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The role of port in the corridor
Bachelor thesis of Ayla Abbasova: Urban& Port and
Transport Economics
Erasmus University Rotterdam
Under supervision of Dr. Erwin van Tuijl
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Abstract-The aim of the paper is to analyze how important
is the role of port in the corridor. The analysis is
based on an example of Port of Baku, which was located on
the international trade route since ancient times. But
not only the good location of the port, but also a welldeveloped hinterland contributes and highlights the
performance of the port. The role of Port of Baku in
TRACECA was examined through the separate analysis of a
port, its hinterland infrastructure and a corridor. The
results have shown that ports in Azerbaijan are of a
great importance for the development of the trade in the
corridor.
Key Words: Port of Baku, TRACECA, hinterland, corridor
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Table of Contents
Chapter 1 Introduction ............................................................................................................................... 4
1.1 Relevance...................................................................................................................................................... 4
1.2 Aim .................................................................................................................................................................. 6
1.3 Research question ..................................................................................................................................... 6
1.4 Method ........................................................................................................................................................... 7
1.5 Structure ....................................................................................................................................................... 7
Chapter 2 Theoretical Review ................................................................................................................ 8
2.1 Port .................................................................................................................................................................. 8
2.1.1 What does it mean to be a port? ...................................................................................................... 8
2.2 Hinterland Infrastructure ................................................................................................................... 11
2.2.1 What is a hinterland infrastructure of the port? ................................................................... 11
2.3 Corridors .................................................................................................................................................... 13
2.3.1 What does it mean to be a corridor?........................................................................................... 13
2.3.2 What is the role of TRACECA in the corridor trade? ............................................................ 15
2.4 Conclusion ............................................................................................................................................. 18
Chapter 3 Methods used for results part ....................................................................................... 18
Chapter 4 Results ........................................................................................................................................ 19
4.1 Port of Baku .............................................................................................................................................. 19
4.2 Hinterland Infrastructure of the port ............................................................................................ 23
4.2.1 Road Transport ................................................................................................................................... 23
4.2.2 Railway Transport.............................................................................................................................. 25
4.4 Ports of Baku in TRACECA.............................................................................................................. 26
4.4.1 Alyat International Port ................................................................................................................... 27
Chapter 5 Conclusion, Recommendations and Discussions ................................................ 30
5.1 Conclusion ................................................................................................................................................. 30
5.2 Recommendations ................................................................................................................................. 33
5.3 Discussions ............................................................................................................................................... 33
Bibliography ....................................................................................................... 33
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Chapter 1 Introduction
1.1 Relevance
There are more than 2000 ports around the world, starting with small docks
handling only several hundred tonnes per year to the biggest harbors such as
Rotterdam, Shanghai and Singapore, each handling multiple of small ones. The
history of ports and maritime transport goes back in ancient times. They have
developed in the same path with the international trade evolvement, which was
hereditary in formation of the present-day world. Therefore, ports and sea
transport plays a critical role in global business world.
Though the role of ports is enormous, the first thing that comes to mind when
thinking about port’s role, is a harbor as a part of supply chain. Ports provide
with facilities to store and handle freights, they deal with postponed
manufacturing, picking and packing, provide ships with required space and
conditions (Mangan & Lalwani, 2008).
There are a number of papers focused on the role of ports today. For instance, a
paper by Mangan and Lalwani (2008) states that an increased accentuate on the
role of ports should be considered with the changes in world trade and sea
transportation specifically. These authors also mention a number of changes that
caused an increased demand and the role of ports. These include a drastically
increase in vessels size, expansion of global shipping companies, specialization,
unitization and transshipment (Mangan & Lalwani, 2008). The role of ports has
been also highlighted, as operations became more capital intensive, labor saving
and space consuming. The alterations have also occurred in the port market: as
there is an increased competition between ports, lowers the transportation
period (being pushed by liners), fear of overcapacity. The above-mentioned
changes reiterating the role of ports can be observed as a generally tendency.
This paper will analyze the role of port in gateway logistics and apply it to one
specific port: Port of Baku. It is notable, that there had been limited research
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conducted on the role of Port of Baku for Azerbaijan and its economy previously,
making the following research challenging and more interesting. Therefore, the
focus of the paper is Azerbaijan (Baku) and its Port.
Azerbaijan, with the capital city in Baku is located on the shore of the Caspian
Sea. Though the country is landlocked, an access and connection to the Caspian
Sea makes it crucial to evolve the sea transportation and land transportation
modes. Being the biggest inland sea in the world, the Caspian Sea is ringed by
five countries: Azerbaijan, Russian, Kazakhstan, Turkmenistan and Iran (Ziyadov,
2011). Therefore, these states are the predominant maritime merchants in
Caspian region. Based on provided data, in 2010 11.7 mln tons of goods have
been consigned through ports in Azerbaijan, out of which 9.5 mln tons were
transit transshipments (Ziyadov, 2011). The sea transportation through Caspian
Sea plays a critical role for Azerbaijan, as the country does not have a land
connection with any Asian countries. The country and the sea play a bridging
role between Europe and Asia. The connecting role of Port of Baku has been
explicitly shown in Taleh Ziyadov’s paper (Ziyadov, 2011).
