Shipping from UAE to Azerbaijan

As the world continues to evolve, logistics and cross-border movement of goods have become a norm and are inevitable. As a result, businesses are required to explore new markets across the globe. In this article, we will explore the trade relationship for those who are concerned with shipping from the United Arab Emirates to Azerbaijan.

With this post, the dynamics of shipping to Azerbaijan will be clearer. This post will introduce the basic, then dive deeper into the economic stance, and opportunities in the UAE- Kazakhstan trade lane. 

Overview of Trade Lane Between UAE and Azerbaijan

In the past five years, it’s reported that the trade between UAE and Azerbaijan increased by 3 folds, which amounts to 270 percent. Trade data for 2021 reveals that trade volume between UAE and Azerbaijan hits over $500 million. Cars have been a top export from UAE to Azerbaijan with a volume of over $73.9 million. On the other hand, Azerbaijan’s top export to UAE has been petroleum resins, worth $2.86 million. Trade volume between these nations records an annual increase of over 6% for several years running.

Economic Overview

Let’s get into the overview of the economies of both countries.

UAE Economy

UAE’s economy is a fast-growing one. The country is originally known for its crude oil reserves, which played a key role in boosting the economy. However, the country has embraced diversification to reduce its dependence on the oil and gas/energy sector. As a result, other sectors and industries have risen to influence the economy.

UAE’s GDP for 2022 was 500 billion USD with a GDP per capita of $47,792. A projected increase of 4.3% by 2024 has been hinted at by economic experts.

Key Industries

Of course, the oil and gas industry top the list. However, other key contributing industries include;

Logistics and transportation
E-commerce
Manufacturing
Service industry
Construction

Top Exports

The top exports are products of the thriving industries in the UAE. Aside from being a top exporter of oil, UAE also exports copper, machine parts, vehicles, food materials, precious metals, and other consumer goods.

Major Trading Partners

UAE trade policy is pretty lenient and attractive. As a result, they easily trade with over 32 countries. However, they trade more with some countries than others. These major trade partners include;

China
Turkey
Iran
USA
Japan
Vietnam
Oman
Germany

Azerbaijan Economy

Big waves of development struck Azerbaijan when they discovered their oil reserve and began to explore. This translated them into an oil-based economy. With time, Azerbaijan paid attention to other sectors of the economy, which has resulted in their impressive growth.

Azerbaijan’s GDP as of 2022, hit up to $170 billion. This is broken down into a GDP per capita of over $15,882.

Check out the annual GDP growth rate of Azerbaijan below.

Market Size

Azerbaijan has a population of over 10 million. They also boast an employment rate of over 63% and a labor force of over 5 million. This shows a good number of the nation’s purchasing power. Azerbaijan’s market is not as large as that of other larger economies like Saudi Arabia, but it has shown consistent growth over the years.

Why Choose for Investment?

An opportunity to invest in Azerbaijan’s economy stares at your face. However, everyone wants solid reasons to be convinced that investing in Azerbaijan is a great idea. Let’s dig out some points.

Azerbaijan is in a great geographical location, which gives you access to other performing markets. It’s a transit point between Asia and Europe, and as a result, you can advance trade to nations like Georgia, Russia, Turkey, Armenia, and more.
Sustained growth and economic stability are good reasons to invest. We have analyzed its economy above and it’s clear that Azerbaijan has a way of growing its economy. It is stable and diversified, hence tends to yield a good return on investments.
Good infrastructure development to aid trade and attract foreign investments. This includes ports, road networks, rails, etc.
The competitive labor market is there for you to explore. In Azerbaijan, you’ll have access to a skilled workforce that is up to half the nation’s population.
Friendly government policies on tariffs, taxes, and general trade.
Trade in Azerbaijan has been working for other foreign investors and can work for you too. In 2021, the cumulative foreign investment hit 3.6 billion USD, which was an increase of 63.6% from that of 2020. Major investments have come from the United States, the United Kingdom, Switzerland, UAE, and Turkey.

