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- Review of international road haulage sector
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Review of international road haulage sector
CONTENT
LIST OF POTENTIAL OPPORTUNITIES
dESCRIPTION
The international road haulage is an extremely efficient segment of the economy of Kazakhstan.
Kazakhstan is located in close proximity to the dynamic growth poles, such as Turkey, Russia, India and China (representing more than half of global economic growth and trade).
Kazakhstan is also able to play an important role as a regional trade and logistics center, taking into account the location of the country along the major railways and highways linking Central Asia and Russia (in the direction from north to south) and China (in the direction from east to west). Moreover, China accession to the IMT Convention, which is planned to take place in the nearest future, will create all the conditions for a significant increase in transportation volumes between China and European countries. Calculations show that in the coming years the volume of cargo transportation from China through Kazakhstan can increase up to 1.5 - 2 million tons per year. For this purpose, the vehicle fleet engaged in the transportation must be doubled.
It is crucial to study the regional communication in the Central Asia for the development of Kazakhstan, given the fact that it opens up opportunities for beneficial use of the economic growth advantages in other countries.
CONTRIBUTION TO THE ECONOMY
Using only one car within the international haulage of goods allows replenishing the country budget with the amount of 4 to 10 thousand US dollars annually, increasing the local content from 60 up to 100 million US dollars, to create at least two new jobs.
Total volume of transportation is dominated by road traffic. According to the statistics, over the past five years it has provided more than 80% of the total cargo transportation, serving almost for all sectors of the economy. Steady grow in the share of road haulage on the annual basis reflects a high potential of this means of transport.
Road transportation
Railway transportation
Air transportation
Sea transportation
Internal river transportation |
thousand tons |
Figure 1. Dynamics of the Cargo Transportation Volumes Depending on the Means of Transport (Without Pipeline Transportation) in All Sectors of the Economy for the period 2009 to 2014
Source: Committee on Statistics at the Ministry of National Economy of the Republic of Kazakhstan
The cargo turnover of the railway transportation is traditionally superior to that of road haulage (Figure 2). However, the share of railway transportation in the total cargo turnover has been steadily declining (from 58% in 2009 to 44% in 2014) with a simultaneous increase in the share of road haulage by 12% to reach 32%.
Road transportation
Railway transportation
Air transportation
Sea transportation
Internal river transportation |
million tons |
Figure 2. Dynamics of the Cargo Turnover (Without Pipeline Transportation) in All Sectors of the Economy for the period 2009 to 2014
Source: Committee on Statistics at the Ministry of National Economy of the Republic of Kazakhstan
Considering the volume of imports from the countries of Europe in terms of money, it is clear that road haulage accounts for about 70% of total transportation. Figure 3 shows a diagram with a comparative analysis of the total imports, with the railway and road haulage.
Railway transportation |
Road transportation |
thousand dollars |
Figure 3. Dynamics of the Imports Volume from Europe by Road or Railway Transportation from 2010 to 2014
Source: Research Institute of Transportation and Communications
Presently, the international road haulage is carried out between Kazakhstan and 40 countries of the world. According to expert estimates the capacity of the Kazakhstan market reaches 1 billion US dollars (the amount of freight). All international road haulage can be divided into two groups: international haulage within the Eurasian Economic Community (EAEC), and that beyond the EAEC. Over the past five years, the total volume of international road haulage outside the EAEC, showing a trend to growth with minor fluctuations, rose by 40% and amounted to 4.4 mln. tons. The structure of international haulage for the period covered by the study has changed - the specific weight of exports has increased from 24% to 43%, while the share of imports fell from 76% to 57% (Figure 4). The right diagram in Figure 4 shows the situation when the transportation of construction materials to Kyrgyzstan is not taken into account in total exports. Due to the fact that the transportation of construction materials from Kazakhstan to Kyrgyzstan it is performed at a distance of 50 km. Further, in the analysis conducted the information will be provided without regard to transportation of building materials to Kyrgyzstan.