The sea transportation through the Caspian Sea has an influence on the whole
Euro-Asian supply chain. The important role of Azerbaijan in Eurasian trade is
reflected in Port of Baku’s position in “Transport Corridor Europe Caucasus Asia”
(TRACECA), which was established in 1993. TRACECA project was created as a
restoration of the historical Silk Road and is known as a new Silk Road of the 21st
century. The main aims of TRACECA project are the following: evolvement of
economical relationships between countries, improvement of transport ties of
international transportation routes, creation of circumstances for transit trade,
transportation policy evolvement and evolution of programs aimed to organize
multi-modal transshipment (TRACECA, 2015). Notable to mention, that the
headquarter office of TRACECA is located in Baku. An important role Port of
Baku with its hinterland infrastructure in the project will be discussed in this
thesis.
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.
1.2 Aim
A role of port varies from pail transshipment destination to crucial logistics
point, which in turns relies upon the supply chain structure of dock users. The
aim of the paper is to examine the current role of port from logistics and supply
chain prospect. As the role of port depends on location, trade routes, this paper
will mainly focus on the Port of Baku. The paper will also analyze why is the Port
of Baku so important for Azerbaijan as a part of transport corridor. As a role of
Port of Baku is tied to the role of Baku in TRACECA project, the hinterland
infrastructure, which is tightly connected to the transportation system
development, will also be highlighted in the paper. It will be reflected how the
logistical aspect and developed hinterland infrastructure of Port of Baku
influenced its role of the bridge.
1.3 Research question
Therefore, the main research question investigated in the paper is the
following:
“How important is Port of Baku for Azerbaijan in a corridor between Europe and
Asia?”
In order to answer to the question there are several sub-questions created to
support and guide the main research question:
1. What does it mean to be the port?
2. What is a hinterland infrastructure of the port?
3. What does it mean to be a corridor?
4. What is the role of TRACECA in the corridor trade?
5. What is the role of Azerbaijan in TRACECA?
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1.4 Method
The research in the paper is based on the literature review. The data will be
analyzed using the qualitative research methods. The SWOT analysis is used as a
tool for an overview of the current situation of the Port of Baku. The paper will
draw its results and conclusions from the different papers review and
examination of the current tendencies.
1.5 Structure
To get an answer to the research question, the paper will be structured as
following. The theoretical part will set up a hypothesis constructed to reply to
the main question. The hypothesis will be composed based on the literature
review. Additionally, the theoretical part will give answers to the first four
theoretical sub-questions. This part is necessary as it provides a general
overview and puts a fundament for the subsequent part of the paper. The result
part of the paper, applying the theory to the Port of Baku, will find an answer to
the last sub-question related to the Port in Azerbaijan. This part is responsible
for the hypothesis analysis and testing. Additionally, the end of the results part
will clarify whether the hypothesis is accepted or rejected. The conclusion part
providing an answer to the main research question will consist of the short
summary, emphasizing the main findings and policy recommendations for the
paper.
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Chapter 2 Theoretical Review
The role of theories is to explain, predict and master various events, phenomena
and relationships. Theoretical framework provides a context for analyzing
hypotheses, creates a frame of references crucial for observations, definitions,
interpretations and generalizations (PeopleLearn, 2008).
The following paragraph will provide the concepts necessary for the solid and
reliable background, critical for the research. Therefore, the first four theoretical
sub-questions are answered in this part. The theoretical part is divided into
three parts: port, hinterland and corridor, which in combination create a
sufficient upbringing for the analyses.
2.1 Port
2.1.1 What does it mean to be a port?
To better understand the role of ports, definitions are explained. The words like
port, harbor and haven are usually tightly linked to each other. However, this
paper will mainly concentrate on port. The Table1 provides an overview to
common definitions of the port:
Table 1: definitions of port
“An entry place for global shipping
(Nijdam, van der Lugt, & de Langen,
transport and area of economic
2012)
activities, connected to the advent of
goods and vessels.”
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“A geographical area where ships are
(Stopford, 1997)
brought alongside land to load and
discharge cargo- usually a shelter deep
water area such as bay of river mouth”
is a port.”
“Extents linked to sea, ocean or river,
(Tarantola, 2005)
equipped with specific facilities
allowing them to manage loads”
Source: Author
From the definitions provided above the unifying tendency is observed: the port
is a place/area or extent, which deals with the discharge/load (loading
management) of ships/shipping transport. From this point, the definition of the
port that best suits this paper is therefore the following:
“Port is a place located on the shore of sea, river or ocean, used to receive vessels
and transfer goods from and to it. Additionally, it applies certain machinery,
facilitating loading and unloading processes.”
The above definition of the port highlights two major roles of port. First of all, a
port is a bud in transportation group, standing in a line with other nodes of
transportation like airports, railroad stations. Additionally, it is a place where
economic activities connected with advent of ships and freight to the port take
place.
It is usually the case that a port consists of several terminals, which are “specific
parts of harbor consisting of one or more wharfs related to special type of cargo”
(Stopford, 1997). There are various categories of freight in harbors: liquid bulk
(crude and refined oil products), dry bulk (coal and iron), unitized freight
(consisting of Ro-RO and Lo-Lo goods) and other consignment products. More
than 6 billion tones of goods are transported every year by sea transportation.
Out of them 45% are liquid bulks, 23% dry bulk and 32% general cargo (OECD,
2012).
