LOGISTICS OF EXPORTING TO EURASIA SERIES 

 

Transportation, Distribution and Warehousing Services in Kazakhstan

 

November 2006

 

Author: Beibit Yerubayev, Bisnis Representative in Kazakhstan

 

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2006. ALL RIGHTS RESERVED FOR USE OUTSIDE OF THE UNITED STATES.

1. GENERAL MARKET OVERVIEW

Located in the heart of Eurasia, Kazakhstan has good potential to become a transportation hub for the region. The country is rich in natural resources, has abundant farm lands, educated labor force, and substantial industrial potential.  The Kazakhstan 2006 per capita GDP reached $5,100, which is about the current level of GDP in the Czech Republic, Hungary and Poland.  By 2015, it is targeted to reach $ 9,000. According to the World Bank rating, Kazakhstan currently is classified as a middle-income country.

Economic activity remains strong in Kazakhstan, with 2006 marking the seventh consecutive year of real GDP growth in excess of 9 %. Throughout 2006, key social indicators continued to improve and unemployment continued to decline.

 

The following table shows the foreign commerce of Kazakhstan with the NIS and other countries of the world.

 

Foreign Commerce of the Republic of Kazakhstan

(In millions $)

 

2003

2004

2005

Total sales turnover -

21,335.4

32,877.5

45,201.2

Including:

 

 

 

- NIS

6,912.8

10,215.1

12,200.7

- Other countries

14,422.6

22,662.4

33,000.6

Total Export

12,926.7

20,096.2

27,849.0

Including:

 

 

 

- NIS

2,980.5

4,097.2

4,066.8

- Other countries

9,946.2

15,999.0

23,782.2

Total import

8,408.7

12,781.3

17,352.2

Including

 

 

 

- NIS

3,932.3

6,117.9

8,133.9

- Other countries

4,476.4

6,663.4

9,218.3

Source: National Statistics Agency, Republic of Kazakhstan

 

1.1   Transport Infrastructure

 

Kazakhstan’s transport sector includes railways, air, maritime, and river transport, pipelines, and automobile routes.

 

Motor and railway routes account for a major share of the total aboveground transport routes, approximately 88,400 km and 14,000 km respectively.  There are 3,900 km of navigable waterways and 61,000 km of air routes. Density per 1,000 square km is 5,100 km for railways, 32,400 km for hard-surfaced automobile routes, and 1,500 km for inland navigable waterways.

 

The airline sector consists of the national airline, Air Astana, and a number of smaller airlines. Regular flights link Kazakhstan to Turkey, UK, China, India, Germany, Austria, and several other countries. Kazakhstan’s largest airports are Astana, Almaty, Karaganda, and Aktobe.

 

1.2      Market peculiarities

 

Kazakhstan’s huge territory, its land-locked position, and its unbalanced distribution of population and natural resources makes the economy of the country highly dependent on its transportation system.

 

Three main transit routes cross the country’s territory:

 

·        Europe to China via the territory of Russia;

 

·        Europe to China via the territories of the Economic Cooperation Organization (ECO) countries: Afghanistan, Azerbaijan, Iran, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkey, Turkmenistan and Uzbekistan;

 

·        Russia to Central Asia.

 

The central geographical location of Kazakhstan, Russia and other Post Soviet countries makes attracting a significant portion of all cargo transit between the EU and Asia. According to the IMF the cargo transit is worth more than $ 600 billon.

 

According to research conducted by Kazakhstani government agencies, Kazakhstan has a basic transportation network and skilled labor force; a lot of investment will be required in future years. Infrastructural investment requirements for the next 30 years are expected to total more than $ 25 billion. Of that, 40 % will be needed for railway transportation, 23 % for highways and motor transport, 25 % for telecommunications, and 12 % for the air and water transport systems.

 

Kazakhstan’s railway system plays a significant role in the transportation-communication network. It provides up to 70 % of cargo and 50 % of passenger turnover in the overall transport operations. Total railway mileage exceeds 14,000 km. The system connects all Kazakhstan’s regions and is suitable for international transit.

