Transformation and Modernization of Azerbaijan Railways: A 20-Year Journey Towards Innovation and Sustainability

Over the past 20 years, Azerbaijan's railways have transformed into a modern, advanced, and sustainable industry, becoming one of the leading forces in the country's transport sector. Thanks to substantial investments and a focused development strategy, the face of the railway system in Azerbaijan has completely changed. Many goals have been achieved, while some remain challenges for Azerbaijan Railways CJSC (ADY).

Jamal Ali
Jamal Ali
Stadler Kiss double-decker train in Azerbaijan, source: Azerbaijan Railways (ADY)

In recent years, ADY has undergone fundamental changes, in other words, a transformation. The company’s traditional management structure and internal operations are being reorganized, a long-term development strategy is being formed, and more attention is being paid to social interests and obligations. ADY has chosen the path of corporatization. In this context, the transition from an established organizational model to an optimized and integrated company model is one of the priority areas. To effectively manage the transformation process, the Transformation Program has been implemented with the support of a reputable international consulting company.

Phases 1 and 2 of the Transformation Program have been completed, and the third phase is nearing completion. As part of this process, an optimal and flexible organizational structure has been formed. Corporate governance system creation efforts have resulted in a more transparent, efficient, and inclusive management structure. Optimization of the number of stations and the reduction of operating stations from 108 to 69 have allowed for a more efficient and flexible railway operations model.

One of ADY’s main achievements as a result of the transformation is that the company now implements major investment projects using its own funds. Through cost optimization and ensuring additional revenue, ADY invested 35 million manats in 2023. For example:

  • 16 km of rails were replaced;
  • Major repairs were carried out on 22 km of tracks at the Keshlya, Baku, Yeni Surakhani-Surakhani, and Yeni Surakhani-Govsany station sections;
  • The port of Zira was connected to the railway network for the first time;
  • The Bilajari marshalling yard tracks, which had not been repaired since the 1960s, were restored.

In 2024, the investment volume will exceed 50 million manats, enabling the implementation of more than 20 projects. For example:

  • The main railway station Alat will be repaired;
  • The Yalama station will be expanded;
  • The upper structure of 50 km of tracks will be repaired;
  • The repair of the Bilajari marshalling yard will be completed, etc.
Electric train at Bakıxanov station. Source: Wikipedia

Modern Train Fleet

The railway rolling stock has been significantly updated. Specifically,

  • In collaboration with Stadler Rail Group, electric trains were acquired in 2015-2018 for use on domestic routes and the Absheron ring line, considered among the best in their class. These trains are currently used in passenger transportation.
  • In 2019, as part of the train and locomotive fleet renewal program, 50 locomotives operating on direct and alternating current were delivered to the country.
  • A contract was signed to purchase 10 FLIRT diesel and electric trains from Stadler. Four of them arrived in the country in 2023 and will be put into operation after testing. The remaining trains are expected to be added to the fleet in 2024.

In 2023, a contract was also signed with Stadler Rail Group to create a Regional Service Center. This center will perform maintenance and repairs for all types of Stadler vehicles actively used on the railways. The center’s services will be available not only for the local train fleet but also for regional railway operators using similar trains.

Freight Transportation Growth and International Corridor Integration

Significant growth in freight transportation volumes has been recorded in Azerbaijan’s railways over the past 20 years. To support this growth, existing railway lines are being updated and new tracks are being built.

To increase the capacity of international transport corridors passing through Azerbaijan, the Baku – Tbilisi – Kars (BTQ) railway, an essential segment of the East-West connection, was opened in 2017. The new railway line reduced distance and time in regional freight transportation, revitalizing the China-Europe-China transport and trade corridor. The expansion of the Georgian segment of the BTQ railway is currently underway, which will increase its capacity from 1 to 5 million tons.

In recent years, there has been significant growth in freight volumes, especially transit. For example,

  • The volume of transit cargo transported through Azerbaijan increased by almost 80%;
  • In 2023, more than 18 million tons of general cargo, including nearly 7 million tons of transit cargo, were transported by rail.

In the North-South corridor, construction work on the Astara (Iran) terminal is 60% complete. Last year, about 700,000 tons of cargo were transported through this terminal. Additionally, a new terminal created in Astara (Azerbaijan) has contributed to the development of the North-South corridor.

To increase the volume of transit cargo and manage them efficiently through the Middle Corridor, of international transport significance, a joint venture was created between the railways of Azerbaijan, Kazakhstan, and Georgia. Freight transportation of Chinese origin through the Middle Corridor via Azerbaijan has been resumed. Container block trains have been organized for container transportation and their direct dispatch to the destination. Container block trains carrying import and transit cargoes from China reach Azerbaijan via the Middle Corridor in an average of 8-10 days, roughly half the traditional routes (15-18 days).

Record Passenger Transportation

Railway reconstruction to ensure citizen comfort is yielding results. ADY has updated the train fleet with modern diesel and electric trains from Stadler and locomotives from Alstom. The use of expired trains has ceased, and stations, terminals, and stops on the Absheron ring line have been overhauled. These improvements have played a significant role in meeting citizens’ needs for comfortable and safe transport services, increasing their trust and confidence in the railways:

  • High-speed trains on the Baku – Sumgait – Baku route have been in operation since 2015;
  • In 2017, the renovated Baku Railway Station with entirely new service infrastructure opened;
  • In the same year, a 110-km line Baku-Sabunchi-Pirshagi-Sumgait-Khirdalan-Bilajari-Baku was built to resume passenger services on the Absheron ring. Passengers can travel on two separate routes covering a total of 14 points;
  • In 2018-2020, the Sumgait railway station, Sabunchi railway station, as well as Zabrat-1, Mammadli stops, and Zabrat-2 station were renovated and opened to the public;
  • The Pirshagi-Garadagh-Novkhany-Sumgait section of the Absheron ring was also opened.

