International Logistics Centres for Western NIS and the Caucasus
International Logistics Centres for Western NIS and the Caucasus in Armenia, Azerbaijan, Georgia, Moldova, Ukraine
Final Report – Annex 5 Feasibility studies for the selected projects
Azerbaijan: ILC at the New Baku International Sea Trade Port at Alyat
February 2011
This project is funded by A project implemented by the European Union Dornier Consulting GmbH / NTU / Inros Lackner AG
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International Logistics Centres for Western NIS and the Caucasus
TABLE OF CONTENTS
1 EXECUTIVE SUMMARY ...... 7 2 INTRODUCTION AND CURRENT SITUATION ...... 9 3 IDENTIFICATION OF MAJOR STAKEHOLDERS AND NEEDS...... 10
3.1 STATUS AND LEGAL FRAMEWORK FOR SITE DEVELOPER ...... 10 3.2 LOCAL TRANSPORT AND LOGISTICS MARKET ...... 10 3.3 OVERVIEW AND DEMANDS OF MAJOR STAKEHOLDERS ...... 12 3.4 TRACECA NETWORK EFFECTS AND SYNERGIES ...... 13 3.4.1 Introduction ...... 13 3.4.2 Synergy with other ILCs in the European and Caucasian parts of TRACECA ...... 14 3.4.3 Interconnections with EU Countries and the TEN-T ...... 17 3.4.4 Links with the Asian TRACECA Countries ...... 17 4 FUNCTIONAL DESCRIPTION ...... 18
4.1 FUNCTIONAL DESCRIPTION AND CONCEPT ...... 18 4.1.1 General Objectives ...... 18 4.1.2 Logistics Trends and Development Vision ...... 19 4.1.3 Cargo Volumes ...... 20 4.1.4 Planning Guidelines and Potential Synergies ...... 25 4.1.5 Functional Areas and Main Transport Infrastructure ...... 25 4.1.6 Functional Concept and Intermodal Operations ...... 28 4.2 SOCIO-ECONOMIC IMPACT OVERVIEW ...... 32 5 MASTER PLAN DESCRIPTION AND PRELIMINARY DESIGN ...... 35
5.1 EXTERNAL AND INTERNAL TRANSPORT INFRASTRUCTURE ...... 35 5.1.1 Description of Site Access ...... 35 5.1.2 Description of Internal Transport Infrastructure ...... 36 5.2 ACCESS TO UTILITY NETWORKS ...... 37 5.2.1 Current Installations and Capacities ...... 37 5.2.2 Interface Points ...... 37 5.2.3 Upgrade and Development Needs ...... 38 5.3 OVERVIEW OF ENVISAGED LOGISTICS AND NON-LOGISTICS SERVICES ...... 40 5.4 SPECIFICATION AND DIMENSIONING OF THE FUNCTIONAL MODULES ...... 43 5.4.1 Specification of Main Functional Modules ...... 45 5.4.2 Stationary and Mobile Equipment ...... 52 5.4.3 Information and Communication Systems ...... 54 5.5 SOIL INVESTIGATION PROGRAMME ...... 55 5.5.1 Description of Required Soil Properties ...... 55 5.5.2 Specification of Soil Investigation Programme ...... 56 5.6 EXPANSION STAGES AND IMPLEMENTATION PLAN ...... 57 5.7 ESTIMATION OF INVESTMENT NEEDS (CAPEX) ...... 61 5.8 DESCRIPTION OF MAIN LOGISTICS PROCEDURES AND OPERATIONS ...... 63 5.9 ORGANISATIONAL STRUCTURE AND OPERATOR MODEL ...... 67 5.10 IDENTIFICATION AND CALCULATION OF REQUIRED STAFF AND WORKSTATIONS ...... 68 6 OVERVIEW AND ASSESSMENT OF STAFF KEY QUALIFICATIONS ...... 73
6.1 LABOUR MARKET OVERVIEW ...... 73
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6.2 SPECIFICATION AND ASSESSMENT OF REQUIRED KEY QUALIFICATIONS ...... 74 6.3 RECOMMENDATIONS FOR SELECTED TRAINEE AND QUALIFICATION PROGRAMMES ...... 80 7 ENVIRONMENTAL IMPACT ASSESSMENT ...... 82
7.1 GENERAL OBJECTIVES OF THE ENVIRONMENTAL INVESTIGATIONS ...... 82 7.2 DEFINITION OF THE INVESTIGATION AREA ...... 82 7.3 OVERVIEW AND CONDITIONS OF THE USED DATA BASE ...... 87 7.4 MAIN ASSESSMENT OF ENVIRONMENTAL RISK ...... 87 7.5 POTENTIAL CONFLICTS WITH ENVIRONMENTAL FACTORS ...... 90 7.6 CONCLUSIONS AND PROSPECTIVE COMPENSATION NEEDS ...... 90 8 BUSINESS PLAN...... 91
8.1 GENERAL PROJECT DESCRIPTION ...... 91 8.2 TECHNICAL DETAILS ...... 92 8.3 LEGAL AND REGULATORY MATTERS ...... 92 8.4 ASSUMPTIONS ...... 92 8.4.1 Cargo Throughput ...... 92 8.4.2 Revenue to the Operator...... 93 8.4.3 Expenditures...... 93 8.4.4 Financing Plan ...... 93 8.4.5 Financial Parameters ...... 94 8.5 MARKETING STRATEGY AND PLAN ...... 94 8.5.1 Strategic Relevance of the Project ...... 94 8.5.2 Market Considerations ...... 95 8.5.3 Promotion Approach ...... 96 8.5.4 Marketable benefits ...... 97 8.5.5 Development Approach...... 98 8.5.6 Summary of Marketing Recommendations ...... 99 8.6 OPERATIONS PLAN ...... 100 8.7 FINANCIAL PERFORMANCE ...... 100 9 COST BENEFIT ANALYSIS ...... 101
9.1 SOCIO-ECONOMIC CONTEXT AND PROJECT OBJECTIVES ...... 101 9.2 PROJECT IDENTIFICATION ...... 102 9.3 PROJECT FEASIBILITY AND ALTERNATIVES ...... 103 9.4 FINANCIAL ANALYSIS ...... 103 9.5 ECONOMIC ANALYSIS...... 104 9.6 RISK ASSESSMENT ...... 108 9.7 DISTRIBUTION ANALYSIS ...... 108 10 RECOMMENDATIONS FOR PUBLIC PROMOTING AND SUPPORT ...... 109 11 APPENDICES ...... 110
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LIST OF FIGURES
Figure 1: Road, railway and ferry routes connecting the Alyat ILC with neighbouring countries ...... 14 Figure 2: Overview of ILC Land Plot and Potential Expansion Areas ...... 18 Figure 3: Relevant Logistics Trends and Impacts ...... 19 Figure 4: Confirmed Available Area Size – ILC Land Plot Boundary (Phase I) ...... 23 Figure 5: Specification of the Functional Areas and Categories ...... 27 Figure 6: Overview of Potential Functional Areas ...... 28 Figure 7: Alternative Version of the Future ILC Railway Link ...... 29 Figure 8: General Alignment of the Functional Areas ...... 30 Figure 9: Overview of Future Development Stages ...... 31 Figure 10: Overview of Future Completion Stage ...... 31 Figure 11: Master Plan Layout – Overall External Transport Infrastructure ...... 35 Figure 12: Overall Master Plan Layout ...... 44 Figure 13: Container Terminal – Cross Section of the Combined Transhipment Module ...... 47 Figure 14: Master Plan Layout – Development Stage 1 ...... 58 Figure 15: Master Plan Layout – Development Stage 2 ...... 59 Figure 16: Master Plan Layout – Development Stage 3 ...... 60 Figure 17: ILC management and communication process structure...... 67 Figure 18: ILC Alyat Business Model ...... 68 Figure 19: Wind Directions for Alyat (According to Information from Alyat Meteorological Station) ...... 83 Figure 20: Land Utilization inside the Investigation Area ...... 85 Figure 21: Future Sea Trade Port Area (Background Mud Volcano Area) ...... 86 Figure 22: View of future Sea Trade Port Area towards Alyat ...... 86 Figure 23: Sensivity in Relation to the Projected ILC Area ...... 88 Figure 24: Statistic Overview about the Sensivity ...... 88 Figure 25: Net Present Value as a Probability Distribution ...... 108
LIST OF TABLES
Table 1: Summary - Utility Requirements ...... 38 Table 2: Electricity Power - Utility Requirements ...... 39 Table 3: Water - Utility Requirements ...... 40 Table 4: Functional Modules with defined functions and sub-functions ...... 41 Table 5: Overview - Main Functional Modules ...... 44 Table 6: Overview Combined Transhipment Module – Dimensions and Specification ...... 46 Table 7: Overview Container Service Centre – Dimensions and Specification ...... 48 Table 8: Customs Terminal – Dimensions and Specification ...... 49 Table 9: Overview ILC Service Centre – Dimensions and Specification ...... 50 Table 10: Overview Logistics Service Facilities – Dimensions and Specification ...... 51 Table 11: Overview Industries and Trade – Dimensions and Specification ...... 52 Table 12: Combined Transhipment Module – Survey of Mobile Handling Equipment ...... 53 Table 13: Container Service Centre – Survey of Mobile Handling Equipment ...... 54 Table 14: Overview Capex – Total of Development Stages 1-3 ...... 61 Table 15: Overview Capex – Development Stage 1 ...... 62 Table 16: Overview Capex – Development Stage 2 ...... 62 Table 17: Overview Capex – Development Stage 3 ...... 63 Table 18: Overview Required Staff and Workstations: Combined Transhipment Module ...... 68 Table 19: Overview Required Staff and Workstations: Container Service Centre ...... 69 Table 20: Overview Required Staff and Workstations: Customs Terminal ...... 70 Table 21: Overview Required Staff and Workstations: ILC Service Centre ...... 71 Table 22: Overview Required Staff and Workstations: Logistics Service Facilities ...... 72 Table 23: Overview Required Staff and Workstations: Industries and Trades ...... 72 Table 24: Overview World Bank‟s Doing Business Index - Azerbaijan ...... 73 Table 25: SWOT Analysis: Labour Market in Baku Region – Transport and Logistics Sector ...... 74
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Table 26: Overall Required Educational Background and Professional Experience ...... 75 Table 27: Overview Required Staff Key Qualifications: Combined Transhipment Module ...... 75 Table 28: Overview Required Staff Key Qualifications: Container Service Centre ...... 76 Table 29: Overview Required Staff Key Qualifications: Customs Terminal ...... 77 Table 30: Overview Required Staff Key Qualifications: ILC Service Centre ...... 78 Table 31: Overview Required Staff Key Qualifications: Logistics Service Facilities ...... 79 Table 32: Graduates in Different Programmes, Tertiary Level ...... 79 Table 33: Overview Required Trainee and Qualification Programmes ...... 80 Table 34: Main Assessment of Environmental Risk ...... 89 Table 35: Scenarios for Government Investment in ILC at Alyat ...... 91 Table 36: Input Data Ranges and Averages: External Benefits ...... 104 Table 37: Cash Flow and Performance Indicators (Financial) ...... 106 Table 38: Cash Flow and Performance Indicators (Economic) ...... 107
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LIST OF ABBREVIATIONS
BSEC Black Sea Economic Cooperation (a grouping of 11 countries: this project‟s 8 beneficiary countries plus Albania, Greece and Russia) EBRD European Bank for Reconstruction and Development (a bank owned and financed by European and other governments, the European Community and the EIB, headquart- ered in London. It provides loans and equity investment to private enterprises, especially those whose needs are not fully met by the market; and assists publicly owned enterprises in support of privatisation) EIB European Investment Bank (the European Union‟s long-term lending bank, providing capital on favourable terms for infrastructural and other projects in EU member-states and elsewhere in support of EU policy objectives) GDP Gross Domestic Product (aggregate value-added within a national or regional economy, usually expressed on an annual basis in terms of the local currency or an international currency such as US dollars or Euros; valued at either current or constant prices; with or without adjustment to „purchasing power parity‟ which takes account of the general price level compared to that in the USA) GFC Global Financial Crisis HAZMAT Hazardous Materials HHLA Hamburg Hafen und Logistik AG HPC Hamburg Port Consulting (a subsidiary of HHLA) ICSP Ilyichevsk Commercial Sea Port IFC International Finance Corporation (a member of the World Bank Group that provides loans, equity investment and advisory services to private enterprises) IGC Intergovernmental Commission IGR Income Gap Ratio (a measure of poverty severity) ILC International Logistics Centre ILO International Labour Office (a United Nations agency) ISCED International Standard Classification of Education LFPR Labour Force Participation Ratio LLC Limited Liability Company LU Loading Unit TEU Twenty-foot Equivalent Unit (a 20-foot long container being the standard unit for measuring containerised traffic) TIR Transports Internationaux Routiers (usually pronounced „Teer‟ in all languages) TOF Track Occupancy Factor TRACECA Transport Corridor: Europe Caucasus Asia
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1 EXECUTIVE SUMMARY The beneficiaries in Azerbaijan have accepted the draft master plan and the business development concept including the land owner, management and a user concept. The Alyat Baku Logistics Centre concept and the feasibility study have been presented at the investment forum in Brussels in October 2010. The project was welcomed by the international financial institutions‟ community and evoked interest of some private stakeholders. The ILC Alyat adjacent to the future port of Baku will be developed to a competitive logistics site as an integral part of the TRACECA network. Its crucial role in interregional trade and in linking the Western part of the TRACECA to Central Asia countries is obvious. The site will offer several logistic functions and excellent infrastructure for tenants interested in logistics and industrial investment in the metropolis region of Baku. On the 3rd of November 2010, the President of Azerbaijan laid the foundation of the new port of Alyat, thus announcing the start of construction of the port as the future major logistics hub of Azerbaijan. The creation of this multimodal node with extended logistics value added functions on Caspian Sea, will become the basis for an improved distribution of imported cargo to consumers in the Baku region and throughout Azerbaijan. The development is in full compliance with the long-term IGC strategy, since the improvement of transport is one of the targets of the Government of Azerbaijan. It is a prerequisite to implement multimodal transport concepts and to minimize pollution generated in the transport sector. Orientation to improved logistics also will help reduce the dependence of Azerbaijani economy on the oil sector. In the base-year (2007) the potential market of 1.7 Mt of LC-suitable cargo has been estimated including traffic via the new railway between Turkey and Georgia with access via the future Marmara Tunnel to the countries of the EU. The Consultant assumes a potential ILC market share of 70% worth 1.19Mt. Driven by Azerbaijan‟s continued economic growth the expected increase of logistics demand between 2007 and 2014 after completion of Phase I of the project will add 30%-35% to its market share. In the best case the ILC may attract 1.6 Mt in its opening year assuming that the ILC will be functioning at its maximum capacity. The annual cargo throughput capacity for the final development stage of the site has been estimated at about 955,000 t for uncontainerised cargo and 1,325,000 t for containerised cargo. Following logistics trends three functional areas have been defined: Logistics Services: transport, handling and storage facilities for logistics providers and operators (land allocation: about 40%). Container Services: combined transhipment module rail-road, container service centre with container depot, container stuffing and stripping, container repair and cleaning (land allocation: about 25%). Logistics-Intensive Industries and Trade: manufacturing and commercial enterprises with high-level or specialized needs for logistics services (land allocation: about 35%). The Master Plan layout indicates the following functional modules for the final stage: Combined Transhipment Module (No.1)
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Container Service Centre (No.2) Customs Terminal (No.3) ILC Service (No.4) Logistics Service Facilities (No.5) Logistics intensive Industries and Trade (No.6) Road System (No.7) Rail Track System (No.8) The estimation of required investment (CAPEX) for the three envisaged stages of ILC development has been calculated based on 2009 figures: Total of Development Stages 1-3: 37.6 Mio EUR thereof Sum of Development Stages 1: 20.3 Mio EUR Sum of Development Stages 2: 7.7 Mio EUR Sum of Development Stages 3: 9.6 Mio EUR It is expected that the project will support Azerbaijan‟s efforts to diversify its economy and achieve a wider distribution of income. Reduced logistics costs should promote investment and employment generation, not only in Baku region but nationally and corridor-wide. Additionally, the increased turnover of high value agricultural products will entail augment incomes of former subsistence farmers. The Business Plan (BP) examines four Investment Scenarios, each one defining a different split of investment between the Government (which will retain ownership of the site) and the ILC Management Company (which will lease the site and manage it under the terms of an agree- ment). The Consultant recommends a scenario that would entail investment of €21.7M (at constant 2009 prices) by the Government and €7.4M by the ILC Management Company. A decision by the beneficiary on the basic conditions for the ILC Management Company would pave the way for discussions with potential investors. The financial performance of the project is moderate, with a Financial Internal Rate of Return (FIRR) of 10%pa. With Investment Scenario 3 the return to the ILC Management Company would be significantly higher at 14%pa. This is based on some loan funding by an international financial institution (IFI) such as the EBRD, but no public subsidies. Revenue rates had to be based on data from other countries, since there is no logistics services market in Azerbaijan from which to draw information. The Cost Benefit Analysis (CBA) indicates a much higher social return, with an Economic Internal Rate of return (EIRR) of 34%pa using financial values and 38%pa using economic values. External macroeconomic benefits, arising from enhanced load factors and modal shift, exceed internal benefits. On the basis of the Consultant‟s analysis the project should be strongly supported.
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2 INTRODUCTION AND CURRENT SITUATION In Azerbaijan the location for development of the logistics centre was determined in the region of Greater Baku, at Alyat where a new port is being constructed. Despite the location‟s being situated almost 70 km south of the Azerbaijani capital it still belongs to the metropolitan region of Baku. The macro location at Alyat is currently the most preferred solution since it best matches major ILC establishment criteria. The future ILC will have perfect transport connections on the East– West (Caspian and Black Sea) trunk route, and the North-South (Russia and Iran) corridor passes next to Alyat at a distance of less then 1 km. The official approval of the ILC location in Alyat and for further feasibility study was received from the Ministry of Transport on 22 December 2009. The master plan of the new port of Baku in Alyat was prepared by Royal Haskoning on behalf of the Azerbaijani Government1. It currently includes an optional area of 50 hectares indicated for the development of an ILC adjacent to the territory of the new port. This area of 50 ha has been used to draft an ILC master plan and prepare a feasibility study within the current EC project. All concepts presented in this report have been agreed with the beneficiary. Justifications submitted to the Ministry of Transport were agreed upon. The most optimal infrastructure access (rail and road), the internal traffic routing, gate subjects and the connection to the access road have been incorporated into business and master plans. Efficient integration of the ILC into the ports access road and rail connection has been already included into the port master plan. The Consultant suggested the scheme to determine which ILC related infrastructure should be financed by the Government in the overall planning (e.g. soil preparation and levelling of the land). Four PPP scenarios are be considered, ranging from minimal financing of government to maximum public financing. All scenarios are considered at the phased basis to optimise capital flows with corresponding utilisation and growth. The best practices and Consultant‟s recommendations serve as a basis for the final Governmental decision on the ultimate concepts.
1 The draft master plan was handed over to the Consultant by the National Secretary on 22 November 2009. The integration of the ILC in to the overall planning was based on first coordination efforts of the consultant with Royal Haskoning
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3 IDENTIFICATION OF MAJOR STAKEHOLDERS AND NEEDS 3.1 Status and Legal Framework for Site Developer The territory for the new port of Baku at Alyat and the ILC belong to the Government of Azerbaijan. The development of the whole area is under the jurisdiction of the Ministry of Transport. Once the planning stage is over the Ministry or other state-nominated institution will be involved in the development. Candidates for this activity are the Ministry of State Property, the Ministry of Economic Development or the Ministry of Finance. The Consultant recommends planning and construction to be implemented under the jurisdiction of the Ministry of Transport, while financial aspects including investment, loans, costs and earnings are supervised by one of the forementioned Ministries. The beneficiary has supported a three party concept for development of the ILC at Alyat. 1. Land owner owning the land and authorising development concepts: a. The land owner will lease the land under specified conditions to the ILC management company. This management company has to be established. 2. Management company with clearly defined tasks including: a. Renting the land under cost covering condition on behalf of the landowner to customers (one-window-principle) b. Maintenance of common infrastructure, facilities, equipment and utilities of the logistics centre (security, gate, fence, buildings, transport infrastructure, green zones, sewage system, water, gas and electricity supply, etc.) c. Marketing of the logistics centre (execution could be outsourced), attraction of new users and services, networking with other centres, etc. 3. Users of the ILC which could rent a plot of land on defined conditions including: a. Lease per plot b. Charges for utilities costs c. Information and communication systems d. Gate control, guarding, facility management, additional services The Landowner is to build the infrastructure of the ILC area on a specified standard including land fill, road and railway connection, access points to utilities. The management company (entity) will canvass users of the ILC, to manage the utilities, to maintain the investment, to collect the money for lease and services, to implement all necessary administrative work. The users are to rent the land under specified conditions, invest in their buildings and installations and run their businesses within a given framework. The decision on the final concept is still pending. The final decision is needed in order to increase the attractiveness of presentation of the project by setting a defined framework for estate development. 3.2 Local Transport and Logistics Market Azerbaijan has a diverse group of freight forwarders and logistics companies. In addition to local enterprises, this group also includes companies from the Russian Federation, Kazakhstan, Iran, the United Arab Emirates, the United Kingdom, Germany, Switzerland, Denmark, or the
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Republic of Korea. The main companies offering forwarding and logistics services in the Caucasian Region include in alphabetical order: ACE Forwarding Caspian is one of the leading transport companies in the Caucasus. Bertling Caspian Limited is a subsidiary of Bertling Global Project Logistics Besttrans specialises in door-to-door truck, rail, air, and sea cargo transport in Europe, Middle East, the United States and CIS. Blue Water Shipping Caspian Ltd. Denmark-based Blue Water Shipping offers worldwide door-to-door freight transport by road, rail, sea, and air to importers and exporters. It has a network of company-owned and agent offices in several continents. CEVA Logistics - a common daughter company of TNT Logistics and EGL Eagle Global Logistics Delta Bar, an Iranian forwarder, is involved in export/import/ transits from and to Iran Deugro is a German freight forwarder that offers the usual services and provides automotive logistics worldwide. DHL Deutsche Post World Net, owners of DHL, placed all the worldwide express and logistics services offered under the DHL brand and DHL global forwarding as a multimodal operator combining sea and land transport as well as air transportation. This entity is also active in warehousing, customs brokerage and general logistics provider. Eurasian Cargo an air freight forwarding company operates Baku–Dubai– Baku charter and scheduled flights. It also provides ground handling, fuel supply, landing clearances, catering, airport shuttle, and hotel booking services. Formag Forwarding has offices in the Russian Federation, the CIS countries, Germany, Spain, and the PRC. It provides customers with a full range of freight services, including multimodal, sea, air, and rail truck transport; customs brokerage; less than container load (LCL); and project cargo handling. Globalink is an international freight forwarder manages air, land, and sea to destinations worldwide. Gosselin Caucasus & Central Asia is a part of the Gosselin Group, a multinational organization providing freight forwarding, customs clearance, and warehousing services. Ikra is a Turkish trucking company that also provides sea and rail freight forwarding and less-than-truck-load (LTL) consolidation services. Kuehne + Nagel (Ibrakom) is the one of top three leaders in international forwarding and integrated logistics solutions worldwide. M & M Militzer & Muench is an experienced forwarding and logistics company providing all types of integrated logistics services worldwide. Murphy Shipping and Commercial Services, with focus on the oil and oil services industry, is one of the top-tier full services forwarding company in Azerbaijan. Panalpina is also one of the world leading companies in forwarding and logistics services, specializing in supply chain solutions with integrated, door-to-door logistics services tailor made for its customers needs. Pentagon Freight is an international freight forwarding organization with offices around the world is and with long leading experiences in the Caspian Basin. Schenker, a subsidiary of the German Railway, is one of the global players offering the whole range of logistics services
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3.3 Overview and Demands of Major Stakeholders Demand for logistics centres is increasing as more multinationals enterprise (e.g. BP, Texaco, Exxon and Mobile) enter the market of Azerbaijan. Also, taking into account its strategic position and against the back ground of the growing economy Azerbaijan assumes a bigger role as a regional transport hub. Further to that, multimodal container transport allows for lower energy consuming in a transportation chain by using of ships and railways. This has not only the effect of lower transportation costs but also a positive impact to the overall environment. Since the global players of the logistics market are obliged to fulfil the green logistics provisions, they are deemed to be interested to keeping same promises worldwide. In addition, the interviews with logistics sector in Europe and research of the TRACECA projects on attractiveness of the Europe-Caucasus-Asia corridor showed that any upgrade of the multimodal capacities will be welcome by the sector. The logistics centre infrastructure at Alyat will offer an improvement of the services and consequently reliability of the supply chain. This aspect is deemed by most of the global players as an incentive to increase their operations via Azerbaijan. Still, the initial investment in starting a logistics centre is very high. To attract private investors (users or developers), the Azerbaijani government should commit itself mitigate risk and provide adequate incentives to encourage private sector. The starting point here is a commitment to prepare the basic infrastructure for the plot. Cold and temperature controlled facilities Cold storage and temperature-controlled storage facilities are important for a large number of products, including fruits and vegetables, flowers, frozen or chilled food, candy (especially chocolate), wine, and pharmaceuticals. The initial investment in starting this kind of activities is higher than a conventional general warehousing. Consequently the fixed costs are higher and also the operating costs are higher. Baku has a number of modern cold storage facilities, including the Baku Customs Warehouse and Baku Cargo Terminal. But those are standalone facilities not linked to each other and are far away from the production side. In the agricultural areas outside Baku, public cold storage facilities are not readily available. There is a process ongoing to pool the interests of individual farmers to optimise logistics and to foster investments in cold storage and temperature- controlled storage facilities. According to the Ministry of Transport there should be a chain of cold and temperature controlled facilities from the North to the South of Azerbaijan. The main hub for export as well as import should be in Alyat, the middle of the country and at the cross-roads of transport routes. It is the aim of the Government of Azerbaijan to decrease the oil dependency of economy. The solution supported by the state entails organising the access not only to their neighbouring countries but also to the world markets not only for oil and oil products but also for high quality agricultural products. This can only be realised with a modern logistics centre providing all kind of facilities including the value added services of agricultural goods processing and handling, intermodal transhipment, stuffing and stripping of containers including reefer boxes. Logistics services and hubs required for new transport links under development The new port of Alyat and its direct links to the ports of the Caspian Sea and the railway links to Iran (so far only projected), Russia and Georgia will allow developing multimodal services. The new railway link from Kars (Turkey) to Akhalkalaki (Georgia)
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This new railway is to link the Turkish railway network with the Caucasian railway network. So, the direct link between the economic centres of Turkey and Azerbaijan will be established. Specialised industrial zones such as Manisa (near Izmir) with modern production of all kind of industrial products and the ports of the Aegean Sea and Black Sea will be directly linked by railway with Azerbaijan. These industrial centres and ports are focussing on containerisation. In order to use the multimodal facilities in Turkey the corresponding facilities are necessary to be established in Azerbaijan. The main hub for this will be the ILC in Alyat. The connection of the Caucasian railway networks and the Turkish railway network is under construction and is expected to be ready prior to construction of the ILC in Alyat. This link is expected on expert estimates to produce an add-on for cargo transport of about 260.000 tons annually starting from 2014 (completion of construction is planned for 2012). The assumed growth rate for the next years after is estimated at the level 4-5%. The upcoming year will provide time for concluding of the new block train contracts and establishment of the regular combined train services. Direct railway link from Europe to Caucasus and Central Asia via Turkey. A railway tunnel crossing the Bosporus is under construction. One of the objectives of this tunnel is to relief the City of Istanbul from public transport collapse. The other benefit of this project is to enhance the multimodal transport. This tunnel will link the economies of Europe not only with Turkey, and but also with the Caucasian economies and Black Sea countries. This link will be based on multimodal transportation mainly in containers. The seaports on the Eastern part of the Aegean Sea e.g. Tekirdag and its industrial developed hinterland could also use the Bosporus tunnel for railway transports of intermodal loading units to Azerbaijan. Based on this the ILC is needed as hub and distribution/collection point in Azerbaijan. Handling of intermodal loading units, storage facilities for empty and loaded containers, container packing facilities (stripping and stuffing) are only on a very limited level available and the expected grow in container transportation cannot handled with these facilities. This link is expected based on expert estimates to produce an add on for cargo transport of 400.000 tons annually starting from 2016, after two years since the project is completed by that time, provided block train services have been established. The assumed growth rate for the next year is 3%. The figure is estimated for the chemicals, cement, steel and iron products coming from the big industrial centres (as Tekirdag) on the western shore of the Aegean Sea. 3.4 TRACECA Network Effects and Synergies 3.4.1 Introduction The urban, regional and national setting of the new port of Baku site at Alyat, and its transport connections with neighbouring countries and across the Caspian Sea, is described in the Inception Report (ref. country report for Azerbaijan) and Progress Report I (ref. Annexes 3 and 4). The map below indicates the major existing transport routes between the ILC in Alyat and the neighbouring countries.