 

Kazakhstan’s transit potential has the possibility to increase its capacity through five international railway transport corridors. The principal among them is the Trans Kazakhstan Route project from China to Europe through Kazakhstan, Turkmenistan, Iran and Turkey. One advantage of this route is that the railroad track width will be in line with the international standards so that it will be unnecessary to change railroad wheels at the borders. The length of the Kazakh portion of the route will be 3,070 km. The route will allow delivering cargo from the ports of China to the port of Rotterdam within 18 days, resulting in significant cost savings for cargo transportation from the Asia-Pacific Region to Western Europe. The two-stage project has a 15-year implementation period and is set to transport up to 110 million tons of cargo a year through the territory of Kazakhstan.

 

Water transportation is the third most important element in Kazakhstan’s transportation system with both state and private companies operating in this field. The Irtysh River and the Caspian Sea present outstanding opportunities for development of this area.

 

 

2.       PRIMARY TRANSPORTATION MODES

 

Rail and auto transport are the two most popular modes of transportation for importing goods into Kazakhstan, followed by sea and air transport. The following table shows the transportation turnover of goods on each type of transport.

 

Transportation of cargo and turnover of goods

 

2003

2004

2005

Million of tons

Billion tonne-   kilometre

Million of tons

Billion tonne-kilometre

Million of tons

Billion tonne-kilometre

All types of transportation

1,687.5

258.4

1,840.5

283.1

1,926.9

296.3

Including

 

 

 

 

 

 

Railroad1

203.2

148.4

215.6

163.4

222.7

171.9

Pipeline2

164.4

69.7

179.4

75.6

192.0

77.1

Water

0.5

0.07

0.7

0.08

0.8

0.09

Motor

1,313.0

40.0

1,444.8

43.9

1,511.1

47.1

Air (Thousands of tons)

23.5

0.09

18.2

0.07

20.7

0.1

Source: National Statistics Agency, Republic of Kazakhstan

1) Before 1997 – outbound freight, since 1997 – carried.
2) Since 1995 –
oil and gas delivery included, since 1997 – transit of natural gas included.

Express delivery companies, such as DHL, UPS, and FedEx, are present in all major cities of Kazakhstan. The services might include customs clearance formalities and provide a number of convenient transportation and logistics solutions for customers.

 

2.1 Waterways and Ports

 

As stated on the Prime Minister of the Republic of Kazakhstan’s website, The International Merchant Seaport of Aktau is the only seaport in Kazakhstan that can facilitate international flows of bulk-cargoes, crude oil, and petroproducts. Commissioned in 1963, it is now a part of the international transport corridors TRACECA and North-South, which ensures access to the ports of the Caspian, Black-Mediterranean, and Baltic basins, ports of the Gulf countries, and Southeast Asia. Cargoes from the seaport of Aktau are mainly transported to the following destinations: Anzali, Amirabad, Neka, Nowshahr, Astrakhan, Olya, Makhachkala, Baku, and Turkmenbashi.

 

Source: http://www.portaktau.kz/trkor.shtml

 

 

Cargo Flows Through the Port of Aktau, (thousands tones)

 

 

2003

2004

2005

Oil and oil products handled

2,500

4,845.4

9,000.0

Dry Cargo

1,150

1,300

1,400

Including metal

800

993

1,070.0

Source: The Port of Aktau

 

 

TRACECA

http://www.portaktau.kz/trkor.shtml

 

The seaport of Aktau (http://www.portaktau.kz) is a major entity within the Aktau Seaport special economic zone established in January 1, 2003. Currently, the port possesses three multi-purpose berths to handle general and bulk cargoes and grain export. The total length of the berths is approximately 550 m and four vessels can be handled at a time. A railway-ferry complex is in operation that transports cargo directly to the rail lines. The grain terminal is capable of processing 600,000 tons and storing of up to 24,000 tons of grain at a time.

 

During a period of eight months in 2006, the International Merchant Seaport of Aktau handled 1,347 vessels, which translates into 7,576,700 tons of general and oil cargoes.

 

2.2 Rail

 

Kazakhstan has a low population density and a vast inland territory located far from any ocean. Therefore, internal transportation is of vital importance and the leading role falls to the railway sector.

 

The rail system is in high demand due to its ability to cover vast distances and it’s comparatively low cost for moving passengers and freight.

 

Out of the 14,203.2 km of railway lines in operation in Kazakhstan, 877.6 km belong to foreign countries. In addition, 336.3 km railways are located in foreign countries. Kazakhstan's railways include 3,997.3 km of electrified lines and 4,801.7 km of dual-track lines and multi-track railways.