tons |
tons |
Экспорт – exports
Импорт – imports
Общий итог – in total
* Без учета перевозок внутри стран ЕАЭС – excluding transportation within EAEC
* Без учета экспортных перевозок строительных материалов в Кыргызстан – excluding exports of construction materials in Kyrgyzstan
Figure 4. Dynamics of the Total Volume of International Road haulage for the Period from 2009 to 2014
Source: Research Institute of Transportation and Communications
Kazakhstan market of international road haulage can be divided into four main groups. The first group is represented by China, where Kazakhstan carriers account for the largest share, namely 84%. The CIS countries constitute the second group where the volume of road haulage does not include Russia and Belarus. Here, the share of national carriers is only 8%, but excluding export transportation of construction materials to Kyrgyzstan, thus the share reaching 17%. In this group, a larger share is occupied by parity carriers (i.e., carriers of the countries origin / destination), with a share of 45%.
Road haulage in the direction of the EU countries divided into two groups, such as the "old countries" and the "new countries" of the EU. The group of "old countries" of the EU includes transportation to 15 countries in Western Europe and is about 14.0% of the total transportation volume (see Figure 5). A major part of the transportation volume of the group is carried out in the direction of Germany. The second group of EU countries includes 13 countries in Eastern Europe; the transportation in this direction is 8.4% of the total volume, where a larger share of transportation takes place with Lithuania and Poland. In terms of the road haulage in the direction of the EU countries, the share of Kazakhstan carriers is only 23% (the "old countries") and 13% (the "new countries"). The carriers of third countries account for the main share of transportation, they are Russia, Belarus, Kyrgyzstan, Poland and Lithuania.
CIS countries |
New EU countries |
Old EU countries |
China |
Carriers of the third countries |
Parity carriers |
Kazakhstan carriers |
* Excluding transportation within EAEC
Figure 5. Division of Kazakhstan Market of International Road haulage into Major Groups of Countries
Source: Research Institute of Transportation and Communications
Compared to 2009, in 2014 the volume of road cargo transportation in the direction of Turkey, Germany, Poland and Lithuania increased as well as the share in the total volume of transportation (Figure 6). The share of Kazakhstan carriers in these directions, with the exception of Turkey and Poland decreased due to the dominant share of the carriers of the third countries. The share of road haulage in the direction of Turkey rose from 3.4% to 4.5% while that of Kazakhstan carriers also increased from 15.0% to 15.6%. The volume of road haulage to / from Germany increased by 3 times, and the share of the total volume rose from 3.5% to 7.9%, however, the share of national carriers has decreased from 41.0% to 29.0%. Since 2009, the volume of transportation with Lithuania and Poland also increased significantly, namely by 2.3 and 2.8 times, respectively.
Foreign carriers |
Kazakhstan carriers |
tons |
Lithuania |
Poland |
Germany |
Turkey |
Figure 6. Major Trends in the Activities of Kazakhstan Carriers
Source: Research Institute of Transportation and Communications
The international haulage market analysis showed that in 2014, 64.5% of transportation was carried out by foreign carriers, and only 35.5% - by Kazakhstan carriers (Figure 7). During the period from 2009 to 2014 the share of Kazakhstan carriers decreased from 64.6% to 35.5% (indication of causes of this phenomenon is presented below).
