“South-Caucasian Railway” JSC, which is 100 % Open Society affiliated company of Public Corporation "Russian railways", hired German company Fablog Consulting GmbH for its project in construction (reconstruction) of International logistic center at the Armenian-Turkish border (Akhuryan station). This project is very important for Fablog Consulting GmbH, because it’s the biggest project in the Caucasian Region and under geopolitical influence because of the upcoming border opening between Armenia and Turkey. Fablog is proud to be chosen to carry out this very important and regional project.

The purpose of the development of this project is to define a strategy for the development of the International logistical center railway station in Akhuryan of the South Caucasian railway and also to define a set of actions for its realization and to develop a working project for the terminal in Akhuryan.

Fablog conducted marketing research and substantiated the expected cargo volumes for the services in the logistical center, which will allow  to create the optimum structure for services and their capacities in the project in terms of the market demand and its dynamics in the near and in the intermediate future.

Fablog analyzed the current situation of railroads of both countries: Armenia and Turkey; the technical characteristics of rolling stock, their productivity, and also the import/export volumes of these two countries.

In 1991 the border between Armenia and Azerbaijan was closed and as a result Turkey in 1993 also closed the border because of the political factors. So nowadays Armenia has only two open borders: with Iran and Georgia. Below you can see the Armenian railroads map.

Map of Armenian railroads

From our investigation we found that on 2008 only 1% of Turkish exports/imports were done by railroads. Mainly, Turkey is organizing its transportation by road transport or maritime. We also mention here that railroad connection in central and eastern parts of country is poor developed (border with Armenia), which have an influence on the transportation of Turkish goods by railroad.

After opening the border between Armenia and Turkey Turkish ports will have important meaning for Armenian market. Nowadays 90% of goods transported through Georgian port Poti (Black Sea). We came to a conclusion that after opening the border the part of Armenian exported/imported goods can be transported through Turkish territory (port Mersin). After opening the border the Mediterranean harbor Mersin can provide for Armenia the shortest way to the countries of Europe, Middle East, continental America, and also countries from Western Africa. As a proof we made a comparing analyze of transportation goods from Europe to Yerevan by two ways: through Turkish port Mersin and Georgian port Poti, which showed that transportation through port Mersin is 3,76% cheaper than by port Poti.

Today Armenia has no transit volumes passing through its territory by railroad. Only railroad connection that Armenia has is with Georgia. The opening of border with Turkey can provide Armenia with transit volumes. We have to mention that during the Soviet period, when Armenia was a country in USSR, it was the connecting hub in the region. All the railroads passing through region go through Armenian territory.  We took into consideration all the upcoming railway projects which can have influence on the transit volumes trough Armenia after opening the border. The main competitor is the project Baku (Azerbaijan)-Tbilisi (Georgia)-Kars (Turkey) route. In our calculations we certainly take this fact into consideration. We also made comparing analyze of transportation goods by this railroad and railroad passing through Armenia to Azerbaijan. As Turkey has railroad connection with Iran, through which it makes its shipments, we calculated the efficiency of that railroad, spreading till Central Asia,  comparing it with armenian one: Turkey-Armenia-Azerbaijan-Central Asia.

Taking as a basis all our databases and analyze we calculated coming volumes at the station Akhuryan in the intermediate future (2010-2016) after opening the border with Turkey. In our calculations we did not exclude also the opening of the border with  Azerbaijan and take it into consideration while making calculations. Thus we made three scenarios of changing the trade volumes of Armenia. In the basis of our calculations we used the Model of equilibrium.

Below these are three scenarios:

1. Turnover between Armenia and Turkey

2.Turkey as a transit country for Armenia: turnover of Armenia with EU countries, countries from Middle East, South and North America and also countries from Western Africa through territory of Armenia.

3. Armenia as a transit country for making shipments to Turkey:

3а. Armenia as a transit country for Georgia

3б. Armenia as a transit country for Azerbaijan

3с. Armenia as a transit country for Central Asia

All the calculations in these scenarios were made from 2010-2016 years. In the third scenario we took into consideration the new railroad connection between Turkey and Azerbaijan through Georgia and considered the calculated trade volumes when this new railroad will be operated and also without working of this new railroad line.

After all these calculations, we calculated the number of wagons and containers passing through the station Akhuryan after opening the border between Armenia and Turkey. To summarize all our analyze we made SWOT analyze and gave to the client also risk assessment.

After providing the client with marketing investigation we made three variants of layouts of Akhuryan station. We described each variant with logistic services. Afterwards we suggested the most effective and realistic variant of reconstruction of logistic center at Akhuryan with complex of logistic services, which would be provided at Akhuryan station.

While making this project, our main aim was not to miss any detail and covered all the aspects, that would have influence further on our suggestions.