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Figure 1: Road, railway and ferry routes connecting the Alyat ILC with neighbouring countries
As mentioned before, it is decided that the old port of Baku will be closed and the new port, serving the ferry services between Azerbaijan and Kazakhstan and Turkmenistan will be in Alyat. It is also considered to build facilities for container and conventional cargo handling. The new port at Alyat is located around 70km south of Baku. It is situated very close to the existing railway lines Baku – Tbilisi / Poti and Batumi and Russia – Baku – Lenkoran – Astara (Iranian Border) in the South. The reconstructed and enlarged highways M4 and further M1 (in old Soviet system M27 and A324) crossing the deep lands of Azerbaijan is the main transport route between West and East for road transportation. It goes from Baku via Alyat, Kurdamir, and Yevlak as M4, and to Georgia passing by Ganja, the second largest city of Azerbaijan as M1. The M1 between Baku and Aran became after the reconstruction of the M4 route of less importance for the road transportation of cargo from or via Georgia on the TRACECA corridor. The M1 from Baku to Aran has to cross several mountain passes and has only 2 lanes on almost all parts. 3.4.2 Synergy with other ILCs in the European and Caucasian parts of TRACECA Existing International Transport Routes The port of Baku – Alyat has an excellent connection by road and railway to Georgia, Iran and the Russian Federation. - The M4 from Alyat via Yevlak and further on the M1 to Georgia with continuation to E60 in Georgia to Tbilisi and Poti-Batumi at the Black Sea and Turkey;
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- The road M3 from Alyat via Lenkaran to Astara and the Iranian border. (part of the “north-south highway”), is connected at the Iranian side with road No 49 to Tehran, and with road No 16/14/27 to Tabriz; - The road route Alyat-Baku and further on via M2 along the Caspian Sea coast in northern direction to the Russian border at Samur (part of the “north-south highway”); - The rail route between Alyat and Tbilisi in Georgia and onwards to Poti and Batumi at the Black Sea, and also in the near future with connection to the railway network in Turkey; - The railway routes along the Caspian Sea to Russia (at Yalama) and Iranian Border (at Astara), respectively. The road routes between Baku/Alyat and the Georgian border at the Red Bridge (the “east-west highway”) are appointed as one of the TRACECA road corridors. The existing routes between Azerbaijan and Armenia are closed and the railway track is partly removed due to the Nagorno-Karabakh conflict. The road and rail infrastructure for these routes consists of: - The road route from Yerevan via M2 and M12 to Karabakh/Azerbaijan border, and from here via M1/ M4 in Azerbaijan to Alyat/Baku; - The road route Yerevan-Hrazdan-Ijevan via M4 to the Azerbaijani border, and from here via M1/ M4 to Alyat/Baku; - The rail route Yerevan-Hrazdan-Dilijan-Ijevan-Qaqzax in Azerbaijan, and from here straight on to Alyat/Baku. In Soviet times the road and rail routes between Baku/Alyat and Nakhichevan via Megri in Armenia was in operation. Nakhichevan today is only linked to Azerbaijan by air and a road connection via Iran. Nakhichevan has a 33 km long border with Turkey. Planned Upgrading of International Transport Routes As an important component of the overall Transport Sector Development Strategy, the Government of Azerbaijan has decided to construct the new port of Baku at Alyat, in order to replace the existing Port of Baku in the centre of the city without extension possibilities. Further to that the whole port traffic by rail and road had to cross the downtown of Baku creating severe traffic problems, increasing accident rates and air pollution. The new port of Baku at Alyat with its excellent connection to the east-west and north-south transport routes should be in operation by 2015. The new port construction includes an access road to the main highway (M4 and M1) and a link to the main railway line. The railway connection to Turkey via Tbilisi with a new railway link between Akhalkalaki in Georgia and Kars in Turkey is under construction. The Georgian Government has received a loan for the construction part on Georgian territory. Potential Relations with Other Hubs in Ukraine, Moldova and the Caucasus The ongoing transport development programme (2005-2014) in Azerbaijan includes the upgrading or the new building of the east-west and north-south highways and the modernisation and/or reconstruction of the railway lines from East to West and North to South. With the improved infrastructure a quick link between the ILCs in Baku/Alyat and Tbilisi could be established. This provides the opportunity of further consolidation, distribution and collection of goods from and to Europe via the shipping lines and the ferry routes between Poti/Batumi and Odessa/Ilyichevsk across the Black Sea. In addition, the road and railway links via Turkey can be utilised. Ferry services and shipping lines on the Caspian Sea are also relevant for the ILCs in Tbilisi and Baku in terms of potential throughput.
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Potentially the Volga-Don canal could provide direct access from the Caspian Sea to the Black Sea, if licenses for transit through the Russian Federation can be obtained. There are general potentials for the ILC in Alyat on the development of more diversified export products, and the development of foreign trade relations with Georgia, Iran, and Russia. Relations with Hubs in Romania, Bulgaria and Turkey The interests of logistics intensive industries and logistics service providers have been investigated. These stakeholders use the intermodal hubs in Romania, Bulgaria and Turkey, decide on supply chain routes and consider allocation of their facilities eastwards. In this respect establishment of matching criteria in Alyat ILC and in other TRACECA logistics node has a potential for creating synergies. The consultant has obtained the following results in stakeholders‟ interviews presumably in Turkey reflecting decision criteria of moving to or using the services of a logistics centre in TRACECA region. The selected interviews conducted in Bulgaria and Romania revealed similar trends. The findings are summarised below. The decision criteria cluster around two main fields including country‟s logistics facilities and reducing of overall costs. On logistics side, greater importance is given to safety and security of a supply chain and possibilities of additional services. These can be provided at the ILC site. In terms of cost reduction, the reduction of transport costs was the main criteria of operating in TRACECA region.
DECISION CRITERIA
COUNTRY LOGISTICS FACILITIES REDUCING OF COSTS
SECTORS
AZMAT
H
Facilities
Standards
Montage&
Demontage
Procedures
Safety & Safety Security
Other Value Other
Regulations&
Storage AresStorage &
AddedServices
Energy Transport Storage Administrative (Personnel& Others) Taxes
CHEMICAL ++ + ++ ++ - - + 0 + + + +
MACHINE ++ + - ++ ++ ++ 0 ++ + + +
AUTOMOTIVE ++ ++ - ++ + ++ 0 ++ + + +
TEXTILE & TEXTILE (FINISHED) ++ + - - ++ 0 0 0 ++ + + +
LOGISTICS SERVICE PROVIDER ++ ++ ++ ++ ++ ++ ++ ++ ++ ++ ++
* (++) as “very high”, (+) as “high”, (0) as “no idea”, (-) as “low” and (--) as “very low” Therefore, the development of foreign trade relations with these countries could be enhanced by developing the cooperation with the ILC in Baku/Alyat and with selected logistics hubs in above mentioned countries. Additionally, efficient links by rail road and deep sea with the ports and hubs in Bulgaria, Romania and Turkey will strengthen the logistics activities in the whole region. The industrial basis of Turkey could offer cargo flows for ILC in Alyat. Potentially some trade relations can be developed for goods coming from the countries on the eastern side of the Caspian Sea. If the site in Alyat is developed into an open an integrated logistics centre, trade relations can possibly be established, depending on which companies that will choose to locate at the Alyat site and which ferry operators that will use the new port
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International Logistics Centres for Western NIS and the Caucasus terminal in connection with the logistics centre. Combined with the opening of ILCs in the Central Asian TRACECA countries, this will stimulate a higher demand for logistics solutions also in Azerbaijan. The effects of the synergic development and allocation of the real cargo flows will be strengthened with implementation of container traffic on Kars-Akhalkalaki-Tbilisi-Baku railway and finalisation of the Marmara projects (see Chapter 3.3). Romanian, Bulgarian and especially Turkish transport sector companies are active players in TRACECA region. Several international freight forwarders from Bulgaria, Romania and Turkey have established their offices in Azerbaijan. The transport and logistics sector in these countries reported the tremendous lack of multimodal nodes in TRACECA countries. Concentration of main services at one site as postal/bank/insurance services, rent of offices, intermodal terminals, warehouses, filling stations, washing facilities, packaging, customs clearance, marketing, trainee activities should attract many entrepreneurs to logistics centres. Comparable level of such services in TRACECA countries is expected by international and national logistics providers. 3.4.3 Interconnections with EU Countries and the TEN-T The transport links with the EU go via the Black Sea ports in Ukraine, Romania and Bulgaria, and overland via Istanbul in Turkey by road and in the near futures as well by railway. Trade relations with the EU countries could be enhanced by establishing direct contacts and cooperation between the ILC in Alyat and major logistics hubs and centres in EU countries. 3.4.4 Links with the Asian TRACECA Countries The ILC in Alyat has a key geographical position for the collection, consolidation and distribution of goods via the ferry routes and shipping services crossing the Caspian Sea. With the exception of the links via Iran, Baku /Alyat is the only entry and exit point for trade flows in the TRACECA corridor between the Caucasian and European countries and the Asian TRACECA countries. The shipping routes across the Caspian Sea provide maritime links with ferries and conventional tonnage with Aktau in Kazakhstan and with Turkmenbashi in Turkmenistan. Both ports have road and railway routes with other Asian TRACECA countries. There are also potentials for the establishment of Caspian Sea ferry routes connecting Alyat with Astrakhan and other ports in the Russia Federation, and with Iranian ports, ref. the MOS concept. However, the synergy effects of transit trade to the Central Asian countries via the ILC in Alyat cannot be fully exploited before the general framework conditions for the maritime routes across the Black Sea and the transit route via Caucasus improve. This involves the implementation of concerted and effective trade facilitation measures among the TRACECA countries and an overall growth in trade relations.
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4 FUNCTIONAL DESCRIPTION 4.1 Functional Description and Concept 4.1.1 General Objectives The location, infrastructure network connectivity and site attributes offer very good conditions and development potential for the future establishment of an ILC at the territory of the new projected port of Baku at Alyat with a total size of about 400ha. The available land plot is a Greenfield site and the ILC area has in total a rectangular size of about 50ha (about 630m x 800m). The land plot is owned by Government of Azerbaijan. This land plot is directly located on the northern boundary of the projected port area. In the west are additional areas direct accessible of about 68.5 ha (area I = 16 ha, area II = 32.5 ha and area III = 19.5 ha) for the further development of the ILC (at moment 50ha of this area have been dedicated to the ICL by the Government of Azerbaijan). It is envisaged to provide several logistics functions by development of the following main facilities: truck port – TIR parking customs services and bonded warehousing area container terminal and container service centre warehousing complex (general and temperature guided warehousing areas) settlement areas for logistics intensive industries and trade Figure 2: Overview of ILC Land Plot and Potential Expansion Areas
Author: Royal Haskoning (port master plan) and INROS LACKNER AG
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Future international logistics centre (ILC) development opportunities and advantages of the site could be based on a reorientation and bundling of freight traffic flows from and to Iran, Turkey, southern Caucasus, Russia, Central Asia and China, as well as on its proximity to producers and end-costumers in the Baku region. There are also potential benefits from synergy effects and close cooperation with the new port of Baku in Alyat, which allows a trimodal transport connection. The new port will be the main Caspian Sea port providing links between the southern Caucasus, Central Asia, Russia, Iran and China and has potential to be a major TRACECA node linking Europe to Asia. The main objective of the proposed ILC next to the new port of Baku in Alyat is the establishment of a highly productive and competitive logistics site as an integrated part of the TRACECA network as well as to support and increase the further development and attractiveness of intermodal transport along the TRACECA route. In addition the future ILC should promote a sustainable business development of the local freight transport and logistics sector as well as logistics intensive industries and trade in Baku region and Azerbaijan. Regional and international stakeholders from the transport, cargo handling, warehousing and service sectors will have an opportunity to settle at the future ILC and to use the transport connections, logistics facilities and services offered there. 4.1.2 Logistics Trends and Development Vision From the point of view of the short-term, mid-term and long-term developments in the field of logistics certain global, European and regional logistics trends can be identified (see Figure 3): Figure 3: Relevant Logistics Trends and Impacts
Trends Impacts Logistics potential Intercontinental trade Demand for premium and Expansion of logistics Increasing product complexity innovative logistics Need for cooperation and and after-sales activities solutions integration Focus on regional Emergence of new Global Consistent trend towards direct market development delivery chains for trade sales Large-scale production and distribution structures and supply
Increased demand for TRACECA corridor chains efficient logistics services strengthening and networking Shortened market and products Liberalisation of competition supply times Demand for advanced
European Promotion of intermodality Development of trans- transport and logistics technologies Enterprise diversification national approaches to
marketing, e.g. Supply chain Networking of enterprises commercial logistics management by Development of training Cooperative structures networking transport capabilities Qualifications modes (intermodal) Regional Complex trade and retail requirements Increased demand for structures qualified logistics stuff In Baku region commercial enterprises and chain stores (like supermarkets or shopping malls) are increasingly demanding efficient, modern and reliable logistics services. The market is responding to this demand and huge investments already have been allocated. Amongst others in two major sites which are already in full operation as distribution centres and shopping areas in Sadarak and Bina about 12 km to the south of Baku region. The area size of each site is about 75 ha. These two sites are used as simple storage and local distribution
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International Logistics Centres for Western NIS and the Caucasus centres as well as shopping malls and bazaar. Import products and goods (mostly un- containerised) are mainly delivered by truck from Turkey or Iran and further distributed in the on- site shopping areas as well as to Baku region mainly and other location in Azerbaijan as well as in Russia. The cargoes distributed vary from food, textiles, furniture, electronics, white goods and construction material. In addition considerable volume of cargo is loaded onto foreign trucks to be exported further to Russia and Iran. The “Ipek Yoli” Terminal is a TIR-Terminal and custom clearance terminal located about 15 km south of Baku, on a highway crossing the Baku by-pass road (Loktaban circle) and proximity to the railway network. But the majority of the other sites are small and also don‟t have a railway access for inter modal transport. Furthermore several international logistics providers and freight forwarders involved in the oil and gas business are also located in the south of Baku. Cameron and Bertling are about 24 km in the south of Baku. The oil and gas logistics companies ASCO Azerbaijan and Consolidated Supply Management (CSM) are based with own supply base zones in Sahil district. The port of Sahil operated as a supply base for the oil companies offshore activities is located about 30 km to the south of Baku. JV Murphy Shipping and Commercial Services operates a warehousing storage facility with bonded warehousing services. This modern logistics location provides storage and logistics services for off shore oil business. The site also is also situated in the Sahil district about 30 km south to Baku close to the national roads Baku – Astara (M3) and Baku Georgia (M4 and M1). The establishment of a logistics hub in the form of an international logistics centre integrated into an international network along the TRACECA corridor enables the further strengthening of the regional logistics sector and inter modal transport. The future ILC next to the new port of Alyat, with its logistics facilities and services as well as transport connectivity, forms the base for an improved distribution of cargo import to consumers in Baku region as well as more efficient marketing of national goods and products at international markets. The development potential for this future ILC also can be determined by the preliminary economic data specified in the Chapter “Cargo Volumes“. 4.1.3 Cargo Volumes According to statistics prepared for TRACECA, Azerbaijan‟s international trade amounted to 11.1Mt (exports) and 2.4Mt (imports) in the base year (2007). Of this total of 13.5Mt, 9.4Mt (70%) is crude oil and oil products. Only 1.7Mt is deemed to be containerisable and therefore suitable for handling at a logistics centre (LC). The great majority of containerisable goods include agricultural products: wheat, sugar, fruit and vegetables (fresh or processed). However, it is known that a significant proportion of actual traded goods (in particular imports such as white/brown goods, electrical equipment, textiles and milk products) go unrecorded. This means that the actual figures are substantially higher than the estimates. Moreover a proportion of domestic logistics services can be partly handled in an ILC. There may be some transit traffic too, although this is not expected to be large. Goods that require sea/road or sea/rail transfer will be handled within the port. Transit goods that enter and leave Azerbaijan by surface mode are unlikely to switch mode within the country. To make some allowance for under-recording, domestic traffic and transit traffic, a catch-all „Unspecified‟ category has been included in the cargo volume estimates, with a base-year containerisable volume of 0.1Mt. In general, the assumption is made that the spatial distribution of demand for logistics services within a country will be in accordance with the pattern of economic activity and consumption.
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From official statistics it is estimated that 45% of economic activity and consumption is con- centrated in Baku. As the main port and transport hub, Baku/Alyat may be assumed to be the natural location for a large proportion of logistics services for the rest of the country too: say, one-third. Thus the effective catchment share of national traffic is 45% + 55%/3 = 63%. Two major transport infrastructure projects have also been taken into account: The new railway line from Kars (Turkey) to Akhalkalaki (Georgia), expected to be in oper- ation in 2012. The direct railway link from Europe to the Caucasus and Central Asia via Turkey, via the Marmaray Tunnel crossing the Bosporus, expected to be in operation in 2014. The impact of these projects is discussed in section 3.3 above. In terms of demand for logistics services in Azerbaijan, an analysis of Turkish export statistics combined with expert judgement has produced the following estimates: The Kars-Akhalkalaki railway line will bring 0.26Mt of Turkish electrical goods, machinery, automotive goods, wood products, cereals, carpets and textiles to Azerbaijan. The railway link via the Marmaray Tunnel will bring 0.40Mt of mainly Turkish and EU- sourced chemical products, cement, iron and steel. Both links will also carry exports, for which data-based estimates have not been made. A broad estimate has been made that each link will carry 0.1Mt of Azerbaijani exports to Turkey and beyond. In applying these estimates, the following conservative assumptions have been made: These cargo flows will all start in 2017. 70% of this traffic will require logistics services. Because of Alyat‟s strategic position in the rail network, this traffic falls entirely within Alyat‟s catchment area for logistics services. None of this traffic falls within the scope of the logistics industry at present. Alyat lies within the Baku City administrative district in a distance of 70km from the city. It may be therefore doubtful whether an ILC located in such a distance can be competitive to LCs closer to the city. However, there are currently no nodes that fall under the definition of a logistics centres. In addition, this issue is related to the overall concept and the conditions offered to users as pointed out in three level concept (see Chapter 3.1). Only with a clearly defined structure and a specification of the condition for users consultation with existing stakeholders can give serious answers to this question. The advantage of the ILC is to be adjacent to the new port in Alyat, with common railway link and road connections. Potential synergies with the port are identified in section „Functional Areas and Main Transport Infrastructure‟ above. However, non-bulk throughput at the existing Baku port is relatively small, dominated by rail ferry and transit traffic. This is expected to change with future development of the transport market, including infrastructural upgrade and improvement in the institutional settings. The following figures are for 2007: Ship Imports Exports Transit calls „000t „000t „000t Ferry terminal 739 226 380 1,949 Cargo terminal 83 47 17 2 Container traffic: The above figures include 1,000 TEUs
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Container traffic has increased in 2010 because of the non-military supply goods for the peace keeping forces in Afghanistan (first 5 months of 2010: 5,500 TEU). It is expected that 30,000 TEUs only from the supply goods cargo for Afghanistan will be handled when the Alyat port is operational. The cement factory in Sahil 40 km north of Alyat imported 300,000 tonnes of clinker in 2009 from Iran by ship via the existing BISTP. The majority of international trade is carried by road and rail. The proposed ILC‟s location at the junction of the north-south and east-west rail corridors, pointed out in earlier reports, has a significant advantage. But there are several reasons for caution: Transit traffic through the port, proceeding by rail to/from Russia or Georgia (including Georgia‟s Black Sea ports), is unlikely to require intermediary logistics services. The north-south rail corridor is yet to be completed. It does not continue into Iran and consequently provides no access to the Gulf port of Bandar-e-Abbas. Such access could be transformative, offering an alternative route to South, South-East and East Asia. As yet there are is no regular block train service to Baku; and efforts to establish a service through Baku to Central Asia and China have so far born no fruit. POLZUG ran several demonstration trains in 2008. It is a reasonable expectation that the new port will promote a change in patterns of trade and a modal shift in favour of maritime traffic and containerisation. This in turn would promote the development of the railway as a complementary mode. But at this early stage it is difficult to define or quantify this effect. Alyat does have its own limited economic hinterland, with manufacturing activities in the town and areas of irrigated agriculture 20km to the west and 30+km to the south-west. The scale of demand for logistics services from these sources is yet to be assessed. It is possible that the proposed ILC could play a role in aggregating export consignments, for example. The basis for the further preparation of a preliminary cargo projection is the current available area potential of about 50ha for the future development of the ILC (see Figure 4). Regarding a preliminary cargo projection for the final stage of development in terms of “area productivity“ (throughput capacity in t/ha per day) empirical data of representative logistics facilities and industries from European ILC‟s have been considered.
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Figure 4: Confirmed Available Area Size – ILC Land Plot Boundary (Phase I)
Author: INROS LACKNER AG Based on the available area as well as in accordance with the demands of the major stakeholders, three potentials functional areas have been defined (see Figure 6). For each functional area the potential brutto area size has been determined, which also includes green and traffic areas, administration and service facilities (see Figure 8). Therefore the relevant data input for the further estimation of “area productivity“ is the netto area size (hence marketable area) of the functional areas. The preliminary cargo projection in terms of potential throughput capacity has been calculated based on the following data and assumptions for each functional area. 1. Functional area “Logistics Services” gross area: 20 ha* net area: 14.5 ha * gross area also already including following dedicated functional modules: Customs Terminal with Open Customs storage and TIR-Parking, ILC Service Centre. The following development structure of representative logistics facilities with their accordingly standard characteristics has been applied. plot area building area troughput troughput troughput No. logistics services facilities: by type - standard - - standard - capacity capacity capacity [ha] [m 2] [t/d] [t/pa] [t/ha] per d 1 Distribution warehousing (large size) 2,00 10 000 160 40 000 80 2 Distribution warehousing (large size) 2,00 10 000 160 40 000 80 3 Distribution warehousing (large size) 2,00 10 000 160 40 000 80 4 Distribution warehousing (large size) 2,00 10 000 160 40 000 80 5 Distribution warehousing (mid size) 1,50 6 000 120 30 000 80 6 Refrigerated warehousing 2,00 10 000 160 40 000 80 7 Forwarding with warehousing (large size) 3,00 9 000 360 90 000 120 total 14,50 65 000 1 280 320 000 88
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In result the potential throughput capacity of the functional area “Logistics Services” has been estimated to be about 320,000 t per year (final stage of development). It further equates to: throughput capacity per day: 1,280 t/d throughput capacity per ha and day: 88 t/ha per d 2. Functional area “Logistics Intensive Industries and Trade” gross area: 17 ha net area: 12 ha The following development structure of representative logistics facilities with their accordingly standard characteristics has been applied. plot area building area troughput troughput troughput logistics intensive industries and trade: No. - standard - - standard - capacity capacity capacity by type [ha] [m 2] [t/d] [t/pa] [t/ha] per d 1 Building materials industry 6,00 1 500 375 000 250 2 Steel manufacturing 3,00 600 150 000 200 3 Food processing 3,00 450 112 500 150 total 12,00 2 550 637 500 213 In result the potential throughput capacity of the functional area “Logistics Intensive Industries and Trade” has been estimated to be about 637,500 t per year (final stage of development). It further equates to: throughput capacity per day: 2,550 t/d throughput capacity per ha and day: 213 t/ha per d 3. Functional area “Container Terminal” In addition the potential throughput capacity of the functional area “Container Terminal” (plot area of about 12 ha including one combined transhipment module of 6 ha and a container service centre) has been estimated to be about 132,500 LU equivalent to 1,325,000 t per year (final stage of development). It further equates to: throughput capacity per day: 530 LU/d equivalent to 5,300 t/d plot area troughput troughput troughput troughput No. container terminal - standard - capacity capacity capacity capacity [ha] [t/d] [t/pa] [LU/d] [LU/pa] combined transshipment module (4-loading tracks a 640m, four reach stackers 1 or optional two reach stackers + two RTG) 6,00 5 300 1 325 000 530 132 500 In total the preliminary cargo projection in terms of potential throughput capacity for the final stage of development of the future ILC including the two functional areas “Logistics Services” and “Logistics intensive Industries and Trade” has been estimated to be about 957,500 t per year. In summary it further equates for both functional areas to: throughput capacity per day: 3,830 t/d throughput capacity per ha and day: 145 t/ha per d In addition the preliminary cargo projection for functional area “Container Terminal” potential throughput capacity has been estimated to be about 1,325,000 t per year. Due to the specific intermodal function, operation and logistics services for the further two functional areas, this potential throughput capacity of the envisaged container terminal has been considered separately.