 

In Kazakhstan, the density of trunk railways is 5.5 km per 1,000 sq km. The main transcontinental routes connecting the countries of the Asian-Pacific region, the Middle East and Near East, and Europe cross Kazakhstan. The main railway corridors of the Trans-Asian Trunk Railway connecting Europe with Asia, the Northern, Southern, Central Asian, North-South and TRACECA corridors, also pass through Kazakhstan.

 

Astana, new capital of Kazakhstan, as well as the large industrial hubs, such as Karaganda, Zhezkazgan and Balkhash, are located in the Northern Corridor. In the west, the railway routes are integrated with the Pan-European Transport Corridor, and in the east, with the highly economically active regions, such as the Korea peninsula, eastern and western China, and countries of Central Asia and the Persian Gulf.

 

According to National Railway Company (Kazakhstan Temir Zholy) at the end of 2004, Kazakhstan's rolling stock included 1,711 locomo­tives (34 steam locomotives, 595 electrics, 1,082 diesel and other lo­comotives), with a total capacity of 6,578.4 MW, as well as 301 railcars, 1,922 passenger and 100 goods wagons. In addition, there were 60,792 freight cars owned by the state railway companies and 26,688 owned by private companies and enterprises.

 

According to research conducted by Kazakhstani government agencies in 2004, the volume of transportation in Kazakhstan was 1.8405 million tons and cargo turnover was 283.1 billion ton-km. The railways were used mainly for transporting coal (38.7% of the total volume), iron and manganese ores (11.6%), and oil (11.3%). As com­pared with 2003, transportation volumes of almost all goods increased. For instance, transportation of oil increased by 2,589,000 tons (11.9%), building materials by 2,514,000 tons (17.0%), iron and manganese ores by 2,234,000 tons (9.8%), and timber by 600,000 tons (35.6%).

 

2.3   Roads

 

Roads are main element of Kazakhstan's transportation infrastructure. They are the most efficient means of transportation for cargo and people. In 2004, 78% of cargo and 85% of passengers were transported on vehicles using the roads.

 

By the end of 2004, the total length of public roads was 90,018 km, in­cluding 84,112 km of surfaced roads (93.4%). The public surfaced roads are of two types: state roads (22,859 km) and local roads (61,253 km). By the beginning of 2005, surfaced road density in the country was 30.9 km per 1,000 sq km, up from 30.7 km in 2003.

 

In 2004, the Astana-Karaganda road was commissioned and in 2005-2006, Almaty-Bishkek road was also commissioned. Under reconstruction are the following directions Aktobe-Kazabutak road and the West Kazakhstan road network.

 

The country's road network is to be further modernized and devel­oped in such way as to benefit from the county's geographic location between Europe and Asia.

 

According to Kazakhstani statistics agency in 2004, motor transport carried 1.4448 billion tons of cargo, including transportation by non-carrier companies and estimates of commercial cargo carriage by private entrepreneurs. This was a 9 % increase over 2003 estimates. In 2004, motor transport of passengers, includ­ing commercial carriage by private entrepreneurs, totaled 9.3903 billion persons, a 5.6 % increase from 2003 figures.

 

In 2004, 22,167 enterprises operated 212,830 motor vehicles (13.9% of total motor vehicles), including trucks (42.6%), automobiles (27.6%), specialized vehicles (17.7%), and buses (12.1%). The total number of trucks (90,750 vehicles) included 31,901 dump trucks, 21,487 platform trucks, and 11,958 tank cars, 12,121 vans. 6,900 truck tractors and 6,383 other vehicles.

 

2.4      Airways and Airports

 

There are 22 airports in Kazakhstan, including Astana and Almaty International Airports and 14 other airports that provide international transportation on short-term bases. Recently, two new international terminals in Astana and Almaty were put into operation. Modernization of radio and air-navigation equipment enabled the number of international air corridors to increase to 72. Eighteen countries in Europe, Southeast Asia, Central Asia, and Russia carry out transit traffic through Kazakhstan airspace. Forty-seven airlines operate in Kazakhstan, including Lufthansa, KLM, British Airways, Turkish Airlines, and others. Kazakhstan is convenient for international flight connections between West and East. Air Astana is currently the largest airline in Kazakhstan and carries out 21 international and 17 domestic flights.