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To better understand what the port is, a deeper insight into functions and roles
of the port from different perspectives is presented in addition to information
provided in introduction part. Table 2 presents four main functions of the port:
Table 2: Different functions of Port
1) Administrative
Making sure that the legitimate,
political and economical importance
of the government is secured
2) Development
Ports contribute, advocate and
investigate local and international
economy
3) Commercial
Ports are worldwide connection
points for various types of the
transport to interact: transition of
goods, stowing and discharging
4) Industrial
Control goods and products export
and import
Source: (Port Reform Tool Kit, 2015)
Different authors in their papers focus on only one function of the port,
emphasizing its importance. For instance, a paper by Robinson (2002), argues
that due to a fast and intensive reorganization of supply chain and logistics way,
in which ports are entrenched, their role is now seen as an essential part in
value-driven chain system. Robinson (2002) shows that port adds value to
carriers and suppliers; therefore it should be considered not just a shipment
place, but also more as a part of a complex value chain scheme (Robinson, 2002).
Nijdam, van der Lugt and de Langen (2012) in their paper emphasize a role of
port as a place of storage place where goods and passengers have to interim
their journeys. Authors in the paper also mention fortification side of the port
that is crucial for achievement economies of scale and efficiency improvement
(Nijdam, van der Lugt, & de Langen, 2012). Another function of the port that was
not mentioned in the table of ports function is a port in gateway logistics. A
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paper by Tongzon and Oum (2005) focused on this important role of the Port. A
gateway in the paper is considered as a bud in international supply chain, which
plays a bridging role between regions by providing different types of
transportation systems. The importance of the port is highlighted by its role in
gateway logistic accomplishment. The influence of the port on efficient
transshipment and amalgamate between sea and land transportation is being
analyzed (Tongzon & Oum, 2005).
To sum up, being located on the side of a sea or ocean, a port is exploited for
ships take in and the transportation of goods from different extent. Additionally,
on the examples provided in papers of Ross Robinson (2002), Nijdam, van der
Lugt, de Langen (2012) and Tongzon together with Oum (2005) it can be
concluded that ports serve a number of functions. Starting with its role in a
value-driven chain system, continuing as a storage place and finally as a bridge
between regions.
The following parts of thesis analyze the importance of hinterland infrastructure
and role of corridors. Thus, the paper focuses on the importance of port in the
corridors, being a part of the gateway logistics.
2.2 Hinterland Infrastructure
2.2.1 What is a hinterland infrastructure of the port?
To start with, the hinterland is an extent, where the freight is transshipped over
the land, after it has been dispatched in the port. The hinterland infrastructure
includes different transportation modes such as road, rail and air and interior
estuary. However, the majority of goods due to the big volumes are traveled by
road and railway hinterland from the port. (Nijdam, van der Lugt, & de Langen,
2012). To emphasize the quality, adeptness and competence of the port, the welldeveloped hinterland infrastructure is essential. A well- located port will have no
value if there is no link between various parts of the transportation points. As the
port is not the last stop for goods, it is critical to have a well- developed
hinterland infrastructure. According to Noteboom, the extent of the port is
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mainly dependent on the size and population of its hinterland. Hinterland is a
place where the port deposits a vast of its goods (Notteboom, 2008). Hinterland
infrastructure creates corridors for the goods to reach their final destination. An
expansion of the corridor has a positive effect on port’s image and profit. Being
one of the largest ports in the world, the Port of
Rotterdam has a curvaceous hinterland infrastructure. It has a good network
with the German Ruhr extent and Western Europe central location (Kreukels &
Wever, 1996).
Figure 1: Hinterland Infrastructure
Source: (Economist, 2013)
As it can be seen from Figure 1, there is a thorough railroad connection starting
in Sweden and enfolding a number of countries. It worth mentioning, that
Belgium and Germany can be attained in 12 hours, whereas places in Central
Europe in only 48 hours (Port of Rotterdam, 2015). Therefore, the welldeveloped hinterland infrastructure contributed to the current position of the
port in the world.
Another example is a port of Singapore, which is one of the biggest ports in the
world. There are more than 400 ship lines working in the port. Moreover, it has a
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link to 600 ports multinational. The location of the port simplified the
connection between different parts of the hinterland, highlighting the efficiency
and sustaining the competitiveness of the port (Backes Vier, 2010).
Therefore, different transportation types define the hinterland, which is a place
to which goods are being transported to using different types of transportation,
once they have been shipped. Truck, rails and planes help to deliver goods to the
final destination. From the examples of Port of Rotterdam and Singapore the
importance of the hinterland infrastructure was highlighted. It was emphasized
that a well-developed hinterland is necessary to efficient works of corridors for
goods transportation. The significance of the full- fledged hinterland
infrastructure can be seen in short- timed transportations, well constructed
connections between different transportation systems, leading to the more
efficient operational system.
2.3 Corridors
2.3.1 What does it mean to be a corridor?
In order to transfer goods from ports to the hinterland, there is usually a need in
one or several transportation corridors. In most cases they consist of different types
of transportation systems: road, railways. The benefit of these corridors is that they
try to avoid the city centers and manage the transshipments in most efficient way.
They try to simplify the transportation process, benefiting from the shortest routes
and shortening the transfer time. It is of the best convenience in big cities, where the
coordination and management of goods is a big problem (Nijdam, van der Lugt, & de
Langen, 2012). Creation of these corridors evolves the quality of hinterland
accessibility.
An example of Great Silk Road is taken in order to explain what it means to be a
corridor. The road played a bridging role between countries of different civilizations
and socio- economic systems. Due to the instable measurement systems, decline of
the ancient society, naturalization of economy in Europe and internal wars, there
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was a need in strong and reliable connection system that built a bridge between
Europe and Asia. The countries located on the route of this corridor were the part of
the new, more developed, simplified and efficient trade system (Waugh, 2012). The
Table 3 presents a list of advantages and disadvantages of the Great Silk Road:
Table 3: Advantages/ Disadvantages of the Great Silk Road
Advantages
1. International division of labor
Created the working places, as there
was a need in translators, camels and
caravanserai.