Key Industries

It’s fine to think of Azerbaijan as an oil-based economy. However, significant diversification has occurred over the years and the burden of the economy has been shared amongst other growing industries as well. So, the key industries include;

The oil and gas industry, which is the highest contributor to the nation’s GDP at 40%.
The agriculture industry. Here the main exports include cotton, tobacco, and other food substances.
Manufacturing industry. This influences food processing, textiles, and every other product.
Construction industry. This is where the real estate and transport infrastructure falls.
Mining industry. Aside from oil, Azerbaijan has other natural resources like copper, iron ore, etc.

Top Exports and Imports

Azerbaijan’s top exports include crude petroleum, refined petroleum, gold, and other non-crude products. On the other hand, its top imports include pharmaceuticals, cars, rice, wheat, and other consumer goods.

Major Trading Partners

Lenient trading policies and a viable economy are unarguable triggers for a good number of trading partners. As a result, Azerbaijan trades with several countries, but its top partners are Russia, Italy, China, the United States, UAE, Turkey, Ukraine, Israel, Switzerland, and Germany.

Shipping Route and Modes of Transportation

For those who want to move cargo to Azerbaijan, it’s necessary to have a pictorial framework or knowledge base of the path your cargo is going to take. Also, understanding the transport modes available on this lane will help you generate a budget on different scales. So, let’s get right into this section.

Transport Corridors

The trade lane between UAE and Azerbaijan has three transport corridors- the west corridor, the east corridor, and the south corridor. Each of these corridors cuts across different geographical regions en-route to Azerbaijan. Most of these corridors consist of a blend of two or more transportation modes. Let’s find out more details.

West Corridor to Azerbaijan

The west corridor is a multi-modal network that links UAE to Azerbaijan. This means that it’s a combination of sea, rail, and road to move cargo between this trade lane. The west corridor facilitates movement from UAE to Azerbaijan through the eastern European port of Poti and Mersin.

East Corridor to Azerbaijan

The east corridor grants access to Azerbaijan from UAE via the China railway system. This means that shipments are first transported to China from the UAE, then moved by rail to Azerbaijan.

South Corridor to Azerbaijan

The south corridor is a proposed alternative to the existing maritime route passing through Turkish Straits and the Suez Canal. This will connect the Persian Gulf Ports in UAE to the Black Sea Ports in Azerbaijan via Iran.

Sea Freight

Sea freight is one major element of shipping services from Azerbaijan to UAE and vice versa. A large volume of cargo is transported via sea freight. So, it’s a viable mode of transportation in this trade lane.

Major Ports in UAE and Azerbaijan

First, let’s look at the ports in UAE.

Port of Sharjah (Sharjah)
Port of Jebel Ali (Dubai)
Port of Fujairah (Fujairah)
Port of Khalifa (Abu Dhabi)

Next, we look at the ports in Azerbaijan.

Port of Alat. This is one of Azerbaijan’s large ports located in the south of Baku.
Baku International Sea Trade Port. This port is located in Baku, the capital of Azerbaijan.
Port of Sumgayit. You’ll find this port in the north of Baku.

Transit Time

The transit time will depend on the corridor adopted for the transport.

The west corridor which involves using the European ports of Poti and Mersin will take 20-30 days.
The east corridor involves shipping cargo to China, it can take 10-20 days, then move cargo via China rail to Azerbaijan which will further take 10-20 days.
The south corridor involves shipping cargo to Iran taking 3-10 days, then shipping from Iran to Azerbaijan via land further taking 3-7 days.

Air Freight

Air freight is a fast and effective alternative to other transport modes. There are multiple airports in both UAE and Azerbaijan, so, let’s look at the functional airports in these regions.

