Development prospects of Russia’s Caspian ports

Russian ports of the Caspian Basin have been long suffering from the falling freight turnover. Lifting of sanctions on Iran, debottlenecking of Russian IWW and revival of cruise shipbuilding bring hope for busier domestic ports in the Caspian Sea. Recently approved strategy for their development foresees the construction of a new deepwater port in Caspijsk.

Deep risks

Total capacity of Russia’s Caspian ports exceeds 20 mln t per year. Between 2011 and 2016, their loading decreased by over 1.5% to 30% of capacity. In 2016, the ports of the Caspian Basin handled only 6 mln t of cargo.

The decrease of throughput should be attributed to different factors, first of all, to the isolated location of the Caspian Sea. For Russia, the prospects of sea-borne trade in the region are mainly associated with Iran and with India via Iran since other countries in the region have and borders with Russia, well developed rail and highway links. For a long period Iran was under international sanctions and trade relations with that country were difficult. Transit flows faced difficulties caused by the depth of the Volga-Caspian Canal and other inland water ways. Those factors hindered investments into Caspian ports which are badly in need of modernization today. For example, the port of Makhachkala lost more than 70% of its throughput due to technical problems with oil cargo transshipment.

Another port of the Basin, Astrakhan, is located within the city limits, which hinders its development. It also requires icebreaker support in winter navigation season. The port considerably depends on the economy of Iran which is actively developing its own iron and steel industry, hence the fall in transshipment of Astrakhan’s key cargo – ferrous metal. 

The fall of the demand for ferrous metal had even more serious implications for port Olya as this cargo accounted for some 80% of the port’s throughput. The port is currently sustained by grain transshipment. Since Olya is the only port in the Basin located beyond the city limits, there were plans to shift port facilities from Astrakhan to Olya but they remained ink on paper.

Recently approved Strategy for the development of the Caspian Basin ports foresees the expansion of their annual throughput to over 14 mln t including 7 mln t of grain. For that purpose, the existing facilities are to undergo modernization, ferrous metal transshipment facilities are to be converted into grain transshipment facilities, two new ports are to be built (location to be approved) as well as a deepwater port in Caspijsk. The Caspijsk terminal is supposed to handle grain and containers, its capacity is to make 3 mln t of grain per year. Dredging is to be performed by yet-to-be-built Russian ships.

According to the Strategy authors, implementation of those tasks will be facilitated by the trade with Iran and by the development of transit by international corridor Sever-Yug (North-South) involving inland water ways of Russia. Construction of the Bagayevsky and Gorodetsy hydrosystems will, in their turn, give an impetus to the development of Russian IWWs.

Besides, there is a plan to develop cruise shipping in the Caspian Sea, the more so as Lotus shipyard is already building a cruise ship of Russian design.

So, there are economic and political prerequisites for revival of the ports in the Caspian Basin which have been suffering for a long time from the fall of throughput. Successful implementation of the announced plans will let not only revive but create even stronger economic and political links with Iran, India and other countries in the region.

Vitaly Chernov