Disadvantages
1. Insecurity
Insecurity, people and goods might
have not reach their final destination
2. Development of the cities
located on the trade routes.
2. The decay of the cities located
far away from the trade routes
3. A single monetary system
3. A high specialization in the goods
To simplify the trade, as not every
country could produce gold and silver
money
4. Protection of the traders’ rights
being in demands the most.
Could have been protected from petty
thieves.
5. Constant development of goods
and technologies.
Countries contributed to the trade with
the things they were best at.
6. Knowledge and idea sharing.
Geography, math, history and religion.
Source: (Latov, 1999)
It can be concluded from the table that benefits of these corridor outweighed the
disadvantages. The trade expansion, improvements of living and working conditions
are consequences of the evolvement of this trade corridor. However, the problem
with security, the fear of getting robbed and degradation of the cities behind the
corridors remain to be disadvantages of the Great Silk Road.
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From the history of the Great Silk Road a number of trends remaining in modern
economy can be observed: International economic relations endure to be a crucial
stimulant of the economic development of the civilization. Being a part of
international trade benefits all the countries participating in it, export and import of
goods leads to the spontaneous evolvement of different trade institutions. The
polycentric (with several centers of power) system is more stable and efficient,
whereas monopolization in the end is short- lived and unreliable (Latov, 1999).
Besides the TRACECA project there is a Great Smart “Silk Road” project (still has to
be launched) that is also considered as a restoration of the Great Silk Road in the 21 st
century. The route of the project will go through China, Japan and India to the
Middle East and Africa to Europe through Cyprus. The goal of the project is to bring
development, integrity, harmony and security (Abdoullaev, 2014).
Another project worth mentioning is Atlantic Gateway and Trade corridor freed in
2011 in Canada. The corridor aims to connect market in North America with markets
in Europe, Latin America, Asia and the Caribbean through the Suez Canal. The aim of
this project was to enhance the trade relationship between regions, by using a welldeveloped transportation system and to emphasize the importance of Canadian
trade (Atlanticgateway, 2009).
Hence, it can be concluded, that there is a unifying goal of corridors. From the
examples of Great Silk Road, a Great Smart Silk Road and Atlantic gateway and
Corridor it can be seen that the aim is to create a more progressed, secured and
organized trade system.
2.3.2 What is the role of TRACECA in the corridor trade?
A New Silk road passes by Europe and Asia through different corridors and ways.
Majority of rails and roads are under control of various organizations including
UNECE, UNESCAP and IRU. TRACECA project was initiated under EU international
transshipments requirements. The project was established in May 1993 within
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Brussels international conference. In 1998 an agreement, which played a crucial role
in development of trade relationships between Europe-Caucasus-Asia, was signed in
Baku. Twelve countries took part and contributed to this agreement: Armenia,
Azerbaijan, Bulgaria, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Romania, Tajikistan,
Turkey, Ukraine and Uzbekistan (Ziyadov, Strategic Assessment of Euro-Asian Trade&
Transportation, 2011). The existence of this agreement has a positive effect on the
evolvement and expansion of the trade relationships in these countries. Starting
from 1998, EU has applied more than 80 development projects, aimed to improve
the connection between different regions. A number of companies assist TRACECA,
for instance EBRD has invested more than 700 mln in projects related to
development of ports, railways and roads routes of TRACECA.
Another project of 2009 signed by Azerbaijan, Armenia, Georgia, Kyrgyzstan and
Tajikistan focused on evolvement of multimodal transport. This agreement
played a critical role for Azerbaijan, as TRACECA’s routes in Azerbaijan included
different types of transport modes: road, railway and sea (Ziyadov, Strategic
Assessment of Euro-Asian Trade& Transportation, 2011). The proper
coordination of the countries policies at the Black and Caspian Seas and effective
organization of different transport modes is critical for the progressive
development of TRACECA into cost-efficient, speedy and trustworthy transport
corridor.
Therefore, it can be concluded that TRACECA tries to obtain the development of
trade relationships between areas through implementation of agreements
achieved and investments in improvement of different types of transportation
modes.
Hypothesis
Being a part of research, hypothesis are guesses conducted by researcher, which will
either clarify or resolve a problem or will counselor him for the further analysis
(Word Central, 2015). The function of the hypothesis is: first of all to put the main
research question in a testable form, assist by either confirming or disconfirming
specific theories used for sub- questions, specify the data necessary for the research
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and recommend the most applicable ways and mechanisms for the research analysis
(Sharma, 2013).
From the theoretical review provided above, the role of port focused in the paper is
established. Additionally, the description of the advantages and functions of the
corridor have been also mentioned. The aim of the paper, which is to analyze the
importance of the role of port in the corridor project, is presented in Table 4.
Table 4: Aim of the paper
Importance of
Port
(Port of Baku) The
well-developed
hinterland and location of
the port influence the role of
the port in the corridor.
Corridor Project
(TRACECA Project)
Source: Author
The theoretical review gives a solid background necessary in hypothesis formation.
Therefore, in order to answer to the research question the following hypothesis is
created:
“The well developed hinterland and location of the port influence the role of the
port in the corridor.”
Well- developed hinterland implies there is a good linking connections between
different types of transportation, assisting to deliver the goods to final destination.
