Real Volume

Can you talk about the current state of affairs in the transportation sector, and about the transit potential of Kazakhstan?

In the past 15 years, Kazakhstan has seen rapid and steady development. The economy has reached a rather high GDP per capita, and for the country. On the request from the President Nazarbayev, the government has developed a strategy for Kazakhstan’s industrialization, which allowed us to increase the export potential of the country. In the past 5-7 years, we focused on delivering export goods to external markets, especially in the Asian region, which required the development of transportation infrastructure. The logistics business has been growing quite actively in recent years due to extensive assistance from the government. Last year, the president announced a new economic policy that includes government investments in the development of transportation and logistics infrastructure. It also provided an incentive to form a transportation and logistics holding on the basis of KTZh. They will be managing not only railway deliveries, but also oversee all logistic undertakings tied to different transportation systems (overland, railway and shipment deliveries) and creation of various transportation and logistics hubs in Kazakhstan and beyond.

Experts predict that by 2020, the volume of railway transit deliveries may go up to 1 million TEU. For reference, the volume of railway deliveries moving through Russia is 2.5 million TEU. Right now, the overall annual volume of cargo deliveries in Kazakhstan constitutes 530,000 TEU, but this does not include cargo flow for the destinations we are developing at the moment, such the North-South corridor, which will provide a connection to Persian Gulf not only through the Aktau and Baku ports, but also through Turkey. The goods turnover between China and Europe may reach 1 trillion dollars by 2020, and between China and Turkey it will be up to 100 billion dollars. The turnover of goods between China and Russia will also grow.

What are the main destinations that KedenTransService is focusing on to develop their activity and increase transportation volumes?

Our shareholders are strongly backing development of delivery routes from Asia to Kazakhstan, as well as the development of transit deliveries through Kazakhstan. The main volume of transit is focused around Dostyk station. This transit point has been in operation for over 20 years, KedenTransService started operating at the station in 2005-2006, and at the moment we are operating seven terminals, one of which belongs to us, and the remaining six are under our supervision. Thanks to the development of business processes and automation of operations, we are seeing a constant increase in container deliveries, especially though Dostyk station. Together with KTZh we are also attracting new cargo deliveries to Horgos station. In 2015, we are planning to double the volume of deliveries to Europe. If last year we transported around 23,000 TEU, or 250 container cargo trains, this year we are planning to increase this number to 500 trains. Prior to 2014, cargo trains operated mostly between China and Europe, but this year we have started running the return route as well. From China to Europe, we are delivering electronics and domestic appliances, from Europe to China, we carry automotive components for companies like Ford, Volvo, and Volkswagen. Kazakhstan itself is rapidly developing its automotive industry. Our country has two main automotive clusters, Ust-Kamenogorsk in the east and Kostanay in the north. With the support from our shareholders, KedenTransService organized transit delivery of automotive parts in cargo trains from Europe. The same technologies have been successfully implemented in Kostanay, where the second biggest automotive manufacturing hub is growing. The volume of transit goods is increasing as well, and factories are demonstrating serious and innovative plans, which we provide with timely delivery of construction parts.