International North–South Transport Corridor alternative to Suez Canal

Transport costs through the International North–South Transport Corridor would be reduced by $2,500 per 15 tonnes of cargo. The new rout also shortens the distance between Mumbai and St. Petersburg from 40 to 14 days.

12 August 2016
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Transport costs through the International North–South Transport Corridor would be reduced by $2,500 per 15 tonnes of cargo. The new rout also shortens the distance between Mumbai and St. Petersburg from 40 to 14 days.

The International North-South Transport Corridor is marked in bold green dots.

The International North–South Transport Corridor (NSTC), a flagship project, with a total length of 7,200 kilometers has been featured in recent discussions among Iran, Russian and Azerbaijan presidents in Baku.

The multi-model route links India to Europe via the Middle East, Caucasus, and Central Asia, is being nurtured for significantly reducing costs and travel time and boosting trade.

Iran’s President Hassan Rouhani, Russia’s President Vladimir Putin and Azerbaijan’s President Ilham Aliyev have vowed to work together to prepare the grounds for the construction of the corridor. The NSTC concept was formalized by India, Iran and Russia in 2000 but it has not taken off in a big way yet. Western trade sanctions on Russia and Iran in recent years have provided a new impetus to put steam on the project.

Both Iran and Russia as well as Azerbaijan are seriously dependent on oil revenues which have sharply fallen due to the price collapse. The new transit route offers them a unique alternative to diversify their economy. It also helps them as well as India and other regional countries reduce their dependence on traditional markets in the West where there is currently not much demand.

The corridor, instead, offers access to growing untapped markets in Asia, Africa and Latin America.

The ship, road and rail route connects India’s Mumbai to the Iranian port of Bander Abbas and further to Baku in Azerbaijan as well as Astrakhan, Moscow and St. Petersburg in Russia before stretching to northern Europe and Scandinavia.

Besides Iran, India and Russia, countries that are on board to integrate into the transit network include Armenia, Azerbaijan, Belarus, Kyrgyzstan, Kazakhstan, Ukraine, Turkey, Tajikistan, Oman, Syria and Bulgaria.

“We believe that this cooperation serves the interests of the peoples of Iran, Azerbaijan, and Russia and, of course, the interests of the entire region,” Iranian Foreign Minister Mohammad Javad Zarif has said.

According to Zarif, the countries were discussing the “final details” of the project.

Dry runs of the route were conducted in 2014, from Mumbai to Baku and Astrakhan via Bandar Abbas. Results showed transport costs had been reduced by $2,500 per 15 tonnes of cargo.

For trade, India currently uses maritime transport to link with Russia. From St. Petersburg, the cargo has to sail around the entire western part of Europe and the Suez Canal which takes around 40 days to reach Mumbai.

According to the Russian Railways Logistics, the new route cuts the time just to 14 days and eliminates the need to pass through the Suez Canal, which is not only overloaded, but also very expensive.

The NSTC project also opens a window for alignment with Silk Road Economic Belt, a brainchild of Chinese President Xi Jinping to establish new trade and transport links with Central Asia and Europe.

China says the plan would boost growth and improve infrastructure to fulfill an “Asia-Pacific dream.” Observers also see it as part of Beijing’s ambitions to redraw the geopolitical map of Asia, which have ruffled feathers in the US.

The Silk Road Economic Belt vision also provides Beijing a counterbalance to Washington’s “pivot to Asia” strategy of focusing more military and other assets on the region.

For Iran, both the NSTC and Silk Road projects are a boost to the country’s ‘Look East’ policy.

 

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