North-South Trade Corridor provides option to shift 'trade strategy'

MOSCOW: As the war in Ukraine continues to invite more and more sanctions on Russia, the International North-South Trade Corridor (INSTC) provides Moscow with a critical outlet to re-orient its export strategy around the trade in Central Asia, media reports said.

Russia is searching for more options to compensate for the sanctions slapped on the country by Western nations and the country is mooting a re-alignment of its trade relationships. Ukraine war is nearing its eighth month and there is no end in sight hence it seems suitable for Russia to pave a new strategy for its trade exports, reported Financial Post.

Moscow aims to expand its trade in the Central Asian region through North-South Corridor. The INSTC corridor connects Asia with Europe and helps Asian nations by providing connectivity.

However, Bandar Abbas Port, which is a part of the International North-South Trade Corridor (INSTC) and has been handling the majority of Iran's freight, is very congested during to its limited logistics capabilities. This Port can receive only 100,000-ton cargo ships. Most international shipping is carried out via 250,000-ton ships.

To resolve this problem, the goods which are to be docked at Bandar Abbas Port do not go directly at the port. All the goods first are docked at Dubai and transported onto smaller ships. All this hassle causes delays for Iran as well as a considerable loss of revenue to the UAE.

However, there is a ray of hope in the INSTC corridor with the continued development of the Chabahar Port. With this, Iran is emerging as a "commercial transit centre for the region," reported Financial Post.

The capacity is better than Bandar Abbas port as Chabahar port is able to receive 250,000-ton cargo ships. The Chabahar Port has a current capacity of 2.5 million tons per annum and development is underway with a view to increasing the capacity to 12.5 million tons.

It also reduces transit times, courtesy of its geographical location. With this positive outlook of trading in the region becoming easier, Russia is now increasing efforts to establish deeper trading relations with India and Central Asia.

Financial Post quoting Russian economist Maxim Mironov highlighted that sanctions are having an effect on the Russian economy but at a pace much slower than Western powers were hoping. The reason for this is the dependence of these very nations on Russia for its energy needs.

A series of heavy sanctions on Russia has not displaced the country of its stronghold position on as an energy producer.

Now, Russia's focus lies on the INSTC, a 7,200-kilometer route for transporting freight between India, Azerbaijan, Iran, Russia, Central Asia and Europe to propel its trade.