India’s signing of a long-term contract for the development of Chabahar port in Iran has heightened the interest of the Port of Baku in Azerbaijan, which has seen a growth in its own volume amid the Red Sea crisis.

New Delhi has signed a 10-year contract to develop and operate the Iranian port, with Indian Ports Global Limited investing about $120 million, while an additional $250-million financing will take the total contract value to $370 million.

Port of Baku director-general Taleh Ziyadov said that there were plans to develop a free trade zone by the port authority in the future with opportunities to explore the sale of Indian goods into Azerbaijan and its surrounding markets within a 1000-kilometer radius catering to over 140 million people as well as to facilitate export further north to the Scandinavian countries.

“I see it as a big opportunity. If we sort out logistics issues, it will only be a plus for us. We can add Indian products in the free zone and sell it to the immediate markets and also facilitate export to Finland and other Scandinavian and European countries with whom India has trade relationships,” Ziyadov said.

He said the land movement of cargo from China to Europe passing through Azerbaijan is now taking less time compared to the sea route, where containers were being diverted through the Cape of Good Hope to avoid disruptions in the Suez Canal.

The price of containers has also skyrocketed with the Drewry World Container Index showing a jump to $4,716 per 40ft container as on June 6, 2024, compared with $1,682 on June 1, 2023.

“There is a big attention now on what we call the middle corridor that starts in China, goes through Kazakhstan and from there it comes to our port at Alat and from there it can go to Black Sea or Turkey or the Mediterranean. The middle corridor was always viewed as a supplement. But this corridor is becoming much more strategic now not only for China-Europe trade but also Central Asia-Europe trade,” said Ziyadov.

He said the Port of Baku has lined up capacity expansion to handle more containers in the coming years.

“In our first phase we have a capacity of 15 million tonnes of general cargo and up to 100,000 TEU (twenty foot equivalent unit) containers. We expect this to grow in the second phase to 25 million tonnes and up to 500,000 TEU containers,” he said.

“Our interest in the future would be to bring the containers here, open and add value and first sell to immediate markets. We are in the middle of a large market of 140 million people within 1000 km,” he said.

The catchment area besides Azerbaijan includes Kazakhstan, Uzbekistan, Turkmenistan, Iran, Iraq, Turkey, Armenia, Georgia and also Russia.

Ziyadov further said that the eventual plans of the port authority will be to expand into a multimodal logistics hub and for that adequate land has been identified to build the hub. With the port looking to attract manufacturers for value addition, a new green city is being planned to supplement infrastructure development.