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An estimation of future modal split has been prepared (see table 14 in chapter 9.4 “Financial Analysis) based on further results of interviews with stakeholders and potential partners and regional statistics so far available. 4.1.4 Planning Guidelines and Potential Synergies In the process of developing a design concept a number of key site requirements and planning guidelines for the future ILC at the new port of Alyat are to be considered, such as: Site requirements Provision of adequate land supply for small, medium and large logistics companies Well accessible and capable road and future rail connection of the site and the individual land plots Unobstructed development potential of the site, no special construction requirements Time unlimited accessibility (24h operation, 7 days a week) Land plots are made accessible and construction is possible in a mid-term (depending on Phase I of envisaged new BISTP implementation in 2014/2015) perspective Custom services for storage and import/export procedures. Planning guidelines Realisation of a flexible, economically viable and real-time logistics concept Settling of logistics intensive industrial and trade companies of different size categories Integration of existing transport infrastructure, warehousing facilities and equipment Realisation of a functional, urban planning and ecologically sustainable overall concept Planning of common service and administration facilities for ILC-settlers and third parties Development of real-time construction modules and their integration for the implementation of the planning concept in development or expansion stages Future site development will take place in expansion stages. This enables a flexible, demand- oriented adjustment to market developments and reduces development costs. The site develop- ment concept is modular, allowing a flexible response to the needs of investors and customers. Innovation, employment security and creation of synergy potentials are important objectives of modern logistics centres. Synergies can be achieved through a projected road-rail interface, creation of future-oriented logistics products and services, as well as cooperation with the new planned port of Baku at Alyat. 4.1.5 Functional Areas and Main Transport Infrastructure For the definition of the Functional Areas and the subsequent functional concept a qualitative assessment of the development potential has to be made, based on the current situation and the Port Master Plan (Draft Report from November 2009). In result the first assessment of development potential reflects, the future ILC development at the new Port of Alyat offers: 1. Favourable basic conditions Promotion and support from Government of Azerbaijan and MoT Proximity to Baku region Nearby road and railway traffic junction of TRACECA east-west route (Caspian and Black sea) and North-South Corridor (Russia and Iran) 2. Excellent infrastructure and transport connection potentials
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Land plot availability and potential extension areas Direct road access to highway M3 - north to Baku and further on M2 to Russia, - south to Iran via Lenkoran and Astara Road connection via highway M3 to highways M4 and further M1 via Ganja to Georgia (Tbilisi, Poti-Batumi and Turkey) Direct railway access via new port area to - main railway (electrified) via Georgia to Black Sea (Tbilisi, Poti-Batumi), - main railway (electrified) via Baku to Russia, - via south-west route (electrified) to south railway line via Lenkoran to Astara in AZ (Iranian border) Direct maritime links via new port with ferries and scheduled ship services to - Turkmenbashi in Turkmenistan, - Aktau in Kazakhstan 3. Synergies and cooperation potentials with new planned BISTP Common utility interfaces and infrastructure Facility management for buildings and other facilities Consolidation and bundling of cargo transport flows Supplement of provided logistics and non-logistics services Optimisation of capacity utilisation of facilities, equipment and personnel Marketing and advertisement Based on these identified first development potentials for the future ILC site, the Port Master Plan and experience from comparable logistics locations the following three functional areas and categories should be defined (subject of further investigation): Logistics Services (land allocation: about 40%) Container Terminal (land allocation: about 25%) Logistics Intensive Industries and Trade (land allocation: about 35%)
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Figure 5: Specification of the Functional Areas and Categories Logistics-Intensive Industries and Trade Logistics Services Logistics of value Advancement of manufactured Consolidation point Location for cooperative chains products for the food industry for trade and distrib- logistics products ution of consumer Supply chain management goods (SCM) and contract logistics Enterprise Spare part logistics for Distribution centres General and temperature development automotive sector and for the food sector guided warehousing agricultural machinery, Specialized trading Bonded warehousing oil and gas business ventures for textiles, Distribution logistics Settlement of industries furniture etc. Forwarding and transportation of high creation of value: Entertainment Service centre: Administration, - Food processing, electronics - White/brown goods, office, bank, agencies etc. - Building materials, Truck port: TIR-parking, - Steel treatment. customs services, open customs storage area, repair, maintenance, fuelling, tyre sales etc. Restaurant, cafeteria, kiosk, social facilities Modular Land allocation: approximately Land allocation: approximately planning concept 35% (including traffic areas) 40% (including traffic areas) The functional area of the Container Terminal includes a combined transhipment module rail- road, container service centre with container depot, customs clearance and brokerage, container packing (CFS), container repair and cleaning (land allocation: about 25%, including traffic areas). Further development of the ILC site requires a target-orientated selection of complementary enterprises and logistics services. The identified future logistics trends and development potentials have been considered and applied to the three functional areas (Logistics Services, Container Terminal, Logistics intensive Industries and Trade) of the site (see Figure 6).
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Figure 6: Overview of Potential Functional Areas
Author: INROS LACKNER AG 4.1.6 Functional Concept and Intermodal Operations The basis for developing the functional concept is the basic layout (confirmed available area size, see Figure 4) with the marked area boundaries and external transport connections. The available areas are clearly marked. They represent the future development potential for the proposed ILC at the new port of Baku at Alyat. The future ILC area will have one external road access in the south-west (about 300 m) which is directly connected via projected new port roundabout and access road to the highway M3 to Baku (in northern direction) and south to Iran via Lenkoran and Astara. This access road also will connect proposed ILC via highway M3 to highways M4 and further M1 via Ganja to Georgia (Tbilisi, Poti-Batumi and Turkey). The traffic junction of the main railway lines Russia - Baku - Lenkoran - Astara (Iranian Border) and Baku – Tbilisi – Poti/Batumi lies at a linear distance of about 5 km south-west from the future ILC area. The future ILC area will have a direct external railway access (about 350 m) to the railway network via projected port rail tracks as well as arrival and departure tracks in the south-west of the new port. In addition the future ILC area will have a trimodal transport connection by direct maritime links via new port of Baku area to Turkmenbashi in Turkmenistan and Aktau in Kazakhstan. Modern technologies and operating procedures for container handling, storage and services as well as rail-road transhipment could also offer interesting development prospects. The future parcelling of individual functional modules due to different customers‟ demands (size categories of the envisaged companies and facilities) enables a flexible adaptation to the space requirements. According to the estimated requirements three functional areas for “logistics services“, „container terminal“ and “logistics-intensive industries and trade“ have been delineated. The functional area “logistics services” (about 19.5 ha) will be developed with its main focus on transport, handling and storage facilities for logistics providers and operators (like truck port,
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International Logistics Centres for Western NIS and the Caucasus customs services, warehousing and storage facilities, distribution centres etc.). The truck port and ILC administration building will located nearby the gate to minimise internal driving times and volume of traffic. The functional area „container terminal“ (about 12.5 ha) will include a combined transhipment module (4 loading tracks á 600 m) for the rail-road handling of intermodal loading units, (container, semi-trailers and swap bodies). The handling of intermodal loading units will be done by reach stackers and in the final stage of development optional by rubber tyred gantry cranes (RTG). Furthermore an administration control centre and gate as well as container service centre with container depot, customs clearance and brokerage, container packing (CFS), container repair and cleaning will be implemented. In the container depot the handling of containers will be done by reach stackers. In the final stage optional the handling of empty containers can be done by empty reach stackers. The internal transport of intermodal loading units between the combined transhipment module and the container service centre will be done by terminal tractors with chassis. Thereby the future ILC railway link will be connected with the envisaged track alignment of the optional rail terminal (Phase III). An alternative version of the future ILC railway link directly connected with the port tracks of the projected Cargo Terminal in Phase I would allow to provide a more proper and efficient railway access, see Figure 7. In result the passive provision of an optional rail terminal at new port of Baku area in Phase III would not be further feasible. But anyway the dedicated rail container terminal (two tracks á 600 m) at new port of Baku area could be extended by additional tracks á 600 m on market demand. Figure 7: Alternative Version of the Future ILC Railway Link
Author: INROS LACKNER AG Both versions for the future ILC railway link for the most suitable connection point and track alignment should be further discussed and finally coordinated with the responsible Port Master Plan contact persons of Royal Haskoning. The functional area “logistics intensive industries and trade” (about 18 ha) will be developed with its main focus on the settlement of logistics-intensive industrial companies (like food
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International Logistics Centres for Western NIS and the Caucasus processing companies or steel treatment industries) and commercial enterprises (distribution centres for retailers). Figure 8 below shows the functional areas, on which the functional concept is based, the development axes and envisaged road and rail connections to the overall transport network. The projected ILC internal basic infrastructure road network has a total length of about 3,600 m with two-way traffic system (roadway width: about 10 m). The total length of the envisaged internal railway yards is about 2,900 m, a minimum curve radius of 250 m has been adapted. Figure 8: General Alignment of the Functional Areas
Author: INROS LACKNER AG Based on the functional concept, in the next step the functional modules for the preparation of the master plan are worked out in detail. With the definition of three development stages, which are planned in the further processing as fully functional units and adjusted on future market demand, the base for the further master plan elaboration is created and the functional concept is completed. The development stage I (about 18,8 ha) will be include the required site preparation, external road and railway access, required internal transport and utility infrastructure, implementation of the ILC administration and customs building, truck port, open customs storage area and bonded warehousing area. In addition the container terminal including administration control centre (first only container offices) and gate, a combined transhipment half-module (2 tracks á 600 m) and the container service centre will be established. The following development stage II (about 13,9 ha) will be include the required further site preparation, required further internal transport and utility infrastructure. Furthermore the areas for general and temperature guided warehousing as well as extended TIR-Parking will be established. The final development stage III (about 17,7 ha) will be include the required final site preparation, implementation of final internal transport and utility infrastructure. In addition further warehousing and freight forwarding facilities as well as areas for the settlement of logistics intensive industries and trade will be established. Furthermore and optional a market oriented upgrading to a combined transhipment module (4 tracks á 600 m) is envisaged.
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Figure 9: Overview of Future Development Stages
Author: INROS LACKNER AG Figure 9 depicts the main important, site-specific planning guidelines such as e.g. development axes, development stages, internal transport routes like main roads and envisaged container terminal, external road and envisaged rail connections. Figure 10: Overview of Future Completion Stage
Author: INROS LACKNER AG Figure 10 illustrates the envisaged final development areas for the main logistics functions. The presented parking areas, building and warehousing areas only are indicated proportions; the details are provided further in this report.
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4.2 Socio-Economic Impact Overview The present port at Baku is operating close to its capacity and cannot be expanded because of its position within the centre of the city of Baku. The traffic is crossing the inner city of Baku generating pollution and high risks especially with dangerous cargoes. The consequent decision has already been taken to build an entirely new port at Alyat, Consultants have been engaged by the MoT to prepare a port master plan and were asked to position the ILC next to it. The socio-economic situation of Azerbaijan is different from that of the other beneficiary countries: The petroleum industry dominates the Azerbaijani economy. It accounts for 94% of industry and 56% of GDP and was responsible for an average GDP growth rate of 23%pa during 2005-08. In 2008 Azerbaijan had the highest per capita GDP among the direct beneficiaries: US$5,200 (official exchange rate) or US$10,400 (PPP)2. There is wide disparity between the oil-dominated urban/industrial sector and the rural economy. Labour productivity in the agricultural sector is only 10% of that in the industrial and service sectors. Social services are generally to be improved and consequently some social indicators need to be increased. Azerbaijan is alone among the direct beneficiary countries in having positive population growth, with a replacement-level fertility rate and minimal net migration. This contributes to the very low old-age dependency ratio of 9.5. There is a major internal refugee problem arising from the regional conflicts. There are an estimated 1 million internally displaced persons (IDPs), equivalent to 12% of the country‟s population. It is normal to find a significantly higher level of affluence in the capital city than rest of the country. Baku accounts for 22% of Azerbaijan‟s population and 45% of consumption (expressed as turnover of goods and services). Therefore per capita consumption in Baku is 2.9 times the average in the rest of the country. In terms of reducing regional disparity, the likely impact of the planned new port at Alyat is ambiguous: On one hand its orientation is still towards Baku and it lies within the administrative district (rayon) of Baku City. On the other hand it will be 70km distant from the city proper, providing employment and commercial opportunities at what is now a small settlement (population: 13,000) in the southern part of Absheron Economic Region. Apart from Baku City, the closest districts are Absheron, Haligabul and Salyan. These have a combined population of 286,000 (57% urban) and per capita consumption 27% below the national average. The proposed ILC is expected to be associated with a free economic zone (FEZ). This, complemented by the ILC‟s state-of-the-art logistics facilities, is expected to attract new investment which will potentially benefit the whole country. A probable effect of the new port development will be to extend the influence of Baku, giving rise to a ribbon of development along the coast while relieving pressure on the existing city and allowing BISTP to continue its expansion. Regarding traffic congestion in Baku, in March 2006, the President initiated a construction project aimed at unblocking the roads, removing traffic jams and creating a modern transport
2 2009 estimates by the CIA.
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International Logistics Centres for Western NIS and the Caucasus infrastructure, including a new highway will be built between the airport and central Baku with nine bridges, 13 underpasses and dozens of car parks. Accordingly the Baku municipal authorities and the transport ministry must also implement a scheme to develop Baku‟s transport network up until 2030. Road safety is also a growing concern in the capital. The UN office in Azerbaijan reported in 2007, that in 2006 Azerbaijan 53% of the 1,027 killed in more than 3,000 accidents were young road users and 109 of these were children. Road accidents caused 90 deaths and 422 injuries in Baku alone during the first quarter of 2007 and the number of road accidents and injuries compared to the same period last year increased by 12% and 37% respectively. It is not reported whether heavy goods vehicles contributed disproportionately to the number or severity of accidents. The port should also open up new commercial and employment opportunities within its hinter- land. The extent to which these opportunities are taken up will depend on the enterprise of local farmers and businesspeople, and the ability of individuals to acquire the skills that the port and ILC will require. According to the European Training Foundation (ETF) Country Plan for Azerbaijan, “vocational training is the most underdeveloped field in the whole state education system“ and “the proportion of young people with qualifications of skilled worker and technician is insignificant.“ Consequently “there is an increase in immigration of highly qualified foreign labour to the country“. The site of the new port and proposed ILC lies within Garadagh District, with a 2008 population of 102,600 living in 11 townships (including the administrative centre of Lokbatan) and 13 villages along a 106-km coastline. The oil industry dominates the district‟s economy. Manu- facture of cement and other construction materials is also a significant sector. EBRD recently approved a US$120M loan to modernise and expand Garadagh Cement OJSC, increasing its capacity to 4,000t/day. In connection with the new port of Baku project, a draft Environmental Impact Assessment (EIA) was prepared in November 2009 by IQLIM Ltd3. It includes a chapter entitled „Initial Social- Economic Environment‟. This includes a description of socio-economic conditions in the Alyat Town Administrative Area, which is summarised here: Population at 1 January 2008: 14,200. Three of five villages within the area are un- occupied due to harsh living conditions and lack of water. They are used by shepherds for shelter in the cold season. In- and out-migration is negligible. There are limited local employment opportunities in the manufacturing, railway and oil industry sectors, and in urban services. A proportion of the labour force commutes to Baku City or neighbouring regions. There is no commercial agriculture due to the arid conditions. Some subsistence farming and seasonal fishing takes place. There are no official statistics on employment or unemployment, but IQLIM estimates that 2,000-2,500 people capable of work are unemployed. The standard of living in Alyat is low, with generally poor infrastructure and services. IQLIM specifically mentions serious deficiencies in roads, power supply, water supply, sewerage, waste disposal, education, medical facilities and recreational facilities. Alyat lies at the junction of the north-south and east-west rail and road corridors, affording access to Russia, Iran, Turkey and Georgia (and its Black Sea Ports). More efficient, cheaper,
3 An Azerbaijani consulting company and a member of the Promitheas Energy and Climate Policy Net- work, sponsored by the EC and BSEC.
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International Logistics Centres for Western NIS and the Caucasus reliable transport and logistics services will potentially increase profits for producers and distributors and reduce prices for consumers throughout the TRACECA corridor.
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5 MASTER PLAN DESCRIPTION AND PRELIMINARY DESIGN 5.1 External and Internal Transport Infrastructure The access and connection of the ILC at new port of Baku with the international transport network and TRACECA corridor is already described under Chapter 3.4. “TRACECA Network Effects and Synergies”.
Figure 11: Master Plan Layout – Overall External Transport Infrastructure
Author: Royal Haskoning and INROS LACKNER AG 5.1.1 Description of Site Access Currently, the site is connected by an unpaved access road of approximately 1.5 km to the highway M3. As part of the development of the new port of Baku, the new construction of an efficient road access is planned. A four-lane access road will form a direct connection to the nearby highway M3. The road entrance of the port is located in the centre of the west side of the port area, between ferry terminal and cargo terminals. In a distance of about 400 m, a rotary traffic is planned, from where a separate access road leads to the envisaged logistics centre. There will be one central road access, including a four lane gate (2 lanes inbound and 2 lanes outbound) to the logistics centre at the western boundary. The railway link from the new port to the railway network has to be new built, too. The distance from the port to the main railway network will be less than 5 km.
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Furthermore the port master plan also provides connections to the main railway routes via the existing shunting yards into northern and southern direction. Therefore, the existing rail connection to the timber yard will be reconstructed and a chord for the port rail connection leading northwards will be new built. The projected port railway facilities include amongst others a shunting yard in the south-west as well as railway sidings to the ferry terminal and the cargo terminal with a connection point for a railway link to the future logistics centre. This railway link is projected from a connecting point at the cargo terminal railway yard leading in northern direction to the ILC south-eastern boundary (see Figure 12). The distance amounts to about 150m. 5.1.2 Description of Internal Transport Infrastructure For an optimal transport connection and an internal traffic development of the future ILC the following planning principles have been considered. 1. Road transport infrastructure: Good connection to the urban, regional and supraregional road network: Proper accessibility of all land plots for trucks and passenger cars. Favourable traffic management and minimization of crossings. Securing of flowing traffic by appropriate standard cross-sections. Consideration of stationary traffic. 2. Railway transport infrastructure: Good access possibilities to long-distance traffic nodes and rail freight stations. Efficient operation of trains, train units and railway cars without expensive shunting procedures. Reduction and/or avoidance of crossing road and railway transport infrastructure. Sufficient provision of properties with track connection. In summary all properties, buildings and facilities must be optimally accessible by the projected internal transport infrastructure of the future ILC. The projected external and internal road transport infrastructure for the final stage of develop- ment contains the following components (see also Figure 12): a) External (off-site) Existing road access to the new port site (currently unpaved - has to be new built): length: about 1,500m, width: 7m, 2 lanes New road access (M3 to the port): length: about 1,900m, width: 20m, 4 lanes New road access (traffic circle to logistics centre): length: about 290m, width: 10,5m, 3 lanes b) Internal (on-site) Main road network: total length: about 3,600m projected main roads
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length: about 3,600m, width: 10m, 2 lanes (bidirectional) TIR-Parking and traffic areas: total area: 240,000sqm, thereof - TIR-Parking area: about 14,400sqm, - other traffic areas area: about 228,000sqm Paved loading and open storage areas: total area: 127,000sqm, thereof - Container Terminal area: about 67,000sqm, - Container Service Centre area: about 28,000sqm, - Container Depot area: about 16,000sqm, - Open Customs Storage Area area: about 16,000sqm The projected external and internal railway transport infrastructure for the final stage of develop- ment contains the following components (see also Figure 12): a) External (off-site) Railway link to port tracks: total length: about 70m single track Switches: one at connecting point b) Internal (on-site) Container Terminal – Loading tracks: total length: about 3,240m, thereof 4 loading tracks a 750-850m (loading length: 2x620m and 2x670m)
Container Terminal – Circulation track (optional): length: about 800m Container Terminal – Switches: 6, thereof - 4 between loading tracks, - 2 for circulation track (optional)
5.2 Access to Utility Networks 5.2.1 Current Installations and Capacities In the course of the port development, the connections to the essential energy and utility networks will have to be established. The necessary supplying facilities have to be new built. Regarding the logistics centre as an optional part of the new port facilities, utility supply (drinking water, sewage facilities, rain water facilities, electricity and communication network) will be effected by the port. 5.2.2 Interface Points For further planning, the interface points for energy and utilities have determined in coordination with Royal Haskoning, the master planners of the port, as follows: 1. Energy supply Interface point: electric power station in the south of the logistics centre road access
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2. Rainwater Interface point: rain and sewage water in extension of the internal central north-south road of the logistics centre at the southern boundary 3. Sewage Interface point: sewage water in extension of the internal central north-south road of the logistics centre at the southern boundary 4. Drinking water Interface point: drinking water in extension of the internal central north-south road of the logistics centre at the southern boundary For the heating of the administration buildings and the logistics facilities may be used electrical heating, or a decentralised supply with gas or fuel tanks. From the present point of view a demand for gas or other utilities is not expected, it depends on the special requirements of the company settlements. 5.2.3 Upgrade and Development Needs In parallel with the current master planning of the new Baku International Sea Trade Port, it was necessary to estimate and assume potential energy and utility requirements. As the kind and dimension of future company settlement is still unknown, the data have to be updated. According to the development stages and the subsequent settlement of companies, which may produce a high demand of electricity, new capacities have to be generated. Table 1: Summary - Utility Requirements
No. Position Requirements plus Allowance 30%
1 Electricity - connected load 5.698 kW 7.407 kW
2 Drinking water 2,89 m³/h 3,75 m³/h
3 Sewage 2,89 m³/d 3,75 m³/d
4 Fire fighting water 50 l/s for 2 hours
5 Rain water 149.796 m³/a
6 Telecommunication cable Cu 2 x 150 twin wire
7 Opticle fibre As the kind and dimension of future company settlement is still unknown, the data must be updated.
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Table 2: Electricity Power - Utility Requirements
peak per number of connected No. Position unit units peak total demand factor load [kW] [kW] [kW] 1 Container Terminal 2 Container Service Centre 2.1 Service and Packing Center 200 1 200 0,6 120 2.2 Container wash and repair 100 1 100 0,4 40 2.3 Equipment / Maintenance 10 1 10 0,6 6 2.4 Container Terminal Administration 100 1 100 0,6 60 2.5 Reefers 11 24 264 0,7 185 3 Costums Terminal 3.1 Gate 5 1 5 0,7 3,5 3.2 Bonded Warehouse 300 1 300 0,6 180 3.3 TIR Administration 50 1 50 0,6 30 4 ILC Service Centre 4.1 Customs Building / ILC-Administration 100 1 100 0,6 60 4.2 Hotel / Restaurant / Canteen 100 1 100 0,5 50 4.3 Gas station / Car wash / Garage 100 1 100 0,6 60 4.4 Gate 5 1 5 0,7 3,5 5 Logistics Service Facilities 5.1 General Warehouse 300 4 1200 0,6 720 5.2 Temperature Guided Warehouse 1500 1 1500 1 1500 5.3 Freight Forwarding Facilitiy 300 1 300 0,6 180 6 Logistics intensive Industries and Trade 6.1 Production or processing and storage facilities 1000 1 1000 0,6 600 6.2 Production or processing facilities 1000 2 2000 0,7 1400 7 Roads 7.1 Floodlight 500 1 500 1 500 8 total 5.698 9 plus 30 % allowance 1.709 10 total plus allowance 7.407 For the heating of the logistics facilities and administration buildings may be used a decentralised supply with gas or fuel tanks. As the kind and dimension of future company settlement is still unknown, the data have to be updated.
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Table 3: Water - Utility Requirements
Per Capita Max. Number of No. Position Consumtion units per shift Peak total Water demand plus Allowance [l/d and employee] [l/h] [m³/h] 30% [m³/h] 1 Drinking water 50 462 2.888 2,8875 3,75 1 Container Terminal / Container Service Centre 1.1 Gate 1 1.2 Container Terminal 11 1.3 Service and Packing Center 5 1.4 Container wash and repair 8 1.5 Equipment / Maintenance 7 1.6 Container Terminal Administration 8 1.7 LU storage area (depot) 3 2 Costums Terminal 2.1 Gate 1 2.2 Bonded Warehouse 28 2.3 Open customs storage 1 2.5 TIR Administration 5 3 ILC Service Centre 3.1 Customs Building / ILC-Administration 11 3.2 Hotel / Restaurant / Canteen 17 3.3 Gas station / Car wash / Garage 8 3.4 Gate 2 4 Logistics Service Facilities 4.1 General Warehouse 30 4.2 General Warehouse 40 4.3 General Warehouse 40 4.4 Temperature Guided Warehouse 35 4.5 Freight Forwarding Facilitiy 25 4.6 General Warehouse 40 5 Logistics intensive Industries and Trade 5.1 Production or processing and storage facilities 60 5.2 Production or processing facilities 38 5.3 Production or processing facilities 38
2 Sewage 2,8875 3,75 Requirement Duration Water Pressure [l/s] [h] [bar] 3 Fire fighting water 50 2 4 Average Rainfall Average Dimension ILC Average Rainwater [mm/a] Rainfall [ha] Rainwater [l/s] [m³/a] [l/s*km²] 4 Rain water 300 9,5 50 5 149.796 The demand for drinking water was determined in relation to the number of employees. As the envisaged settlements of companies are still unknown, the process water has not been considered. Therefore, data have to be updated. 5.3 Overview of Envisaged Logistics and Non-Logistics Services This chapter includes a brief overview of the envisaged logistics and non-logistics services provided by the future ILC at new port of Baku in Alyat. The table below contains a summary of all defined functional modules with sub-functions and a brief description of their corresponding envisaged logistics and non-logistics services.
