Azerbaijan Transport and Logistics

Sector outlook

Thanks to its strategic location, on the most convenient route from North-Eastern Europe to Central Asia and the Middle East, Azerbaijan has a vibrant transport sector, which accounts for about 7% of total GDP. In 2009, it conveyed about 1.3 billion passengers and 1.9 million tons of goods.

Freight traffic flows by modes of transport are distributed as follows: road 48.8%, railway 16.7%, pipelines 28.3%, sea 6.1%. The breakdown for passengers is the following: road 84.0%, metro 15.3%, railway 0.6%, airport 0.1%

With modern airports in several cities across the country, aviation is one of the leading segments. Shipping also showed strong growth since the mid-1990s, at an average annual rate of about 20%. Due to the increasing volume of goods in transit through the country, rail transportation is growing at the same pace.

The liberalisation process is still ongoing and much remains to be done in road and urban transport.


Strategic direction/ specific schemes and incentives

The government took significant steps to encourage private participation in the sector’s various segments, to develop multimodal transport and to reduce the time spent on export-import and transit operations:

    Massive investment in infrastructure: USD 9 billion over the 2005-2009 period (USD 4.5 billion in road construction and rehabilitation), USD 13 billion for the modernisation and construction of roads, railways and other physical infrastructure, including ports over the 2010-2015 period;

    Relocation of the Baku International Sea Port in Alyat (65 km South of Baku) to increase cargo transportation capacity from 8 million tons to 10 million by 2014 and 21-25 million in the long term: USD 760 million investment for the first phase to be completed in 2014;

    Strong support to the development of aviation: construction and rehabilitation of airports in major cities and the regions, continuous legislative improvements (notably with the adoption of a Law on Aviation in 2005), creation of a Civil Aviation Administration;

    Railway modernisation programme for a total investment of USD 1.5 billion: Rehabilitation of East-West main line, new mainline locomotives, adoption of international monitoring methods, modernisation of oil spill prevention and response capacity equipments, capacity building;

    Programme for public transport development: new bus lines, Baku taxi company to be created in 2012, rehabilitation of the tramway along the Caspian Sea (French company selected for the design);

    Development of transport and logistics projects under the PPP model via the Azerbaijan Investment Company: 25% stake in Baku Shipyard Company (construction of a modern shipyard and ship repair facility on Caspian Sea), 25% stake in the Sangachal Terminal (construction of a new logistics terminal in Sangachal).

Azerbaijan participates in the EU-funded TRACECA programme, which aims at developing the Europe-Caucasus-Asia transport corridor. Implemented by Egis International and Dornier Consulting as part of TRACECA, the LOGMOS project will conduct feasibility studies for investment opportunities in the logistics sector in Azerbaijan.


Business opportunities

    Sea transport: engineering and construction works for the new Alyat International Sea Port, development of sea freight shipping and services;

    Rail transport: rehabilitation of the Baku–Alyat–Beyuk Kesik line (connecting the new international sea port of Alyat with the Georgian-Azeri border) for a EUR 1 billion investment, rehabilitation works and supply of new locomotives and equipments within the railway modernisation programme, track transportation services for agricultural products;

    Roads and bridges: highway improvement project, 14 km-long highway bridge over Baku Bay to be build by an international consortium on a build-operate-transfer basis for an estimated cost of USD 1.5 to 1.8 billion (feasibility study prepared by the Korean company Dong Sang Engineering);

    Aviation: launch of new routes, development of aviation services, opening of shops in the airports;

    Logistic facilities: International Logistic Centre to be developed on the PPP basis on a 100 ha area at the new International Sea Port of Alyat, 7 other potential sites identified for logistics centres, warehouses for fruits and vegetable storage, refrigerated transport and storage.


Some success stories

The leading urban and rail transport engineering group Systra (France), as head of a consortium including MottMacDonald (Czech Republic) and SAMAN (Korea), won an international call for tenders launched by the Baku Metro in 2009 to draw up designs for the future metro network in 2009. The latter will involve extending the 2 existing lines and creating 2 new lines. Once completed, the network could cover an additional 60 kilometres and include 50 new stations. Systra had previously been involved in the renovation of the railway network through a programme financed by the Asian Development Bank. Systra opened a branch in Baku in 2010.

This publication has been produced with the financial assistance of the European Union. The contents of this publication are the sole responsibility of EUROCHAMBRES and can in no way be taken to reflect the views of the European Union.

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