Kazakh port looks to trade bypassing Russia

Kazakh port looks to trade bypassing Russia
Aktau port’s cargo tonnage nearly halved in 2015.
By Naubet Bisenov in Almaty February 18, 2016

Kazakhstan’s government has ordered the country’s sole seaport at the city of Aktau on the Caspian Sea to cut the time required for customs clearance to boost the port’s attractiveness. A host of economic problems the country is facing, together with red tape, have led the port’s cargo tonnage to nearly halve in 2015.

However, regional countries' attempts to trade bypassing Russia – which has imposed barriers on Turkish, EU and Ukrainian transit via its territory – will increase the port’s attractiveness. The port is currently carrying out an expansion project which upon completion later this year will increase its capacity from 16mn tonnes to 19mn tonnes of liquid and dry cargo a year.

On his second visit to the Aktau international sea trade port in the past two weeks, First Deputy Prime Minister Bakytzhan Sagintayev checked the implementation of his orders to cut the time required for customs clearance from up to 12 hours to 3 hours by establishing better coordination between government agencies and the port authority. He also issued orders to set up car parks for large-capacity lorries outside the port and create living conditions and conveniences for lorry drivers.

Sagintayev’s concern over the port’s operations is caused by a dramatic fall in the tonnage of cargo handled by the port in 2015: according to official figures, the amount of oil and petroleum products and dry cargoes fell by 43% y/y to 5.9mn tonnes in 2015, including oil and petroleum products by 42% to 3.5mn tonnes and dry cargoes by 44% to 2.4mn tonnes. Of dry cargoes, the transhipment of metal products fell to 1.1mn tonnes from 1.2mn tonnes and grain to 0.5mn tonnes from 0.7mn tonnes, and other cargoes to 0.34mn tonnes from 0.43mn tonnes.

The decline in the transhipment of oil and petroleum products is explained by a decrease in Kazakhstan’s oil output by 1.5mn tonnes to 79.5mn tonnes in 2015 and an increase in the shipment of oil from 40mn tonnes in 2014 to 42.7mn tonnes in 2015 by the Caspian Pipeline Consortium pipeline, the capacity of which was increased to 52mn tonnes of oil a year in 2015. The pipeline ships Kazakh oil to the Russian Black Sea port of Novorossiysk.

The opening of a Kazakhstan-Turkmenistan-Iran railway line with a capacity of 10mn tonnes a year in December 2014 has inflicted another blow to the Aktau port as it, the figures show, has already started diverting part of the dry cargo shipments, including grain. Kazakh authorities will now have to work hard to maintain both sea and land routes at full capacity.

However, the port could benefit from China’s desire to trade with the Middle East and Europe under its One Belt, One Road (aka Silk Road Economic Belt), especially with Iran after the partial lifting of Western sanctions in January. In early February China tested the new railway route by sending a freight train from its eastern city of Yiwu to Iran via Kazakhstan and Turkmenistan. The train covered nearly 10,500 km in 14 days, saving 30 days compared to the sea route between Shanghai and Bandar Abbas, an Iranian port on the Persian Gulf.

In January, Ukraine tested an intermodal route by sending a container train to China via the Black Sea to Georgia and Azerbaijan and across the Caspian Sea to the Aktau port. Despite a two-week-long journey to arrive in Aktau, the route offers Ukraine an opportunity to maintain its trade relations with other former Soviet countries and China after Russia has imposed a ban on the transit of Ukrainian lorries via its territory.

Kazakhstan, which has also been affected by the Russian ban on imports of Western foodstuffs after Moscow prevented the transit of Kazakhstan-bound freight, is also suffering from the Kremlin’s ban on the transit of Turkish goods imposed as a retaliation against Turkey’s downing of a Russian jetfighter in November. The Russian measures against its neighbours resulted in an almost 10-fold increase in the transhipment of lorries carried by ferries: it processed 802 lorries in December alone against 870 lorries in the first 11 months of 2015.

Sagintayev is now touring Azerbaijan and Georgia to discuss the creation of a permanent railway corridor from the Caucasus to Central Asia across the Caspian Sea. In Tbilisi on February 17-18, he announced the creation of a consortium by the railway authorities of Georgia, Azerbaijan and Kazakhstan. “This is a very profitable transit route for us all and we are seriously interested in the creation of such consortium,” he was quoted as saying by the state-run Kazinform news agency.

Should the trans-Caspian container route prove to be a success, Kazakhstan and Turkey will be encouraged to employ it to bypass Russia. As a result, the Aktau port will benefit too.