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Table 4: Functional Modules with defined functions and sub-functions
No. Functional Module Description Rail-road and rail-rail transhipment of combined Combined 1 LUs (containers, swap bodies, semi-trailers) and Transhipment Module project cargo . Four loading/unloading tracks, thereof: - two tracks in half-module 1 (by reach stackers) 1.1 Loading tracks - two tracks in half-module 2 (by reach stackers or optional under RTG cranes) . One bypass line (optional)
1.2 Truck loading lanes . Truck entrance/exit and loading road lanes
1.3 LU storage lanes . Interim storage for loading units and equipment
1.4 Loading staff office . Loading personnel office (container)
Container Services Container services (stripping and stuffing, repair 2 Centre (CSC) and varnishing, wash) 2.1 CFS (Container Freight . Container packing centre Station) . Stripping and stuffing . Pre-packaging of consignments 2.2 Container wash and . Container services (maintenance, repair) repair workshop . Container varnishing . Container washing 2.3 LU handling equipment . Shed for parking of container transport and stacking and maintenance equipments . Garage for mobile equipment repair and maintenance . Petrol station for all mobile equipment (e.g. reach stacker, terminal tractor etc.) Container terminal . CT administration and staff office 2.4 administration . Control tower . Full loading units storage areas 2.5 Container depot (including dangerous cargo) . Empty loading units storage areas
2.6 Reefer Slots . Interim storage for reefer containers . Two automatic entrance gate to terminal area . One entrance control counter (office container) 2.7 Control Gate . Two automatic exit gate from terminal area with scale . One exit control counter (office container) Bonded area with warehousing facility and open 3 Customs Terminal storage area, TIR-Parking[
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No. Functional Module Description . One automatic entrance gate to TIR - Parking area 3.1 Gate . One automatic exit gate from TIR - Parking area . Bonded warehousing building for temporary or long- 3.2 Bonded warehouse term storage of general cargo . Administration and staff office . Covered or open storage area for temporary storage 3.3 Open customs storage of project and general cargo 3.4 TIR-Parking area . Truck parking . TIR - Parking administration, dispatcher and staff 3.5 Administration office office (container) ILC management, administration, control and 4 ILC Service Centre communications, petrol station, garage, canteen + restaurant . ILC-administration, general coordination, ILC-Administration/ 4.1 administration, management Customs building . Customs office . Hotel 4.2 Hotel/restaurant/canteen . Self-service restaurant . Canteen and catering services . Refuelling of heavy goods vehicles and cars Gas station/car . Car wash 4.3 wash/garage . Repair and maintenance . Tyre change and depot . Two automatic entrance gates to ILC area 4.4 ILC-Gate . Two automatic exit gates from ILC area . Scale Logistics Service General Warehousing, Temperature Guided 5 Facilities Warehousing, Freight Forwarding Facilities . General warehousing building including storage of 5.1 General warehouse general cargo, administration and staff office . Distribution logistics . General warehousing building including storage of 5.2 General warehouse general cargo, administration and staff office . Distribution logistics . General warehousing building including storage of 5.3 General warehouse general cargo, administration and staff office . Distribution logistics . Warehousing building for cold store of refrigerated Temperature guided 5.4 goods or temperature controlled products Warehouse . Administration and staff office . Intersection between long-distance and short- distance traffic 5.5 Freight forwarding facility . Handling and consolidation of consignments . Administration and staff office . General warehousing building including storage of 5.6 General warehouse general cargo, administration and staff office . Distribution logistics
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No. Functional Module Description Logistics intensive Settlement of logistics intensive production or 6 Industries and Trade processing facilities . Light industry facility: e.g. Production or processing - Building materials industry, 6.1 and storage facilities - Steel manufacturing . Storage areas for general and project cargo . Light industry facility: e.g. Production or processing - Food processing, 6.2 facilities - Assembling of white/brown goods, - Automotive sector . Light industry facility: e.g. Production or processing - Food processing, 6.3 facilities - Assembling of white/brown goods, - Automotive sector 7 Road System Site access and ILC internal road traffic system . Road access from/to Highway M3 Road access . Control counter (office container) and gate with two entrance and two exit lanes (see also 4.4)
Parking areas . ILC internal parking areas (trucks, equipments, (see Legend of Master private cars) Plan)
Internal road system . ILC internal road traffic distribution and connection (see Legend of Master system Plan) 8 Rail Track System Site access and ILC internal railway system . Railway link from the planned port rail tracks to the Rail access ILC combined transhipment module The future services provided by the ILC administration mainly will include general administration and management, real estate development, acquisition and marketing, facility management, security services, IT-services and other support services (e.g. accounting, communication etc.). 5.4 Specification and Dimensioning of the Functional Modules The Master Plan layout (see Figure 12) for the final stage of development gives the following information: Basic outline and boundary of the ILC at new port of Baku. External and internal main road network infrastructure, including the site accesses and gates. External and internal main rail network infrastructure including site access and connection to the planned port rail tracks. Connection and interface points to existing utility network and facilities. Functional modules outline, dimensions and internal arrangements of areas, transhipment and storage facilities, special equipment and buildings. Fencing of the ILC operational areas (Container Terminal and Customs Terminal incl. TIR- Parking). Systematic numbering of all main and sub functional modules and buildings.
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Figure 12: Overall Master Plan Layout
Author: INROS LACKNER AG The main functional modules defined for the final stage of development in the Master Plan lay- out is systematically structured and numbered as depicted in Table 5. Table 5: Overview - Main Functional Modules
No. Functional Module Description
Rail-road and rail-rail transhipment of combined Combined Transhipment 1 LUs (containers, swap bodies, semi-trailers) and Module project cargo Container Services Centre Container services (stripping and stuffing, repair 2 (CSC) and varnishing, wash, container depot, equipment) Bonded area with warehousing facility and open 3 Customs Terminal storage area, TIR-Parking[
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ILC management, administration, control and 4 ILC Service Centre communications, petrol station, garage, hotel, canteen + restaurant General Warehousing, Temperature Guided 5 Logistics Service Facilities Warehousing, Freight Forwarding Facilities Logistics intensive Industries Settlement of logistics intensive production or 6 and Trade processing facilities
7 Road System Site access and ILC internal road traffic system
8 Rail Track System Site access and ILC internal railway system
5.4.1 Specification of Main Functional Modules The specifications and dimensions of the main functional modules for the final stage of develop- ment have been outlined in the following corresponding overview tables.
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1. Combined Transhipment Module (No.1) Table 6: Overview Combined Transhipment Module – Dimensions and Specification No. Functional Description remarks and justification Modules
1 Combined Transshipment Module
Dimensions Total area of CTM 67,000 sqm 1.1 Loading Tracks size (operational track 620m / 670m length) gauge 1,520mm stage 1: 2 number of tracks stage 2: 2 + 1 by pass track optional stage 3: 4 + 1 by pass track optional stage 1: 620 m / 620 m stage 2: 620 m / 620 m operational track length stage 3: 620 m / 620 m / 670 m / 670 m by pass track (opt.): 800 m one bypass line (optional) 1.2 Loading Lanes number of lanes stage 1: inbound: 1 outbound: 1 stage 2: inbound: 1 outbound: 1 stage 3: inbound: 2 outbound: 2 1.3 Temporary LU Storage Lanes stage 1: 2 number of lanes stage 2: 2 paved area, heavy construction stage 3: 4 number of ground slots (TEU) stage 1+2: 182 stage 3: 360
number of slots (TEU) stage 2+3: 91 x 2 = 182 ground slots stack height: 4 = 728 TEU 5 = 910 TEU stage 3: 180 x 2= 360 ground slots stack height: 4 = 1,440 TEU 5 = 1,800 TEU 1.4 Loading staff office gross area [m²] 15 size (length and width) 6 m x 2,50 m container construction height The potential throughput capacity for the development stages 1, 2 and 3 (final stage) of the Combined Transhipment Module has been calculated as follows: Development Stage 1 and 2 Two loading tracks a loading length of 620m (half-module 1) Average railway platform wagon (PW) length of 19,6m Loading capacity per track: 620m/19,6m = 31 railway platform wagon Total track loading capacity: 2 x 31 PW = 62 railway platform wagon Throughput capacity per day: (2) x 2 x 31 PW x 1,6 TEU/PW x 1,3 (TOF) = 257 TEU per day - (2) = inbound and outbound - TOF = track occupancy factor
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Throughput capacity per year: 250 WD per year x 257 TEU per day = 64.250 TEU per year - WD = working day Mobile handling equipment: - 2 x reach stacker (lifting capacity 42t) - handling capacity: max. 20 LU per hour Development Stage 3 Four loading tracks, thereof - two with a loading length of 620m (half-module 1), - two with a loading length of 670m (half-module 2) Average railway platform wagon length of 19,6m Loading capacity per track (half-module 2): 670m/19,6m = 34 railway platform wagon Total track loading capacity (half-module 2): 2 x 34 PW = 68 railway platform wagon Throughput capacity per day (half-module 2): (2) x 2 x 34 PW x 1,6 TEU/PW x 1,3 (TOF) = 282 TEU per day - (2) = inbound and outbound - TOF = track occupancy factor Total throughput capacity per day (half-module 1+2): 257 TEU per day (half-module 1) + 282 TEU per day (half-module 2) = 539 TEU per day Throughput capacity per year (half-module 2): 250 WD per year x 282 TEU per day = 70.500 TEU per year - WD = working day Total throughput capacity per year (half-module 1+2): 250 WD per year x 539 TEU per day = 134.750 TEU per year - WD = working day Mobile handling equipment: - 4 x reach stacker (lifting capacity 42t) - handling capacity: max. 20 LU per hour or optional - 2 x RTG crane (capacity under spreader 40t) + 2 x reach stacker (lifting capacity 42t) - handling capacity RTG: max. 25 LU per hour
Figure 13: Container Terminal – Cross Section of the Combined Transhipment Module
Author: INROS LACKNER AG
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2. Container Service Centre (No.2) Table 7: Overview Container Service Centre – Dimensions and Specification No. Functional Description remarks and justification Modules 2 Container Service Centre Dimensions Total area of Container Service Center 57,000 sqm 2.1 CFS Container Packing Centre gross area [m²] 7 500 stripping and stuffing of containers, size (length and width) 150m x 50m with integrated office, lightweight height 1 floor construction, (concrete, steel, light clear height 6,50m metal) 2.2 Container Wash, Container Repair gross area [m²] 2 500 workshop with integrated office size (length and width) 50m x 50m facilities, lightweight construction height 1 floor (concrete, steel, light metal, wooden clear height 6,50m truss) 2.3 LU Equipment and Maintenance gross area [m²] 1 200 workshop with integrated office size (length and width) 40m x 30m facilities, lightweight construction height 1 floors (concrete, steel, light metal, wooden clear height 3,00m truss) 2.4 Container Terminal Administration gross area [m²] 1 500 office building for administration, size (length and width) 50m x 30m dispach management, office space height 2 floors to rent clear height 6,50m 2.5 Container Depot gross area [m²] 15 900 paved area, heavy construction ground slots 244 Full loading units storage areas (incl. stacking height / 4 high = 976 TEU Refrigerated, dangerous cargo) number of total slots 5 high = 1.220 TEU Empty loading units storage areas 2.6 Reefer Slots size (length and width) 25m x 11m 3 Stacking height Reefer Slots for 40' Container number of ground slots 8 Interim storage for loading units total number of slots (40'- 24 Cont.) 2.7 Control Gate staff office two office container container construction (2x); gross area [m²] 15 two automatic entrance lane, two automatic exit lane size (length and width) 6 m x 2,50 m
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3. Customs Terminal (No.3) Table 8: Customs Terminal – Dimensions and Specification No. Functional Description remarks and justification Modules 3 Customs Terminal Dimensions Total area of Customs Terminal 50,000 sqm 3.1 Gate staff office container construction; gross area [m²] 15 one automatic entrance lane, size (length and width) 6 m x 2,50 m one automatic exit lane 3.2 Bonded Warehousing gross area [m²] 7 000 incl. administration and staff office, size (length and width) 100m x 70m lightweight construction (concrete, height 1 floor steel, light metal) clear height 8,00m 3.3 Open Customs Storage gross area [m²] 15 600 size (length and width) 180m x 88m 3.4 TIR-Parking gross area [m²] 14 400 size (length and width) 124m x 20m stage 1: 25 number of truck parking slots stage 2+3: 74 3.5 Administration office (TIR-Parking) gross area [m²] 15 container construction for size (length and width) 6 m x 2,50 m administration, dispatcher height management
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4. ILC Service Centre (No.4) Table 9: Overview ILC Service Centre – Dimensions and Specification No. Functional Description remarks and justification Modules 4 ILC-Service
Dimensions Total area of ILC- Service Centre 20,000 sqm 4.1 Customs Building / ILC-Administration area [m²] 1 000 size (length and width) 40m x 25m office building for administration, height 1 floor dispatcher management, customs clear height 4m 4.2 Restaurant / Canteen gross area [m²] 1 200 size (length and width) 40m x 30m lightweight construction height 1 floor (concrete, steel, light metal, wooden clear height 3m truss) Hotel gross area [m²] 450 size (length and width) 30m x 15m real estate facility height 2 floor clear height 6m 4.3 Gas-Station, Car Wash, Garage gross area [m²] 3 150 workshop with integrated office, size (length and width) 70m x 45m lightweight construction, (concrete, height 1 floor steel, light metal,) clear height 6,5m 4.4 ILC-Gate 2 staff offices container construction; gross area [m²] 15 two automatic entrance lanes size (length and width) 6 m x 2,50 m two automatic exit lanes
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5. Logistics Service Facilities (No.5) Table 10: Overview Logistics Service Facilities – Dimensions and Specification No. Functional Description Remarks and justification Modules 5 Logistics Service Facilities Dimensions
Total area of logistics service facilities 168,000 sqm 5.1 General Warehouse gross area [m²] 7 200 size (length and width) 120m x 60m incl. administration and staff office, lightweight construction (concrete, height 1 floor steel, light metal) clear height 8,00m 5.2 General Warehouse gross area [m²] 9 100 incl. administration and staff office, size (length and width) 130m x 70m lightweight construction (concrete, height 1 floor steel, light metal) clear height 8,00m 5.3 General Warehouse gross area [m²] 9 100 incl. administration and staff office, size (length and width) 130m x 70m lightweight construction (concrete, height 1 floor steel, light metal) clear height 8,00m 5.4 Temperature Guided Warehouse gross area [m²] 4 900 incl. administration and staff office, size (length and width) 70m x 70m lightweight construction (concrete, steel, light metal); height 1 floor additional 4.900 m² extension area clear height 8,00m 5.5 Freight Forwarding Facility gross area [m²] 7 000 incl. administration and staff office, size (length and width) 140m x 50m lightweight construction (concrete, steel, light metal); height 1 floor Intersection between long-distance clear height 6,50m and short-distance 5.6 General Warehouse gross area [m²] 9 800 incl. administration and staff office, size (length and width) 140m x 70m lightweight construction (concrete, height 1 floor steel, light metal) clear height 8,00m
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6. Logistics intensive Industries and Trade (No.6) Table 11: Overview Industries and Trade – Dimensions and Specification No. Functional Description Remarks and justification Modules 6 Logistics Intensive Industries and Trade Dimensions Total area of LIIT 103,000 sqm 6.1 Production or Processing and Storage Facilities
gross area [m²] 13 600 Light industry facilities; Storage areas for general and project cargo; size (length and width) (60m x 60m) + (200m x 50m) lightweight construction (concrete, steel, light metal, wooden height 1- 2 floor truss)
6.2 Production or processing facilities gross area [m²] 7 200 Light industry facilities; lightweight construction size (length and width) 120m x 60m (concrete, steel, light metal, wooden height 1 - 2 floor truss) 6.3 Production or processing facilities gross area [m²] 7 200 Light industry facilities; lightweight construction size (length and width) 120m x 60m (concrete, steel, light metal, wooden height 1 - 2 floor truss)
5.4.2 Stationary and Mobile Equipment In this chapter the main required mobile equipment as well as stationary technical equipment for the future ILC are listed together with key technical parameters.
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1. Combined Transhipment Module (No.1) Table 12: Combined Transhipment Module – Survey of Mobile Handling Equipment no. description number technical specification example: of manufacturer 1 Reachstacker 2 e.g. Kalmar stage 1: 2 operating data optional and on demand: stage 2: 2, - lifting capacity, max.: 42 tons 4 reachstacker in stage 3 or see no.2 stage 3: 2 - stacking capacity: 5
2 Rubber Tyred Gantry Crane (RTG) 2 e.g. Konecranes stage 1: 0 operating data optional and on demand in stage 3 stage 2: 0, - capacity under spreader: 40 tons or see no.1 stage 3: 2
3 Terminal Tractor 4 e.g. Kalmar, MAFI stage 1: 1 operating data stage 2: 2, - vertical load capacity: 74,800 kg (fifth wheel) stage 3: 4 - pulling capacity: 108,000 kg (fifth wheel) - service weight: 6,600 kg - front axle load: 4,000 kg - rear axle load: 2,600 kg
dimensions - lengths: 4.993 mm - width: 2.500 mm - height: 3.655 mm - turning radius: 6.126 mm
power unit - diesel engine - engine power: 179 kW 4 Chassis 16 e.g. Houcon, D-TEC stage 1: 4 dimensions stage 2: 8, - lengths: 14.120 mm stage 3: 16 - width: 2.500 mm - height: 1.180 mm
5 Fork Lift - Diesel 1 e.g. STILL stage 1: 1, operating data stage 2: 1, - loading capacity: 6 tons see also technical information stage 3: 1 - service weight: 8.8 tons - e.g. STILL R 70-60 - front axle load fully loaded: 13.4 tons
6 Mobile Loading Ramp 1 e.g. RAWIE stage 1: 1, dimensions stage 2: 1, - ramp length: 8.800 mm stage 3: 1 - ramp width: 4.500 mm see also technical information - fixed height: 1.180 mm - e.g. MER-3 - ramp weight: 3 tons - load: max. 3 tons per car
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2. Container Service Centre (No.2) Table 13: Container Service Centre – Survey of Mobile Handling Equipment no. description number technical specification example: of manufacturer 1 Fork Lift Truck- Diesel 1 e.g. Kalmar stage 1: 1 operating data stage 2: 1, - loading capacity: 16 tons Container repair workshop and wash stage 3: 1 - service weight: 23 tons (no. 2.2) - lifting height: 5.000 mm - frontspreader: Drehtrainer type FSPR
2 Fork Lift - Electric 3 e.g. STILL CFS container packing centre (no. stage 1: 2 operating data 2.1): 2 pc, stage 2: 2, - loading capacity: 2.2 tons LU handling equipment and stage 3: 3 - service weight: 4.1 tons maintenance (no. 2.3): 1 pc - front axle load fully loaded: 5.7 tons
power supply - operational voltage: 400 V - input supply voltage: 20 kV - net short circuit power: 500 MVA
3 Reachstacker 1 e.g. Kalmar stage 1: 1 operating data Container depot (no. 2.5) stage 2: 1, - lifting capacity, max.: 42 tons stage 3: 1 - stacking capacity: 5
4 Empty Reachstacker 1 e.g. Kalmar stage 1: 0 operating data Container depot (no. 2.5), stage 2: 0, - lifting capacity, max.: 10 tons optional and on demand in stage 3 stage 3: 1 - stacking capacity: 5
5.4.3 Information and Communication Systems This subchapter provides a recommendation for the future information and communication systems with main focus on the Combined Transhipment Module (Container Terminal) and Container Service Centre. In the Container Terminal and Container Service Centre almost all defined main operational processes should be supported by a computerised Communication and Control System (CCS). Basic requirements for a CCS are: All ingoing and outgoing movements of cargoes and load units (loaded or empty) and vehicles on the rail-sides (trains, wagons and their cargoes) as well as on the road-sides (trucks and their cargoes) must be identified, and their data must be captured in the central database. All movements of cargoes and vehicles between the different functional areas and their actual positions and status data must be captured and updated in the central database. The unique data sets of each object (order, cargo unit, wagon, train) data should only be captured once, during the order process further status and position data are added. By this way, it must be insured that the actual position and status data of each single cargo unit and vehicle is available for online-retrieval (by authorised functions and personnel) at any time (tracking and tracing function based on real-time order processing status data base).
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All authorised management and operational staff must have “full visibility” of the actual position and status and progress of “their” cargo units and vehicles as well as occupation and “work status” of their facility and equipments. Customers and partners (other railways) must be served on requests for actual tracking and status data for their cargo unit or vehicle via data interfaces (Internet) or via telephone or fax. Customers and partners must be served for booking their cargo transport via online booking interface (Internet) or via telephone or fax. Exchange of train and wagon data with partners (other railways) must follow European rail standards and interoperability requirements. The CCS should be located in the Container Terminal Administration building (no. 2.4) including appropriate computer hardware and software (database and communication servers). Furthermore a central logistics management and information system which supports and informs the ILC customers should be implemented by the ILC administration. The further specification and implementation of such information and communication systems shall be done in close cooperation with the potential operators of the ILC and Container Terminal. 5.5 Soil Investigation Programme 5.5.1 Description of Required Soil Properties The new port of Baku at Alyat is in a master planning stage and will include an area designated for a logistics centre. The area of the dedicated logistics centre covers a length of 800 m and a width of 630 m, comprising a total area of approx. 500.000 m². Currently, the entire area is not in use. The area should be suitable for heavy duty traffic and heavy loads in general. The functional design of the area considers the following items: Traffic and parking areas Rail tracks Business and administration module Combined transhipment module and container service centre Customs terminal incl. TIR-Parking Storage facilities (bonded warehouse, general warehouses, temperature guided warehouses) Areas for industries and logistics service activities Service areas (energy supply, waste and water treatment, restaurant, gas station and garage, facilities for maintenance)
The investigation has to contain recommendations for construction and foundation of the paved area under consideration of the following loading parameters: 1. Container stack Maximum gross weight (DIN-ISO 668) 1 container 40‟: 30.48 t ≈ 304.8 kN Loading parameter: container stack, stacking height -> 4 container F= (4*304.8)/4 = 304,8 kN Dimensions of container support area: b x l = 0.19 m x 0.20 m = 0.038 m²
Бstack = 304.8 kN / 0.038 m² = 8021 kN/m²
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2. Reach stacker Front axle load of reach stacker with 40‟ container = 115 t ≈ 1150 kN Wheel support area: 0.55 m x 0.525 m 0 0.289 m²
Бwheel = 1150 kN / (4 x 0.289 m²) = 995 kN/m² 3. Rubber Tired Gantry Cranes (RTG) Dimensions: o width 4 + lane, o height: 1 over 4, o lifting height: 15,240 m o weight: 250 t Foundation and pavement in the sections of other facilities have to match the loads of the envisaged use. 5.5.2 Specification of Soil Investigation Programme The new port will be developed on a Greenfield site at 49°24‟ east and 39°56‟ north, prospectively covering an area of 400 ha. The port master planners ordered GeoGlobe to perform a first phase of a soil investigation in 2009. The soil investigation focused on general descriptions of soil characteristics, stability and settlements assessments for the port area and potential sources of filling material. Accordingly, the land was classified as low-lying – it has to be filled up by approx. 3 - 5 m. Furthermore, the area has a complicated soil structure, reaching from swamps, to mud volcano breccias and a typical semidesert complex covered with shrubs and sands. It is essential to know detailed information about soil conditions in advance of further planning. Therefore, it would be reasonable to investigate the main points of soil conditions. The trail borings have to be placed especially on the prospective areas of the railway lines, the container depot, the TIR-parking as well as on the areas of the different facilities and warehouses. The points marked in the layout plan show the places for the trail boring. Depending on the found soil layer and the envisaged utilization, the required drilling depth has to be determined. The documentation of the soil investigations has to match the standards of directive DIN EN 1997-1, DIN EN 1997-2, DIN EN ISO 14688, DIN EN ISO 22475-1 and DIN EN ISO 22475-2. The documentation has to contain the following specifications: Ground-water level at the time of the trial boring as well as the medium, the maximum and the 10-year ground-water level maximum Soil types, ground classes Moisture equivalent, consistency limit, grain-size distribution Frost-sensitivity of the found soil layer Compactness, allowable soil pressure of the found soil layer Compactibility of the found soil layer Soil infiltration ability/ water permeability of the found soil layer (the soil infiltration ability has to be evaluated) Stiffness modulus, coefficient of subgrade reaction, density and angle of friction of the found layer Statements to sinking sensitivity Statements to the existing contamination
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The positions of the trial boring points have to be marked on a layout plan with respect to the coordinate system and the top ground level. In consequence of the investigation, it is necessary to prepare solutions/variants/alternatives for the foundation of prospective superstructure and infrastructure network. Relevant documents to submit The results have to be supplied as follows:
1. Two copies on paper, placed in a DIN A4 folder with contents as follows: Documentation of the soil investigation Drilling profiles Levelling and mapping of the drilling areas on a layout plan (M 1:1000) 2. One digital copy on a CD-ROM Documentation of the soil investigation, saved as Word format (*.doc) or Excel format (*.xls) Drilling profiles, saved as DWG/DXF file
All costs concerning data and plan supply shall be included in the offer and have to be defined as additional charges. 5.6 Expansion Stages and Implementation Plan The specification and overview of the envisaged stages of development have been outlined in the following sections, with a brief implementation plan. Based on the potential market and customers demand, construction specifications are recommended in three development stages. Development Stage 1 Development stage 1 includes the following main functional modules or components: Combined Transhipment Module (No.1) with half-module 1 incl. two loading tracks (operated by reach stackers) and a new railway access. Container Service Centre (No.2) Customs Terminal (No. 3) with bonded warehouse (No. 3.2), open storage area (No.3.3) and TIR-Parking (No.3.4) ILC Service Centre (No.4)
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Figure 14: Master Plan Layout – Development Stage 1
Author: INROS LACKNER AG Development Stage 2 In addition, the development stage 2 contains the following main functional modules or components: Relocation and extension of TIR-Parking (No.3.4). General warehousing buildings (No.5.1, 5.2, 5.3). Temperature guided warehouse incl. extension module (No.5.4). Optional bypass track (No.1.1)
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Figure 15: Master Plan Layout – Development Stage 2
Author: INROS LACKNER AG Development Stage 3 In addition, Development stage 3 includes the following main functional modules or components: Combined Transhipment Module (No.1) with additional half-module 2 incl. two loading tracks (operated by reach stackers or optional by RTG cranes) Freight Forwarding Facility (No.5.5). General warehousing building (No.5.6). Production or Processing and Storage Facilities (No.6.1) Production or Processing Facilities (No.6.2, No.6.3).
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Figure 16: Master Plan Layout – Development Stage 3
Author: INROS LACKNER AG Initial Implementation Plan The following milestones and overall time schedule have been recommended for the future ILC development stages: Planning and engineering period 2013 - 2014 Start implementation phase 2014 Development Stage 1 2014 - 2016 Development Stage 2 2017 - 2019 Development Stage 3 2020 - 2024 End implementation phase 2024 Remark: The settlement of enterprises can be started from 2015 on market demand.
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5.7 Estimation of Investment Needs (Capex) The first estimation of required investment needs for each of the three envisaged stages of ILC development have been outlined in the following overview tables. The more detailed tables for each development stage representing all main positions are part of the appendix of Annex 5. Table 14: Overview Capex – Total of Development Stages 1-3
Pos. Construction measures Investment [€]
A Construction site preparation 15 168 000 B Infrastructure 5 226 000 B1 Transport infrastructure 2 624 000 B2 Utility infrastructure 2 602 000 C Transhipment and storage areas 3 690 000 D Buildings 6 110 000 E Handling Equipment and Facilities 1 110 000 F Safety and Security 511 000 G Other Facilities and Installations 893 000 subtotal (Pos. A - F) 32 708 000 H1 Planning, Surveying, Soil Investigation 3 271 000 H2 Contingency 1 635 000 total (Pos. A - G and H1 + H2) 37 614 000 thereof:
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Development Stage 1 Table 15: Overview Capex – Development Stage 1
Pos. Construction measures Investment [€]
A Construction site preparation 5 705 000 B Infrastructure 2 534 000 B1 Transport infrastructure 1 325 000 B2 Utility infrastructure 1 209 000 C Transhipment and storage areas 2 790 000 D Buildings 4 700 000 E Handling Equipment and Facilities 1 110 000 F Safety and Security 364 000 G Other Facilities and Installations 484 000 subtotal (Pos. A - G) 17 687 000 H1 Planning, Surveying, Soil Investigation 1 769 000 H2 Contingency 884 000 total (Pos. A - G and H1 + H2) 20 340 000
Development Stage 2 Table 16: Overview Capex – Development Stage 2
Pos. Construction measures Investment [€]
A Construction site preparation 4 374 000 B Infrastructure 1 279 000 B1 Transport infrastructure 380 000 B2 Utility infrastructure 899 000 C Transhipment and storage areas 0 D Buildings 600 000 E Handling Equipment and Facilities 0 F Safety and Security 77 000 G Other Facilities and Installations 312 000 subtotal (Pos. A - G) 6 642 000 H1 Planning, Surveying, Soil Investigation 664 000 H2 Contingency 332 000 total (Pos. A - G and H1 + H2) 7 638 000
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Development Stage 3 Table 17: Overview Capex – Development Stage 3
Pos. Construction measures Investment [€]
A Construction site preparation 5 089 000 B Infrastructure 1 413 000 B1 Transport infrastructure 919 000 B2 Utility infrastructure 494 000 C Transhipment and storage areas 900 000 D Buildings 810 000 E Handling Equipment and Facilities 0 F Safety and Security 70 000 G Other Facilities and Installations 97 000 subtotal (Pos. A - G) 8 379 000 H1 Planning, Surveying, Soil Investigation 838 000 H2 Contingency 419 000 total (Pos. A - G and H1 + H2) 9 636 000
5.8 Description of Main Logistics Procedures and Operations The main internal transport and logistics processes, operations and interactions will be provided by the following main functional modules: Combined Transhipment Module (No.1). Container Service Centre (No.2). Customs Terminal (No.3). These modules are involved in the handling of the cargo traffic flow through the ILC, and are systematically described in the following subchapters. Furthermore the corresponding main management and information processes are outlined. Operating and main logistics procedures – Combined Transhipment Module (No.1), Container Service Centre (No.2) incl. Container Depot (No.2.5) The combined traffic (combined trains, wagon groups and trucks) of loading units (i.e. contain- ers, swap bodies and semi-trailers) includes the following main functional interfaces and cargo flows: A – Combined Transhipment Module (CTM) The Container Terminal (CT) administration (No.2.4) comprises all main functions of manage- ment, administration, surveillance and control of all rail traffic flows and operations, the combined transhipment and gate operations. These CT administration functions are supported by the Communication and Control System (CCS).