* Excluding transportation within EAEC |
Carriers of the third countries |
Kazakhstan carriers |
Parity carriers |
Figure 7. Dynamics of the Total Volume of Road haulage Taking into Account Ownership for Vehicles from 2009 to 2014
Source: Research Institute of Transportation and Communications
Dynamics in the total volume of international road haulage taking into account that within the EAEC is shown in Figure 8. In the last five years, the total volume increased by 3.6 times, and in 2014 it reached 15.2 million tons. The volume of transportation in the direction from Russia to Kazakhstan and in the opposite direction is growing at an accelerated rate, and reached 11.8 million tons in 2014. The main reason for high rates of transportation growth within the EAEC consists in removing customs barriers within the EAEC, between Kazakhstan and Russia, and Russia and Belarus, the elimination of barriers to the previous development of this transportation direction.
tons |
* Excluding export transportation of construction materials to Kyrgyzstan |
Exports
|
Imports |
Figure 8. Dynamics in the Total Volume of International Road haulage taking into Account transportation within the EAEC countries from 2009 to 2014
Source: Research Institute of Transportation and Communications
Currently, 3580 road carriers are admitted to international road haulage in Kazakhstan. Distribution of transportation companies on the region basis is presented in Figure 9, left, it is of irregular nature, the highest level of concentration is observed in South-Eastern, Eastern and Northern Kazakhstan. It should be noted that the western region of the country, which is the closest to European countries from the geographical point of view, has the smallest number of operators, which, to a certain extent, produces a negative impact on the market of international road haulage of the Republic of Kazakhstan. The impact on the market of Western partners is obvious.
Currently, the vehicle fleet engaged in international road haulage, has 15,468 units (as of January 1, 2015), 5427 of them perform the transportation with the IRT system, beyond the EAEC. Figure 9 (to the right) shows that the largest share of road vehicles (MV), Almaty accounts for 34%.
Almaty Almaty region East Kazakhstan Oblast Karaganda Kostanay North Kazakhstan Region Aktobe Pavlodar Aqmola South Kazakhstan region West Kazakhstan region Astana Jambyl Atyrau Mangystau Qyzylorda |
Almaty East Kazakhstan Oblast Kostanay North Kazakhstan Region Almaty region Karaganda Aktobe Aqmola Pavlodar South Kazakhstan region West Kazakhstan region Astana Jambyl Mangystau Atyrau Qyzylorda |
Figure 9. Distribution of Companies Engaged in International Road haulage on the Regional Basis and The Fleet
Source: Committee of Transport Ministry of Investment and Development of the Republic of Kazakhstan
Due to the fact that the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan was unable to obtain the information required for a comprehensive analysis of international road haulage through research and survey of transport operators working under the IRS system economic indicators have been calculated for the last five ones, presented in Table 1.
Table 1. Economic Indicators of International Road haulage Market for the Period from 2010 to 2014
Year |
Number of ATS as of the end of the year |
Average annual operational kilometers |
Total operational kilometers, mln. |
Loaded proportion of operational kilometers |
Operational kilometers with cargo, mln. |
Costs of 1 km. of the US dollars |
2010 |
5 831 |
80 000 |
466,5 |
0,58 |
270,6 |
0,7010 |
2011 |
5 719 |
79 000 |
451,8 |
0,58 |
262,0 |
0,7015 |
2012 |
5 621 |
78 700 |
442,4 |
0,58 |
256,6 |
0,7017 |
2013 |
5 580 |
78 700 |
438,0 |
0,58 |
254,1 |
0,7018 |
2014 |
5 427 |
78 400 |
425,5 |
0,58 |
246,7 |
0,7019 |
Year |
Total cost, mln. US dollars |
Release price, US dollars |
Total income, mln. US dollars |
Profit, mln. US dollars |
Ratio of profitability to costs (profit/costs) |
Profit margin |
2010 |
327,0 |
1,50 |
405,8 |
78,8 |
24,1% |
19,4% |
2011 |
316,9 |
1,49 |
390,4 |
73,5 |
23,2% |
18,8% |
2012 |
310,4 |
1,48 |
379,7 |
69,3 |
22,3% |
18,3% |
2013 |
307,4 |
1,47 |
373,5 |
66,1 |
21,5% |
17,7% |
2014 |
298,6 |
1,46 |
360,3 |
61,7 |
20,6% |
17,1% |
Source: compiled by the authors
Compared with 2010, the number of vehicles involved in the IRS decreased by 7% by 2014, while the average annual run reduced by 2%. In the face of intense and sometimes unfair competition, tariffs for international road haulage fell by 3%, which led to a decrease in profit (during the same period, the tariffs for international railway transportation of cargo increased by 1.5 times). In comparison with 2010, the ratio of profitability to costs reduced by 14% by 2014, the profit margin also decreased by 12%.