Additionally, the well-located port opens larger possibilities for trade, highlighting
the efficiency of port.
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The constructed hypothesis plays a linking role between the Port of Baku and
TRACECA. The analysis in the empirical part of the paper will either prove or reject
the hypothesis therefore leading to an answer to the main research question.
2.4 Conclusion
To sum up, the role of port, which is an area, located next to the sea, ocean and river
and used by ships and goods transportation, concentrated in the paper is its function
in a gateway logistics. Additionally, a progressed hinterland infrastructure, which
stands for the connection ties between different types of transportation, plays a
critical role in simplified accessibility of different extents and goods transshipment.
The last part of the theoretical review shows the importance of the corridors on the
example of the Great Silk Road, a Great Smart Silk Road and Atlantic gateway and
Corridor.
The next part of the paper will try to apply the obtained theory to the specific port
(port of Baku). Based on the theory review it will show the connection between the
Port of Baku, its hinterland infrastructure and TRACECA project.
Chapter 3 Methods used for results part
At the beginning of the paper the method part gave a general overview to the
methods applied throughout the paper. This section gives a more specific
outlook to the ways implemented, focusing on the results. For the wholeness of
the paper the theory used in theoretical framework, which was firstly divided in
three parts: port, hinterland and corridor and then again divided into four sub
questions, will be applied to the case of Port of Baku. As the paper is entirely
based on the qualitative analysis, the desk research is being conducted. The desk
research collects data available from the existing sources and analyses it. It
offers the cheapest and quickest way of information gathering and further
analyzing (Flyvbjerg, 2006).
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For the method part of the paper related to the port of Baku the main
information is gathered from: Port of Baku, State Statistical Committee of
Azerbaijan and TRACECA. To analyze the Port of Baku, the case study research is
conducted. This type of the research methods bring to the simplified
comprehension of the complicated issue related to the subject. It helps to
highlight the analysis of the constrained number of events and conditions and
the link between them (Jensen, 2005).
The first part of results is devoted to the Port of Baku. The main features of the
port are discussed along with the explanation how important can the port can be
considered as a corridor. The second part of results refers to the hinterland
infrastructure of the port, as the theoretical part has explained, the welldeveloped hinterland infrastructure has advantages and influences the role of
port in the corridor. The pluses and minuses of the hinterland infrastructure of
the Port of Baku are listed and analyzed. The SWOT analyzes is used as a tool for
straightforward comparison of the advantages and shortages of port’s
hinterland. It will show both weak and strong sides of two types of hinterland:
road and railway. The last part of the results part gives an answer to the very last
sub-question and provides with a background necessary for the hypothesis
justification. This part will also present a SWOT analysis that facilitates the
understanding of available information.
Chapter 4 Results
4.1 Port of Baku
There are ten major ports in the Caspian Sea, Baku (Azerbaijan), Aktau
(Kazakhstan), Turkmenbashi (Turkmenistan), Astrakhan, Makhachkala and Ola
(Russia), Anzali, Amirabad, Neka and Noshahr (Iran). Each port’s share in the
Caspian Sea is presented in the Figure 2.
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Figure 2: Ports in Caspian Sea (in %)
Source: (Ziyadov, Baku International Sea Port , 2010)
Today, as it can be seen from Figure 3, the port of Baku is mainly trading with
port of Aktau, Anzali, Amirabad, Makhachkala and Turkmenbashi.
Figure 3: Marine Routes of Port of Baku
Source: (Turabov, 2013)
Dating back to the 16th century, when the sea trade was one of the main activities
in city, Port of Baku is the most aged port in the extent. It was the Soviet Union in
1900s contributing to the reconstruction of the Port of Baku to the way it looks
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today. The biggest part of the trade during the Soviet Union period was betwixt
Port of Baku, Turkmenbashy and Nowshar (Tochintskaya, 2012).
It is Azerbaijan State Maritime Administration who is in charge of
implementation of policies and evolvement programs for sea transportation and
port sector. The transshipment of cargo via sea is maintained by the Azerbaijan
State Caspian Shipping Company (CASPAR), which is also in charge of technical,
restoration, trading, supplying and shipment organizational procedures of the
port.
The maritime fleet of Baku counts 70 ships, including 34 tankers, 26 dry cargo
ships, 2 Ro-Ro ships and 8 consignment barges (Ziyadov, Strategic Assessment of
Euro-Asian Trade& Transportation, 2011).
When considering the overall volumes traded via port, 18 millions are
partitioned between 4 terminals: the main Cargo (2 mln), Dubendi Oil (8 mln),
passengers and ferry terminals (8 mln). From the picture below it can be seen
that 5.7 mln tons have been griped by port of Baku in 2010. There is an
availability of 24,000 m2 of open space used for the freight storage and 15,000
m2 of shaded area.
When having a closer look at the terminals: the main cargo terminal mainly deals
with general and dry freight. From figure 4, it can be seen that the cargo terminal
had a general turnover of 610,000 of freight in 2010. When considering the
imports which stand for 82% of the total trade over, more than 80% come from
ports of Iran (cement), 15% from ports of Turkmenistan (aluminum, chemical
products) and less than 5% from European ports (equipment and machines)
(Ziyadov, Strategic Assessment of Euro-Asian Trade& Transportation, 2011).