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Trucks arrive via the new road accesses to the ILC-Gate area (No.4.4) for entrance control. Drivers will check in and drive to the Control Gate (No.2.7) and into the inside parking area, clear their documents (including export customs) at the CT administration counter hall and receive their entrance permit and loading guidance information. With the entrance permit and loading guidance information they drive to the assigned loading lane (No.1.2) position, to the Container Service Centre or Container Depot loading/unloading area. Optionally, and considering the approach of advanced electronically cleared cargo and truck drivers, trucks also can directly enter through an electronic gate express lane. From the gate area the internal road system leads directly to the assigned loading lane positions. Having been unloaded/loaded trucks drive either directly back to the Control Gate (in cases where exit has been cleared already during the entrance procedure) or they stop at the internal parking area to receive exit clearance at the CT administration counter hall. At the Control Gate the trucks will pass the first exit control. Thereafter at the ILC-Gate area the trucks further pass the second exit control and an automatic weighing machine (No.2.7) for a check on gross vehicle weight. In case of requiring customs clarification, they have to stop at the ILC Administration/Customs Building (No.4.1). 1. Arrival of combined train The combined trains (Ct-train) will arrive from the railway network via a new projected local railway connection at the projected shunting yard in the south-west of the new BISTP territory at Alyat. The main line locomotive will be replaced by a port shunting engine. If the Ct-trains are too long for the available track loading length (600 m) of the container terminal, they must be divided into half-trains or appropriate wagon groups. The half-train or wagon group will be shunted by a port shunting engine from the shunting yard via the internal port track system to an empty loading track (No.1.1) of the combined transhipment module (distance: about 2km). Technical control of platform wagons as well as the documentation of the cargo and the wagons will be carried out at this loading track. After unloading of a half-train or wagon group, potential defective platform wagons will be shunted out and directed to the new port shunting yard. 2. Unloading and loading of combined train The unloading and loading of half-trains or wagon groups will be carried out with reach stackers and optional RTG cranes under “standing method” procedure, therefore half- trains or wagon groups remain in the loading track during unloading and loading. After the platform wagons have reached their loading track positions the reach stacker or optional RTG drivers are directed, by instruction from the CT administration, to start the unloading process. The unloading of platform wagons is preferably made in the direct transhipment onto trucks which are available in the loading lane (No.1.2) or in the indirect transhipment by the temporary LU storage lanes (No.1.3). Containers destined for longer storage in the container depot (No.2.5) or for further processing in the container service centre (No.2) are unloaded on available chassis. The chassis are driven with terminal tractors to the container transfer area. There a reach stacker takes over and carries the containers into the container depot or container service centre. The loading of the platform wagons likewise preferably takes place via direct transhipment (if empty space is already available) from the trucks arriving on the loading lane or via
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indirect transhipment by the temporary LU storage lanes. The loading process starts early to ensure scheduled train departure times are met. In the case of rail-rail transhipment (long-distance shuttle or block train) the containers are handled directly between the platform wagons of these trains at the loading lanes or onto the LU storage lanes (only applicable for half-module 2 and optional operating by RTG cranes). Remark: In development stages 1 and 2 (planned first half-module 1), the unloading and loading of the wagons will be carried out by reach stackers. Optional and on demand also project cargo can be handled. The half-module 2 will be built in the development stage 3 and the handling processes optionally also can be performed by RTG cranes. 3. Departure of combined train Upon completion loading of a half-train or wagon group the technical control of platform wagons as well as cargo and wagons documentation will be carried out at the loading track. The half-train or wagon group is prepared for shunting (i.e. brake test). The half-train or wagon group will be shunted by a port shunting engine to the new port shunting yard. There the half-train or wagon group will be composed again with other wagon groups to a complete Ct-train. The mainline locomotive is coupled and the entire Ct-train is prepared for departure to the railway network. Remark: In the future departures of block or shuttle Ct-trains (max. length of 600m) may, as an option for saving valuable transport time, be made ready for departure on the loading tracks (including brake test) so that trains are directly taken by the mainline locomotive from the combined transhipment module to the railway network access. B - Container Service Centre The CSC service facilities comprise the Container Freight Station with Container Packing Centre (No.2.1), Container Wash and Repair Workshop (No.2.2), LU Equipment and Maintenance Area (No.2.3), the Container Depot (No.2.5) as well as the Container Terminal Administration (No.2.4). Forklifts are operated in the Container Packing Centre and in the Container Repair Workshop. The LU Equipment and Maintenance Area also includes the petrol station to provide for refuelling of all mobile equipment operating in the CTM, CSC and Container Depot. Loading units (LUs) for CSC services facilities are either unloaded from platform wagons directly to the transfer chassis or from the LU storage lanes to the transfer chassis. Those LUs on transfer chassis are trucked to the CSC-transfer area and taken over by the CSC-mobile handling equipment. The fork lift truck or optional reach stackers lift the containers and move them to the dedicated CSC service facilities. In the same way loading units from customer trucks are transferred to/from the CSC service areas. The Container Depot (No.2.5) maintains two major external interfaces, the delivery/reception of LUs from the CTM and Container Service Centre and the delivery/reception of LUs from other ILC areas or outside. The Container Depot comprises the LU storage area for empty and full containers including refrigerated and dangerous cargo. LUs for long-term storage in the Container Depot are either unloaded from platform wagons directly to the transfer chassis or from the LU storage lanes to the transfer chassis. The transfer chassis are trucked to the Container Depot-transfer area and taken over by the Container Depot-mobile handling equipment. The reach stackers lift the containers and move them to the
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International Logistics Centres for Western NIS and the Caucasus dedicated LU storage areas. In the same way loading units from customer trucks are transferred to/from the LU storage areas. The handling and transport of the loading units (loaded or empty containers and swap bodies) within the Container Depot will be done by reach stacker. Optionally the handling and transport of empty containers within the Container Depot will be carried out by empty reach stacker. C – Customs Terminal (No.3) The Customs Terminal includes the Gate (No.3.1), a bonded warehouse (No.3.2), the open customs storage area (No.3.3), the TIR-Parking (No.3.4) and the TIR-Parking administration office (No.3.5). Arriving trucks, with the destination customs terminal, drive first left and enter the logistics centre at the Gate for entrance control. Drivers will check in, clear their documentation at the ILC Administration/Customs Building (No.4.1) counter hall and receive their dispatcher inform- ation. Thereafter, they will drive on to the assigned Customs Terminal area (Bonded Warehouse, Open Customs Storage or TIR-Parking area). The TIR-Parking administration includes all main functions of management, surveillance and optional control of truck traffic flows to/from new BISTP. Having been unloaded/loaded trucks drive either directly back to the Gate (in cases where exit has been cleared already during the entrance procedure) or they stop at the internal parking area to receive exit clearance at the ILC Administration/Customs Building counter hall. At the Gate the trucks will pass the exit control and an automatic weighing machine (No.2.7) for a check on gross vehicle weight. ILC management and communication process The main ILC management and communication process is in general outlined in the following overview (see Figure 16). Thereby a systematically structure in five levels of control (top-down) will be recommended for the main ILC management and communication process: This top-down structure starts from the overall logistics management level (level 1) to the management levels of cargo (level 2) and train operations (level 3), container terminal security and surveillance (level 4) and the telecommunication network and interfaces as basic platform of all control processes (level 5).
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Figure 17: ILC management and communication process structure
ILC Management and Communication Process Structure
1. Logistics management+ control
2. Cargo management + control
3. Train management + control Rail signaling 4. Terminal security + surveillance system
External Internal Inter - 5. Telecommunication network Inter - faces faces
5.9 Organisational Structure and Operator Model A simple business model is proposed, illustrated in Figure 17 below. The Government of Azerbaijan will continue to own the site, but will lease it to the ILC Management Company – a private company which is yet to be identified. The lease agreement will provide for the Company and the Government to share investment costs. An agreed formula will relate the rental to the Government‟s cumulative investment. The business model chart shows the port as well as the ILC. This is because of the close relationship and synergy that will exist between them. The two will operate as independent commercial enterprises. The site will be divided into functional areas, as shown in the master plan, and parcels of land will be subleased to tenants (or settlers) by the ILC Management Company. In some cases the Government or the Company will have constructed buildings or other facilities on the land. In other cases the tenants will pay rent only for the land, together with the necessary common infrastructure, and construct their own buildings and facilities. In the case of the Combined Transhipment Module (CTM) it is envisaged that the bulk of the investment will be undertaken by the Government or the Company: railway tracks, switches and paving. It is important to attract a well experienced operator for the CTM, on which the success of the ILC as a whole will largely depend. Reducing the risk to the operator will make it easier to generate competitive interest in the right quarters. The ILC Management Company will be responsible for maintenance of the site, infrastructure and any facilities in which the Company or the Government has invested. These costs may be recovered through rentals paid by tenants, or through fees or other means. In this business model it is assumed that all such cost recovery by the Company is through rentals.
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Figure 18: ILC Alyat Business Model
Government of Azerbaijan
Ownership, Lease & management investment, agreement manage- ment ILC Management Specialist Company firms
Investment in land & selected facilities; ILC management Outsourced retention of ownership & investment services
New Baku ILC populated by tenants who undertake additional investment, Port provide services directly to customers and pay rent and fees to at Alyat the ILC Management Company
| ------INTERNATIONAL LOGISTICS CENTRE ------|
All lease agreements will require tenants to apply best management practices in the hiring, training and supervision of their staff, since the efficiency, safety and reputation of the ILC as a whole and all its tenants will be affected. 5.10 Identification and Calculation of Required Staff and Workstations The identification and initial calculation of required staff and workstations for each of the three envisaged stages of ILC development have been presented in the following overview tables. For the future ILC operation a two shift operation (operation time per working day: 06:00 – 22:00) has been supposed. 1. Combined Transhipment Module (No.1) Table 18: Overview Required Staff and Workstations: Combined Transhipment Module
no. functional description/ number shift sum sum sum classification workplace per shift operation stage 1 stage 2 stage 3 1. Loading Track (no. 1.1)
1.1 driver reach stacker 2 2 4 4 4 operational staff
1.2 RTG crane driver (stage 3) 2 2 4 4 4 operational staff
1.3 fork lift diesel driver 1 2 2 2 2 operational staff
2. Truck loading lanes (no. 1.2)
2.1 driver terminal tractor 1 2 2 2 2 operational staff
2.2 driver terminal tractor (stage 2+3) 1 2 2 2 operational staff 2.3 driver terminal tractor (stage 3) 2 2 4 operational staff
3. Loading staff office (no. 1.4)
3.1 loading master 1 2 2 2 2 operational staff
3.2 waggon inspector 1 2 2 2 2 operational staff total sum - Combined Transshipment Module 11 16 18 22
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2. Container Service Centre (No.2) Table 19: Overview Required Staff and Workstations: Container Service Centre
no. functional description/ number shift sum sum sum classification workplace per shift operation stage 1 stage 2 stage 3 1. Container packing centre (no. 2.1)
1.1 manager 1 1 1 1 1 administration staff 1.2 commercial clerk 1 1 1 1 1 administration staff
1.3 employee - stripping and stuffing 2 2 4 4 4 operational staff
1.4 driver fork lift - electric 1 2 2 2 2 operational staff
2. Container repair workshop and wash (no. 2.2) 2.1 manager 1 1 1 1 1 administration staff
2.2 commercial clerk 1 1 1 1 1 administration staff
2.3 employee - repair 2 2 4 4 4 operational staff
2.4 subsidiary worker (stage 2+3) 1 2 2 2 operational staff 2.5 employee - cleaning and wash 2 2 4 4 4 operational staff
2.6 driver fork lift truck- diesel 1 2 2 2 2 operational staff
3. LU handling equipment and maintenance (no. 2.3)
3.1 manager 1 1 1 1 1 administration staff 3.2 secretariat 1 1 1 1 1 administration staff
3.3 commercial clerk (stage 2+3) 1 1 1 1 administration staff
3.6 employee - repair and maintanenance 2 2 4 4 4 operational staff
3.7 driver fork lift - electric 1 2 2 2 2 operational staff 3.8 filling station attendant 1 2 2 2 2 operational staff
4. Container terminal administration (no. 2.4)
Central administration
4.1 terminal manager 1 1 1 1 1 administration staff 4.2 secretariat 1 1 1 1 1 administration staff
4.3 commercial clerk (stage 2+3) 1 1 1 1 administration staff
4.4 IT-manager 1 1 1 1 1 administration staff
4.5 control centre dispatcher 1 2 2 2 2 operational staff
4.6 scheduler 1 2 2 2 2 operational staff Customs clearance
4.7 customs officer 1 1 1 1 1 operational staff
4.8 employee - customs clearance and control 1 2 2 2 2 operational staff
5. Container Depot (no. 2.5) 5.1 employee - instructor and coordinator 1 2 2 2 2 operational staff
5.2 employee - instructor and coordinator (stage 3) 1 2 2 operational staff
5.3 driver reach stacker 1 2 2 2 2 operational staff
6. Control Gate (no. 2.7)
6.1 control counter 1 2 2 2 operational staff total sum - Container Service Centre 32 44 50 52
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3. Customs Terminal (No.3) Table 20: Overview Required Staff and Workstations: Customs Terminal
no. functional description/ number shift sum sum sum classification workplace per shift operation stage 1 stage 2 stage 3 1. Gate (no. 3.1)
1.1 control counter 1 2 2 2 2 operational staff
2. Bonded warehouse (no. 3.2)
2.1 sum - administration staff 8 1 8 8 8 administration staff
2.2 sum - operational staff 20 2 40 40 40 operational staff
3. Open customs storage (no. 3.3)
3.1 employee - instructor and coordinator 1 2 2 2 2 operational staff
4. Administration building (no. 3.5) 4.1 manager 1 1 1 1 1 administration staff
4.2 secretariat 1 1 1 1 1 administration staff
4.3 commercial clerk 1 2 2 2 2 administration staff
4.4 dispatcher 2 2 4 4 4 operational staff total sum - Customs Terminal 35 60 60 60
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4. ILC Service Centre (No.4) Table 21: Overview Required Staff and Workstations: ILC Service Centre
no. functional description/ number shift sum sum sum classification workplace per shift operation stage 1 stage 2 stage 3 1. Gas station/car wash/garage (no. 4.3)
1.1 manager 1 1 1 1 1 administration staff
1.2 secretariat 1 1 1 1 1 administration staff
1.3 commercial clerk 1 1 1 1 1 administration staff
1.4 employee - repair 2 2 4 4 4 operational staff 1.5 employee - car wash 2 2 4 4 4 operational staff
1.6 filling station attendant 1 2 2 2 2 operational staff
2. Restaurant/canteen (no. 4.2)
2.1 manager 1 1 1 1 1 administration staff
2.2 secretariat 1 1 1 1 1 administration staff
2.3 commercial clerk 1 1 1 1 1 administration staff
2.4 employees - restaurant and canteen 6 2 12 12 12 operational staff
3. Hotel (no. 4.2) 3.1 manager 1 1 1 1 administration staff
3.2 secretariat 1 1 1 1 administration staff
3.3 commercial management 1 1 1 1 administration staff
3.4 reception 1 2 2 2 operational staff
3.5 employees - hotel 4 2 8 8 operational staff
4. ILC administration/Customs building (no. 4.1)
4.1 managing director 1 1 1 1 1 administration staff
4.2 assistant 1 1 1 1 1 administration staff 4.3 secretariat 1 1 1 1 1 administration staff
4.4 commercial clerk (stage 2+3) 1 1 1 1 administration staff
4.5 commercial management 1 1 1 1 1 administration staff
4.6 manager logistics 1 1 1 1 1 administration staff
4.7 IT manager 1 1 1 1 1 administration staff
4.8 manager security 1 1 1 1 1 administration staff
4.9 customs officer 1 1 1 1 1 operational staff
4.10 employee - customs clearance and control 1 2 2 2 2 operational staff 4.11 security staff supervisor 1 3 3 3 3 operational staff
5. Gate (no. 4.4)
5.1 control counter 2 2 2 2 2 operational staff total sum - ILC Service Centre 38 43 57 57
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5. Logistics Service Facilities (No.5) Table 22: Overview Required Staff and Workstations: Logistics Service Facilities
no. functional description/ number shift sum sum sum classification workplace per shift operation stage 1 stage 2 stage 3 1 General warehouse (no. 5.1)
1.1 sum - administration staff 5 1 5 5 administration staff 1.2 sum - operational staff 25 2 50 50 operational staff
2 General warehouse (no. 5.2) 2.1 sum - administration staff 5 1 5 5 administration staff
2.2 sum - operational staff 35 2 70 70 operational staff 3 General warehouse (no. 5.3)
3.1 sum - administration staff 5 1 5 5 administration staff 3.2 sum - operational staff 35 2 70 70 operational staff
4 Temperature guided warehouse (no. 5.4) 4.1 sum - administration staff 5 1 5 5 administration staff 4.2 sum - operational staff 30 2 60 60 operational staff
5 Freight forwarding facilitiy (no. 5.5) 5.1 sum - administration staff 5 1 5 administration staff
5.2 sum - operational staff 20 2 40 operational staff 6 General warehouse (no. 5.6)
6.1 sum - administration staff 5 1 5 administration staff 6.2 sum - operational staff 35 2 70 operational staff total sum - Logistics Service Facilities 210 0 270 390
6. Logistics intensive Industries and Trade (No.6) Table 23: Overview Required Staff and Workstations: Industries and Trades
no. functional description/ number shift sum sum sum classification workplace per shift operation stage 1 stage 2 stage 3 Production or processing and storage facilities 1. (no. 6.1) 1.1 sum - administration staff 10 1 10 administration staff
1.2 sum - operational staff 50 2 100 operational staff
2. Production or processing facilities (no. 6.2)
2.1 sum - administration staff 8 1 8 administration staff 2.2 sum - operational staff 30 2 60 operational staff
2. Production or processing facilities (no. 6.3)
3.1 sum - administration staff 8 1 8 administration staff
3.2 sum - operational staff 30 2 60 operational staff total sum - Industries and Trade 136 0 0 246 The total sum of required staff for all main ILC functional modules at the final stage of development has been calculated as 462 per shift. Thereof the sum of indicated required staff for the main functional modules “Logistics intensive industries and trade” and “Logistics service facilities has been calculated at 346 per shift. Basis for this calculation have been average operating benchmark figures from comparable standard and modern facilities in Western Europe, which were adapted to practical experience in the current Azerbaijani transport and logistics sector.
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6 OVERVIEW AND ASSESSMENT OF STAFF KEY QUALIFICATIONS 6.1 Labour Market Overview As an indicator for the ease of employing labour force in Azerbaijan, the World Bank‟s Doing Business Index gives a quick overview of the labour market. The World Bank Index is based on a detailed survey of employment regulations completed by local lawyers and public officials in Azerbaijan. The index encompasses the following indicators measured on a scale from (0 – 100), where 0 corresponds to the level of easy and 100 to difficult. The five indicators included in the index are: The difficulty of hiring index, measures the applicability and maximum duration of fixed-term contracts and minimum wage for trainee or first-time employee. The rigidity of hours index, measures the scheduling of non-standard work hours and annual paid leave. The difficulty of redundancy index, measures the notification and approval requirements for termination of a redundant worker or a group of redundant workers, obligation to reassign or retrain and priority rules for redundancy and reemployment. The rigidity of employment index - a simple average of the difficulty of hiring index, the rigidity of hour‟s index, and the difficulty of redundancy index. The firing cost, measures the notice requirements, severance payments and penalties due when terminating a redundant worker, expressed in weeks of salary. Table 24: Overview World Bank’s Doing Business Index - Azerbaijan Indicator Azerbaijan Eastern Europe & OECD Average Central Asia Difficulty of hiring index (0-100) 0 31.9 26.5 Rigidity of hours index (0-100) 20 29.9 30.1 Difficulty of redundancy index (0-100) 10 25.9 22.6 Rigidity of employment index (0-100) 10 29.2 26.4 Redundancy costs (weeks of salary) 22 27.8 26.6 The Azerbaijan overall ranking of the Doing Business Index for 2010 is 33, which places Azerbaijan among the best and easiest countries when it comes to employing labour force. A total of 183 countries were assessed in the survey. SWOT analysis of labour market in Baku region In order to assess the staff key qualifications and the labour market conditions in the transport and logistics sector of Azerbaijan, a SWOT analysis has been undertaken. In general strengths and weaknesses should be seen as factors directly influencing the labour market, while opportunities and treats should be seen as external factors potentially influencing the labour market. The results of the SWOT analysis are presented in the matrix below.
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Table 25: SWOT Analysis: Labour Market in Baku Region – Transport and Logistics Sector
Strengths Weaknesses In 2000 4.5% of the labour force was active A rather limited available labour force. in the transport, distribution and Relatively low educated labour force. communications business, increasing to No variety of training institutions for the 5.2% in 2008. transportation industry. Positive tendencies in the level of Lack of skilled and experienced education. operational staff with qualified logistics The government has changed the and intermodal transport competences. educational system in line with the Bologna Lack of severe experience in logistics convention. management and marketing.
Opportunities Threats Further reforms of the education system Relatively low unemployment rate. are going to take place. Uncertain economic prospects for Evolve training plans for private Azerbaijan. organizations to enforce the qualifications The energy sector will attract the high of personnel in the logistics industry. potentials of the labour market. Import trainers and training modules in Economic and transport policy reforms logistics from EU countries. needed to strengthen the Azerbaijan The energy sector generates substantial labour market. tax income which can be used for education.
The overall objective of the SWOT analysis is to turn weaknesses and threats into respectively strengths and opportunities. The key strategy for this is training programmes for both workers with high management, middle management as well as operational and administrative staff within the transport and logistics sector. 6.2 Specification and Assessment of required Key Qualifications With the establishment of the new ILC in Alyat the staff requirements come down to a small team of professionals that are responsible for the final preparatory work before the actual inauguration of the Logistics Centre. The team should consist of the following members: - A General Manager: general specialist of the logistics sector with good networking and negotiation capabilities, good knowledge about cooperation between private and public stakeholders - A technical manager with a background in engineering and construction of logistic centres - A lawyer with specialisation in construction contracts for the owners or leasers of lots and facilities. The General Manager is also a vital member of the ILC management team after the opening of the ILC. Here the General Manager should work as Managing Director of the ILC and be in charge of further ILC development, expansion, new business opportunities as well as working acting as contact person for the Logistics Centre outwards to the public and the logistics industry. The technical manager and the lawyer will assist the general manager in the recruitment process for the Logistics Centre staff. Overall the educational background and professional experience required for the different levels of staff at a Logistics Centre can be summarized as follows:
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Table 26: Overall Required Educational Background and Professional Experience Management level Educational background: Professional experience ISCED High management University degree (M.Sc.) 5-10 years 5
Middle management – University degree 1-5 years 5 (administration staff) (B.Sc./M.Sc.) Middle management Vocational education and 1-5 years 3 (operational staff) training Operational and Secondary school + 1-3 years 3 administrative staff vocational training It should be noted that sufficient years of professional experience can replace the required education (e.g. a person with 10-20 years experience from low till high level in the transport and logistics sector, does not necessarily need an university degree to be able to fulfil his tasks satisfactory). With reference to the staff calculations and structure performed in chapter 5.11 the following matrixes for the staff key qualifications and need for professional training and general experiences have been made. In this context the required key qualifications for the overall management of the ILC are summarized in the section “ILC administration” (see Table 30). For the tables the following abbreviations are used to distinguish between (a) = administration staff and (o) = operational staff.
