bne IntelliNews – Death of China-Russia freight transit routes means everything is on board for Kazakhstan

Vladimir Putin may well have monumental ideas about Russia reorienting its economy east and south, but right now freight shippers in China are faced with sending goods to Europe via Russian or Kazakh territory. are increasingly opting for the latter.

For many players in the transit trade, Russia, with its economy entangled in sanctions, is simply no longer an option. The volumes shipped by Kazakh Railways are booming and new routes from China, including the China-Kyrgyzstan-Uzbekistan (CKU) Railway, are planned.

Paul Stronski, senior fellow in the Russia and Eurasia program at the Carnegie Endowment for International Peace, highlighted Russia’s difficulties in mid-June when he told the South China Morning Post that a railway line linking the Chinese border through Kazakhstan, Russia, Belarus and the European Union “heavily subsidized by the Chinese side” and considered vital to transport goods from China to Europe via the Union Eurasian Economic Community (EAEU) “is now dead,” Stronski said.

Head left for Kazakhstan (Credit: Полномочное представительство Республики Татарстан в Республике Казахстан, cc-by0-sa.).

“European suppliers are now hesitant to put their goods on a train via Russia given the reputational risks, or fear that Russia will hold those goods,” Stronski said. “Chinese growers are wary of using the road, for the same reasons,” Stronski added.

Boom time in Aktau

Kazakhstan Temir Zholy (KTZ) company recently reported that Aktau Sea Commercial Port, Kuryk Port and Aktau Marine North Terminal, key points in the Caspian Sea on the Trans-Caspian International Transport Route (TITR), also known as a key section of the “Middle Corridor”, which offers several options such as Europe via Turkey, has doubled its shipping volume. And the head of the Aktau Sea Commercial Port, Abai Turikpenbayev, said volume on the TITR is expected to increase six-fold this year to 3.2 million tonnes.

The Azerbaijan-Georgia-Turkey (or Baku-Tbilisi-Kars) railway is a key section of the “Middle Corridor (Credit: Turkish Foreign Ministry).

AktauMarine’s North Terminal is actually part of three cargo routes, namely the TITR, the Europe-Caucasus-Asia Transport Corridor (TRACECA) and the International North-South Transport Corridor (INSTC) which in all its extent, would extend from Finland to India via Russia and Iran. , the South Caucasus and Iran (although the Russia-Finland leg must be a dubious prospect as things stand, especially since once in Iran shipments have several other routes to the ‘Europe). Freight from the Aktau terminal is shipped to Iran, Russia and Azerbaijan.

Kazakhstan is already part of the Chinese investment and transport infrastructure Belt and Road Initiative (BRI), which envisions Kazakhstan as a transit zone for Chinese goods heading to Europe and vice versa, but this role is set to expand further as European and Caucasian countries seek to improve the TITR.

The INSTC concept transports freight through Russia to Finland. But once the goods reach Azerbaijan via Iran, there are other options west. (Credit: zbk1, cc-by-sa 3.0).

Due to global concern over Russia’s war on Ukraine, the May 10 meeting in Ankara between Kazakhstan’s President Kassym-Jomart Tokayev and Turkish President Recep Tayyip Erdogan apparently slipped under the radar of main geopolitical observers. Nevertheless, their “Joint Statement on Enhanced Strategic Partnership” includes the outline of a new phase not only in bilateral relations but also in the reconfiguration of the multilateral map of Central Eurasia. While not the only such agreement, perhaps the most important aspect of the agreement is their mutual commitment to improving the TITR.

Tokayev noted during the meeting with Erdogan that “after the seaport of Kuryk [on Kazakhstan’s Caspian Sea coast] joined the Transcaspian Corridor, freight transportation time from Khorgos [on Kazakhstan’s border with China] to Istanbul… which previously took 60 days, now offers arrival in just 13 days.

He added that Kazakhstan had already started to “diversify oil export routes to China and Europe, including the use of Turkish transport corridors”. This trend is expected to continue to develop in the future, as Kazakhstan increases the capacity of its oil pipelines and modernizes the seaports of Aktau and Kuryk.

At a press conference on May 25, Wang Lingjun, vice-minister of the General Administration of Customs of the People’s Republic of China, spoke about improving China’s customs system at the land ports of Alashankou and Khorgos on the Sino-Kazakh border. These were naturally expected to boost trade between the two nations this year.