Figure 4: Turnover of the Cargo Terminal
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Source: (Ziyadov, Baku International Sea Port , 2010)
Speaking of the Ferry Terminal reflected in Figure 5, which plays a crucial role in
gateway between Europe and Asian trade, more than 80% is the transit freight,
coming mostly from Kazakhstan and Turkmenistan. The majority of trading
goods are transported from Asia to Europe, from Kazakhstan and Turkmenistan
to Europe through ports of Black Sea, making a port of Baku a transit point
(Rzayeva, 2009).
Figure 5: Turnover of the Ferry Terminal
Source: (Ziyadov, Baku International Sea Port , 2010)
Dubendi Oil terminal, stemming the oil from Kazakhstan and Turkmenistan and
is considered the biggest oil terminal in the Absheron extent, counts 2 wharfs
with an accessibility of 5,000-13,000 tons at once. Figure 6 shows that the
biggest part of the general turnover is transit, highlighting the bridging role of
Baku.
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Figure 6: Turnover of Dubendi Oil Terminal
Source: (Ziyadov, Baku International Sea Port , 2010)
Therefore, from the main activities of the Port of Baku ‘s terminals it can be
concluded that the goods mainly transshipped through port are transit goods,
transported mostly from East to West (Turabov, 2013).
4.2 Hinterland Infrastructure of the port
4.2.1 Road Transport
It has been mentioned in theoretical part that to analyze how well is the
hinterland infrastructure developed, the analysis of truck and rail- way transport
mode should be conducted. To see how well is developed the hinterland
infrastructure of the Port of Baku, the separate analysis of the road and railway
infrastructure is implemented.
To start with, the roads of Azerbaijan having the length of 25,000 km, play a
critical role both in Caucasian and Europe/Asia area, by performing a vital
connecting route between extents. More than 5,000 km are considered
international, contributing to the trade evolvement (Turabov, 2013).
Road and truck transshipment is the most efficient type of transportation within
the TRACECA project, therefore making the development of road transportation
more attractive in Azerbaijan. However, for today, Azerbaijan lacks accessibility
to the huge tracks, by not meeting the high European standards, implying that
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the major part of the road transportation avoids Baku (Tochintskaya, 2012). The
SWOT analysis presented in Table 5 will analyze 2 preeminent road routes
playing a central role in international transshipments: Southern and Northern
Roads.
Southern Rotterdam
Route
-GermanyAustriaHungaryBulgaria –
Turkey –
Georgia or
Iran- Baku
Northern Rotterdam
Route
-GermanyPolandBelarus or
Ukraine –
Baku
Table 5: Road Hinterland
Advantages
1. Can use either way
from Georgia or Iran
to get to Baku.
2. Has a length of 5,600
km and total cost is
2700-2900 euro.
Time needed 9-11
days.
3. The way through Iran
gives a chance to ship
goods to Central
Asian countries.
1. The length is 4,900
km.
2. The cost 1600-euro.
3. A 10-day trip.
Disadvantages
1. The length of the
transshipment.
Can choose an
option from
Germany to
Latvia-RussiaBaku (6,5 day).
2. Is expensive.
3. The presence of
bribery on the
boarder with
Georgia
1. The lost of three
days due to the
checking at the
boarder.
2. The bribery at
the check points
on the boarder
with Russia and
Belarus conduct
over 8% of the
total cost of
transshipment
Source: Author
From the SWOT analysis in Table 5 it can be concluded that the northern route is
more preferable as it offers the cheaper and shorter transportation.
Though it can be concluded that TRACECA is interested in transportation via
road in Azerbaijan, a number of reconstructions and evolvements have to take
place first. There have to be changes undertaken on the boarder with Georgia,
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Russia and Belarus necessary for the increased efficiency. Additionally, an
improved type of network is essential between Port of Baku Authority and
CASPAR, in order to reduce the delay times.
4.2.2 Railway Transport
The railway transportation is the second type of transportation playing a crucial
role in TRACECA’s international transshipments. To give a general picture of the
advantages, disadvantages, opportunities and weaknesses of the port and its
hinterland, SWOT analysis is performed in Table 6.
Table 6: Railway Hinterland
Strengths
Weaknesses
1. The short distance between
Port and Baku Railway Station.
2. Implementation of electric
shifts.
3. Possibility to undertake the
import/export actions at the
station.
Opportunities
1. Little investment to the
development of the port and
station equipment.
2. Long time transportation
period from Baku to the
boundary.
1. The construction of the new
Alyat Port.
2. The need to cut transportation
cost will increase the demand
for road transportation.
3. The implementation of the new
line Baku/Tbilisi/Kars.
4. The new State program used
for bridges and equipment
reconstruction.
1. Majority of freight comes from
one port (Turkmenistan).
2. Mostly all the vessels belong to
CASPAR.
3. High level of bureaucracy.
4. The decrease in the trade level
due to crises.
5. The shut border with Armenia.
Threats
Source: Author
One of the advantages of the Ports location is its short distance accessibility to
the railway station, which in turn minimizes the security problems during
transportation. The electric system availability at the station improves the speed
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and facilitates the managerial procedures. The condition for the import/export
activities saves time and simplifies the burden of the port. Speaking of the
opportunities, the construction of the new port in Alyat will provide a possibility
to renew the port and railway facilities to the level set by international
standards. Additionally, the construction of the railway station at Alyat improves
the service provided; emphasizing the efficiency both of the port and the station.