Combined Transhipment Module (no.1) Table 27: Overview Required Staff Key Qualifications: Combined Transhipment Module Loading track: Driver reach staker (o) - vocational education transport & logistics, driving license reach stacker RTG crane driver (o) - vocational education transport & logistics, license RMG crane Driver fork lift – diesel (o) - vocational education transport & logistics, certificate forklift driver Truck loading lanes Driver terminal tractor (o) - vocational education transport & logistics, driving license tractor Loading staff office - vocational education transport & logistics, course planning and Loading master (o) dangerous goods, 3 year working experience in transport and logistics sector - vocational education transport & logistics, course inspection, 1 year Wagon inspector (o) working experience in similar job
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Container Service Centre (no. 2) Table 28: Overview Required Staff Key Qualifications: Container Service Centre Container packing centre: - university degree (transport/technical or related), 3 years experience in Manager (a) transport and logistics sector, languages English and Azerbaijani (Azeri) Commercial clerk (a) - secondary school, commercial training certificate, languages English and Azerbaijani (Azeri), 1 year experience Employee - stripping and - vocational education transport & logistics stuffing (o) Driver fork lift – electric (o) - vocational education transport & logistics, certificate forklift driver Container repair workshop and wash: Manager (a) - university degree (transport/technical or related), 3 years experience in transport and logistics sector, languages English and Azerbaijani (Azeri) Commercial clerk (a) - secondary school, commercial training certificate, languages English and Azerbaijani (Azeri), 1 year experience Employee – repair (o) - technical vocational education Subsidiary worker (o) - technical vocational education Employee - cleaning and - technical vocational education or secondary school wash (o) Driver fork lift truck- diesel - vocational education transport & logistics, certificate forklift driver (o) LU handling equipment and maintenance: Manager (a) - university degree (transport/technical or related), 3 years experience in transport and logistics sector, languages English and Azerbaijani (Azeri) Secretariat (a) - secondary school, secretary training Commercial clerk (a) - secondary school, commercial training certificate, 1 year experience Employee - repair and - technical vocational education maintenance (o) Driver fork lift – electric (o) - vocational education transport & logistics, certificate forklift driver Filling station attendant (o) - technical vocational education CT central administration: Terminal manager (a) - university degree (economics, administration), 5 years experience in transport and logistics sector, languages English and Azerbaijani (Azeri) - secondary school, secretary training, languages English and Secretariat (a) Azerbaijani (Azeri) Commercial clerk (a) - secondary school, commercial training certificate, languages (English, Azerbaijani (Azeri), 1 year experience IT-manager (a) - university degree IT, min. 3 years experience similar job - vocational education transport & logistics, 1-3 years experience similar Control centre dispatcher (o) job - vocational education transport & logistics, 1-3 years experience similar Scheduler (o) job Customs clearance: Customs officer (o) - vocational education transport & logistics, customs certificate, 1 to 3 years experience similar job Employee - customs - vocational education transport & logistics, customs certificate clearance and control (o) Container depot: Employee - instructor and - vocational education transport & logistics, 5 years experience in similar coordinator (o) job Driver reach stacker (o) vocational education transport & logistics, driving license reach stacker Control gate: Control counter (o) -secondary school, vocational training logistics, security certificate
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Customs Terminal (no. 3) Table 29: Overview Required Staff Key Qualifications: Customs Terminal Gate: Control counter (o) -secondary school, vocational training logistics, security certificate Bonded Warehouse: - vocational training administration, customs certificate, 1-3 years Administration staff (a) experience in similar job, languages English and Azerbaijani (Azeri) Operational staff (o) - technical vocational training, customs certificate Open customs storage - vocational education transport & logistics, customs certificate, 3-5 Employee - instructor and years experience in similar job, languages English and Azerbaijani coordinator (o) (Azeri) Administration building: - university degree (transport/technical or related), customs certificate, 3 Manager (a) years experience in management, languages English and Azerbaijani (Azeri) - secondary school, secretary training, customs certificate, languages Secretariat (a) English and Azerbaijani (Azeri) Commercial clerk (a) - secondary school, commercial training certificate, customs certificate, languages English and Azerbaijani (Azeri), 1 year experience - vocational education transport & logistics, customs certificate, Dispatcher (o) languages English and Azerbaijani (Azeri)
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ILC Service Centre (no. 4) Table 30: Overview Required Staff Key Qualifications: ILC Service Centre Gas station/car wash/garage: - university degree (transport/technical or related), 3 years experience in Manager (a) management Secretariat (a) - secondary school, secretary training Commercial clerk (a) - secondary school, commercial training certificate, 1 year experience Employee – repair (o) - technical vocational training Employee - car wash (o) - technical vocational education Filling station attendant (o) - technical vocational education Restaurant/canteen: Manager (a) - university degree (food / catering business), 3 years experience in restaurant sector Secretariat (a) - secondary school, secretary training Commercial clerk (a) - secondary school, commercial training certificate, 1 year experience Employees - restaurant and - secondary school canteen (o) Hotel: Manager: (a) - university degree (hotel management), 3 years experience in hotel business, languages English and Azerbaijani (Azeri) - secondary school, secretary training, languages English and Secretariat (a) Azerbaijani (Azeri) Commercial management - university degree (marketing), 3 years experience in hotel business, (a) languages English and Azerbaijani (Azeri) - secondary school, hotel reception training, languages English and Reception (o) Azerbaijani (Azeri) Employees – hotel (o) - secondary school ILC administration/customs building: - university degree (transport/technical or related), 5-10 years Managing director (a) experience in transport and logistics sector, languages English and
Azerbaijani (Azeri) Assistant (a) - university degree (transport/technical or related), 1 year experience in transport and logistics sector, languages English and Azerbaijani (Azeri) - secondary school, secretary training, languages English and Secretariat (a) Azerbaijani (Azeri) Commercial clerk (a) - secondary school, commercial training certificate, languages English and Azerbaijani (Azeri), 1 year experience Commercial management - university degree (marketing), 3 years experience in transport and (a) logistics sector, languages English and Azerbaijani (Azeri) Manager logistics (a) - university degree (transport/logistics), 3 years experience in transport and logistics sector, languages English and Azerbaijani (Azeri) IT manager (a) - university degree (IT), 3 years experience in similar job - university degree (transport), security training certificate, 3-5 years Manager security (a) experience in transport and logistics sector, languages English and
Azerbaijani (Azeri) Customs officer (o) - vocational education transport & logistics, customs certificate, 1 to 3 years experience similar job Employee - customs - vocational education transport & logistics, customs certificate clearance and control (o) Security staff supervisor (o) - vocational education, 3-5 years experience in transport and logistics sector, languages English and Azerbaijani (Azeri) Gate: Control counter (o) -secondary school, vocational training logistics, security certificate
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Logistics Service Facilities (no. 5) Table 31: Overview Required Staff Key Qualifications: Logistics Service Facilities General warehouse: Administration staff (a) - vocational training administration, logistics management, marketing Operational staff (o) - technical vocational training, forklift certificate Temperature guided warehouse: Administration staff (a) - vocational training administration, logistics management, marketing Operational staff (o) - technical vocational training, forklift certificate Freight Forwarding facility: Administration staff (a) - vocational training administration, logistics management, marketing Operational staff (o) - technical vocational training, forklift certificate
As it can be seen from the tables a higher education, similar to ISCED level 5, is mainly expected for the share of the staff which has managerial responsibility. ISCED level 5 is similar to educations on university level. While for others, a vocational education similar to ISCED level 3, education at upper secondary level, is required to perform the needed tasks satisfactory. For many of the positions 1-3 years of experience within the transport and logistics sector is required. Due to possible limited experience and expertise within the local transport and logistics sector, the employment of workers with less experience than 3 years will be needed. For positions with managerial and administrative responsibility some of the most important skills will be that the persons are strategically focused and visionary, are good in coaching and team building, have experience from project management and process optimizing, are aware of quality management systems and finally have the foundation for creating good collegial management styles. For the operational staff good characteristics are ICT and e-skills, technical knowledge, analytical and process optimizing skills and flexibility. According to the database on education from UNESCO‟s Institute for Statistics, a total of 50.386 students graduated from tertiary education programmes in Azerbaijan in 2009. The number of student graduating is 18.000 higher or 56% higher compared to 2008, and is showing a very positive tendency in the level of education in Azerbaijan. The graduates on a tertiary level with a possible future within transport and logistics are split within the following educations. Table 32: Graduates in Different Programmes, Tertiary Level
2008 2009 Graduates in Education 4.003 9.365 Graduates in Social Science, Business and Law 9.918 15.103 Graduates in Science 5.216 4.842 Graduates in Engineering, Manufacturing and Construction 2.599 3.139 Graduates in Services 1.889 3.844 The large numbers of available graduates within the fields of business and engineering indicates a high availability of skilled and qualified work force for several of the administrative positions as well as for some the operational positions at the Logistics Centre. The total labour force in Azerbaijan was in 2008 - 4.318.000 persons. The labour force by occupation was in 2008 split with 38,3% in agriculture, 12,1% in the industry sector and 49,6% in the service sector The latest updates (2009 red.) from the CIA fact book on unemployment rate figures, show that 6 % of the work force in Azerbaijan is without job, thus creating a good opportunity for filling out positions that requires less academic or vocational training.
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6.3 Recommendations for Selected Trainee and Qualification Programmes At the Azerbaijan State Technical University in Baku students can obtain a bachelor degree in logistics, marketing, business economy, management, etc. which can prepare them for a job in the transport and logistics business sector. The results and training programmes from the ongoing TRACECA project concerning - Strengthening of Transport Training Capacities in NIS countries, Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyz Republic, Moldova, Tajikistan, Turkmenistan, Ukraine, Uzbekistan could make a good starting point for an additional logistics training programmes for B.Sc. and M.Sc. students at the Azerbaijan State Technical University in Baku. This educational institute is a potential cooperation partners for this and other training programmes. During contacts to the learning environment in the TRACECA countries, particular interest was shown in components concerning training of trainers and development of training materials as an e-learning module. The expert team therefore advises that the e-learning module established on www.tracecatraining.org is used as a very good starting point for training courses and seminars in transport and logistics. The contents of the reports on the tracecatraining homepage is made in a way where both academics and non-academics can learn from them, although the training courses themselves should preferably be split between administrative and operational staff as the contents of the proposed courses is mainly made for people already having an academic background or being underway to obtaining a such. The training modules proposed includes the following modules: Transport Planning Investment Appraisal Multimodal Transport E-learning and Teaching Methods The module on Multimodal Transport could be of high significance for the operational staff. While the Transport Planning and Investment Appraisal modules are mainly for the administrative staff. As the Logistics Centre develops and traffic flows grows, there might be need for additional training in ICT systems and Supply Chain Management, but as a starting point the materials from the above mentioned project could deliver a good foundation which could be build upon. A benefit of the above mentioned program is that it has been adapted to the specific conditions and logistics tasks and challenges in the TRACECA countries and at the same time the training program is up to date (developed 2009-2010 red.) In overall the program will ensure that the employees are trained in the following: Table 33: Overview Required Trainee and Qualification Programmes
Learning module Mainly dedicated towards: Transport modelling Administrative personal and management Transport Policy and Infrastructure Planning Administrative personal and management Infrastructure Financing and Investment Appraisal Administrative personal and management CBA and Economic analysis Administrative personal and management Financial analyses and feasibility studies Administrative personal and management Logistics and supply chain management All staff Inland Waterway Transports and multimodality All staff Air and land transport modalities and multimodality All staff Logistics terminals in Central Asia All staff
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Depending on which modalities the Logistics Centre serves the training focus can be respectively increased / decreased to suit the requirements of the staff. In addition to the above mentioned learning modules, training courses needs to be established with regards to the following: Risk management (Transport safety and security regulations, accident prevention) ISO 9000 quality management standards ISO 14000 environmental management Dangerous goods handling Courses in additional and updated IT and ICT skills Courses in repair services and maintenance Where needed – language courses in English. The structuring of such courses should be done in a way, where the training needs for the individual worker is assessed initially. The Azerbaijan State Marine Academy (АSМА) is experienced in the field of giving professional training for the transport and logistics industry and can assist with training courses for the maritime aspects of the ILC. Providers of in-house logistics training by international logistics providers in Azerbaijan are also an opportunity which can be utilised to give professional training to new employees. Finally organisations like (ELA) the “European Logistics Association's”, (CLECAT) – the “European Association for Forwarding, Transport, Logistics and Customs Services” and (FIATA) the "International Federation of Freight Forwarders Associations” all offers assistance and guidance for managing logistics for all transport modes. As an additional service it is proposed that the employees at the new ILC at Alyat can be taught the content of the training modules at seminars and workshop in a form of on-the job training, which also could include the utilisation of the e-learning module. This will require training facilities within the ILC, which should be established fully in line with the principals of cost sharing of common facilities.
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7 ENVIRONMENTAL IMPACT ASSESSMENT 7.1 General Objectives of the Environmental Investigations The investigation was effected on a 2,000 m corridor around the planned ILC area (about 50ha) and is directly situated at the Caspian Sea, north of the city Alyat. The total space of the investigation area is about 1,840 ha. The investigation area mainly consists of desert. Besides, there can be found areas of mud volcanoes and some rather sparsely used industrial areas. The village Kotal forms the only residential area on the investigated territory. The area is mostly covered with tamarisk, without agricultural utilization. Its relief is plain; whereas the micro-relief of the plain consists of small sand dunes. Marine deposition has formed this area, and it is geologically considered to be a modern continental and new Caspian formation. Semi-desert and arid mild-hot climate types dominate the region. Diversity and phytomass of plant species are very limited, and plants change according to water and salina conditions of the area. Ephemers develop very well at young age. 7.2 Definition of the Investigation Area The investigation area is defined by desert. The nearest residential area (village Kotal, small settlement of some 30 houses) is located 700 m west of the planned new port. There is a disused sewage treatment plant in approximately 150 m distance to the planned area. The investigation area is situated south-west of the Caspian Sea, on the coastal area of south- eastern Gobustan. The studied area is the continuation of the Alyat Anticlinorium and other geological structures of the Gobustan folding. The Alyat anticlinorium resulted from the Dashgil and Alyat anticlines. The Alyat marine anticline is located in the lengthening of this ridge which extends into the sea and consists of productive strata and young Pliocene depositions. Researches revealed that the Gil Island mud volcano was created by fracture of the Alyat Ridge south wing. There are small tectonic fractures in the investigation area. However, these fractures run parallel to the area between north and south of the project area. The project area is located in a synclinal zone, which is filled with sedimentary depositions. The hydrological regime of ground waters near the coastal zone (200 m – 500 m) is related to perennial and seasonal changes of the Caspian Sea. In the coastal zone, where eolian depositions are spread, ground waters are located in a depth of between 0.2 m and 2 m. The mineralization degrees of these waters differ between 15.0 g/l and 20.9 g/l. Chemical compositions are chloride-sulphate, chloride-sodium and sodium-magnesium. In soil with alluvial-proluvial depositions, ground waters are found in a depth of 3 and 5 m – they mainly are salt waters with an overall mineralization degree of 6-8 g/l and chemical compositions like sulphate-chloride and chloride-sodium. The relief of the area primarily consists of Old Kvalyn-New Caspi abrasive accumulative lowlands. The surface of the lowland is flat and almost uncracked. The lowland between Alyat Cape and the city of Alyat is a narrow strip of 1-2 km width. The lowland rapidly widens to the south of Alyat city. Ridges and hills formed by anticlinal structures and mud volcanoes are isolated by low hills.
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The research area shows a complicated soil structure. This complexity is due to an absolute elevation of the area, the variety of soil-forming rocks, biological and hydrological conditions etc. Moreover, humidity conditions of the soil generate a specific area. Arid climate parameters created favourable circumstances for the formation of a semi-arid landscape as well as for relevant kinds of soil and vegetation. Besides, the arid and non hot climate allows a good development of desert and semi-desert salina which are covered with halophytes. A primitive gray salina type consisting of gray soils can be found widespread into western direction of - to the west of the Baku-Astara highway. This type has developed on young alluvial-proluvial and deluvial depositions having sparse vegetation. The amount of humus in these soils comprises 1.5 – 2 %, showing a high rate of carbonates and little nitrogen. The mechanical composition is heavily shaley. These soils, formed under high arid conditions, fissure during summer season, therefore they look like takyr. An arid hot semi-desert climate is specific for the area. The character of wind in the region is determined both, by wide-scale influence of global atmospheric circulation as well as by local atmospheric circulation and thermal conditions. The Caucasus in the west and the Caspian Sea in the east accelerate the passage of frequently repeated north-east (25.6 %) and north (23.8 %) winds through the area. Winds faster than 15 m/sec are possible to blow at any time in a year, however, they are more specific for the summer period. According to Alyat Meteorological Station, the annual wind speed average speed is 4.6 m/sec, the maximum speed can reach up to 28-32 m/sec. Besides, statistics show an annual probability of 22 % to 25 % for calm weather. Figure 19: Wind Directions for Alyat (According to Information from Alyat Meteorological Station)
The land near the coast and near Alyat city is not cultivated, there is only a small number of livestock pastured in swamp areas during spring/summer season In autumn / winter instead, arid areas with dispread halophytes are used as pasture land. Vegetation can be divided into two groups: • Semi-desert areas - they occupy most of the on-shore part; various swamps can be found, shrubs and halophytes are developed; • Coastal vegetation cover - swamps, alternating in their ephemer covers; coastal plants at sandy sea shores or within shallow lagoons.
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Micro-changes in landscape to north-west, south-east and south of Alyat city as well as into western direction of the Baku-Astara highway are directly represented in an expansion of vegetation. Saltmarshes (Salsola dendroides), flavoured saltwort (salsola crassa), camelthorn (alhagi psendoalhagi), tamarisk (Tamarix ramosissima) are widespread on saline lands of the area. Caspian kalidium (Kalidium capsicum), tumbleweed and ephemers prevail in small sand- hill plains. The spreading of wormwood, saltwort (Salsoletum), seablites (Suaeda) and flavoured saltwort varies on higher landscapes. These landscapes are formed by mud volcanoes, depending on the age of breccia. 21 species of reptiles were found in the project area and its surrounding territory. These species are specific to exist in Azerbaijan. There are four different species of hidden-neck turtles living in Eurasia, three of them could be found in Azerbaijan – these three also exist on the project area as well as in adjacent biotopes. It should be pointed out that one of these species, the spur- thigh tortoise (Testudo graeka), has been included in both, the Azerbaijani Red Book and the International Union for the Conservation of Nature and Natural Resources (IUCN) Red List. This species is considered to be globally endangered. 18 species of scaly reptiles were found on the project area. 11 of these belong to lizards and 10 species belong to snakes. It is worth to note that 11 out of 27 species of lizards and 10 out of 24 species of snakes living in Azerbaijan exist on the project area. 1571 individuals of 33 different species of birds could be counted in the continental part of the seaport project area during field observations on 14 and 15 August 2009. All of these birds are synanthropic. Rock pigeon and domestic sparrow prevail among them. And only European roller is enlisted in International Union for the Conservation of Nature and Natural Resources (IUCN) Red List. The closest protected sensitive areas to the project area are Gil Island, Gobustan state reserve and Shirvan National Park, located 20 km south of Alyat. Other sensitive areas in the South Caspian territory can also be considered to be potential receptors in transboundary perspective. More than 300 out of total 800 mud volcanoes on earth are located in the east of Azerbaijan, surrounded by the Caspian Sea region. Most of the mud volcanoes are in Baku and Absheron Peninsula whereas some of them are nominated as natural heritage.
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Figure 20: Land Utilization inside the Investigation Area
(map basic: google) Author: INROS LACKNER AG
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Figure 21: Future Sea Trade Port Area (Background Mud Volcano Area)
Figure 22: View of future Sea Trade Port Area towards Alyat
Existing Influences There is a great influence of anthropogenic factors on relief formation. The coastal zone of the area, especially around Alyat and the Pirsaat Capes are rich of yellow marine sands which is an expensive construction material. This sand layer lays at 40 cm to 50 cm beneath the surface.
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Sands are exposed to wind after excavation and form sand dunes and knolls of 1.5 m to 2 m height. Moreover, heavy-duty tipper trucks - transporting sand from the coastal plains - damage the hard surface layer as they pass through and leave deep traces which afterwards turn into hollows. Due to the fact that local sands are used as construction material, the soil layer has been removed. The further one gets away from the sea, into northern and southern direction of the area, the more the landscape relief shows a significant modification. The extraction of sand in these areas after removing the solid top layer caused the sand being blown all over the area, creating small sand dunes. Anthropogenic factors have a negative effect on the development of vegetation in the area. In addition, exploitation of sand pits, spontaneously operated 200 m to 300 m away from the coast, destroys the roots of area specific plants (ephemers, wormwood and tamarisk). The soil top layer, where vegetation is normally developed, was totally carried away for sand extraction. Natural rehabilitation of these plants is impossible in this case. Besides, more soil and vegetation are going to be destroyed as sand-pits expand and the environment of the surrounding areas is polluted. Sewage is discharged by people to the entire coastal zone in Alyat city. Fetid swamp biotope expands to vast areas between the coastline and the town where common reed (phragmites australis) and other swamp vegetation could usually develop well. Swamp vegetation is widespread along the coastal zone north of Alyat town, extending to Alyat Cape sometimes as wide as 150 m to 200 m. Restrictions of these lagoon swamps - which are in the stage of formation - change due to perennial and seasonal fluctuations of the Caspian Sea level. Caspian calidium (calidium capsicum) is spread in a narrow corridor (radius 50 m to 100 m) along the coast, together with halophyte plants Swamps grow towards the inland along the coastline. 7.3 Overview and Conditions of the Used Data Base For this investigation, the Environmental Impact Assessment Report for the projected “Baku International Sea Trade Port” from November 2009 was mainly used. The data were detailed. Because of differences between the aero photo and the description of the area from the EIA- Report, additional investigations and measurements will be required to improve the data (concerning animals, habitats, landscape and residential areas). It will be necessary to find out, if the spur-thigh tortoise, which is found near the project area (see EIA Report figure 4.20), has a habitat inside the project area as well. The tortoise is an IUCN protected animal. Investigations regarding direct and indirect impacts on plants and animals (i.e. amphibians and reptiles), landscape, borders of protected areas are recommended. 7.4 Main Assessment of Environmental Risk Based on the status quo of the investigated area, the project is examined according to effects and impact on the environment. The significance of impacts can be seen in the sensivity overview in Figure 23.
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Figure 23: Sensivity in Relation to the Projected ILC Area
Author: INROS LACKNER AG Figure 24: Statistic Overview about the Sensivity
Author: INROS LACKNER AG
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About 90 % of the investigation area has a sensitivity assessed as „middle‟, „low‟ or even „very low‟ (see Figure 24 or statistics). The main assessment of environmental risk is „low‟. But due to added ecological and environmental risks, the overall assessment of environmental risk is „low to high‟ (Further investigations of the area can fix the value). Table 34: Main Assessment of Environmental Risk
Main Assessment of Environmental Risk: Very low Low Middle High Very high Classification Explanatory statement Environmental balance sheet for the investigation area (1) Environmental risks The investigation area has A very high environmental risk On 6,8 % of the investigation area (protected areas) A high environmental risk On 3.2 % of the investigation area (residential area, possible habitats of protected animals (periodic lake)) (2) Concernment of residential areas On 2.5 % of the investigation area Relevance for assessment: No (3) Ecological risks International nature protected Areas On 0 % of the investigation area (according IUCN definition) Relevance for assessment: No National/regional nature protected On 6.8 % of the investigation area Areas (i.e. Natural Parks) Relevance for assessment: No Claiming of special soil (like fenland) On 0 % of the investigation area Relevance for assessment: No (4) Landscape risks Reclamation of unimproved areas for On 2.4 % of the investigation area the project On 100 % of the project area Excavation, reclaiming On 100 % of the project area Relevance for assessment: Yes Special methods of Soil stabilization On 100 % of the project area Relevance for assessment: Yes Added relevance for valuation (1) Barrier effects (space resistance at the No level “very high” and “high”, also combined with residential areas (2) Large-scale effects (on protected No areas)
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(3) Initial level of pollution No (noise, air, soil, water) (4) Interaction with other projects Yes (Baku International Sea Trade Port)
(5) Miscellaneous (Short description) No The added relevance of assessment none criteria for valuation Result of the Environment Risk Assessment The level of the project risk of environmental impacts is mainly middle to high. Special project risks are the impacts to the nature. Special landscape risks must be added. It is necessary to replace the soil, because of the unstable and inapplicable sediments. According to a further investigation of the area it could be that the project risk can be lower, to find out it will be necessary to visit the area directly. 7.5 Potential conflicts with Environmental Factors According to the plan, residential areas in the investigation area are impacted by the project. The impacts caused by the ILC development are due to noise (traffic and logistics) and pollution (mostly by traffic). But the noise from the projected sea trade port will almost cover the noise from the envisaged ILC. It is unlikely that this effect would be additional. The land reclamation is the greatest impact of the projected ILC, as it reduces the biomass production. Potential land for biological processes will be lost. Habitats for protected animals will possibly be lost. This should be compensated (see chapter 7.6). In view of currently foreseeable impacts (sand dunes and water sewage), the project can even have a positive effect on the environment, as new standards effectively can be implemented. Noise and air pollution will have some influence on the residential area, because the area has been hardly developed. It is not likely that the groundwater will be influenced by the ILC project, if state-of-the-art technical measures are built in (for example oil separators for all water collecting on traffic areas, collecting of waste water and recycling of water in the container washing plants). 7.6 Conclusions and Prospective Compensation Needs For compensation of land reclamation it is necessary to find compensation measures for the plants and the animals living on the area. Therefore, it will be advisable to find an area with appropriate conditions to recultivate the vegetation, so that it could be a habitat for the kind of animals that are likely to be found in the project area (especially the Caspian turtle and the Spur-thigh tortoise and other amphibians, reptiles and birds. Considering such a situation of biodiversity, new artificial landscapes (using the areas of coastal territories) shall be created and covered with vegetation and small water bodies to replace old, structurally destroyed natural biotopes. These biotopes will then be inhabited by animals whose living space is affected or influenced by excavation and reconstruction works during the project implementation.