Airports in UAE and Azerbaijan

You’ll find the following airports in UAE:

Sharjah International Airport
Abu Dhabi International Airport
Ras Al Khaimah International Airport
Fujairah International Airport
Al Maktoum International Airport
Dubai International Airport

You’ll find the following airports in Azerbaijan:

Heydar Aliyev International Airport (Baku)
Nakhchivan International Airport (Nakhchivan)
Ganja International Airport (Ganja)
Gabala International Airport (Gabala)
Zaqatala International Airport (Zaqatala)

Airlines that Operate on the Route

Following airlines offer services on this trade lane:

Silk Way West Airlines
Turkish Cargo
Emirates SkyCargo
Lufthansa Cargo
Etihad Cargo
Azerbaijan Airlines Cargo
Cargolux
Air Astana Cargo
Qatar Airways Cargo

Transit Time

Air freight is the fastest transport method in existence. It’s estimated that air freight shipment can take 1-5 days, depending on the prevailing factors at the time of shipping.

Customs and Regulations

One of the vital parts of imports and exports is the customs and regulations of the trading partners. Each country has its shipping principles, requirements, and standards. As a result, there are licenses and documentation that are must-haves for any business or trader.

UAE Customs and Regulations

Here, we will look at the import and export rules peculiar to the United Arab Emirates.

Documentation Required for Imports and Exports

Packing List – The packing list gives a description of the goods such as quantity, dimensions, characteristics, and weight.
Certificate of Conformity – Certifies that the goods exported or imported meet the standards.
Export License – May be needed as specified with special goods. Showing that the exporter is licensed for such an operation.
Import License – May be needed in the case of imports of special goods.
Bill of lading – This document is prepared by the shipping company stating that the goods have been loaded and are ready for shipment.
Insurance Certificate – This document shows that the goods exported or imported have been insured.
Commercial Invoice – This will show the price of the goods, payment methods, and terms of sale.
Custom Declaration – This document is used for determining the custom duties as it states the goods, their quantity, and value.
Health Certificate – This document is unique to pharmaceutical and food products, showing that they meet health and safety standards.

UAE Import Regulations

Let’s have a quick dive into UAE import rules, mandatory for goods entry into the country.

Pay import duties and taxes
Register with the UAE custom authorities
Obtain a trade license
Comply with regulations on restricted items
Adhere strictly to UAE packaging regulations

UAE Export Regulations

Similarly, for exports, following regulations are important:

Obtain an export permit
Obey the intellectual property law
Acquire relevant custom documentation for imports
Adhere to the regulations regarding embargoed goods

Tariff and Taxes

Value Added Tax – UAE places a VAT of 5% on goods. However, some goods are exempted from VAT, such as vegetables, fruits, milk, and other basic food items.
Custom Fees – These are not constant as they are placed on a a few goods, for example, luxury goods.
Excise Tax – The rate varies, and it is placed on goods thought to be harmful.

Azerbaijan Customs and Regulations

Azerbaijan’s customs control the movement of goods in and out of the country. Some of its rules are unique from other countries.

Documentation for Import and Export

Bill of lading
Certificate of origin
Import license
Export license
Custom declaration
Packing list
Commercial invoice

Import and Export Regulations

Payment of tariff and duties
No import and export of restricted or prohibited goods
Adhere to custom clearance rules and procedures

Tariff and Taxes

Azerbaijan‘s tariff on goods is very lenient. They place a tariff rate of 7.7%, although it may be different for some special goods and cases.

Trade Opportunities and Challenges

This section is the core of the idea or reason why this post was written. The UAE– Azerbaijan trade lane is embedded with opportunities. It’s a chance to take an early spot in the fast-growing Azerbaijan economy. Along with these opportunities come challenges. However, a balanced idea will give you the right system and ideas to explore this emerging market.

Opportunities

Are there opportunities in this trade lane? Yes. The next question is – what are they? Let’s find out.

Key Industries with Growth Potential

You already know by now that Azerbaijan runs a diversified economy. This has given the country’s different sector room for growth. Some of the major sectors include:

Agriculture

If there is any industry with so much expectation in Azerbaijan, it has to be the Agricultural sector. By records, this sector employs up to 37% of the country’s population. Currently, this industry contributes just 7% to the country’s GDP. With newer technologies and strategies in place, the government has placed so much attention on this sector. As a result, there is projected growth by experts.

