Faster alternative to Suez Canal: five principle facts about North-South Corridor

2021/06/29 at 10:02 AM

Finland has become the first EU country to join the North-South Corridor to deliver containers to India instead of using the conventional deep-sea shipping lines. What benefits does the transport artery provide to the customers from other countries?

June 2021 has become a new watershed period for the development of the International North-South Transport Corridor (INSTC) between Russia and India. At the beginning of the month, RZD Logistics, a dedicated subsidiary of Russian Railways, and Nurminen Logistics, the Finnish logistics provider, signed a cooperation agreement for organising rail shipments via the transport artery. The document marked the fact that Finland joined the corridor.

The Helsinki – Mumbai container train runs via Azerbaijan, source: ADY Container

Meanwhile, both companies have been already cooperating in this area before the agreement was concluded as the first freight train with 32 40-foot containers departed from the Vuosaari station in Helsinki, Finland, and headed towards India on 21 June. Currently, the train is running via Azerbaijan. The next country will be Iran where the boxes will be transhipped for sea delivery to the Indian port of Nhava Sheva near Mumbai. Why the corridor is attractive for Finland and what benefits does it provide for the customers?

Is the Finnish train the first rail shipment on the North–South Corridor?

Partially no and partially yes. No is because there were some rail-sea shipments from Russia to India in the early 2000s. However, they were stopped due to low popularity among the shippers. Afterwards, the North – South Corridor was used only the direct shipments between Russia and Iran.

As for the ‘yes’ answer, this means that the Helsinki – Mumbai train, which was initiated by Nurminen Logistics, is the first service dispatched from Finland via the transport artery. And not only from Finland but from the entire European Union too.

Who are the principal beneficiaries of the North–South Corridor?

The North-South Corridor was established in September 2000 by three countries such as Russia, Iran and India, which signed a dedicated agreement to arrange multimodal, rail-sea, goods delivery between the Russian port of Saint Petersburg to Mumbai in India via the Iranian harbour of Bandar Abbas. Therefore, these countries are highly interested in developing the international link: Russia and Iran in attracting more transit freight while India in obtaining more opportunities to export its goods. According to the estimations of Russia’s Ministry of Transport, up to 25 million tonnes of goods could be transported via the corridor annually.

The INTSC was projected as an alternative way for delivering goods from India to the Nordic countries, bypassing the Suez Canal. For instance, the travel time of the Helsinki – Mumbai train is expected to take around 22 days while the direct shipping service requires 22 days only to reach the Suez Canal. However, not only Northern Europe could benefit from the route but the landlocked Central Asian states, especially Kazakhstan, too. They joined the route in late 2018. Moreover, the corridor could be also reliable for the states of the Persian Gulf, especially for Oman due to its geographical proximity to the Iranian port of Bander Abbas.

What about Azerbaijan?

When talking about the North – South Corridor, it is underestimated the role of Azerbaijan. This country joined the project a little bit later, in 2005, but it is also interested in its further development. Why? The answer is similar as in the case of Russia and Iran, namely to increase freight traffic on its railway network.

Astara freight terminal in Iran, source: ADY Express

That’s why Azerbaijan is investing in developing the Astara freight terminal in Iran, which is located close to the border. ADY Express, the freight forwarding subsidiary of Azerbaijan Railways, is responsible for the project. Azerbaijan also granted the 500-million-dollar loan to Iran for completing the Astara – Rasht railway, a missing link on the way to the port Bander Abbas. Moreover, ADY Container, another subsidiary of Azerbaijan Railways, provided its flat wagons for the Helsinki – Mumbai train. First, the empty units were sent to Finland. Now, they are running through the home country.

Is it possible a rail only north–south connection to India?

At the moment, the containers can be delivered by rail only to the Astara station in Iran near the border with Azerbaijan. To move further, the containers from the Helsinki – Mumbai train will be transhipped to the trucks for the delivery to the Rasht station. The key reason of these operations is the missing 167-kilometre-long railway link between Astara and Rasht. Several years ago the trucks were used for the longer distance, around 350 kilometres, as there were no railways between Astara in Azerbaijan and Qazvin in Iran. As of today, two sections, Astara (Azerbaijan) – Astara (Iran) and Qazvin – Rasht, are available for freight trains. The Astara – Rasht stretch is scheduled to be completed this year but it is more likely to be postponed due to the pandemic.

Three possible routes of the International North-South Transport Corridor, source: Wikimedia Commons

Meanwhile, there is a direct railway link from Iran to India via Pakistan. Theoretically, the sea leg between the ports of Bander Abbas and Mumbai could be replaced with the railway service. Currently, it seems unlikely due to the political tensions between India and Pakistan as well as the lack of capacity on the Iranian railway network. There is also another challenge, namely the break of gauge between Iran and Pakistan. Iran has the European gauge (1,435 millimetres) while Pakistan and India have the broad gauge of 1,676 millimetres.

How many routes does the North – South Corridor has?

The way of the mentioned Helsinki – Mumbai train goes via Russia, Azerbaijan and Iran. It is the western route of the INSTC, which is the most popular one. However, there could two more options to deliver freight from Russia to India. There is a very similar opportunity to reach Iran by rail but along the eastern shore of the Caspian Sea, namely via Kazakhstan and Turkmenistan. This route became available in 2014 when the Zhanaozen – Gyzylgaya – Bereket – Etrek – Gorgan railway was put into operation.

The third possible route is via the Caspian Sea. It includes the usage of the Russian ports of Astrakhan, Olya, Makhachkala and the Iranian harbour of Bandar-e Anzali. This route is the most complicated as it consists of two sea legs. At the same time, maritime transport via the Caspian Sea is cheaper and allows the shippers to avoid the break of gauge between Azerbaijan and Iran.

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