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8 BUSINESS PLAN 8.1 General Project Description The Government of Azerbaijan has decided to close the existing Baku International Sea Trade Port (BISTP) and build a new port at Alyat, 70km to the south. The Ministry of Transport has decided in the context of the present study, to develop an ILC adjacent to the port. The ILC would benefit from proximity to the port and from its strategic position at the junction of east- west and north-south roads and railway lines. The new ILC will be the only logistics centre in the country with inter-modal facilities and a wide range of logistics services in the country. When fully developed the ILC would have the following functional areas and facilities: Combined Transhipment Module, for rail/road transhipment and temporary open storage of containers. Container service centre, with storage, stuffing and stripping facilities, container repair facilities and open storage. Customs terminal, with bonded warehousing and open storage. ILC service centre, with administration building, equipment maintenance facility, gas station, garage, car-wash, restaurant/canteen and hotel. Logistics service facilities, comprising general and temperature-guided warehousing and freight forwarding facilities. Areas for own facilities industries and trade under long-term leasing contracts. The Government owns the land of the port under development as well as the 50 ha dedicated to the ILC and intends to retain the ownership. Most of the land swampy and requires costly draining and filling to make it developable. The Government intends lease the estate (on terms to be negotiated) to a private management company, which might also be a significant investor in site development. The extent of the Government‟s participation in investment is uncertain at present and will be guided by the findings of this study. The Consultant is preparing business plans (BPs) for four possible scenarios, summarized in the table below. The ticks indicate which capex items the Government would invest in under each scenario. The Business Plans are developed for a management company, hereafter referred to as the ILC Management Company. Table 35: Scenarios for Government Investment in ILC at Alyat Scenario Capital expenditure items 1 2 3 4 The land and making it developable by draining, filling and constructing an access road Common on-site infrastructure: internal roads and parking areas, utilities, fencing, lighting, signage, security cameras etc Combined Transhipment Module, including on- and off-site railway tracks and switches Selected buildings: administration offices, customs building, bonded warehouse, weighing station and vehicle services Approximate cost (€M at 2009 prices including planning, 10.3 15.9 21.7 27.8 surveys, soil investigations and contingency)
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8.2 Technical Details The technical details and master plan layouts are already described in Chapter 5 “Master Plan Description and Preliminary Design”. 8.3 Legal and Regulatory Matters The site is and will remain in Government ownership. Having high national priority, together with the new port, whatever legislative or administrative arrangements are necessary to ensure its implementation and success will be effected. 8.4 Assumptions 8.4.1 Cargo Throughput It is assumed that there will be recovery from the GFC in line with the latest IMF GDP project- ions. Unlike almost all other countries, Azerbaijan‟s economy has maintained strong growth through the GFC, with average growth of 8.8%pa between 2007 and 2010. This is entirely attributable to the oil/gas sector‟s performance and associated activity in construction and financial services. But the IMF projects a deceleration to less than 1% in 2012. The Consultant has adopted a long-term growth rate of 5%pa thereafter. Regional GDP statistics are used as a proxy for relative levels of production and consumption, and hence demand for logistics services. According to official statistics Baku is responsible for 45% of goods turnover, which may be taken as a proxy for its share of GDP and hence for its share of economic activity and consumption. As explained in section 4.1.3 above, it is assumed that Baku‟s primacy and its key role in the oil and gas industry also gives it a one-third share of logistics demand in the rest of the country. Official statistics on trade volume are known to be incomplete. For the base year (2007) they show total exports of 11.1Mt (84% crude oil and petroleum products) and imports of 2.7Mt. (98% food products). The Consultant estimates that 10% of exports and 21% of imports are containerisable and therefore LC-suitable: 1.7Mt in total. In recognition of the incompleteness of the statistics, and the absence of estimates for domestic and transit traffic (both expected to be small), an additional 0.1Mt of unspecified cargo is added to this base-year volume. Section 4.1.3 also discusses the likely impact of two major railway projects in Turkey: The new railway line from Kars (Turkey) to Akhalkalaki (Georgia), expected to be in oper- ation in 2012. The direct railway link from Europe to the Caucasus and Central Asia via Turkey, via the Marmaray Tunnel crossing the Bosporus, expected to be in operation in 2013. These projects are expected to generate total additional LC-suitable cargo of 0.53Mt per year, at base-year level. This total market has been disaggregated into the main cargo categories, distinguishing between exports, imports and other traffic. Two methods of projection have been employed: For endogenously determined demand, GDP growth x income elasticity of demand, with convergence towards „mature market‟ elasticities over time. For exogenously determined demand, annual growth rates estimated in consultation with stakeholders and in the light of the expected pace of global economic recovery. There is no empirical method of predicting market share. The consultant has adopted a market share of 70% across all cargo categories, unchanging over time. At present there is no comp-
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International Logistics Centres for Western NIS and the Caucasus etitor to the planned ILC, but it is recognized that not all cargoes will require intermodal handling or third-part logistics (3PL) services. Progressive development of the site will take place in phases, in response to actual demand and competitive market conditions. For business planning purposes it is assumed that Phase I will be completed in 2014, Phase II in 2017 and Phase III in 2020. 8.4.2 Revenue to the Operator The operator is the ILC Management Company which will lease the site from the Government, recovering its costs and deriving a profit by leasing land plots, buildings and other facilities to tenants. The consultant has adopted a set of assumed monthly rental rates per square metre, based principally on local market research and guided by estimated development cost: In addition the ILC Management Company will earn revenue from providing a range of ancillary services to tenants and users. These may include facility management, security, equipment leasing, marketing, logistics management and training. 8.4.3 Expenditures Capital expenditure (capex) has been estimated for each phase of development by: Estimating unit costs, based on consultation with stakeholders and reference to known unit costs for other projects. Estimating quantities, based on the master plan. This results in total capital expenditure of €29M at constant prices, phased as follows: Phase I ...... €20M Phase II ...... € 4M Phase III ...... € 5M Operating expenditure (opex) has been estimated for the final phase of development when the facility operating at full capacity. This ultimate figure has been used to estimate expenditure in each preceding year by making a judgement about the proportion of each expenditure item that: Is fixed, irrespective of the sale of the facility or activity level. Varies in proportion to scale, represented by cumulative capital investment in €. Varies in proportion to activity, represented by total cargo throughput in tonnes. A large component of the operating expenditure born by the ILC Management Company is the rent paid to the Government as land-owner and co-investor. The Consultant has assumed that the Government will negotiate a rental in the form of a fixed rate of return on its cumulative investment, indexed to the general rate of inflation. In the absence of guidance as to the required rate of return, the Consultant has used a rate of 7.5%pa. Initially all expenditures were estimated at constant prices (base year: 2009-10) before applying a projected inflation rate of 3%pa. The same inflation rate was applied to rentals and other revenue rates. 8.4.4 Financing Plan If the Government opts for Scenario 4 (see Table 35 above), the investment required from the ILC Management Company will be minimal, therefore no borrowing by the Company is envis- aged. With other scenarios, borrowing of between €4M and €14M should be possible and would enhance the returns to the Company. It is assumed that an IFI such as the EBRD would be
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International Logistics Centres for Western NIS and the Caucasus interested, given the potential strategic significance of the project and the strong support from the Government. In the full BP a financing plan is proposed for each Investment Scenario. 8.4.5 Financial Parameters It is assumed that ILC Management Company will be taxed normally with regard to its operation of ILC: Profit tax ...... 22% × profit conventionally defined. Dividend tax ...... 10% × dividends paid out. Social insurance ...... 22% × all remuneration expenses, paid by the employer. It is further assumed that the Company will adopt the following generally conservative financial management policies: Depreciation: A depreciation reserve will be built up using the (high) rates of depreciation allowed under the Azerbaijani tax system. Dividends: 70% of residual cash flow after making provision for depreciation, the remaining 30% going into a general reserve. Working capital: Assumed to be equivalent to 10% of annual gross revenue, financed by commercial bank borrowing. A financial discount rate of 15%pa (nominal, equivalent to 11.65%pa in real terms) is used to compute present values. This is considered to be a reasonable profit expectation of private investors in the present investment climate. 8.5 Marketing Strategy and Plan 8.5.1 Strategic Relevance of the Project A logistics centre in Alyat is deemed to be a modern intermodal and value-added services facility at the intersection of TRACECA and North-South Corridors. The logistics centre is adjustment to the new port of Baku. This new port will be the main hub on Caspian Sea providing a gateway to the southern Caucasus and Central Asia for Europe and China. The major maritime link on TRACECA will be to Aktau in Kazakhstan, followed by Turkmenbashi in Turkmenistan, the ports of Anzali / Amirabad in Iran, which belongs to the North-South corridor, is a part of the TRACECA route after accession of Iran to the Multilateral Agreement (MLA.) The link to Russia via the North-South corridor is potentially possible via Astrakhan or other ports at Russian shore. With improved maritime and port services, it will be the major TRACECA node on Caspian linking Europe to Asia. The ILC development will bring the following benefits: Improved containerisation and multimodal services along TRACECA corridor, develop- ment of new types of transport and logistics services to increase attractiveness of the TRACECA route in terms of liability, reduction of travel times, costs and environmental protection. Development of the new businesses in transport sector, contribution to the port attract- iveness as a central hub on the Caspian region and hence switch of cargo flows onto TRACECA corridor. Facilitation of intermodality and development of the container transportation on Caspian sea
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Linking node to the network of the logistics centres in Caucasus, Central Asia and log- istics terminals in Iran and Russia, thus contributing to the continuity of the transportation along TRACECA 8.5.2 Market Considerations There are no full-fledged logistics centres in Baku metropolitan region and in Azerbaijan. Some private enterprises are working on standalone initiatives and construct their own warehouses and storage facilities. The warehouses with some very basic logistics value added are located at Lenkoran Airport area, Gandja Airport area, Samur/Yalama (Russian border), Astara a (Iranian border), Qazakh (Georgian border - road), Yevlakh, new terminal for Murphy, Bertling cargo terminal, Sangachal Azerpetrol terminal, Sangachal fruit and vegetable consolidation point, or TransGloba, Panalpina, M&Ml distribution points. The most advanced node for transport and logistics, in area of Baku is Murphy Shipping and Commercial Services logistics facility some 30km south from Baku in Sahil. Still, this logistics centre is only used for cargo of clients of Murphy Shipping. The share of Murphy Shipping in the overall transportation of Azerbaijan is estimated at below 5%. At this location Murphy operates a rail/road and warehouse storage facility with a bonded warehouse service. Murphy is also offering airfreight and maritime services on case-by-case basis for clients. Additionally, Murphy has developed another terminal in Yevlakh, but on a smaller scale, for road and eventually rail transit traffic to and from Georgia. Still, these locations cannot be described as logistics centres, as these are service bases for one company only. Murphy competes in an open market with all other freight forwarders such as Blue Water, Transglobal, K&N, Bertling and Panalpina and has also to compete against the small companies. The Murphy facility cannot be considered as a competitive entity for the future ILC in Alyat. On the contrary, Murphy should be approached as a potential tenant at the ILC in Alyat. Alike, for many industrial and freight-forwarding enterprises, the situation with transportation chains and storage facilities selection will reduce overtime with establishment of ILC and port in Alyat. The container terminal and container freight station will definitely influence the current container transportation patterns in Azerbaijan. Companies would be challenged to adjust their transportation chains and work with centre in Alyat. At the same time, to reach the price advantages the companies will consider settling at logistics parks to benefit from service and price advantages offered for tenants. The ILC in Alyat will not be of importance for air cargo, as the site is located too far away from the international airport. The air cargo logistics market in Azerbaijan is served in a modern air cargo terminal at Baku Haydar Aliev International Airport in the North of Baku. The market is saturated by a local joint-venture for air cargo logistics. The air cargo market is not to be considered in the marketing development of the ILC in Alyat. The ILC in Alyat will also have strategic importance in the cold supply chain of Azerbaijani agricultural products. According to the World Bank investigations4, Azerbaijan has a comparative advantage in production of early spring vegetables, flowers and other fruits and vegetables. Still, the infrastructure facilities to support the cold supply chain are missing. This is being an issue of government concern. The establishment of the nodal ILC in Alyat fits to the redevelopment Azerbaijan‟s agricultural system is already in the redevelopment process. The government focuses on the development of food products that can be produced, canned and exported - not just to Russia and Turkey,
4 Azerbaijan Agricultural Markets Study FINAL REPORT - The World Bank June 2005
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International Logistics Centres for Western NIS and the Caucasus but also to the east. There is a rapidly developing commercial supply industry for food. In the Kazakh ports of Aktau and Atyrau, for instance, lots of these products are being flown in from Dubai and being sold in grocery stores all over the region. Cold storage and temperature-controlled warehouses, as well as international standard refrigerated trucks, are required to support the export of produce to world markets. Most of the cold storage facilities are small, private facilities that serve only the farmers who own them. Moreover, good quality refrigerated trucks are in short supply and charge very high rates. Most of the hauling vehicles are not refrigerated. The few that are refrigerated generally use refrigeration machines that are several generations behind current technology. Reefer containers could be stuffed or stripped for transhipments to the world markets in East and West provided the ILC in Alyat is equipped with required handling facilities. The ILC facility in Alyat envisages temperature controlled warehouses to meet the demand for settlers active in agricultural market and interested in improvement of cold-chain logistics system to support the export of Azerbaijan‟s produce to world markets. The ILC in Alyat is deemed to reinforce “farmer-to-market” linkages, contributing to promoting the agricultural development in Azerbaijan. 8.5.3 Promotion Approach The management and organisation business of the ILC in Alyat will be delegated to a manage- ment company to be selected by the site owner, the Azerbaijani Government. This management company will be also responsible for development, marketing and promotion as well as for administration. Development of the centre entails attracting investors and users. The novelty of ILC concepts requires pursuing marketing approach in two dimensions: 1. Comprehensive marketing of the whole ILC concept among investors and users as one hub. 2. Focused marketing of specific functional areas of the logistics centre (selective pro- motion) among investors and users. At the same time the Baku region should be promoted as a transport node and logistics hub on TRACECA and North-South corridors for attracting customers both on international and local level. The management company of the ILC is recommended to establish a business development department, directly responsible for positioning of the ILC at the freight and logistics market, with an adequate budget for marketing and promotional work directed to both public and private sectors. The marketing function is recommended to be outsourced to a professional promotion company. In the public sector, six major stakeholders have to be involved in the marketing approach: Government of Azerbaijan with its Ministries of Transport, Economy and Agriculture to promote the Azerbaijan as a regional logistics location, and to secure integration of the ILC Alyat into the nation wide transport master plans or agricultural development strategies. In addition, the Alyat ILC is in line with the Azerbaijani programme on reduction of the oil dependency of the economy. The PS IGC TRACECA in Azerbaijan to position the ILC as TRACECA unit and to enhance the synergies between TRACECA publicity and future ILC services. Such partnership is expected to generate a win-win situation for ILC Alyat and TRACECA. Customs of Azerbaijan to establish their services and facilities e.g. custom bounded warehouses and storage areas in Alyat ILC.
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CASPAR, Caspian Shipping company to direct the cargo to the port and to secure additional container transport in order to exploit the full potential of the container transportation across the Caspian. This issue should be addressed via the Governmental channels to create synergies, rather backlogs, for the performance of the Azerbaijani transport system in accordance with international standards. Azerbaijan Railways, to establish a partnership to integrate the Alyat into their block train operations. Management of the new port of Alyat to achieve synergies with port operations and to benefit from port infrastructure. 8.5.4 Marketable benefits Alyat ILC will offer several marketable benefits that have to be channelled to the potential investors and users respectively: The ILC is adjacent to the new port and will offer the most optimal handling and processing capacities for container cargoes. It is located closed to the intersections of the major transport routes, as well as close to centres of production and industrial basis The land is also envisaged for the industrial use and in full compliance with Baku urban development, which provides the substantial planning reliability for the investors and lease tenants. The project is supported by the Government of Azerbaijan, and was supported by the President of the Republic of Azerbaijan The customs facilities will allow the ILC to offer full customs clearance and bonded storage, both warehousing and secure open areas for all regimes: import, transit and export ones. No competitor owns such a large area of land with possibility of perspective development (50 ha+) so conveniently located, giving Alyat ILC an advantage in offering space and services to customers with large-scale operations; or in logistics activities which are inherently land-intensive. Possibility of processing of almost all freight flow of containers in Alyat junction point. The Ministry of Transport is a devoted promoter of the project. Early recognition of demand for logistics centres and pioneering the market will provide a competitive advantage in comparison to other players in the long run. The long-terms strategic thinking in development provides further comparative advantage in comparison to other companies that currently mostly follow opportunistic development paths. Ability to generate external economies of scale through concentration of freight and co- operation between different types of transport and other transport related companies in Azerbaijan. Potential for minimising of transaction cost due to the possibility to provide demanded facilities and services on a cost-sharing or pay-per-usage basis. Possibility for minimising a user company internal cost because of the externalisation of cost of services from a single company. At the same time the number of services and capacities offered by the centre as a whole is maximised. This effect produces a win-win situation for a logistics centre and for a single company. Synergy due to economies of scale and economies of scope. Synergy effect regarded to energy and water supply, operation of a centralised sewage system and communication and security services.
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Networking for improved supply chains of companies. With the concentration and co- operation between the companies in the logistics centre the activities can be distributed among the companies according to their competence. Each company may specialise and have more creative and innovative activities. Win-win image effect - A reputable logistics centre can contribute to the improved image of the companies settled there. Equally important is to attract some big-name companies to enhance the ILC‟s reputation at the first stage of development. A wide range of transport services offered at Alyat will help to generate competitive cost advantages, allowing competitive pricing of services. A concentration of professional services at lower cost at one location will attract new customers. This is likely to include some industrial enterprises which will see the opportunity to outsource their logistics functions to specialists. A consolidated service facility for agricultural production storage complies with the inter- ests of the agricultural producers. At the public sector level, the ILC offer a possibility for synergies between various public sector development strategies. For instance it allows upgrading the multimodal perform- ance of Azerbaijani transport system, contributes to increased containerisation and therefore to environmental protection, complies with the plans to improve the performance of the agricultural export industry of Azerbaijan. 8.5.5 Development Approach The development of the logistics centre requires attracting both investors and users, or a combination thereof. The role of the management company is to arrange the optimal tenants in this respect. The management company should work in close cooperation with the government of Azerbaijan, to assure adequate level of public support. The Government is equally interested in development of the ILC in Alyat taking into account the public good generated by the existence of the ILC and will strive to generate attractive conditions for investors. Private Developers/Investors The Alyat ILC is recommended to consider internal and external investors in private and inter- national development sectors. Government of Azerbaijan, the site owner, possesses budgetary funds for development and loan funds. The government could inter alia benefit from attracting the ENPI NIF instruments of the European Union provided private banking sector or development banks are financing the part of the project. IFC is interested to participate in the envisaged project stakeholder group. The logistics centres is among the interests of the IFC strategies. The ADB is one of the candidate banks to approach for external financing. The large sector players, especially Turkish ones, should be approached for development perspective. Attraction of investors should be implemented both using formal tools, as investor conferences or transport exhibitions, investment promotion publications as Invest in Azerbaijan and direct contacts to target groups. The Ministry of Transport is recommended to participate in the TRACECA investment forum to promote the ILC in Alyat and to establish contacts with potential investors. Then a meeting for core investor presentation and bilateral negotiation sessions in Baku could be organised with selected potential investors, key users and central stakeholders. However, to enhance concrete commitments a devoted work has to be on a bilateral basis with the interested companies. It is important to keep regular intensive contact to such companies or development institutions. It is also equally important to follow up the initiatives.
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Such actions have to be supported by PR activities to increase awareness of Logistics Centre at the future port of Baku. The Consultant recommends using Europlatforms for publications and networking. Core Users (Transport and Logistics Companies) Due to the fact that the capital level of the local companies is limited and is preferably applied to “mobile” equipment, leasing logistics facilities is preferable to investment. Thus, most of the facilities will be mainly leased to tenants. It is very important to finding and negotiating with an experienced international operator to invest and run the container terminal (CT). This is a matter of technical expertise and also access to markets. The rental agreed between the ILC operator and the CT operator shall take into account the former‟s investment in the CT. The operator for the container terminal should be identified and attracted to the site. This step should be implemented in parallel in cooperation with the Azerbaijani railways. For attracting core users, PR activities are needed. For instance press publications, present- ations and personal contacts are seen as the most effective marketing channels. Other Users Several potential logistics customers have been identified. However the real PR activities to be done closer to the implementation stage. Potential users have to be contacted, including invitation to Investors Conference, e.g. agricultural traders, food-processing industries, oil and petrol companies, recycling companies and others. Future interviews with stakeholders will show whether their interest is rather focussed on potential outsourcing of logistics processes to service providers than on establishment of own facilities. Therefore, the role of manufacturing and trade companies primarily have to be seen in conjunction with new (outsourcing) demand for logistics services, which may attract logistics companies to ILC. 8.5.6 Summary of Marketing Recommendations Establishment of a marketing department, directly responsible for the business develop- ment and positioning of the ILC at the freight and logistics market. The day-to-day work could be outsourced to a specialised company, which is common practice in the EU. Allocate budget line for marketing and promotion activities. Organisation marketing promotion at public and private levels at least among potential investors and users. Considering two fold marketing approach for the whole ILC concept among investors and users, and for specific function areas of the logistics centres (selective promotion) among investors and users. Involve the Government of Azerbaijan to start promotion of Baku region Azerbaijan as a major logistics hub. Work closely with TRACECA structures in Azerbaijan to benefit from the synergies of positive TRACECA image in Azerbaijan. Emphasise that ILC in Alyat is an integrator for the national strategic policies and strategies in the sphere of investment promotion, multimodal transport and agricultural development. Exploiting full potential of the ILC in Alyat is in line with the National Programme on reduction of the oil dependence of the economy. So this aspect has to be emphasised to generate further public support. Establishment of a partnership with Azerbaijani railways and international railway operators to integrate ILC Alyat into their block train operations. Channelling the marketable advantages to investors and users.
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Attraction of investors by formal tools, as investor‟s conference or transport exhibitions and bilateral contacts. Regular contact to targeted companies or development institutions and follow up. PR activities to increase awareness of the ILC at Alyat, including press campaigns, public- ation of promotion materials, advertisements and mailings, presentations, fair activities. Use of the EUROPLATFORMS for publishing the ILC idea and networking. Approach international big players in the logistics and transport markets, and especially Turkish logistics companies to discover their potential interest. Participation at TRACECA investment forum, organise a follow up meeting in Baku for potential investors, core users, major stakeholders Targeted bilateral work with companies interested in concrete development and cultivate the emerging initiatives Offering attractive lease conditions to established third-party logistics (3PL) providers with an existing strong customer base, who will also be well placed to promote the site‟s advantages to new customers. Finding and negotiating with an experienced international operator to run the container terminal (CT). This is a matter of technical expertise and also access to markets. The rental agreed between the ILC operator and the CT operator shall take into account the former‟s investment in the CT. Working with the future Baku port and the Customs Service of Azerbaijan Targeting manufacturing and other added-value activities that would benefit from access to large land areas, first-class transport access, especially to the port; and on-site customs services. Considering the construction options for storage, manufacturing or other facilities to lessees‟ specifications based on long leases, but with fair escape clauses. 8.6 Operations Plan A simple business model is proposed, illustrated in Figure 17 above. The Government of Azerbaijan will continue to own the site, but will enter into a lease agreement with the ILC Management Company – a private or joint venture company or a PPP model which is yet to be identified. An agreed formula for sharing investment costs will relate the rental to the Govern- ment‟s cumulative investment. 8.7 Financial Performance The financial performance of the planned ILC is shown in six standard tables in the full BP: Cargo Projection. Financing Plan. Profit and Loss. Cash Flow. Balance Sheet. Performance Indicators. On the basis of the Consultant‟s analysis, investment Scenario 3 is recommended, in which the Government would invest €21.7M in land, infrastructure and the CTM. This scenario offers the best balance between returns and risk. It is also the most stringent in that the Government undertakes infrastructural investment. The project would have a financial internal rate of return (FIRR) of 10%pa. The return to the ILC Management Company would be 14%pa.
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9 COST BENEFIT ANALYSIS 9.1 Socio-Economic Context and Project Objectives Section 4.2 provides an overview of the proposed project‟s expected socio-economic impact. A brief description of the socio-economic context of the project is presented here. Baku is the political, economic and commercial centre of Azerbaijan, and any transport/logistics facility will primarily serve Baku. Alyat is 70km from the city, though within the administrative district (rayon) of Baku City. The site was chosen because the Government had already decided to close Baku International Sea Trade Port (BISTP) and build a replacement port at Alyat. Being located the city, the present port has no potential for further growth and port-related traffic is not only a nuisance to the citizens but a cause of congestion. The planned ILC will be sited adjacent to the new port, but outside its premises. In addition to having the new port, Alyat is situated at the junction of the east-west and north-south railway lines, making it an ideal location for intermodal transfer services. On completion of the new port the ILC will have unrivalled access to sea, rail and road modes, within an hour‟s drive from the capital. Azerbaijan is an oil-rich country. Oil and gas account for 94% of industry, 56% of GDP and 90% of exports. By regional standards it has a high per capita GDP (US$5,200 at the official exchange rate, US$10,400 at PPP) and a trade balance equivalent to 18% of GDP. The country maintained rapid GDP growth through the GFC. However there is wide disparity between the oil-dominated urban/industrial sector and the rural economy. Labour productivity in the agricultural sector is only 10% of that in the industrial and service sectors. 24% of people are assessed to be living below the poverty line. There is a major internal refugee problem arising from the conflict with Armenia over Nagorno- Karabakh. There are an estimated 1 million internally displaced persons (IDPs), equivalent to 12% of the country‟s population. As one would expect, there is a wide difference between average incomes in Baku and else- where. According to official statistics the average income in Baku is almost triple compared to the rest of the country. The Garadagh District which is located next to Alyat, which has a population of 100,000 living in 11 townships and 13 villages along the coastline. A recent study of Alyat township found it to be depressed economically and socially. Some settlements are abandoned due to harsh conditions and lack of water. Since there are limited employment prospects, many people commute to Baku City or neighbouring regions. Social services and infrastructure are very poor. The project has the potential to provide employment opportunities in this depressed community, provided that training is also available. But the main impact is expected to be felt much more widely, not only in Azerbaijan but throughout the TRACECA corridor. The project objectives may be stated briefly as follows: To complement the new port at Alyat by providing modern intermodal facilities and a wide range of logistics services hitherto unavailable in Azerbaijan. To support Azerbaijan‟s efforts to diversify its economy and reduce regional and sectoral disparities. This will be done by reducing transport and logistics costs, thereby promoting investment and job creation. To create a logistics node at a critical point in the TRACECA corridor, at a major railway junction where rail, road and sea modes converge.
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To strengthen economic and other ties within the South Caucasus region, and between that region and its neighbours to the north (Russia), east (Central Asia), south (Iran) and west (Turkey and beyond). To promote intermodal transport, allowing significant modal shift away from road. The business plan presented in Chapter 8 sets out the projected cargo volumes, costs and revenues to the ILC operator. These can easily be monitored with the cooperation of the ILC operator and used as input to the EU monitoring and evaluation (M&E) system. The current chapter also presents the projected impacts on load factors and modal shares. These may also be monitored, though with less precision with respect to load factors. However their value as M&E tools is lower because it will never be possible to estimate which share of change may be attributed to the project and which to other causes. 9.2 Project Identification The ILC will be established by the Government of Azerbaijan adjacent to the new port at Alyat. It will be owned by the Government and managed by a private company under a lease agreement. Tenants will provide a range of services to customers. Facilities will comprise a combined transhipment module (CTM) connected to the national railway network; warehousing, open storage; TIR truck parking; a customs terminal, space for logistics-intensive industries and trading companies and a wide range of logistics services. The largest share of costs will be incurred to develop the new 50ha site. Some off-site works will be necessary to gain road and rail access and utility connections. These costs are included as project costs irrespective of the source of funding. Most measurable benefits will accrue to settlers/tenants of the ILC; and through them a wide range of producers, suppliers, consignors, distributors and consumers. A proportion of these benefits will be captured by the ILC Management Company in the form of rents and fees, and these revenues constitute the basis for valuing such benefits. In addition there will be benefits that accrue to the community at large and are not susceptible to capture. These will result from: Increased road vehicle load factors, allowing the same transport task to be performed with fewer vehicle-kilometres. Modal shift away from road transport in favour of rail. They will take the form of reduced external logistics costs, chiefly: transport infrastructure construction and maintenance. road accidents. air pollution. noise disturbance and
climate change, in particular CO2 emissions. An additional positive impact might be reduction of road congestion which is caused by moving the bulk of Baku‟s logistics activities away from the city. However, for two reasons there is no attempt to place a monetised value on it: There is no local traffic study which would allow an adequate estimate to be made for the city of Baku, The ILC will generate additional traffic which would increase congestion in Alyat. Through the new infrastructure the congestion is prevented and thus no additional benefits are
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caused. In other words, the ILC necessitates additional investment and maintenance to preserve the level of service. The project is also expected to enhance corridor competitiveness and, through efficiency gains, to promote economic development in Azerbaijan and in the related corridors. This in turn is expected to have a beneficial impact on employment and poverty alleviation. These are potentially the most significant benefits, but they are also the most difficult to quantify. Consequently, the consultant has chosen to discuss them in qualitative terms but to exclude them form the quantitative analysis – which may therefore be considered as a conservative approach. 9.3 Project Feasibility and Alternatives The without-project case (or business-as-usual case) is a continuation of the present situation. The logistics sector comprises basic facilities and services for transportation and storage. Inter- modal freight services are non-existent. The freight village model that allows many operators to offer complementary services on a single site and is now common in the EU, remains unknown in Azerbaijan. No other alternatives to the with-project and without-project case were considered. From the inception phase of the current study it was clear that the Baku region was the only feasible location for a major logistics facility. It was the Government‟s decision to close BISTP and build a replacement port at Alyat, and its willingness to provide a large area of land for an adjacent ILC, that became the only site shortlisted for analysis. 9.4 Financial Analysis Financial costs, both capital and operating, are extracted directly from the Business Plan (BP) without any adjustment. The same applies to the ILC operator‟s revenue, used conservatively as a proxy for internal project benefits. An explanation of this method, as well as the approach for estimating external project benefits is outlined in the Annex 3, Section 3.6.6. The project- specific input data for external benefits are summarised in Table 36, in the form of minimum, maximum and average values across the range of cargo categories. In general, it has been estimated that: Load factors will increase by 10 percentage points for short-haulage, and by 5 percentage points for long-haulage There will be a 10–15 percentage point shift of cargo in favour of rail, the lower figure applying to the traffic carried by the new rail links to/through Turkey. It is assumed that the construction of those links will be responsible for the largest share of the shift, with or without the project.