Manufacturing

A lot has been happening in this sector as the zeal for production swims around the nation. The ones that hit the strides are the textile, food, and machinery sub-sectors. The advantageous location of Azerbaijan makes it a favorable place for investors to establish manufacturing infrastructure and businesses. This gives the industry grounds for growth.

Construction

Azerbaijan now embraces commercial real estate and is putting efforts to keep the industry rooted for improved outputs. With significant development in physical infrastructure, the construction industry is one to watch.

Trade Agreement Between UAE and Azerbaijan

There is no major fear of trade between UAE and Azerbaijan as they have signed several trade agreements. These agreements show that the ground is secured for productive and profitable trade even for foreign investors.

A Memorandum of Understanding (MoU) on cooperation on renewable energy projects.
The major is the bilateral investment treaty. This will give investors incentives and coverage as they trade in Azerbaijan.

Emerging Markets in Azerbaijan

There are new and rising markets in Azerbaijan. These markets include e-commerce, renewable energy, fintech, health, etc. These markets hold great potential for profits.

Challenges

Let’s spot a few challenges applicable to this trade lane.

Language and Cultural Barrier

UAE speaks Arabic as its official language while Azerbaijan speaks Azerbaijani as its official language. However, in the business space, both partners can communicate in English, but that cannot overrule the little challenges caused by language differences.

The same happens with culture as UAE operates a strict Islamic culture but that of Azerbaijan is more lenient. This can cause overlaps in values, conducts, and more.

Political Instability

This involves unfavorable changes in government regulations towards trade. So, changes in policies by one nation tend to affect the trade relationship. This will cover signed agreements, tariffs, duties, etc.

Infrastructure Challenges

Some industries do not have the newer infrastructure to keep up with the pace of the world’s evolving system. This then becomes a challenge as growth and output will be limited.

Value Addition from Al Sharqi

Following this post, it’s possible that you are triggered to hit the ground running. So, we are here to offer you Azerbaijan logistics and express freight services. We have quality experience in this trade lane and can deal with the hiccups with improved technology along this route.

How can we help?

By Ocean: We can be your freight forwarder in Azerbaijan and UAE. You’ll get top-quality ocean freight services including FCL and LCL, as we seamlessly transport your cargo via sea.
By Air to Destination Airport: We can handle your air cargo in Azerbaijan and UAE, making the whole process simple. We offer cost-effective and efficient air freight services along the UAE-Azerbaijan trade lane.

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Conclusion

The UAE-Azerbaijan trade lane is one filled with opportunities and impressive records. Seeing the statistics and economic data all show that there is more to gain than lose in this trade lane. The economy is promising and the emerging markets in e-commerce, manufacturing, and agriculture make it all viable. It’s ideal to explore this trade lane, move your cargo to Azerbaijan and be part of something big.

Frequently Asked Questions

Who are the Biggest Foreign Investors in Azerbaijan?

Usually, Russia is deemed as the biggest foreign investor but the reports from 2022 show the UK has the highest share of the total FDI in the country.

Which Countries Does UAE have a Free Trade Partnership with?

UAE has a free trade agreement with Kuwait, Tunisia, Oman, Qatar, Saudi Arabia, Iraq, Egypt, Libya, Palestine, Syria etc.

What are Azerbaijan's Major Resources?

In the first place is oil and gas. This resource covers two-thirds of the country. Other significant resources are Gold, Copper, Silver, Manganese, Antimony, Titanium, etc.

What Areas of Trade between UAE and Azerbaijan have the Potential for an Increase?

Logistics and transportation, agriculture, construction, and the energy sector have the most growth potential for this trade lane.

What was the Total Trade Volume Between UAE and Azerbaijan in 2020 (Pandemic era)?

Records from 2020 show that the total volume of trade hit 406 million USD. Splitting this value gives USD 77 million UAE exports to Azerbaijan and Azerbaijan exports to UAE hit USD 329 million.