MARKET CAPACITY
Over the past five years (Figure 10) the volume of road haulage in import connections, excluding transportation within EAEC countries, has been around 2.5 mln. tons, with the exception of 2013, when it reached 3.3 mln. tons. The main directions of transportation are the countries of Asia, Europe and the CIS countries. In 2014, the share of import transportation from Asia accounted for 34%, including 26% for China and 7% for Turkey. The share of import transportation from Europe increased from 13% to 35%, Germany, Lithuania and Poland accounted for the highest share. In 2014, the share of transportation from the CIS amounted to 27% and taking into account transportation from Russia and Belarus exceeded a half (54%). The principal directions of transportation are Russia, Belarus, Kyrgyzstan, Ukraine and Uzbekistan.
tons
|
Азия – Asia
СНГ – CIS
Европа - Europe
Прочие – Other
* Данные без учета перевозок внутри стран ЕАЭС – excluding transportation within EAEC
Figure 10. Structure of Import Cargo Flow in the Main Directions from 2009 to 2014
Source: Research Institute of Transportation and Communications
During the period from 2009 to 2014 the share of national operators in import transportations decreased by 1.7 times amounting to 38% in 2014 (Figure 11). Shares of carriers from the countries of origin and third countries rose to 28% and 34%, respectively.
Parity carriers |
Kazakhstan carriers |
Carriers of the third countries |
* Excluding transportation within EAEC
Figure 11. Dynamics in the Volume of Import Road haulage Including Ownership for Vehicles from 2009 to 2014
Source: Research Institute of Transportation and Communications
Import (Figure 12) shows a stable commodity structure of transportation, where vegetable products (28%), machinery and equipment (19%) and consumer goods (12%) accounted for the largest share in 2014.
tons
|
Others Products of animal origin Ferrous and non-ferrous metals and its production Consumer goods Machinery, mechanisms, equipment and facilities, including electronic ones Products of vegetable origin
|
Figure 12. Dynamics of import road haulage in view of goods in the period of 2009-2014
Source: R&DE TC
In 2014 the volume of international road haulage in export direction is amounted to 0.7 mln. tons. It should be noted that the proportion of haulage is increased to the direction of the Asian countries from 10% in 2011 to 31% in 2014. The share of export cargo flows in the European direction remains relatively stable, 19% in 2011 without any significant changes, 21% in 2014. The main direction of Kazakhstan export transportations is CIS countries. In 2011 64% of the total export transportation was carried in this direction, and in 2012 this figure was decreased up to 26%. In 2013 and 2014 the share of export transportations to the CIS countries was 58% and 48% (Figure 13), indicating the importance of this direction for the trade turnover of Kazakhstan.
tons
|
Asia
|
CIS
|
Europe
|
Others
|
Excluding of transportation inside the countries of EEU
|
Figure 13. The structure of export cargo flows in the main directions in the period of 2009-2014.
Source: R&DE TC
Over the past six years the proportion of foreign and domestic haulage contractor has changed significantly (Figure 14). In 2009 a major exporter is the national haulage company, the participation share - 75.7%, however, for the reasons that will be explained below, by 2014 this figure had fallen up to 24.6%. Also during this period, in 2009 - 2014, the haulage contractor of the country of destination strengthened its positions, and the indicator was increased from 13.8% to 38%. However, third-country haulage contractors occupied a considerable share in the volume of export transportation in 2014 -37.4%, whereas in 2009 they held only 10.5% of the total amount.