The new State program will improve the rate of motion (will reach 160 km/h)
and reduce the time travelled. As for the weaknesses, the current condition of the
equipment is less than satisfactory, requiring the soon renovation. Moreover, it
takes over 15 hours to get the boarders of the country (Ziyadov, Strategic
Assessment of Euro-Asian Trade& Transportation, 2011). Coming last, being a
threat, the trade between Turkmenistan and Azerbaijan implies that wants of
Turkmenistan can have a substantial effect on the total volumes traded of
Azerbaijan. Additionally, the fact that CASPAR owns the majority of vessels in
Azerbaijan, reduce the possibility of the cost reduction, as the entry for the
different shipment companies in the market is restricted. The high level of
bureaucracy also complicates and stagnates the trading procedures. Another
thing worth mentioning is the economic crisis that might occur and lead to
reduce trading amounts (Ziyadov, Strategic Assessment of Euro-Asian Trade&
Transportation, 2011).
Thus, from the SWOT analysis it can be concluded that the network between
station and the Port is in a good condition, emphasizing and contributing to the
role of port in corridor. However, there are a number of improvements that
should have been undertaken for the more efficient results of the Port: new or
reconstructed equipment, increased number of operating shipping companies.
4.4 Ports of Baku in TRACECA
To start with, Azerbaijan is a country having all necessary resources, facilities
and climate to be one of the most important areas contributing to the Euro-Asian
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trade. Remaining its crucial position in Central Eurasian trade, Azerbaijan adds
to the trade expansion in the region.
To have a closer look at the role of Azerbaijan’s hinterland, the logistic
development of the state is considered. The history of Azerbaijan shows that a
country was a transit point for many caravanserais and other huge trading
centers within the Great Silk Road. The country was worldwide famous for silk,
carpets, jewelry.
Today, considering the logistic sector development in Azerbaijan it can be seen
that the country is just getting acknowledged with the concept, however showing
a big potential. The World Bank Logistics Performance Index that considers
boarders, transshipments, logistics, tracking & tracing and timing, gave an 89th
place out of 155 countries evaluated (Worldbank, 2015). As stated above, one of
the reasons restraining the timing is the delay on boarders, which in majority
cases are associated with bribery.
The transit role of Azerbaijan in TRACECA is proved by the 82% of the total 9.4
mln tones of goods transported, being transit through Azerbaijan in East-West
directions (TRACECA, 2015).
Though the Port of Baku played a vital role in transshipments for TRACECA, the
efficiency and timing were in need in urgent and substantial redevelopments.
4.4.1 Alyat International Port
The new Alyat Project, which is financed by TRACECA highlights the role of trade
through Azerbaijan. The construction is aimed to improve and alter shortages
and lacks of Port of Baku, which as the result will improve the position of
Azerbaijan and play a critical role in International transshipment and supplychain between East and West. The port’s role in the Caspian region will be
considered as a main logistical center, linking good markets of Europe and Asia.
The Table 7 presents main advantages and disadvantages of the new Alyat
project and will make comparisons between new and existing Port of Baku.
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Table 7: Port of Baku vs. Port of Alyat
Port of
Baku
Advantages/
TRACECA
One of the biggest
ports in the
Caspian Sea
Is considered as
transshipment,
but oil trade is
mainly dominated
The close location
to the northern
boarders
The railway
station is just in 2
km distance
Disadvantages/
TRACECA
1. The
monopoly of
CASPAR at the
port- high
prices
2. Bribery at the
boarder
3. Delays in
deliveries
4. Problem with
security
5. Old
machinery
and
technology
The Great Silk Road
1. Plans to handle 25
mln tons of cargo
and 1 mln TEUs
2. Is only 70 km
away from Port of
Baku
3. Faster and more
competitive
transshipment
from Alyat to
Georgia, Iran,
Turkey, Russia
and Southern
Europe
4. Availability of
airlift from Baku
Airoport
5. Connection of
Port of Poti and
Alyat by land
6. An increased
number of
shipping
companies
operating in the
port.
1. Financed by
TRACECA, the
project might
be closed any
time
2. The presence
of many
international
shipping
companies
might kick the
local
companies
from the
market
1. Improved
security
2. Development
of the other
regions
3. Creation of
working
places
4. Greater
number of
countries to
trade
(opportunity
to learn,
exchange)
1.
2.
3.
4.
Alyat
Port
Ayla Abbasova
1. 1.Port of
Baku is
located on
the route of
the Great Silk
Road
2. Improves
and expands
the trade
volumes
3. Creates
working
places
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7. Border Control
and Customs
8. International
standards are met
Source: Author
Port of Baku
Though the Port of Baku plays a crucial role for the trade in TRACECA, as it is one
of the biggest ports in the Caspian area and as it follows the conditions of the
Great Silk road, a number of disadvantages overweight the list of advantages.
The port is well located and is considered as a transshipment destination.
However, the old technology, corruption, security problems and existence of
monopoly, diminish the value of the port in international trade. The construction
of the new Alyat Port is seen as a solution to all shortages of the port of Baku.
Port of Alyat
The construction of the new Port of Alyat once more highlights the important
role of Azerbaijan for TRACECA. The change of the port location, an improved
hinterland, investment in machinery and technology are signs that TRACECA is
more than interested in the developing the conditions that highlight the role of
port in the corridor. By having a closer look at the hinterland infrastructure of
the Port of Alyat the crucial role of the new port in corridor is depicted.
As a port plays a linking role between sea and land transportation, the
development of its hinterland goes in the same path with its economic
presentation.
In the Caspian extent, the port of Alyat will have a linking role with ports Poti,
Batumi, Makhachkala and Astara. The new port’s location at the east-western
and north-southern routes gives a possibility for the freight transshipment to
and from Western Europe, Central Asia, Middle East and China. The aim of the
hinterland is to attain as much cargo from the regions as possible to implement
their export and import through cargo gateway. Figure 7 gives a general picture
of the port new Port of Alyat.
