In 2005, Nursultan Nazarbayev, president of Kazakhstan, told an international conference that he saw his nation as a junction country in the Central Asian region, describing it as “an integrator of intra-regional economic ties” and “centre of gravity, of capital and investments.”
As a transcontinental country in Central Asia, Kazakhstan has many of the attributes needed to fulfil Nazarbayev’s ambitious vision of a decade ago, to emerge as a primary logistics hub connecting Europe and Asia – so long as it can overcome both political and operational complexities involved.
GAC has been working in Kazakhstan since 2008; during this time we have seen great progress through plans to invest in regional infrastructure projects to facilitate the movement of freight traffic through Kazakhstan.
Ambitious development plans
One of the key components in transforming Kazakhstan into a transportation hub is the completion of its first comprehensive Transportation Infrastructure Development Plan, which the government drafted in collaboration with the World Bank. Extending to 2020, the plan sets the framework and requirements for developing Kazakhstan into a leading transit hub for Eurasia and beyond.
Its goal is an ambitious one: to improve the country’s ranking in the World Bank’s Logistics Performance Index from 86th (in late 2012) to 40th place. To do so would require doubling transit cargo passing through Kazakhstan by 2020.
The plan foresees regional developments across road, rail, maritime and aviation sectors, effectively positioning Kazakhstan as a central cog in a regional multi-modal transportation corridor and facilitating more efficient flow of goods across Central Asian, and into international markets.
We recognized the potential of Kazakhstan early on. By combining local expertise and connections with the GAC Group’s global experience and resources, we provide a range of integrated services including ship supply and agency, provision of tugs and barges, expert logistics support and more for oil and gas activities operations in the region. In doing so, GAC Kazakhstan underlines its commitment to Kazakhstan’s growth ambitions.
Sturdy foundations
Kazakhstan’s development plans highlight its determination to overcome the challenge of being the world’s largest landlocked state with no direct access to the open sea, to emerge as a prosperous logistics hub.
The success of the government and World Bank plan is based on the growth and development witnessed in Kazakhstan in recent years.
The modernization of the Aktau port has enabled more efficient and cost-effective operations in the Caspian Sea, attracting major foreign investment in the oil sector, and generating marked economic growth that has averaged 8% every year since 2000.
Further, Kazakhstan has developed more export opportunities through other ports to increase the flow of international goods, such as the Baku Grain Terminal, the Black Sea port of Batumi, the grain terminal in the Baltic port of Ventspils and several others. Thus, despite its landlocked status, Kazakhstan has built a port infrastructure with substantial international reach.
Additional transport infrastructure is already being developed, primarily to improve exports of oil and gas to larger markets. The largest transit project of global significance is the 2,700-kilometre Kazakh section of the Western China-Western Europe auto corridor, which aims to improve the efficiency and safety of the main roads between China and Europe that pass through Kazakhstan, reducing transportation costs.
Bridging China and Europe
Businesses sending goods from China to Europe currently face a quandary; they can send items by trans-Siberian railway, which takes 14 days, or they can send goods by sea, through the Suez Canal, which costs less but takes three times as long.
Once completed, the planned Eurasian corridor will enable shippers to send goods faster by land with only 10-day travel times from China to Europe, enticing exporters from central and western China to consider the trans-Eurasian railway networks as an alternative to sea routes.
The Kazakh portion of the US$5.6 billion highway corridor should be completed later this year, and it is expected to raise the nation’s GDP by 68% above the 2010 baseline, while boosting the GDP of neighboring Central Asian countries by 43%. It is also expected to reduce yearly transportation costs in Kazakhstan by some US$230 million simply by reducing transit times. The country’s significant contribution towards the success of the cross-border project should also bolster Kazakhstan’s international standing as a reliable, cost effective central Asian logistics hub.
Kazakhstan has also been part of the process of implementing a longer, faster rail link between China and Germany, and the “Silk Road” railway is currently under construction. In October 2013, the Kazakhstan Minister of Transport declared that 915 kilometres were already open. Thanks to strong government support, Kazakhstan still expects to finish its portion of this track by 2015 – the original deadline – and 1,721 kilometres should be running by the end of this year.
Intra-regional trade
Elsewhere, Kazakhstan has supported the Northern Distribution Route, which links Baltic and Caspian ports with Afghanistan via Russia, Central Asia, and the Caucasus. While military needs are the impetus for the construction of these supply lines, their establishment nonetheless offers a prospect for future development.
Kazakhstan’s leaders maintain the economic fates of Kazakhstan and neighbouring countries are inseparable. Measures to proactively shape the regional transport infrastructure through multimodal projects is positioning Kazakhstan as a leading player; cementing a positive reputation on the global stage.
However, while the prospects seem positive, it is paramount that supply chain managers and their logistics partners continue to look for the most suitable logistics options to meet the needs of their business. GAC gives priority to working with its customers to ensure that they always have access to the most efficient, cost effective and reliable transportation solutions.
Its branches in Kazakhstan have extensive experience in multiple logistics solutions such as handling project cargo and providing general freight forwarding services for rig relocations for the oil and gas sector, serving as a freight forwarder and rail tariff provider, and multimodal projects through Turkmenistan and Uzbekistan. We pride ourselves on our in depth knowledge of the local market and our ability to tailor solutions to every logistics project.
By Jan Jiyenkulov
General Director, GAC Kazakhstan | Almaty