In 2023, ADY achieved a record indicator, transporting 7 million passengers. This figure exceeds last year’s by 38% (5.1 million people) due to the addition of extra trains on the Absheron ring route, the opening of the Baku – Gabala – Baku route, and the extension of the Baku – Ganja – Baku route to Agstafa with the restoration of stops at Govlar (Tovuz) and Deller (Shamkir) stations.

Last year, to relieve public transport on the Absheron ring line, 10 daily services were added, and express services were assigned on the Baku – Sumgait – Baku route, providing direct, non-stop communication between the two cities. The average number of passengers on the busiest days on the Absheron ring line was 26,000 people (19,400 people in 2022).

Infrastructure Modernization

In the past 20 years, large-scale construction and reconstruction projects have been implemented on Azerbaijan Railways. As a result, the quality of freight and passenger services has improved, and the country’s transit capabilities have expanded:

  • The Alat-Alat Port railway line was built and commissioned in 2007;
  • Between 2010-2014, 917 kilometers of the Baku-Boyuk Kesik railway line were overhauled under the state program for the development of the railway transport system;
  • In 2015-2017, 200 kilometers of main railway lines were overhauled;
  • In 2017, the construction of the 8.3-kilometer Astara (Azerbaijan) – Astara (Iran) railway line and the railway bridge over the Astara River was completed;
  • In 2021, a 43-kilometer single-track railway line Laki-Gabala, connecting the Gabala station with the Laki station, was opened.

Additionally, new locomotive depots were completed in Baku and Ganja in 2022-2023. In 2023, a new railway bridge over the Kura River was built, and railway bridges over the Araz and Kura rivers were overhauled.

Railways in Karabakh and Eastern Zangezur

Large-scale restoration and construction works on the liberated territories, started after the 44-day Patriotic War, include railways. ADY actively participates in infrastructure restoration projects in these areas, deploying work trains and restoring its networks.

In this context,

  • In 2021, the foundation of the Horadiz-Agbend railway line was laid. Design and construction work on this line began soon after;
  • The Horadiz-Agbend railway line is part of the multimodal transport corridor that will connect Azerbaijan with Nakhchivan;
  • Currently, 82% of design and 47% of construction work on the Horadiz-Agbend railway line has been completed;
  • In 2021, design and construction work on the Barda-Agdam railway line also began;
  • Construction of the section of this line to Agdam city and the construction of stations have been completed;
  • Design work on the restoration of the Agdam-Khankendi line has begun.
In 2021, the foundation of the Horadiz-Agbend railway line was laid. Design and construction work on this line began soon after.

Railway Digitalization

Digitalization is one of the main areas of ADY’s transformation process. The digitalization program covers all areas of activity. Thus, automation of production areas and corporate functions, development of business processes, creation of a central reporting system, optimization of human capital, digitalization of customer services, and other areas of digitalization are being implemented in parallel within the company’s internal procedures, in the field of freight and passenger transportation.

Initially,

  • A strong IT team was formed, and an experienced foreign Chief Digital Officer (CDO) was recruited;
  • Together with invited experts from a reputable consulting company, an IT development strategy was developed;
  • Work is underway to improve the technological base, automate transportation, asset and investment project management systems, create a customer-oriented freight transportation and commercial system, and a GPS-based locomotive movement monitoring system;
  • Work on automating logistics corridors using digital electronic signatures and cryptographic tools in cooperation with partners from Azerbaijan and abroad has begun.

In 2023, the “ADY Mobile” application was launched for passengers. The new mobile application allows passengers to plan their trips more conveniently. With “ADY Mobile,” tickets for all destinations can be purchased and refunded, balances topped up, schedules checked, and all news and updates related to railways received.

To eliminate queues at ticket offices and reduce paper use, which helps decrease environmental harm, paper tickets on the Absheron ring line were discontinued. Passengers can now travel contactlessly using bank cards or ADY travel cards with NFC support.

Optimization as a Priority

In 2023, ADY’s structure was optimized based on a business-oriented policy. Commercial activities meeting modern standards were established within the company. Management was transferred to digital platforms and reorganized. An Agile-oriented management system was implemented, meaning a business model capable of sustainable and flexible adaptation to changes. Additionally, a human capital and corporate culture policy was formed. For more professional organization of staff training, the ADY Training and Development Center was created.

Environmental, Social, and Corporate Governance (ESG) Responsibility

In 2023, after becoming a member of the UN Global Compact, ADY further improved its ESG program. The sustainable development agenda included in Azerbaijan’s national socio-economic development priorities is one of the main factors guiding railway development.

As part of ESG activities, ADY uses electric trains to reduce emissions in passenger transportation. To encourage bicycle use, an environmentally friendly and health-beneficial form of transportation, bicycle parking has been set up at railway stations. To promote green energy and reduce CO2 emissions, over 650 solar panels were installed on the roofs of the locomotive depots in Baku and Ganja during their renovation.

Furthermore, ADY takes measures to prevent environmental harm during railway construction. In every new project, ESG principles are analyzed and applied most effectively. For example, at the 85th kilometer of the Horadiz-Agbend line, near the Minjivan station, trees were carefully replanted to avoid damaging the forest. Attention is paid to tree planting along the railway strip in all projects. Pine and other types of trees have already been planted on one section of the Barda-Agdam project. ADY also uses innovative technological solutions to reduce paper usage in internal document management.

The successes achieved over 20 years open up significant prospects for future development. A strategic document until 2030 has been developed, including ADY’s strategic goals and programs aimed at achieving them. ADY intends to continue working on issues such as improving operational efficiency, expanding commercial opportunities, digitalization, and safety, which form the core of the strategy.

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