 

Major Airports:

 

·        Almaty International Airport http://www.almatyairport.com

·        Astana International Airport http://www.astanaairport.kz

·        Karaganda "Sary-Arka" http://airport.karaganda.kz

·        Shymkent International Airport http://www.airserver.kz

·        Aryrau International Airport http://www.atyrauairport.com

 

Kazakhstan's airspace is attractive for transit fights from Europe and Russia to Southeast and Central Asia.

Major transit corridors in Kazakhstan's airspace:

·        ARISA-SARINE: from Europe to China and Southeast Asia;

·        ARISA-ODIVA: from Europe to South Asia;

·        AZABI-TIROM: from Europe to South Asia, the Middle and Near East;

·        SARINE-BAEOON: from the Near East to China and Southeast Asia.

 

 

List of air companies operating cargo aircrafts in Kazakhstan

No.

Name

Contact details

1

Sayakhat Air Company JSC

13, Novaya St., Karagaly vill., Karasay rayon, Almaty oblast , tel.: +7(3272) 62-26-28

2

Irbis Air Company JSC

65, Furmanova St., Almaty tel.: +7(3272) 73-02-74

3

Air company GST Aero JSC

115, Zheltoksan St., office 350, Almaty tel.: +7(3272) 62-35-86

4

Atma Air Company JSC

28, Markova St., Almaty tel.: +7(3272) 97-17-52

 

3. TRANSPORTATION AND LOGISTICS SERVICES

 

About 350 freight forward companies operate in Kazakhstan, some of them are international, but most are local. Globalink, DHL, FedEx, UPS, Maersk line, Agis-Aweca-Europe International Logistik, GmbH, and M&M International Transport are already operating in Kazakhstan. List of some transportation companies is provided on the last page of this paper.

 

3.1      Shipping and Freight forwarding

 

The shipping and freight forwarding market is represented relatively well. As stated before there are many Kazakhstani and foreign companies perform services such as, export-import, international air and sea shipments, door-to-door delivery, logistics, warehousing, packing, customs clearance, insurance, and assistance in goods supply.

 

3.2 Distribution (wholesale/retail supply networks)

 

a) Wholesale networks

 

The major wholesale network is “Skif” LLP with  “Cash&Carry”, operates in major cities of the country. “Anvar” big supermarket chain http://www.anvar.kz/ operates mainly in the western part of Kazakhstan. Also in major cities of the country there are a lot of small and medium companies work on the wholesale market and distribute different type of goods among retail companies and shops.

 

b) Retail

Kazakhstan’s retail market is one of the most rapidly developing sectors of the country’s economy. Local chains currently dominate, but the situation can be changed with the entry of global retail companies.

 

c) Retail food sector

 

Major players:

·        Ramstore (supermarket chain) http://www.ramstore.kz

·        Gross (supermarket chain)

·        Pyatorochka (Russian supermarket chain) http://www.e5.ru

·        Astykzhan (supermarket chain) http://www.tsesnaastyk.kz

·        S.mile (convenience store chain) http://www.s.mile.kz/

·        Pyatorochka (Russian supermarket chain) http://www.e5.ru

 

d) Retail non-food sector

 

Major players:

 

e) DIY sector

 

Major players:

Do-it-yourself stores recently appeared on the Kazakhstani market, but have quickly gained popularity. Currently, local operators dominate the market with the major retail chains being:

 

f) Distribution

 

Trucks belonging to individual entrepreneurs and independent transportation companies distribute most of the ready products or supplies of assorted commodities to food shops in Kazakhstan’s cities. Large trade companies mostly have their own distribution infrastructure with their own fleet of trucks.

 

3.3               Warehousing

 

Warehousing market in Kazakhstan is relatively young and has several problems. The lack of Class A and Class B warehouses and the oversupply of low class warehouse makes it challenging to find a warehouse with satisfactory specifications for size, height, microclimate, and additional services.

