RLL Container Report - 22 March 2017
From: John Keir, Ross Learmont Ltd. Email: john.keir@telia.com Date: 22 March 2017
Iran rolls out the Persian carpet (Part Three)
So far, the Government of Azerbaijan has invested USD 630 million in the construction of the Baku-Tbilisi-Kars railway that will link Iran to Eastern Turkey and from there on to the market of 500 million consumers that make up the European Union. After several delays, the project is slowly but surely coming to its conclusion and posterity might show that this was money well spent, for Azerbaijan has got two strategically-important transport corridors for the price of one. By the time the first container train trundles along the line from Baku via Tbilisi to Kars and beyond, Iranian Railway engineers should have completed the missing link that will complete the rail corridor from Teheran to Astara at Azerbaijan’s border with the Islamic Republic. From Astara, container block trains will pass through the Azeri capital and from there either north to Russia, Ukraine and Belarus, or west via Georgia and Turkey to the European Union. In the space of a few months, the Caucasian republic will have been catapulted from semi-obscurity to being one of the most important intermodal rail hubs linking Europe with the Middle East and beyond.
The new westbound rail link should also provide an economic lift to Turkey, which at 75 million has almost as large a population as Iran. It was politics which decided that the rail connection with Iran should go via Georgia and Azerbaijan, rather than the direct route via S E Turkey or via Armenia. To a neutral observer, the shortest route from Kars runs through Armenia but the Turks had closed their border with Armenia. However, the Armenian option is still on the table and there is much in its favour. Iranian rail engineers costed the project at USD 1.3 billion, although that figure does not include the purchase of the land, which the line would cross. These costs could, however, be offset by the shorter journey times in addition to which the Armenian corridor could be built to standard gauge, thus eliminating a great deal of unnecessary delays caused by the two switches of gauge in the space of just one day.
The Kars Question may be raised again in connection with Iran’s plans for a rapid growth of its commercial fleet and eventually the expansion of its main container terminal at Bandar Abbas. In the coming years, IRISL will take delivery of four container carriers each with a capacity of 14,500 teu. At the same time, CMA CGM will form an alliance with the Iranians, which will require IRISL to add no less than 570,000 teu capacity in the coming years. Bandar Abbas will be transformed into a major box hub on the northern shore of the Persian Gulf. It can boast a unique rail network, reaching right up into Afghanistan and the land-locked states of Central Asia as well as the industrial centres of Siberia. At the same time, the new line via Astara brings into play all of the industrial capacity of Western Russia, Ukraine and Belarus, to which can be added to the increased output of Iran’s domestic industry and agriculture.
The route via Armenia will provide additional rail capacity for traffic coming up from Bandar Abbas and Western Iran heading in the direction of the great EU market. The proposed route passes through a mountainous region of Armenia with no competing rail infrastructure and it is also far shorter than the alternative via Baku and Tbilisi and at the same time is closer to Bandar Abbas. The initial budget will obviously rise but will nevertheless will be far cheaper than a similar stretch of line in Europe. In this “Great Game”, Commerce will eventually trump local politics.
John Keir, Ross Learmont Ltd.
22 March 2017
Copyright ©, 2017, John Keir