The International North-South Transport Corridor (INSTC) and the Northern Sea Route can increase and accelerate freight transportation in Eurasia and become a profitable alternative to previous sea routes.
In 2024, the large-scale logistics project namely North-South will get a new development, which was discussed at the international economic forum, Russia – Islamic World: KazanForum 2023.
Cargo carriers of Eurasian countries expect the opening of a new fast route from the Indian Ocean and the Persian Gulf to the Caspian Sea region, to Russian ports on the Baltic and northern seas – by rail.
Iran is already completing the construction of the final branch line connecting the country’s rail network through the city of Resht to the Caspian Sea port infrastructure.
In parallel, as part of the North-South corridor, the western and eastern land routes around the Caspian Sea through Azerbaijan, Kazakhstan, and Turkmenistan are being developed.
Last year, Russia and Iran signed an agreement to build the last railroad section on the western branch of the project between the cities of Resht and Astara.
North-South corridor significance
In general, the North-South corridor, according to KazanForum experts’ forecasts, will provide fast and seamless transit of cargo to Europe, between Russia and the Persian Gulf countries. Container delivery time can be reduced by more than 2 times compared to traditional trade routes.
For example, from St. Petersburg in Russia to Mumbai in India, transportation along the North-South corridor will take about 10-20 days instead of 30-45 days by sea through the Suez Canal.
According to experts’ calculations, the average cost of transportation may decrease up to 30-40%. The volume of cargo traffic will increase significantly, transit potential will be strengthened and access to external markets of the project member countries will be expanded.
Russia plans to invest 280 billion rubles in the development of the North-South corridor until 2030. First Deputy Prime Minister of the Russian Federation Marat Khusnullin forecasted at KazanForum 2023 that the cargo turnover between Russia and the countries of the Caspian region, South, and Southeast Asia, and the Persian Gulf should double by next year.
Moreover, he projected it to reach at least 30 million tons. By 2030, it is expected to further increase to 35 million tons, representing a 155% increase compared to 2021.
According to experts’ calculations, further modernization will increase the capacity of the corridor by more than 100 million tons of cargo per year. Investments in the project carry great economic potential.
At KazanForum 2023, Alireza Peyman-Pak, the head of the Trade Promotion Organization of Iran, assessed the prospects of the route. He emphasized the importance of creating port infrastructure with equipment for unloading-loading to maximize the potential of the Caspian Sea.
Additionally, he highlighted the necessity of deepening and clearing the seabed in the port water area. He further stated that all countries around the Caspian Sea benefit from cooperation in this business.
Increasing engagement of countries
The North-South high-speed transport corridor is multimodal. It is connected by sea, rail and road routes, and the total length of the route from the Baltic Sea to the Indian Ocean is 7,200 kilometers.
The development of infrastructure and solution of joint logistical tasks within the framework of the project already unites a number of countries through which the routes pass by different modes of transportation. These countries include Azerbaijan, Kazakhstan, Turkmenistan, Iran, India, Iraq, Tajikistan, and Uzbekistan.
The United Arab Emirates is also showing interest in investments and the development of the technological component of the North-South corridor. This was reported by the UAE Minister of State for Foreign Trade, Tani bin Ahmed Al-Zeyoudi, at KazanForum 2023.
According to him, the project provides new opportunities for the development of the largest ports in the Persian Gulf. It will allow the building of logistics not only with Russia but also with the countries of Central Europe and Central Asia, and unite many existing routes.
According to Russian Deputy Prime Minister Marat Khusnullin, the construction of the North-South corridor has become one of the key topics of KazanForum. This is also related to the interest of Muslim countries in exporting Russian agricultural and halal products.
The new highway is expected to transport food and other agro-industrial products for consumers in Central Asia, the Persian Gulf and Africa. Thus, this transport corridor will make a tangible and practical contribution to global food security.
New opportunities for accelerated and reliable delivery of goods on the continent, including via the Northern Sea Route, will be discussed at the next KazanForum in May 2024 with the participation of the countries of the Organization of Islamic Cooperation.