The Caspian region has always been known for its abundance of oil and gas, and the logistics service providers have delivered loads of project cargo to sites across the likes of Azerbaijan or Georgia. However, the conflict in Ukraine has put significant stress on the region’s infrastructure, as transit routes changed and traffic to the Central Asian countries increased.

“This middle corridor became very active since the conflict in Ukraine started and sanctions on Russia were added on top of the existing sanctions against Iran,” says Azer Aliyev, Regional Director CIS and Caspian Sea at Trans Global Projects (TGP).

This, however, has caught countries in the region off guard, as it became obvious that there is not enough capacity in the supply chain, not enough trucks, not enough wagons, bottlenecks at border crossings and 30-kilometre-long queues. “This certainly affected our operations, our projects had to wait, and very important cargo was stuck at the border for two-three weeks,” Aliyev said.

“It happened sort of overnight, and all of a sudden we are seeing 70 per cent of traffic increase,” Aliyev stressed.

The governments have recognized the importance of improving port and transit activities and have invested heavily in these areas. This has allowed for more trucks and rail wagons to be added, giving market players greater control over the situation.

OOG cargo is still under the cosh

While operations within the countries of the Caspian region were put under control, the transport of oversize, heavy, out-of-gauge cargo was hit since the conflict broke out. The fact that shipping OOG project cargo requires passage through the Russian waterways meant that new options and new solutions had to be looked at.

A trend that could be observed recently was that of constructing ever larger components, to reduce assembly requirements on site. This, however, resulted in technical possibilities of transport being pushed to the limit.

For TGP, this meant shipping more components and finding routes that don’t cross the Russian waters. Additionally, the investment in infrastructure meant more capacity. In Azerbaijan alone, owned trucks fleet grew eight-fold over one year.

“No, I can see quite a lot of investment in new equipment or even used equipment, good quality. I can tell you, if I am not mistaken, in Azerbaijan, the fleet of owned trucks by companies increased 8 times during the last year,” said Aliyev.

There is not much private companies can do in the current situation. Ultimately, decisions have to be made on a government level, which has already happened, with more relaxed regimes, rate discounts, and the setting up of free zones, Aliyev added.

Wind moving slowly

Traditionally, the region is rich in oil and gas but recently there has been big investment in green energy projects.

“Wind has been around for quite a few years, but, it is still some way off from actual physical cargo moving. These things take a long time,” adds

.

“It is a logistics issue for the region,” continues Aliyev. Wind project development requires the transport of sizeable components which is, as noted earlier, affected by the conflict in Ukraine, and the inability to pass through Russian waters, serving these projects has become an issue.

The economics for wind projects is largely dependent on government funding, and progress is dependent on securing long-term sale and purchase agreements for oil and gas volumes, Charnock commented.

Then there are also abundant oil and gas reserves to be developed, even though there is plenty of wind to exploit in Azerbaijan. These are challenges that the industry is working to navigate as it paves the way toward a viable, sustainable future.