Haulage contractors of the country of destination |
|
Kazakh haulage contractors |
|
Haulage contractors of third parties |
*Excluding the transportation inside the countries of EEU
Figure 14. Dynamics of road haulage export, taking into account the nationality of means of transport
Source: R&DE TC
Commodity structure of export transportations highlights a few basic product groups (Figure 15). Vegetable products occupy the largest share, 24% in 2014, and did not show much hesitation, other than in 2011, when 45% of export transportation was products of the chemical industry. The share of finished food products in the total commodity transport structure was significantly increased, from 3% in 2010 up to 20% in 2014. The small share also belongs to ferrous and non-ferrous metals and products of animal origin.
tons
|
Others Products of animal origin Products of vegetable origin
|
Ferrous and non-ferrous metals, and its production Finished food products |
* Excluding export transportation of building materials to Kyrgyzstan |
Figure 15. Dynamics of road haulage export in view of goods for the period of 2009-2014
Source: R&DE TC
Considering the purpose set by the State program of development and integration of the transport system infrastructure of the Republic of Kazakhstan up to 2020 that is to develop a modern transport infrastructure, to ensure its integration into the international transport system and to realize the transit potential1 and favorable geographical position of the country, the volume of transit transportation is increased in 1.9 times within five years, reaching 1.5 mln. tons in 2014 (Figure 16).
ths.tons |
Figure 16. Dynamics of the transit transportation volume in the period of 2009-2014
Source: R&DE TC
In transit direction, the commodity structure of international road haulage is quite stable. As noted earlier, the volume of transit transportation has been increased, whereas the specific weight of the main product groups are preserved in the same time. The main groups of products are consumer goods, machinery and equipment, vegetable products, textiles, as well as ferrous and nonferrous metals (Figure 17).
tons
|
Others Ferrous and non-ferrous metals and its production Source materials, textiles, textile materials and its production Products of vegetable origin Machinery, mechanisms, equipment and facilities, including electronic ones Consumer goods
|
Figure 17. Dynamics of the transit road haulage in view of goods in the period of 2009-2014
Source: R&DE TC
Figure 18 shows the dynamics of the volume of road haulage for 2009-2014 in transit direction in view of countries of origin. The main country of origin for the past five years has been China; in 2014 the proportion of total road haulage in transit direction in the country of departure is 69%, when in 2009 - 36%. Significant growth was occurred in 2011 - 57%, and since that period it has preserved it share as a prevailing. Quite stable country of origin in transit direction is also Uzbekistan; its share in the total volume is in the range of 10-13%. The total share of Kyrgyzstan in the whole transit volume in 2009 was 28%, in 2011 this figure had decreased up to 11%, and it was equal to 7% in 2014. Other European and Asian countries are included in the group of “other countries” in the figure 18, since the maximum rate is 2%.
tons
|
China
|
Uzbekistan |
Kyrgyzstan |
Others |
Figure 18. Dynamics of the road haulage volumes in transit direction in view of countries of origin, 2009-2014
Source: R&DE TC
Figure 19 shows the dynamics of the road haulage volumes changes in 2009-2014 in transit direction in view of countries of destination. According to the data received, Russia is the major participant of the transit transportation in view of countries of destination for the last five years. Uzbekistan has also preserved a stable share in transit transportation in view of the countries of destination.
tons |
Kazakhstan |
Russia |
Uzbekistan
|
Others
|
Figure 19. Dynamics of the road haulage volumes in transit direction in view of countries of destination 2009-2014
Source: R&DE TC
From 1997 to 2009 the number of transport companies being the members of Kazakhstan Auto Transport Organization (KazATO) was increased by 5.8 times, while the number of vehicles engaged in international road haulage of goods was increased by 22.5 times. At the time of KazATO formation in Kazakhstan there were overall 20 transport companies operating in the conditions of the TIR Convention; as of January 1, 2015 KazATO has already included 337 companies.
