, acts as the basis for the development of trade and investment partnerships within Eurasia and can become a driver of Greater Eurasia.
Anna CHERNENKO, Almaty – Moscow – Almaty