Figure 7: Port of Alyat
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Source: (Turabov, Transport Policy and Economy Department , 2013)
Conclusion
The Table 7 has shown a parallel between port of Baku, port of Alyat and a
corridor being the Great Silk Road. From a number of similarities such as:
contribution to the trade evolvement, promotion of security and exchange it can
be concluded that both ports and a corridor followed similar aims.
The hypothesis “The well developed hinterland and location of the port influence
the role of the port in the corridor “that was created to answer to the research
question can therefore be answered on the example of the Port Alyat. The
improved hinterland infrastructure of the new port and a new location
highlighted its position in the corridor between Europe and Asia. The increased
efficiency, new ties, expanded trade volumes are the consequences of the
creation of the new port.
Chapter 5 Conclusion, Recommendations and Discussions
5.1 Conclusion
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This paper analyzed the role of port in the corridor on the example of Port of
Baku. The theoretical framework is divided into three parts: port, hinterland and
corridor, giving an answer to 4 sub-questions that are necessary for the solid
background, used as a foundation of the results part. The Table 8 shows the main
findings of the paper.
Table 8: Summary
Theory
Port
Ports play a crucial
role in economic
development of a
country. The
focused role of portas a gateway
logistics.
Hinterland Hinterland
infrastructure uses
different types of
transportation to
deliver goods to the
final destination.
The most common
modes of
transportation:
road and railway.
Road
Railway
Corridor
Ayla Abbasova
Port of Baku
Plays a transit role
between Eurasian
trade. However, can
improve efficiency, as
has shortages: delays,
old machinery and
corrupts.
Playing a bridging
role in Eurasian
transshipment, a
well-developed
hinterland plays a
critical role for Port
of Baku. However, a
number of
improvements should
be undertaken to
make the work of the
port more efficient.
Is more efficient for There are 2 routes:
the short distance
Southern and
transshipments as it Northern. Should be
is fast.
altered, as there are a
lot of delays.
Used for the heavier Bribes on the boards,
goods
delays restricted the
transshipment.
development of
economic
relationships.
Since ancient times Though the location
the trade corridors
of the Port is very
played an important crucial in Eurasian
role for the
transshipments, ships
countries
tried to avoid it.
development.
Example of Great
Silk Road shows
Port of Alyat
Meets European
standards, opens
the market for
shipping
companies
Financed by
TRACECA, it was
constructed to
improve the
efficiency of the
old port, expand
the economics
relationships
Has a land
connection with
Ports of Poti and
Baku.
Improved board
and custom
service, faster
transshipments.
Crucial role for
TRACECA (under
their
sponsorship).
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both plusses and
minuses.
Source: Author
Port
From the analysis results it can be concluded that both ports of Azerbaijan in the
Caspian Sea: the Port of Baku and Alyat play a critical role in international trade,
as they are located on the corridors routes. The construction of the Port of Alyat
highlights the importance of trade through Azerbaijan and improves the
shortages of Port of Baku.
Hinterland Infrastructure
The hinterland infrastructure of the Port plays a crucial role, as it assists to
deliver goods to the final destination. The well- developed hinterland
infrastructure consists of developed ties between different types of
transportation (road and railway). Though Port of Baku has a good hinterland
infrastructure, a number of improvements (boarders, tariffs, organizational)
should take a place first. The hinterland of the Port of Alyat will open the market
to other shipping companies, expand the trade connections, and therefore
improve the general picture of the corridor trade in Azerbaijan.
Corridor
Since ancient times Baku was located on international trade routes. Today, ports
of Baku play a bridging role between Europe and Asia. The interest of TRACECA
in evolvement of the port in Azerbaijan can be seen in their sponsorship of the
Port of Alyat. The aim of TRACECA is to develop the economic ties of the regions
and expand the trade.
An answer to the main research question of how important is Port of Baku for
Azerbaijan in the corridor between Europe and Asia can be seen in the
hypothesis analysis. The construction of the new port, financed by TRACECA
highlighted the importance of the Port for Azerbaijan, being a transit point
between Europe and Asia. The aim of constructing the port is in improvement
the efficiency, expansion of the trade connections by creation of new economic
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ties, new machinery and increased competition. Therefore, a new Port of Alyat
can be seen as a prove of the importance of role of Port for Azerbaijan in the
corridor trade between Europe and Asia.
5.2 Recommendations
There are a number of limitations and recommendations for the paper.
To start with, for the better analysis of importance of the Ports in Azerbaijan in
Caspian extent, the comparison with other ports in the region will be helpful. It
will show what are the advantages and shortages of the port. Another thing
worth mentioning is the statistical analysis that can be conducted based on the
data available on Statistical Comity of Azerbaijan. Simple regression analysis can
be presented to analyze the connection between for instance the investment in
port and its performance.
5.3 Discussions
There are several policy recommendations worth mentioning. To start with, the
policy of the port should attract different shipping companies, contrary to the
case of Port of Baku, where only CASPAR shipping company operates. There are
a number of pluses followed from implementation of this policy; the competition
level will increase the quality and effectiveness of deliveries, decrease the
operational costs of shipping. Additionally, the board custom regulations should
be controlled and checked due to the fear of corruption that ruins the reputation
of the country and restricts the transshipments. These steps should be
undertaken by Port of Alyat in order to improve the effectiveness and efficiency
of the port.
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