 

3.4         Supply chain management (third-party logistics (3PL), consultants and IT solution providers)

 

The following is a list of leading operators in warehouse logistics (3PL and supply chain management):

·        LP JV “ Kazakhstan Logistics service,” www.kls.kz

·        International Transport Logistics Services (ITLS), http://www.itls.kz

·        Panalpina World Transport LLP, http://www.panalpina.com

·        Globalink ALMATY, http://globallink.com

 

3.5       Other Services (Security, Insurance, Equipment and Vehicle Leasing)

 

Services provided for transportation companies:

 

4.     MARKET OPPORTUNITIES FOR U.S. COMPANIES

 

Kazakhstan’s transportation system is rapidly developing and requires investments in different areas such as:

 

 

However, the above mentioned is only a small part of the investment opportunities that can be found in Kazakhstan’s transportation system.

 

5.  USEFUL RESOURCES

 

5.1   Government Organizations (i.e., Mintrans, RosAvtodor, etc.)

 

Ministry of transport and communication of the republic of Kazakhstan

Head office country: Kazakhstan

Astana, 010000

Address: 49,Abay Ave.,

Tel: 7 (3172) 326277, 322994

Fax: 7 (3172) 321058

Web site: www.mtk.gov.kz

 

Joint-stock company «National company «Kazakstan temir zholy», (National railway company)

Astana, 010000

Address: 98 Pobedy Ave.

Tel:  7 (3172) 93-01-13, +7 (3172) 93-01-49

Fax: 7 (3172) 93-45-50

Web site: http://www.railways.kz/ (The website does not provide any information in English.)

 

5.2 Trade associations and information portals

 

Almaty entrepreneurs association 

Alamaty, 050010

85 Dostyk Ave. office 519

Tel: 7 (3272) 613551

Fax: 7 (3272) 728310

E-mail: paltasheva@nursat.kz

Web site: http://aaekz.com

 

Commercial and industrial chamber of Almaty city

Almaty, 050000

45/91.Tole bi St.

Tel: 7 (3272) 610187, 613226, 611572, 611934, 611624, 612295

Fax. 7 (3272) 610301, 611404, 611453

E-Mail:alcci@mail.kz

Web site: www.almatycci.kz (The website provides all information in English.)

 

Kazakhstan Association of Marketing

 Almaty 050020

12 Chaikinoy St.

Phone/ Fax: 7(3272) 915616

Email: marketingkam@nursat.kz

Web site: http://www.marketingkam.kz (The website provides information in English.)

 

Association of National Fright Forwarders  

Almaty 050000,

127 Fyrmanov St.

Tel.+7 (3272) 61-01-38, 61-02-95

E-mail: info@kffanek.kz

Web site: www.kffanek.kz

 

5.3   Trade consultants, lawyers, etc.

 

Consultants:

 

Strategic Consultants and Company

Almaty, 050000

531 Seyfulina St. office 421

Tel: 7 (3272) 2582252

Fax: 7(3272) 2582388

E-mail: ia_scc@nursat.kz

Web site: http://www.scc.kz

 

KazConsult

Astana, Kazakhstan:

Telephone:  +7 (3172) 31 55 06

E-mail: info@kazconsult.com

Web site: http://www.kazconsult.com

 

 

Deloitte & Touche

Almaty, 050059

Address: 240-v Furmanov St.

Tel: 7 (3272) 2581340

Fax: 7 (3272) 2581341

E-mail, almaty@deloitte.kz

Web site: http://www.deloitte.com/kz

 

KAZCONSULT REGCON-ASIA

Almaty, 050000

Address: 177 Makatayev St. 4th floor, office # 401

Tel/Fax: + (3272) 795298, 343987

E-mail: office@regcon-asia.kz

Web site: http://www.regcon-asia.kz

 

Legal:

 

Bracewell & Patterson

Almaty, 050012

Address: 57 Amageldy St.