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Table 36: Input Data Ranges and Averages: External Benefits Min- Max- imum imum Average Enhanced load factors Cargo by road, without …………… %[a] 0% 0% 0% Average haul ………………….. km 60 60 60 LF without project ……………… % 40% 40% 40%
Short-haul LF with project ……………… % 40% 50% 47% Cargo by road, without …………… %[a] 50% 90% 78% Average haul ………………….. km 1,000 1,000 1,000 LF without project ……………… % 60% 60% 60%
Long-haul LF with project ……………… % 65% 65% 65% Modal shift from road to rail Cargo % shifted ……………… %[a] 10% 15% 14% Average haul before modal shift Road ………………………………… km 1,200 1,200 1,200 Rail ……………………………………….km 0 0 0 Average haul after modal shift Road ………………………………… km 200 200 200 Rail ……………………………………….km 1,300 1,500 1,331
a % relates to total cargo volume within a cargo category.
The output of the analysis takes the form of a cash flow projection up to the year 2033 and a set of standard performance indicators. These are presented in Table 37 below. It appears that: The majority of the measurable benefits are external to the project. This is partly because the internal benefits are attributed to the ILC Management Company‟s revenue (see Annex 3 „Methodology‟) and partly because a high proportion of exports and imports are carried by road over long distances. Of the external benefits, those attributable to enhanced modal shift somewhat exceed those attributable to enhanced load. The EIRR is very high at 34%pa. Other performance indicators are similarly robust. This good economic performance is partly due to the fact that much of the capital cost will be borne by tenants, and therefore not included here as project costs. In addition, external benefits from improved load factors and modal shift are high because of long haulage distances and good potential for shifting freight from road to rail. 9.5 Economic Analysis In the economic analysis costs and benefits were re-valued by applying shadow prices. For an explanation refer to Annex 3, Section 3.6.7. The results are presented in Table 38 below. The structure of this table is identical to that of Table 37 above, but with the addition of summarised results of the risk analysis. These appear as NPV values at five percentiles in the probability distribution. It appears that: The economic performance is somewhat superior to the financial, because the economic conversion factors (ECFs) applicable to costs are generally higher than those applicable to benefits.
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There is no risk that the NPV of the proposed project would fall below zero, using any of the three social discount rates. The project is, from a social point of view, well worth supporting.
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Table 37: Cash Flow and Performance Indicators (Financial)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Capital expenditure A Construction site preparation ……………………………3.3 3.3 1.7 2.0 B Infrastructure …………………………………………1.5 1.5 1.5 1.7 C Storage facilities ………………………………………4.3 4.3 1.0 D Transshipment facilities/equipment …………………0.6 0.6 E Miscellaneous ………………………………………….0.5 0.5 0.4 0.2 O&M expenditure A Personnel ……………………………………………………0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 B Utilities ………………………………………………………..0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 C Equipment …………………………………………….. D Miscellaneous ……………………………………………0.3 0.5 0.5 0.5 0.6 0.6 0.6 0.8 0.8 0.8 0.8 Benefits 1 Internal benefits ………………………...…..…………..…..………0.3 1.3 2.7 2.7 3.1 3.1 3.2 4.9 5.4 5.5 5.6 2 Congestion cost savings ...... 3 Enhanced load factor ………………………………………...…….0.2 1.0 1.7 1.7 2.2 2.2 2.2 3.8 3.9 4.1 4.3 4 Modal shift ………………………………………………...…………..0.3 1.2 2.0 2.0 2.6 2.6 2.6 4.5 4.7 5.0 5.2 Totals: Costs ...... 10.8 11.0 0.8 0.8 4.5 0.9 0.9 6.0 1.1 1.1 1.1 Benefits ...... 0.8 3.5 6.5 6.5 7.8 7.9 8.0 13.2 14.1 14.6 15.1 Net benefits ...... -9.9 -7.6 5.7 5.7 3.3 7.0 7.0 7.2 13.0 13.6 14.1
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Capital expenditure A Construction site preparation …………………………… B Infrastructure ………………………………………… C Storage facilities ……………………………………… D Transshipment facilities/equipment ………………… E Miscellaneous …………………………………………. O&M expenditure A Personnel …………………………………………………… 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 B Utilities ……………………………………………………….. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 C Equipment …………………………………………….. D Miscellaneous …………………………………………… 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 Benefits 1 Internal benefits ………………………...…..…………..…..………5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.6 5.7 2 Congestion cost savings ...... 3 Enhanced load factor ………………………………………...…….4.4 4.4 4.6 4.6 4.6 4.6 4.6 4.7 4.7 4.7 4 Modal shift ………………………………………………...…………..5.3 5.3 5.5 5.5 5.6 5.6 5.6 5.6 5.7 5.7 Totals: Costs ...... 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 Benefits ...... 15.3 15.4 15.7 15.8 15.8 15.8 15.9 15.9 16.0 16.0 Net benefits ...... 14.2 14.3 14.6 14.7 14.8 14.8 14.8 14.8 14.9 15.0
Performance indicators Social Discount Rate (SDR) Note 5.5% 10% 12% NA a EIRR Economic Internal Rate of Return ...... %pa 34% b MIRR Modified Internal Rate of Return ...... %pa 14% 16% 19% c NPV Net Present Value ...... EUR M 95 53 41 d Switching values: e Costs could change by ……………………………% 262% 176% 146% Benefits could change by ……………………………% -72% -64% -59%
Notes a A range of SDRs is used in order to satisfy the needs of different donors and lenders. b EIRR is that discount rate which produces a zero NPV. c MIRR introduces the assumption that net benefits (+ or -) are reinvested at the SDR. d The present value of the stream of net benefits, discounted at the SDR. In the risk analysis, NPV is also presented as a probability distribution. e Switching values are proportional changes in costs and benefits that give a zero NPV.
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Table 38: Cash Flow and Performance Indicators (Economic)
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Capital expenditure A Construction site preparation …………………………… 3.0 3.0 1.5 1.8 B Infrastructure ………………………………………… 1.4 1.4 1.3 1.5 C Storage facilities ……………………………………… 3.9 3.9 0.9 D Transshipment facilities/equipment ………………… 0.6 0.6 E Miscellaneous …………………………………………. 0.4 0.4 0.4 0.2 O&M expenditure A Personnel …………………………………………………… 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.3 0.3 0.3 B Utilities ……………………………………………………….. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 C Equipment …………………………………………….. D Miscellaneous …………………………………………… 0.3 0.5 0.5 0.5 0.6 0.6 0.6 0.7 0.7 0.7 0.7 Benefits 1 Internal benefits ………………………...…..…………..…..………0.3 1.3 2.9 3.0 3.5 3.7 3.8 6.1 6.9 7.3 7.6 2 Congestion cost savings ...... 3 Enhanced load factor ………………………………………...…….0.2 0.9 1.6 1.6 1.9 2.0 2.0 3.4 3.6 3.7 3.9 4 Modal shift ………………………………………………...…………..0.3 1.1 1.8 1.8 2.3 2.3 2.3 4.0 4.3 4.5 4.7 Totals: Costs ...... 9.7 9.9 0.7 0.7 4.1 0.8 0.8 5.4 1.0 1.0 1.0 Benefits ...... 0.8 3.3 6.3 6.4 7.8 8.0 8.1 13.5 14.7 15.5 16.2 Net benefits ...... -8.9 -6.6 5.6 5.7 3.7 7.2 7.3 8.2 13.8 14.5 15.2 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Capital expenditure A Construction site preparation …………………………… B Infrastructure ………………………………………… C Storage facilities ……………………………………… D Transshipment facilities/equipment ………………… E Miscellaneous …………………………………………. O&M expenditure A Personnel …………………………………………………… 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 B Utilities ……………………………………………………….. 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 C Equipment …………………………………………….. D Miscellaneous …………………………………………… 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 Benefits 1 Internal benefits ………………………...…..…………..…..……… 7.8 8.1 8.3 8.6 8.9 9.1 9.4 9.7 10.0 10.0 2 Congestion cost savings ...... 3 Enhanced load factor ………………………………………...……. 4.0 4.0 4.1 4.1 4.2 4.2 4.2 4.2 4.2 4.2 4 Modal shift ………………………………………………...………….. 4.8 4.8 4.9 5.0 5.0 5.0 5.0 5.1 5.1 5.1 Totals: Costs ...... 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Benefits ...... 16.6 16.9 17.4 17.7 18.0 18.3 18.6 18.9 19.3 19.4 Net benefits ...... 15.6 15.9 16.4 16.8 17.1 17.4 17.6 17.9 18.3 18.4
Performance indicators Social Discount Rate (SDR) Note Risk analysis 5.5% 10% 12% NA a Note EIRR Economic Internal Rate of Return ...... %pa 38% b Percentile NPV f MIRR Modified Internal Rate of Return ...... %pa 15% 18% 20% c 2.5 €M 52 g NPV Net Present Value ...... EUR M 110 62 48 d 25 €M 58 Switching values: e 50 €M 62 h Costs could change by …………………………… % 334% 226% 189% 75 €M 66 Benefits could change by …………………………… % -77% -69% -65% 97.5 €M 74 g
Notes a A range of SDRs is used in order to satisfy the needs of different donors and lenders. b EIRR is that discount rate which produces a zero NPV. c MIRR introduces the assumption that net benefits (+ or -) are reinvested at the SDR. d The present value of the stream of net benefits, discounted at the SDR. In the risk analysis, NPV is also presented as a probability distribution. e Switching values are proportional changes in costs and benefits that give a zero NPV. f For NPV calculation the default SDR is 10%pa. Values are in €M. g Percentles 2.5 and 97.5 are shown in preference to minimum and maximum values, which may be extreme. h The median value will be close to (but not identical to) the 'Most Likely' NPV.
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9.6 Risk Assessment The quantitative risk analysis applies a triangular probability function to each broad category of economic costs and benefits; computes the economic analysis 1,000 times with random numbers generated within those probability functions; and produces a probability distribution in place of a single economic net present value (NPV). The probability distribution is summarised numerically as five percentile values (presented in Table 38 above. It is presented graphically in Figure 25 below. Figure 25: Net Present Value as a Probability Distribution
30 40 50 60 70 80 90 NPV (EUR million at constant prices)
This quantitative analysis forms part of a wider risk assessment. The chief risks to the success of the proposed project are: Reluctance by consignors and transport service providers to take advantage of enhanced intermodal transport options. Reluctance by transport and logistics stakeholders, nationally or corridor-related, to coord- inate activities to the extent needed in order to achieve potential synergies. Competition from unforeseen sources, reducing the ILC‟s market share and consequently its throughput, to which all financial revenues and economic benefits are proportional. The principal strategy to counter these risks is to phase the development of the ILC parallel to growing demand, and in a manner that is responsive to the nature of that growth. 9.7 Distribution Analysis Because of Azerbaijan‟s oil wealth and the expectation that the economic benefits of the project will be widely dispersed, a formal distribution analysis and calculation of the poverty impact ratio do not seem useful in this case.
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10 RECOMMENDATIONS FOR PUBLIC PROMOTING AND SUPPORT It has already been decided that the estate will be provided by the Government, and that the Government will undertake a proportion of the necessary investment. As explained in Chapter 8, the Consultant recommends Investment Scenario 3 in which the Government would expend €21.7M (at constant 2009 prices, including costs of planning, surveys, soil investigations and contingency) on the following list of items: The estate and basic site development, such by drainage, filling and constructing an access road. Common on-site infrastructure: internal roads and parking areas, utilities, fencing, lighting, signage, security cameras etc. The combined transhipment module (CTM) including on- and off-site railway tracks and switches. This public investment will be recovered by payment of a rental fee paid by the ILC Management Company. Subject to advice from the Government of Azerbaijan, the Consultant has used a rental rate of 7.5%pa in the analysis. It is recommended that the ILC Management Company, supported by the Government, seeks loan funding from an International Financial Institution (e.g. the EBRD or EIB) for the larger share of planned investments.
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11 APPENDICES
Layouts Master Plan and Expansion Stages
Capex Items Tables
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] A Construction site preparation 5 705 000 A1 Earthworks: removing, backfilling, leveling, compaction 190 000 5,0 950 000 6 m³ 5 700 000 green spaces [20% of pos. B1.3 + traffic and parking area A2 5 200 1 m² 5 000 (no. 7)] B Infrastructure 2 534 000 B1 Transport infrastructure 1 325 000 B1.1 New private road with road access 290 10,0 2 900 25 m² 73 000 B1.2 Internal road system 1 710 10,0 17 100 25 m² 428 000 B1.3 TIR parking area (no. 3.4) 6 600 25 m² 165 000 B1.4 Railway access 70 350 m 25 000 B1.5 Container terminal - Loading tracks (no. 1.1) 1 600 350 m 560 000 B1.6 Container terminal - single switches 3 25 000 pc. 75 000 B2 Utility infrastructure 1 209 000 B2.1 Electricity 1 600 100 m 160 000 B2.2 Water (potable water, fire fighting water) 1 660 200 m 332 000 B2.3 Drainage 2 100 200 m 280 000 B2.4 Sewage 1 400 120 m 168 000 B2.5 Separator 1 45 000 pc. 45 000 B2.6 Communication 1 600 140 m 224 000 C Transhipment and storage areas (CT) 2 790 000 C1 Combined Transhipment Module area (no. 1), 67.000 m² 30 000 45 m² 1 350 000 C2 Container depot storage area (no. 2.5) 16 000 45 m² 720 000 C3 Open customs storage area (no. 3.3) 16 000 45 m² 720 000
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] D Buildings 4 700 000 D1 Bonded warehouse (no. 3.2) 7 000 500 m² 3 500 000 D2 Customs building / ILC Administration (no. 4.1) 1 000 4 4 000 300 m³ 1 200 000 D3 Restaurant/canteen (no.4.2) 1 200 m² 0 D4 Hotel (no.4.2) 450 m³ 0 E Handling equipment and facilities 1 110 000 E1 Forklift truck diesel (6 tons), (no. 1.2) 1 50 000 pc. 50 000 E2 Reachstacker (42 tons), (no.1.2, 2.5) 3 350 000 pc. 1 050 000 E3 Mobile loading ramp (no. 1.1) 1 10 000 pc. 10 000 F Safety and Security 364 000 F1 Gate System - ILC entrance/exit (no.4.4) 1 60 000 pc. 60 000 F2 Gate - Customs terminal (no. 3.1) 1 30 000 pc. 30 000 F3 Control Gate - Container Terminal (no.2.7) 1 60 000 pc. 60 000 F4 Fence (Hight 2 m) 3 600 50 m 180 000 F5 Fire Alarm System 1 20 000 pc. 20 000 F6 Security cameras 8 500 pc. 4 000 F7 Signage System 1 10 000 pc. 10 000
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] G Other Facilities and Installations 484.000 G1 Scale -weighing machine (entrance ILC) 1 35.000 pc. 35.000 G2 Scale -weighing machine (entrance customs terminal) 1 35.000 pc. 35.000 G3 Loading staff office container (no. 1.4) 1 20.000 pc. 20.000 G4 Administration container: TIR - Parking (no. 3.5) 20.000 pc. 0 G5 Car wash for trucks (no. 4.3) 200.000 pc. 0 G6 Garage (no. 4.3) 1 120.000 pc. 120.000 G7 Gas station (no.4.3) 1 70.000 pc. 70.000 G8 Gas station (no.2.3) 30.000 pc. 0 G9 Lighting (every 50 m) 56 2.000 pc. 112.000 Floodlighting (Container terminal,Container Depot, TIR Parking, G10 7 6.000 pc. 42.000 Open storage) G11 IT-System 1 50.000 pc. 50.000 subtotal (Pos. A - G) 17.687.000 H1 Planning, Surveying, Soil Investigation 10% of CAPEX 1.769.000 H2 Contingency 5% of CAPEX 884.000 total (Pos. A - G and H1 + H2) 20.340.000
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] A Construction site preparation 4 374 000 A1 Earthworks: backfilling, leveling, compaction 145 000 5,0 725 000 6 m³ 4 350 000 green spaces [20% of pos. B1.3 + traffic and parking area A2 24 120 1 m² 24 000 (no. 7)] B Infrastructure 1 279 000 B1 Transport infrastructure 380 000 B1.1 New private road with road access 10,0 0 25 m² 0 B1.2 Internal road system 740 10,0 7 400 25 m² 185 000 B1.3 TIR parking area (no. 3.4) 7 800 25 m² 195 000 B1.4 Railway access 350 m 0 B1.5 Container terminal - Loading tracks (no. 1.1) 350 m 0 B1.6 Container terminal - single switches 25 000 pc. 0 B2 Utility infrastructure 899 000 B2.1 Electricity 1 200 100 m 120 000 B2.2 Water (potable water, fire fighting water) 1 840 200 m 368 000 B2.3 Drainage 740 200 m 124 000 B2.4 Sewage 620 120 m 74 000 B2.5 Separator 1 45 000 pc. 45 000 B2.6 Communication 1 200 140 m 168 000 C Transhipment and storage areas (CT) 0 C1 Combined Transhipment Module area (no. 1), 67.000 m² 45 m² 0 C2 Container depot storage area (no. 2.5) 45 m² 0 C3 Open customs storage area (no. 3.3) 45 m² 0
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] D Buildings 600 000 D1 Bonded warehouse (no. 3.2) 7 000 m² 0 D2 Customs building / ILC Administration (no. 4.1) 1 000 m² 0 D3 Restaurant/canteen (no.4.2) 1 200 500 m² 600 000 D4 Hotel (no.4.2) 450 m³ 0 E Handling equipment and facilities 0 E1 Forklift truck diesel (6 tons), (no. 1.2) 0 50 000 pc. 0 E2 Reachstacker (42 tons), (no.1.2, 2.5) 0 350 000 pc. 0 E3 Mobile loading ramp (no. 1.1) 0 10 000 pc. 0 F Safety and Security 77 000 F1 Gate System - ILC entrance/exit (no.4.4) 60 000 pc. 0 F2 Gate - Customs terminal (no. 3.1) 30 000 pc. 0 F3 Control Gate - Container Terminal (no.2.7) 60 000 pc. 0 F4 Fence (Hight 2 m) 900 50 m 45 000 F5 Fire Alarm System 1 20 000 pc. 20 000 F6 Security cameras 4 500 pc. 2 000 F7 Signage System 1 10 000 pc. 10 000
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] G Other Facilities and Installations 312.000 G1 Scale -weighing machine (entrance ILC) 35.000 pc. 0 G2 Scale -weighing machine (entrance customs terminal) 35.000 pc. 0 G3 Loading staff office container (no. 1.4) 20.000 pc. 0 G4 Administration container: TIR - Parking (no. 3.5) 2 20.000 pc. 40.000 G5 Car wash for trucks (no. 4.3) 1 200.000 pc. 200.000 G6 Garage (no. 4.3) 120.000 pc. 0 G7 Gas station (no.4.3) 70.000 pc. 0 G8 Gas station (no.2.3) 1 30.000 pc. 30.000 G9 Lighting (every 50 m) 15 2.000 pc. 30.000 Floodlighting (Container terminal,Container Depot, TIR Parking, G10 2 6.000 pc. 12.000 Open storage) G11 IT-System 100.000 pc. 0 subtotal (Pos. A - G) 6.642.000 H1 Planning, Surveying, Soil Investigation 10% of CAPEX 664.000 H2 Contingency 5% of CAPEX 332.000 total (Pos. A - G and H1 + H2) 7.638.000
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] A Construction site preparation 5 089 000 A1 Earthworks: backfilling, leveling, compaction 169 000 5,0 845 000 6 m³ 5 070 000 green spaces [20% of pos. B1.3 + traffic and parking area A2 19 160 1 m² 19 000 (no. 7)] B Infrastructure 1 413 000 B1 Transport infrastructure 919 000 B1.1 New private road with road access 10,0 0 25 m² 0 B1.2 Internal road system 1 180 10,0 11 800 25 m² 295 000 B1.3 TIR parking area (no. 3.4) 25 m² 0 B1.4 Railway access 350 m 0 B1.5 Container terminal - Loading tracks (no. 1.1) 1 640 350 m 574 000 B1.6 Container terminal - single switches 2 25 000 pc. 50 000 B2 Utility infrastructure 494 000 B2.1 Electricity 600 100 m 60 000 B2.2 Water (potable water, fire fighting water) 500 200 m 100 000 B2.3 Drainage 1 160 200 m 156 000 B2.4 Sewage 780 120 m 94 000 B2.5 Separator 45 000 pc. 0 B2.6 Communication 600 140 m 84 000 C Transhipment and storage areas (CT) 900 000 C1 Combined Transhipment Module area (no. 1), 67.000 m² 20 000 45 m² 900 000 C2 Container depot storage area (no. 2.5) 45 m² 0 C3 Open customs storage area (no. 3.3) 45 m² 0
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] D Buildings 810 000 D1 Bonded warehouse (no. 3.2) 7 000 m² 0 D2 Customs building / ILC Administration (no. 4.1) 1 000 m² 0 D3 Restaurant/canteen (no.4.2) 1 200 m² 0 D4 Hotel (no.4.2) 450 6 2 700 300 m³ 810 000 E Handling equipment and facilities 0 E1 Forklift truck diesel (6 tons), (no. 1.2) 0 50 000 pc. 0 E2 Reachstacker (42 tons), (no.1.2, 2.5) 0 350 000 pc. 0 E3 Mobile loading ramp (no. 1.1) 0 10 000 pc. 0 F Safety and Security 70 000 F1 Gate System - ILC entrance/exit (no.4.4) 60 000 pc. 0 F2 Gate - Customs terminal (no. 3.1) 30 000 pc. 0 F3 Control Gate - Container Terminal (no.2.7) 60 000 pc. 0 F4 Fence (Hight 2 m) 1 000 50 m 50 000 F5 Fire Alarm System 1 20 000 pc. 20 000 F6 Security cameras 500 pc. 0 F7 Signage System 20 000 pc. 0
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] G Other Facilities and Installations 97.000 G1 Scale -weighing machine (entrance ILC) 35.000 pc. 0 G2 Scale -weighing machine (entrance customs terminal) 35.000 pc. 0 G3 Loading staff office container (no. 1.4) 20.000 pc. 0 G4 Administration container: TIR - Parking (no. 3.5) 20.000 pc. 0 G5 Car wash for trucks (no. 4.3) 200.000 pc. 0 G6 Garage (no. 4.3) 120.000 pc. 0 G7 Gas station (no.4.3) 70.000 pc. 0 G8 Gas station (no.2.3) 30.000 pc. 0 G9 Lighting (every 50 m) 24 2.000 pc. 47.000 Floodlighting (Container terminal,Container Depot, TIR G10 6.000 pc. 0 Parking, Open storage) G11 IT-System 1 50.000 pc. 50.000 subtotal (Pos. A - G) 8.379.000 G1 Planning, Surveying, Soil Investigation 10% of CAPEX 838.000 G2 Contingency 5% of CAPEX 419.000 total (Pos. A - G and H1 + H2) 9.636.000
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] A Construction site preparation 15 168 000 A1 Earthworks: backfilling, leveling, compaction 504 000 5,0 2 520 000 6 m³ 15 120 000 green spaces [20% of pos. B1.3 + traffic and parking area A2 48 480 1 m² 48 000 (no. 7)] B Infrastructure 5 226 000 B1 Transport infrastructure 2 624 000 B1.1 New private road with road access 290 10,0 2 900 25 m² 73 000 B1.2 Internal road system 3 630 10,0 36 300 25 m² 908 000 B1.3 TIR parking area (no. 3.4) 14 400 25 m² 360 000 B1.4 Railway access 70 350 m 25 000 B1.5 Container terminal - Loading tracks (no. 1.1) 3 240 350 m 1 134 000 B1.6 Container terminal - single switches 5 25 000 pc. 125 000 B2 Utility infrastructure 2 602 000 B2.1 Electricity 3 400 100 m 340 000 B2.2 Water (potable water, fire fighting water) 4 000 200 m 800 000 B2.3 Drainage 4 000 200 m 560 000 B2.4 Sewage 2 800 120 m 336 000 B2.5 Separator 2 45 000 pc. 90 000 B2.6 Communication 3 400 140 m 476 000 C Transhipment and storage areas (CT) 3 690 000 C1 Combined Transhipment Module area (no. 1), 67.000 m² 50 000 45 m² 2 250 000 C2 Container depot storage area (no. 2.5) 16 000 45 m² 720 000 C3 Open customs storage area (no. 3.3) 16 000 45 m² 720 000
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] D Buildings 6 110 000 D1 Bonded warehouse (no. 3.2) 7 000 500 m² 3 500 000 D2 Customs building / ILC Administration (no. 4.1) 1 000 4 4 000 300 m³ 1 200 000 D3 Restaurant/canteen (no.4.2) 1 200 500 m² 600 000 D4 Hotel (no.4.2) 450 6 2 700 300 m³ 810 000 E Handling equipment and facilities 1 110 000 E1 Forklift truck diesel (6 tons), (no. 1.2) 1 50 000 pc. 50 000 E2 Reachstacker (42 tons), (no.1.2, 2.5) 3 350 000 pc. 1 050 000 E3 Mobile loading ramp (no. 1.1) 1 10 000 pc. 10 000 F Safety and Security 511 000 F1 Gate System - ILC entrance/exit (no.4.4) 1 60 000 pc. 60 000 F2 Gate - Customs terminal (no. 3.1) 1 30 000 pc. 30 000 F3 Control Gate - Container Terminal (no.2.7) 1 60 000 pc. 60 000 F4 Fence (Hight 2 m) 5 500 50 m 275 000 F5 Fire Alarm System 1 60 000 60 000 F6 Security cameras 12 500 pc. 6 000 F7 Signage System 1 20 000 20 000
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No. of Length Width Area Height/ Volume Unit price Investment Pos. Construction measures Unit Pos. [m] [m] [m²] Depth [m] [m³] [€] [€] G Other Facilities and Installations 893.000 G1 Scale -weighing machine (entrance ILC) 1 35.000 pc. 35.000 G2 Scale -weighing machine (entrance customs terminal) 1 35.000 pc. 35.000 G3 Loading staff office container (no. 1.4) 1 20.000 pc. 20.000 G4 Administration container: TIR - Parking (no. 3.5) 2 20.000 pc. 40.000 G5 Car wash for trucks (no. 4.3) 1 200.000 pc. 200.000 G6 Garage (no. 4.3) 1 120.000 pc. 120.000 G7 Gas station (no.4.3) 1 70.000 pc. 70.000 G8 Gas station (no.2.3) 1 30.000 pc. 30.000 G9 Lighting (every 50 m) 94 2.000 pc. 189.000 Floodlighting (Container terminal,Container Depot, TIR Parking, G10 9 6.000 pc. 54.000 Open storage) G11 IT-System 1 100.000 pc. 100.000 subtotal (Pos. A - G) 32.708.000 H1 Planning, Surveying, Soil Investigation 10% of CAPEX 3.271.000 H2 Contingency 5% of CAPEX 1.635.000 total (Pos. A - G and H1 + H2) 37.614.000
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