As of January 1, 2015 the total number of vehicles in the members of KazATO was 7.5 million units including those ones operating in the TIR system - 5427 cars (Figure 20). 2338 auto vehicles or 43.1%, meet the requirements of the environmental class Euro-4 and Euro-5 (in 2013 this figure was 31.2%).
Amount of KazATO members Amounts of vehicles |
Figure 20. The dynamics of growth in the companies number – the members of KazATO and its rolling stock
Source: R&DE TC
Figure 21 presents a quantitative change in the amount of Carnets TIR issued by the Kazakh haulage contractor (the amounts of trips to Europe, the Caucasus and Turkey). Since 2009, the situation of the country, both economically and politically was changed (EEU was formed), and the number of Carnets TIR being used was reduced from 32500 to 22,466 in 2014. According to the data of KazATO in 2014, the number of flights by the TIR system was reduced by 27% compared with 2009. The diagram (Figure 22) shows the structure of transportation according to the directions in the framework of the TIR system, which shows the most attractive directions of transportation and the trend of its development.
Amount of Carnets TIR issued |
Figure 21. Dynamics of Carnets TIR issue in 2009-2014
Source: R&DE TC
Kazakhstan Turkey Russia China Germany Lithuania Others Gross total |
Figure 22. The number of flights performed by Kazakh transport companies in the TIR system in the main directions in the period of 2009-2014.
Source: R&DE TC
MAIN PARTICIPANTS
List of major industry players in the market of international road haulage in the regional context
№ |
Name of the region |
Amount of transport companies |
Own auto vehicles |
Rented auto vehicles |
Own trailer |
Rented trailer |
1 |
Akmola region |
202 |
430 |
139 |
321 |
82 |
2 |
Aktube region |
219 |
508 |
140 |
375 |
109 |
3 |
Almaty region |
368 |
923 |
1608 |
1004 |
2228 |
4 |
Atyrau region |
22 |
62 |
20 |
42 |
14 |
5 |
East-Kazakhstan region |
414 |
680 |
550 |
614 |
534 |
6 |
Almaty city |
568 |
1519 |
3732 |
1434 |
3352 |
7 |
Astana city |
130 |
236 |
158 |
120 |
183 |
8 |
Jambyl Region |
56 |
91 |
43 |
84 |
45 |
9 |
West-Kazakhstan region |
134 |
430 |
71 |
108 |
58 |
10 |
Karaganda region |
325 |
751 |
284 |
495 |
226 |
11 |
Kostanay region |
392 |
645 |
342 |
553 |
281 |
12 |
Kyzylorda Region |
3 |
1 |
3 |
0 |
0 |
13 |
Mangystau region |
31 |
59 |
12 |
62 |
4 |
14 |
Pavlodar region |
200 |
390 |
227 |
278 |
73 |
15 |
North-Kazakhstan region |
371 |
688 |
205 |
557 |
169 |
16 |
South-Kazakhstan region |
145 |
249 |
272 |
208 |
217 |
TOTAL |
3580 |
7662 |
7806 |
6255 |
7575 |
Source: Committee of Transport MIR RK
FACTORS OF DEVELOPMENT
The development of road transport contributes to a number of key factors. First of all, it is the location Kazakhstan at the crossroads of Europe and Asia. According to the IMF the Asian region is a driving force in world trade (6.1%), headed by China (8.8%) and West Asia (8.6%). In the future, there will be a rising demand in Europe, and thus the development of trade flows in Eurasian direction.
Kazakhstan is located within the zone of China's initiative “One Belt and One Road” providing for the concentration of efforts of the interested countries in the key areas: simplification of trade and investment procedures, including through the development of cross-border crossings, infrastructure development, expansion of sub-regional economic cooperation; the development of financial cooperation.
Another important factor is the presence of developed road network in Kazakhstan and in the region as a whole. Roads are the part of the Asian Highway, E-road network determined by the European Agreement on Main International Traffic Arteries, CAREC corridors, EATL routes (Euro-Asian transport links).