Tel: 7 (3272) 2581400, 2581197

Fax: 7 (3272) 2581444

E-mail: Gregory J. Vojack, Managing Partner, Kazakhstan

(greg.vojack@bracewellgiuliani.kz)

 

Denton Wilde Sapte

Almaty, 050022

96 Baitursinov St.

Tel:  7 (3272) 2581950

Fax: 7 (3272) 2581905

E-mail: almaty@dentonwildesapte.com

Web site: http://www.dentonwildesapte.com

 

McGuireWoods Kazakhstan

Almaty, 050010

41-a Kazybek bi St. Казыбек би, 41-а

Tel: 7 (3272) 2596100, 2596114

Fax: 7(3272) 2596116

E-mail: akalyakina@mcguirewoods.com

Web site: http://www.mcguirewoods.com

 

Michael Wilson & Partners

Almaty, 050051

"Samal-1", 36, floor 5

Tel: 7 (3272) 2501570, 2584890

Fax: 7(3272) 2501575

E-mail, mwp@nursat.kz

Web site: http://www.mwp.kz

 

international and local transportation companies in Kazakhstan:

 

MAXX INTERMODAL SYSTEMS

Almaty, 050059

95 Al-Farabi Ave.

Tel: 7 (3272) 668174, 668175, 695120, 695121, 695122

Fax 7 (3272) 668173

E-mail:  joachim.hanssen@ritel.be

Web site: http://www.maxx.be

 

Polfrost Almaty

Almaty, 480091

86 Gogola St., office 716

Tel: 7(3272) 95 28 65

Fax: 7(3272) 95 28 66

Email: polfrost.almaty@polfrost.kz

Web site: http://www.polfrost.com

 

Panalpina World Transport LLP

Almaty, 050050

5 Tabachnozavodskaya St.

Tel: 7 (3272) 507171

Fax: 7 (3272) 509385

Email: info.kazakhstan@panalpina.com

Web site: http://www.panalpina.com

 

STS Logistics

Almaty, 050000

5 Valikhanov St., mailbox 158

Tel: 7(3272) 34-78-04, 34-78-05, 34-77-81

Fax: 7(3272) 34-77-80

Email: stsala@stslogistics.net

Web site: http://www.stslogistics.net

 

Globalink ALMATY

Almaty, 050010

52, Kabanbay Batyr St.

Tel: 7 (3272) 588880  

Fax: 7(3272) 588885

E-mail:  info@globalinkllc.com

Web site: http://globallink.com

 

BEST LTD. Shipping & Marine Services.

Kazakhstan, Aktau, 130000, P.O.Box 152

Tel: 7 (3292) 502122

Fax: 7 (3292) 522555

Telex: 94072139 BEST (via UK)

E-mail: Best.shipping@mail.ru, Best.shipping@nursat.kz

 

LP JV “ Kazakhstan Logistics service”

050002 Almaty

64, Kunaev St., office 21

Tel.: 7(3272) 73-70-89, 73-38-67

Fax: 7(3272) 73-25-79

E-mail addresses:

The director: shestakov@kls.kz

Customs department: customs@kls.kz

Web site: www.kls.kz

 

International Transport Logistics Services

ITLS

Almaty, 050016

18 Konayev St., 3rd floor.

Tel: 7 (3272) 713351, 710590, 734462, 711774

Fax: 7 (3272) 506188

E-mail: lilian@itls.kz, alexey@itls.kz

Web site: http://www.itls.kz

 

Kaztransservice JSC

Astana, 473021 

63 А Zhubanov St.

Tel.: 7 (3172) 58-03-12, 58-03-10, 34-54-42

Fax: 7 (3172) 58-03-11, 37-24-64

E-mail: kts_ktzu@kepter.kz

 

 

5.4   USG Resources (local offices)

 

Embassy of the United States of America in the Republic of Kazakhstan

Astana, 010010

Ak Bulak 4,

Str. 23-22, building #3

Phone: 7 (3172) 70-21-00

Fax: 7 (3172) 34-08-90

Email: info@usembassy.kz

 

American Chamber of Commerce in Kazakhstan
tel.: 7 (3272) 587938, +7 (3272) 587939, +7 (3272) 587940
fax: 7 (3272) 587942,

Email: info@amcham.kz

US Embassy Almaty

U.S. Commercial Service

Samal - 2, 97 Zholdasbekov St. - 11th fl.

050099 Almaty, Kazakhstan

Tel: 7 (3272) 50-49-50, 50-48-50
Fax: 7 (3272) 50-49-67, 50-48-74
Email: almaty.office.box@N0SPAM.mail.doc.gov

 

For more information on Kazakhstan, visit BISNIS online at http://www.bisnis.doc.gov/bisnis/country/kazakhstan.cfm

 

BISNIS (www.bisnis.doc.gov) is part of the U.S. Commercial Service (www.export.gov)