Generally, freight costs occupies up to 45% of production costs. That is why reducing logistics costs and the current level of transport infrastructure are important issues for producers to promote domestic products oriented primarily to export markets.
Kazakhstan, located at the crossroads of Europe, Asia, and the Middle East, is equidistant from the world’s oceans. Since the times of the Great Silk Road a favourable geographic location has helped Kazakhstan to acquire in a modern times a new concept of international economic integration and the development of trade routes – the transport hub.
Kazakhstan is a member of major transport projects, such as “Silk Road Economic Belt “, “Southern Gas Corridor”, “North-South Transport Corridor”, TRACECA (which provide the country access to the Baltic Sea, Black Sea and Mediterranean Sea, the Persian Gulf and the Indian Ocean). It has been actively involved in the developing of the transportation and logistics cluster to increase its inland share in the of continental cargo market in the “Western China-Western Europe” transport project.
According to Logistics Performance Index (LPI) 2016, Kazakhstan has climbed up to 77th place (compared with the 88th in 2014) among 160 countries and has left behind such countries like Ukraine (80th), Russian Federation (99th), and Georgia (130th).
On September 22, 2008 in Aktobe, the Ministry of Transport and Communications of the Republic of Kazakhstan and the Ministry of Transport of the Russian Federation signed a Memorandum of cooperation and development of the Transport Corridor “Western China-Western Europe”. “Saint Petersburg – Moscow – Vladimir – Kazan – Bavly – Orenburg – Kazakhstan border” is the designated route of the Corridor on the territory of Russia.
On April 16, 2009 in Beijing, Kazakhstan and China signed a Memorandum on the establishment of the “Western China-Western Europe” road transport corridor for moving freight. The total length of road route amounts to 8 445 km and it passes through the territory of Russia (2 233 km), Kazakhstan (2 787 km) and China (3 425 km).
Typically, ocean freight from China to Western Europe takes up to 45 days, rail freight takes up to 14 days, the road transport corridor “Western Europe-Western China” greatly shortens shipment time in just 10 days. For Kazakhstan the advantage of constructing international road corridor would be the opportunity of boosting international trade and heighten investment appeal of the country in the entire Eurasian Silk Road.
In 2016 the budget of 8 road projects implemented in Kazakhstan, including the project “Western Europe – Western China” was estimated in the amount of 324,8 billion tenge, including: 35 billion tenge (10,8%) funded from the national budget; 138,3 billion tenge (42,5%) – from large banks and 151,3 billion tenge (46.5 %) – from the National Fund.
Beside the development of transit road infrastructure, Kazakhstan is actively involved in developing rail transit corridor through the SEZ “Khorgos – Eastern gate” to promote multi-mode transit system, in the framework of “Nurly Zhol” State program.
Since the launch of the SEZ “Khorgos – Eastern gate” a total container traffic amounted to 191 thousand containers, including 14 thousand containers in 2015, 87 thousand containers in 2016 and 90 thousand containers in 1H 2017 (www.europe-china.kz). Today, the throughput capacity of Khorgos dry port amounts to 200 000 containers, which is expected to increase to 500 000 containers by 2020. In 1H2017 it was transported 73,1 thousand containers via “China-Europe-China” corridor, which is 2 times higher the same period of 2016 (36,3 thousand containers).