A distinctive feature of road transport is its high mobility and possibility of transportation to any remote regions. The road haulage also provides the possibility of implementation of the principle of delivery of goods directly from the manufacturer's warehouse to the user’s one ( “Door to Door”) without any additional overloads being very important for users and provides high transportation speed. Road transport is relatively easy in transportation organization. Due to market containment of tariffs for the motor vehicles, while the annual growth of tariffs for the railway transportation is taken place, this type of transport is more often used for the transportation over long distances, including the transportation in the international direction.
OBSTACLES AND LIMITATIONS
No. |
Problems and limitations (obstacle description) |
Offer for problem solving |
The effect expected |
1. Access to national, international markets, state purchases and provision of National Defense needs |
|||
1.1 |
Impossibility to implement TIR convention at the major territory of Russia |
State authorities at all the levels shall continue the constructive work for the reactivation of TIR system all over the territory of Russian Federation. On 29thMay, 2015 the Decision of the Eurasian Intergovernmental Council No.12 ‘On the conditions of free transit provision with the application of Convention on International Transport of Goods Under Cover of TIR Carnets (TIR Convention) of 1975 at the territory of the Eurasian Economic Union’. But until now it has not been implemented at the territory of Russian Federation, moreover, the number of inspections increases. We deem at as a necessary that the Ministry of investment and development, Ministry of finance, Ministry of national economy and government of Republic of Kazakhstan should include the issue of TIR implementation to bilateral meeting agendas at all the levels, as the business events held by EAEU and probably apply to Eurasian Economic Court. |
Reduce of Kazakhstan transporters expenses and increase of European transportations profitability. Kazakhstan transporters perform around 22 thousand trips from Europe to Kazakhstan each year. Transporters’ losses per each trip comprise on the average $150. It means that the transporter’s expenses can be reduced by $ 3.3 Mio per each year |
1.2 |
Unsatisfactory work of the licensing system: 1) High price of national permit approval documents for goods transportation; 2) Determination of quota for permissions exchange with foreign states. |
The adoption of appropriate amendment of cl. 461, p. 1, sub-p. 1 of Code of Republic of Kazakhstan ‘On taxes and other obligatory payments to the budget’ is required in the part of fee reduction for exit permits issue (foreign permit approval document) to the cost equal to Russian (Belorussian) one. The cost of a foreign permit in Belorussia comprises $9,4, in Russian - $5, in Kazakhstan – 3 MCI (as for today - $30). We offer to reduce the cost of one foreign permit approval document to 1 MCI (around $7). Constructive approach (mechanisms) for determination of quota for permit exchange shall be developed only upon the parity basis, considering the interest of national transporters (chapter 2, paragraph 1, cl. 11,12 of Rules of implementation of Kazakhstan international automobile transportations permission system, approved by the Order of acting Minister of investment and development of Republic of Kazakhstan dd. 27th March, 2015, No. 353, shall be revised). We offer to accept as a basis the necessity of parity (equal) permission documents exchange with foreign countries exclusively – to (from) the third countries in particular. Today there is an experience of unequal exchange, for example, with Republic of Belarus. Kazakhstan transporters require 600 of Belorussian permits and the exchange is performed in accordance with the request of Belarus party for 4000 permits. The same is true for relations with Poland. It means that as a result of non-constructive exchange mechanism, we give 34 Mio of Kazakhstan provision to Belorussian party each year within the total scope of transport services, and the budget of our country receives $2.7 Mio taxes less, around 6,5 thousand of Kazakh people do not get new workplaces. |
Reduce of the expenses for Kazakh transporters and creation of a new effective competition at the international haulages market. Kazakhstan transporters obtain around 109 thousand of foreign permission each year. If the permit cost reduces at least twice, the transportation expenses economy will comprise $1,2 Mio. |
2. Availability or unavailability of transport and logistics, energetic, industrial infrastructure |
|||
2.1 |
Transport infrastructure issues |
Obstacle elimination offers: 1. To include into the road construction and reconstruction programs the rehabilitation of motor roads at the access ways to the checkpoints of Dostyk, Maikapshagai and Bakhty, and the road to commercial seaport of Aktau city (Beyneu – Shetpe); 2. To consider the possibility of arrangement of access point for automobiles and passengers in the seaport of Aktau city; 3. Development of motorway service network, first of all – arrangement of guarded truck parkings. |
Reduce of Kazakhstan transporters expenses for, provision of the conditions of for their adhering to the requirements of AETR Agreement. 25% reduce of transportation primecost at these areas will help to save around $1.3 Mio yearly.
