Posted: 02.06.2023 17:53:00

North-South transport corridor able to transform global logistics chains

The importance of transport routes for the world economy was clearly demonstrated by the traffic jam formed two years ago in the Suez Canal due to a stranded container ship. Forced downtime or a roundabout movement brought billions of Dollars in losses, some countries felt a shortage of certain goods, often strategically important. Apparently, the countries of the collective West were counting on the same effect, when breaking Belarus’ logistics chains one by one, depriving the country of access to its ports, closing the airspace and arranging cargo transport jams at the border. By doing that, they actually pushed the countries of the Eurasian continent to a decision that could leave unfriendly states aside from the most important trade route.

The North-South transport corridor has every chance to become a key logistics element connecting Belarus and Russia, as well as the EAEU as a whole with the countries of South Asia, the Middle East and East Africa. This 7,200km-long route runs from the Indian port of Nhava Sheva in the south of Mumbai through Iran, Kazakhstan to St. Petersburg and includes three branches, as well as several types of transport: rail, road, sea and mixed river-sea.

The draft agreement on the North-South international transport corridor was initiated back in 2000 by Russia, India and Iran to create a shorter path compared to the sea transport route through the Suez Canal. Accordingly, the delivery time for goods shipped from Mumbai to St. Petersburg through the Suez Canal ranges from 30 to 45 days (in case of no runs aground), and it makes 15-24 days if the North-South route is chosen.

Belarus and Russia are very interested in the development of this transport corridor, as it opens up new opportunities for transit and trade in the face of sanctions pressure and logistical restrictions from the West. Its high transit potential will help reduce the cost of transportation and increase trade turnover between Belarus and Russia, as well as between the Union State and partner countries.

“The demand for Belarus-made products in the Persian Gulf region is quite high. Minsk is a reliable trade and political partner for Tehran, Baghdad and Abu Dhabi. Until recently, supplies were carried out by sea routes, but due to well-known reasons, it is currently problematic for Belarusian exporters to use sea transport. Therefore, the automobile corridor passing along the territory of Russia and Azerbaijan has been increased at the expense of the Iranian direction," the Ministry of Transport and Communications noted. “Iran, which is permit-free for Belarusian carriers, not only creates conditions for the supply of domestic products to its capacious market, but also enables Belarus’ exporters to consider logistics multimodal (that is, using Iranian seaports) product supply chains to India, China and Bangladesh, as well as to the countries of the African continent. The North-South corridor can ‘bring closer’ other Persian Gulf states to Belarus.”

The total volume of investments for creation of the North-South infrastructure makes $38.2bn, and Russia accounts for $13.21n of the sum. However, in addition to financial investments, a number of barriers need to be eliminated to ensure effective functioning of this logistics route: i.e. legal harmonisation of customs clearance, exchange of information and simplification of border crossing procedures, development of an agreed tariff policy, establishment of payment and settlement mechanisms between participants, insurance of goods and vehicles, digitisation of transport documents and procedures, creation of a co-ordination mechanism to manage the transport corridor are required. Differently speaking, the North-South transport corridor development is a serious incentive for integration processes within the Union State and the EAEU.

Experts say the North-South transport corridor is a key element of the transport framework of Eurasia, and it will contribute to the shift of the centres of economic activity to China, the Persian Gulf countries and Southeast Asia.