Table: Main indicators of transport industry of the Republic of Kazakhstan for the period 2008-2016
|Contribution of transport sector to GDP, %||8,5||8,3||8,0||6,8||7,3||7,5||7,9||8,6||8,3|
Freight transportation, million tones
|2 188,7||2 103,3||2 439.4||2 974.9||3 231.8||3 508.0||3 749.8||3 733.8||3 729.2|
|Rail freight transport||269.0||248.4||267.9||279.7||294.8||293.7||390.7||341.4||338.9|
|Automobile and urban electric freight vehicles||1 721.0||1 687.5||1 971.8||2 475.5||2 718.4||2 983.4||3 129.1||3 174.0||3 180.7|
|Maritime freight transport||1.7||3.6||4.7||4.6||4.0||4.0||3.6||2.5||2.6|
Freight turnover by all modes of transport, billion t/km
|Rail freight transport||214.9||197.5||213.2||223.6||235.9||231.3||280.7||267.4||239.0|
|Freight Road transport||63.5||66.3||80.3||121.1||132.3||145.3||155.7||161.9||163.3|
|Maritime freight transport||0.8||1.4||3.1||3.2||2.8||2.7||2.5||1.6||1.8|
|The revenue of freight rail transport, billion tenge||415.3||406.4||496.8||601.5||679.9||687.2||683.8||589.4||642.8|
|The revenue of freight road transport, billion tenge||35.6||29.5||37.5||48.5||56.2||73.0||84.0||110.0||101.3|
*excl. inland water transport, pipeline transport, air transport
Source: Committee on Statistics of RK
In 2016 rail cargo transit of 205 000 containers (+36% compared to 2015) via Russia brought the Russian railways revenue of 6 billion rubles ($ 100 million), according to foreign experts.
In 2016, a total of 3 507 freight trains were sent from China to Europe via Kazakhstan. Of these, 1 212 were sent to Europe and 1 230 were sent to Kazakhstan and other Central Asian countries, according to Prime minister of Kazakhstan official site.
Launched in December 2016 the ferry complex in the Kuryk port (Mangistau region) has a transit capacity of up to 4 million tonnes of ferry cargo. To increase the volume of cargo traffic via the Trans-Caspian International Transport Route (TITR) it is planned to introduce a new car ferry with a loading capacity of up to 2 million tonnes of vehicles, by December 2017. In 8M2017 the cargo traffic of the ferry complex has reached 580 thousand tonnes and about 1 million tonnes of cargo is planned to transport by the end of 2017.
At the moment China plays a role of key investor in the formation and development of transport infrastructure of Kazakhstan, participating in various joint programmes and projects. According to some reports, Jiangsu province has invested about $ 600 million to the infrastructure construction on the territory of Kazakhstan. Since 2014, China have invested about $20 billion and around $ 8 billion in the current year.
According to the press-service of JSC “NC “Kazakhstan Temir Zholy”, on May 2017, in the framework of the ongoing One Belt One Road International Cooperation Forum in Beijing, Kazakhstan Temir Zholy signed an investment agreement with the corporation COSCO Shipping and Port Lianyungang on the joint development of the free economic zone Khorgos-Eastern Gate. Chinese investors will jointly make a purchase of a 49% (will take respectively 24.5%) of the shares stake in the dry port of Khorgos Gateway. COSCO Shipping is the world’s largest maritime operator and provider of logistics services. The corporation has more than 1100 ships with a total capacity of over 1.6 million containers, operates more than 300 international and domestic sea routes, connecting 254 seaports in 79 countries.
For China the main strategic direction of exports continues to be Western Europe. Approximately 90% of cargo traffic from China in this direction goes the most cost effective way of transporting – by sea. For comparison, the total container-carrying capacity of modern super container ship amounts to 16 000-20 000 containers, capacity of train – 40-100 containers, and capacity of trucks – 3-4 containers.
According to data, the minimum maritime freight rate for a 40 feet container shipment from UK to China starts from around $ 1 085 and takes about 40-day-delivery period. The minimum rail freight rate for the same size of container starts from around $ 4 600 and takes about 20-day-delivery period. The cost of air shipment twice as expensive as the train, however, and the delivery time is much shorter.
Beside the positive impact of transcontinental transport hub for Kazakhstan, there is also another side of the coin – it is well-organized transportation supply chain for the export of raw materials, agricultural and food products to China. In fact, Chinese contribution to the improvement of intermodal transport infrastructure in EEU countries is qualified as an attempt to expand its trade routes, both quantitatively and qualitatively. In addition, it should boost the interest of Central Asia, Russia and Eastern Europe to PRC products intended for self-pickup.
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