Figures reported by data collection agencies this year have already shown a major recovery in Kazakhstan’s trade turnover with China. It stood at $9 billion in the first four months of 2022, the General Administration of Customs of the People’s Republic of China announced on May 18. 35.6% year-on-year.

On May 25, transport and logistics company PTC Holding completed the second stage of the Dostyk TransTerminal at the Sino-Kazakh border, doubling the terminal’s throughput from 160,000 TEU to 320,000 TEU.

On the other side of landlocked Kazakhstan (the ninth largest country in the world at 2.72 million square kilometers), the volume of freight transported jointly managed by the Kazakh public railway operator Kazakhstan Temir Zholy and the railways of Azerbaijan jumped to 1,388,100 tonnes, up 1,088,800 tonnes, or 364%, year-on-year.

Kazakhstan’s growing emergence as a transit hub for bypassing Russia is also evidenced by certain geographical advantages. There are of course existing routes between Asia and Europe via the Suez Canal, but transport costs and delivery times are more important than alternative routes via the Caspian Sea. INSTC is one of the projects announced as a superb alternative to the Suez Canal option. Goods from Kazakhstan can be linked to the INSTC.

Some, however, believe that Kazakhstan may not be a long-term trade beneficiary at all from Russia’s loss of trade routes.

Potential setbacks

Nathan Hutson, a professor at the University of North Texas, wrote in an opinion piece for Eurasianet at the end of March that Kazakhstan could face setbacks as a transit zone under the Belt and Road Initiative.

China will re-evaluate its modern “Silk Road” routes given the geopolitical mess.

Since Kazakhstan’s territory under the BRI is primarily useful for moving freight further out to Russia, Hutson suggested that China could focus on prioritizing freight routes that pass through other countries in the United States. Central Asia. He cited an example of Chinese leader Xi Jingping working “to strengthen diplomatic relations along the southern route, discussing trade and transit with the leaders of Turkmenistan, [the president of Turkmenistan] Gurbanguly Berdimuhamedov and his son and [then] heir [now president]Serdar.

“Kazakhstan is the Central Asian nation with the most to lose from the BRI [plans] disturbance. The BRI transit trade has been a bright spot in Kazakhstan’s otherwise bleak economic landscape in recent years,” Hutson wrote. “Even as the COVID pandemic raged, the Trans-Eurasian rail corridors saw growth; in 2021, the BRI network, of which Kazakhstan is a major hub, handled around 15,000 trains, carrying almost 1.5 million containers.

“The massive new inland port of Khorgos on the Kazakh-Chinese border, often described by Kazakh officials as the ‘loop’ of the Belt and Road, has generated an attractive revenue stream into state coffers, despite rampant smuggling. Now it seems likely that there will be a sustained drop in trains passing through Khorgos.

Uzbekistan’s Deputy Transport Minister Abdusamat Muminov told the Trend news agency in March that Chinese, Turkmen, Kyrgyz, Azerbaijani, Georgian and Turkish officials were working with Turkmenistan to develop an Asia-Pacific international multimodal (China)-Central Asia-South Caucasus-Europe route, which appears to bypass Kazakhstan entirely. It was presumably referring in part to the CKU, which would form the first segment of this infrastructure.

Other observers, meanwhile, have suggested that if the death of the BRI was caused by realignments, this could be a moot point, since the BRI would simply continue to exist in a different form and would likely continue to rely on Kazakhstan in one form or another. .

“Considering that for Beijing, the Belt and Road is a political rather than an economic project, I believe that under the conditions of the polarization of the international system, China will always have an interest in maintaining and expanding its influence. Yes, most likely, the project will not exist in its original version, but most likely the belt and southern roads will be activated, as well as China’s ties with Russia will be intensified, including including in the transport corridor passing through Kazakhstan,” Anastassiya Reshetnyak, a political analyst working for the independent think tank PaperLab, told EURACTIV in early June.

Reshetnyak’s position is echoed in recent reports on northwest China’s Ningxia Hui Autonomous Region launching the first sea-rail intermodal freight train from China to Iran, forming a new logistics channel internationally via the Caspian Sea. The race stretches for about 8,500 kilometers from Yinchuan, the capital of Ningxia, and crosses the Caspian Sea via Kazakhstan, finally arriving at Bandar-e Anzali or the port of Anzali in northern Iran.

Kazakhstan’s territorial importance in linking the West to China seems unlikely to be eroded anytime soon. Russia, on the other hand, has a lot to do if it wants to shift to new relevance.

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