ADY Container Director: "This process created condition for the acceleration of containerization - INTERVIEW

The predicted growth in the container transportation via railway is expected to realize thanks to transit transportation through Azerbaijan, Director of ADY Container Natig Jafarov told Report.

Full text of the interview:

- In 2019, container transportation via railway increased by 56% compared to 2018. In 2020, the growth in container transportation is expected to be more than 50%. To which countries do you think the transportations will provide this growth? Which markets are main in Azerbaijan's container transportations?

- In recent years, Azerbaijan has turned into a regional junction in the international freightage. The volume of cargos passing through Azerbaijan remains stable. In order to meet these challenges more effectively, manage the increasing volume of freight, Azerbaijan Railways CJSC made several necessary institutional changes. The CJSC established ADY Container LLC to carry out and manage container transportations.

The company has been operating since August 1, 2017. Compared to 2016, the container transportations quadrupled during the activity of the company. Compared to 2018, growth in 2019 was 74%< including 58% in the import rose 58%, and 74% in transit.

Long-distance block trains play an essential role in the increase in the volume of the containerization. According to statistic data, more than 600,000 containers were carried from China to Europe. ADY Container also has proportion in these transportations. The company carries out cargo transportation through the Middle Corridor to Georgia's Poti and Batumi ports, then to Europe through the Black Sea or to Turkey via the BTK railway, then to Europe via railways.

The advantage of the Middle Corridor is that it has wide diversification opportunities. It is possible to carry out cargos with containers to Europe through the routes of China-Kyrgyzstan-Uzbekistan-Turkmenistan-Azerbaijan-Georgia, China-Kazakhstan-Azerbaijan-Georgia-Turkey, and China-Russia-Azerbaijan.

The number of containers carried through the Middle Corridor is planned to reach 100,000 TEU. For this, a large amount of investment was made not only in Azerbaijan but also in other countries along the Middle Corridor. This allows the number of containers to reach 150-200 TEU.

Our company cooperates with a number of leading operators in Eurasia. This cooperation allows us to increase the volume of container transportations. The 50% growth forecasted for 2020 is expected to be realized thanks to transit transportations through Azerbaijan.

- Although there is a positive tendency in container transportations, the containerization level in the country is low. What are the objective and subjective reasons for it?

- We can talk here mainly about objective reasons, not subjective reasons. The containers mainly carry finished products. As the base price of the finished products is high, production enterprises are in different places, and there is no railway link among them, fast cars are preferred during the transportations.

ADY Container takes certain steps to increase the containerization. For instance, block trains are organized towards Poti and Batumi ports, which regularly operate in single tariffs. This process created a condition for the acceleration of containerization. In 2019, 35,895 TEU were carried with containers to these ports, while this figure was 24,505 in 2018.

At the same time, block trains are organized to Turkey's Istanbul and Mersin cities, to main cities of Central Asia, to Europe passing through the Black Sea, to Iran, Central Asia, Russia, and China passing through Azerbaijan. This is attractive for cargo-owners, and the number of appeals for container transportations is increasing.

As the transportations were carried out via wagons in post-Soviet countries, including neighbor countries, the containerization process needs time. Therefore, we are working to make Azerbaijan as a transit country between the markets with high-level containerization and other countries.

- As is known, containers are rented for both directions. It causes losses for carriers when the containers come back empty. Are there any steps to neutralize this factor?

- Of course, if there is no cargo to both directions, the attractiveness of container transportations is lower than cars. During transportation via vehicles, the vehicle can bring any cargo even at a low price so as not to come back without load. In the railway, there are commitments, standard tariffs. Azerbaijan Railways CJSC has bought containers to carry out transportations ground-to-ground, and the number of these containers will be increased soon. At the same time, ADY Container solves this problem within the cooperation. The companies such as Maersk, MSM, CMA/GMA, with which we are cooperating, have container bases, and we don't need rent.

- How is the modernization of the existing container terminals significant?

- Speaking about container terminals, I want to note that ADY Container LLC started to operate in Keshla Container Terminal. However, as the volume of cargo transportations increased, there was a need for new terminals. With the support of the Azerbaijani government, Absheron Logistics Center was established.

Currently, the Sumgayit terminal, which is in the balance of ADY Container, has become one of the significant transport junctions. Before transferring to the balance of the ADY Container, the container transportations in this terminal had almost stopped. Today, nearly 300 containers are sent from the Sumgayit terminal, and this figure is increasing. At the same time, modernization of the terminal is underway. As you know, a number of enterprises are located in Sumgayit. ADY Container also participates in the export of products of these enterprises.

- What steps does ADY Container take for the creation of new routes?

- Our company is specialized in international transportations. It aims to strengthen Azerbaijan's position in international transportations.

We participate in the implementation of a number of projects in our country. We are extending our cooperation with China, Japan, South Korea, European countries, including Ukraine, Turkey, Russia, Iran, India, and other countries on the increase of cargos transported via East-West, North-South International Transport Corridors, as well as Transcaspian International Transport Route. ADY Container's slogan is 'We are connecting the continents.'

Along with the existing corridors, works are underway to create new routes, such as Georgia-Azerbaijan-Turkmenistan-Uzbekistan-Kyrgyzstan-China, as well as Nakhdoka port in the Far East, a route connecting Turkey and Iran through Azerbaijan.

Moreover, ADY Container's Xi'an-Prague container train opened new opportunities for us and enabled diversification of the existing routes. Container transportations through Marmaray tunnel allowed us to establish railway links with European countries. We conducted negotiations with Italy's 'Mercitalia,' Austria's 'Rail Cargo,' Poland's 'RKP,' Bulgaria's 'BGZ,' Romania's 'CFR' in this direction. The last meetings were held with 'Metrans' and 'Rail Cargo' companies.

A daughter company of Hamburg port 'Metrans' carries 1 million containers inside the continent with its 15 terminals. Such advantages of 'Metrans' will play a significant role in the transportation of cargos from Mersin, Istanbul, and Black Sea ports to European borders and delivery to any point in Europe.

We are working with many railway companies in this direction. We are connecting Romania's Constanta port with Georgia's Poti and Batumi ports via PKP LHS Autoterminal, Grandpet company, BGZ Karpo port with the port of Varna via Batumi and Poti ports. We are interested in carrying out the transportations from Turkey's Kapikulle station to Romania, Bulgaria, and Serbia, Central and South European countries via Rail Cargo, Metrans companies, from Italia's ports – via Mercitalia and Trieste ports and the port of Genoa.

Cooperation with Metrans will support the increase of volume of transportations between Europe and Central Asia and China passing through Azerbaijan.

As for Rail Cargo, we have experience of cooperation with this company on the arrival of Xi'an-Prague container train to Europe. Recently, the Working Group, which was created for the implementation of the project 'Promoting green ports and connectivity in the Caspian Sea region,' held a meeting with the participation of Rail Cargo. ADY Container is a member of et Working Group. It was noted that the Chinese government is planning to transport 150 trains from Xi'an city to Europe through the Middle Corridor (Azerbaijan and Turkey). Within the cooperation with Rail Cargo Group, in the first half of 2020, the first test train will depart from Venlo (Netherlands) to China through Azerbaijan.