Armenia to use Black sea trade route as alternative to Upper Lars checkpoint at Russian-Georgian border
Black Sea as an alternative to Upper Lars checkpoint
From June 15, the Armenian government plans to launch regular ferry transportation of goods across the Black Sea as an alternative to the only land road through the Upper Lars checkpoint connecting the country with Russia. This road is often closed due to bad weather conditions or landslides. Armenian cargoes often end up stuck in queues for a long time due to the small capacity of Upper Lars.
The government decided at first to fully reimburse the expenses of Armenian companies that will transport their goods on ferries along the Poti-Kavkaz-Poti route from the state treasury. However, full subsidies will not last forever. According to the Prime Minister of Armenia, it is expected that “the economic scheme will work by itself”, the government is only creating infrastructure.
The design capacity of the road through Upper Lars, which connects Armenia with Russia, is 170 tracks and 200 cars per day in both directions. However, the actual number of traffic is several times higher, and in summer it increases so much that it leads to constant queues.
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Problems at the checkpoint negatively affect the economy of Armenia
The road through the Upper Lars checkpoint is crucial for the Armenian economy. Cargo transportation from Armenia to Russia and back is carried out along this road – and the Russian Federation is the largest foreign trade partner of Armenia. Meanwhile, the cars of Armenian companies are constantly idle at the checkpoint, in the summer – due to low throughput, the rest of the time – due to weather conditions, landslides and landslides.
According to official data, 10-15 Armenian trucks pass through Lars daily. The cargo of each of them is estimated at an average of 25,000 dollars.
This year, until early April, there were also regular reports of thousands of vehicles stuck at checkpoints. 15-20% of the total number of blocked cars were from Armenia.
This situation, according to experts, has a negative impact on the Armenian economy as a whole. And the need for finding an alternative route has been discussed for years.
Subsidizing the costs of the ferry – for the competitiveness of goods
By the end of last year, the Ministry of Economy came up with a legislative initiative to fully reimburse the expenses of Armenian companies for the transportation of goods by ferry.
“Given that the use of the ferry, which is considered as an alternative to the land route, is more expensive for cargo carriers and may reduce the competitiveness of Armenian products in foreign markets, state reimbursement of the costs of using this alternative type of cargo transportation can significantly reduce the level of logistical obstacles, contribute to increasing the efficiency of cargo transportation”, the project summary explained.
The government came to the conclusion that “reimbursement of transportation costs by ferry will be a new impetus for the Armenian economy and will compete with Upper Lars”. This issue will be resolved by renting a ferry. And the Cabinet of Ministers has already approved the company that will carry out ferry transportation, this is C&M International Limited Liability Company.
According to information in the state register of legal entities, C&M International LLC has been registered only a month ago, on April 1. Information about the owners of the company is not disclosed.
According to preliminary estimates, due to ferry transportation, tax revenues will increase by $2.7 million during the year.
Minister of Economy Vahan Kerobyan said that the ferry will be able to transport cargoes equal in volume to 40 railway wagons and 50 trucks. Ferry service Poti-port “Kavkaz” will be carried out twice a week.
The minister said that these steps are being taken to increase the competitiveness, in particular, of exported industrial products.
“The problems exacerbated because of Russia-Ukraine war”
The problems that Armenia has been solving for many years due to the small capacity of the Upper Lars checkpoint have escalated due to the war in Ukraine, Prime Minister Nikol Pashinyan said:
“Quite a lot of goods began to be transported not by sea, but by land. And again – the entire or a large part of the route passes through Upper Lars. As a result, the congestion of the Upper Lars has increased, I can not say exactly – by two, three, or four times, so much so that the problems that we all knew before have significantly worsened.
We are now approaching the start of the fruit and vegetable export season. And we need to develop the infrastructure. We even think ( I don’t know how realistic it is), about launching an air transportation route”.
The prime minister also said that a significant increase in exports from Armenia has been observed since the end of March.