|
3. Human resources and skilled personnel availability, dependency relation with foreign specialists |
|||
3.1 |
Lack of personnel, its insufficient training (drivers and mechanics, specialist in the field of international automobile transportation arrangement). |
The problem can be resolved by implementing the public private partnership: 1. The issue shall be studied completely – the entities which are able to arrange the training all over the regions (a list shall be made), to determine the state training program and to include in it the offer regarding the state co-financing of the driver of E-category trainings; 2. To restore the educational establishments (universities, colleges, technical school), which carry out the training of higher and middle ranking for international automobile transportation. As it was mentioned, right now there is a lack of 750 drivers of E-category in Kazakhstan now to carry out international haulage (table 23). Besides that, nowadays at least 70 operators are handling the international automobile transportations, whose vehicle fleet is over 20 cars (attachment 8). All of these companies have (more or less) equipped technical basis for maintenance of these vehicles. Judging from working experience with international transporters, they will need around 10 international haulage managers yearly, the same number of mechanical engineers for the repair and operation of foreign and native vehicles, and combined transportation logistics specialists, and the economic and financial international haulage specialists. Discussing this issue with President of Kazakhstan Academy of Transport and Communication of M. Tynyshpaev, it was accepted as necessary to create a new Academy faculty which will train the motor vehicle specialists. |
Reduction of personnel deficiency. Considering the fact that personnel deficiency entails the down time only for 5% of vehicles, involved into the international haulages, and at the European direction there are around 6000 motor vehicles involved: 6000 х 0,05=300 motor vehicles 300 х $4 thousand = $1,2 Mio per year of budget payment increase. |
4. Availability of financing |
|||
4.1 |
Absence of budget financing for Drivers of E-category training |
See above, development of private public partnership within the field of personnel training for the international haulage sphere. |
Reduction of personnel deficiency. See point 3.1 |
4.2 |
Provision of credits by the high (unprofitable) percent rates |
Arrangement of special credit lines developed for enterprises which deal with international haulage organization and performance, acc. to Damu program at the fund partner banks. |
Renewal and replenishment of vehicle fleet. See point 4.3 |
4.3 |
Difficulties in investment preferences obtaining |
Obstacle elimination offers: 1. To admit the vehicles used for cargo transportation, to be the process equipment and to cover them by cl. 17 of Law of Republic of Kazakhstan ‘On investments’, which provide release from the import customs duty; 2. To reconsider the content of documents submitted at the same time as the application for investment preferences provision (cl.19 of Law of Republic of Kazakhstan ‘On investments’), and the content of a business plan of the investment project (Requirements for the drawing up of an investment project business plan, accepted by the Order of Minister of industry and new technologies of Republic of Kazakhstan dd. 1st June, 2012 No.184) considering the special features of service sector, in particular – the international cargo transportation. 3. Within the scope of the state investment support provided for in chapter 3 of Law on investments, to provide the help for international transporters by : - development of a standard business plan for investment project within the sphere of international cargo transportation; - existing state services consulting; - accompanying of an investment project in the central and municipal enforcement bodies when receiving the state services |
Renewal and replenishment of vehicle fleet. Each car for international haulage, which was bought at the expense of these resources, will provide the budget recharge from $4 thousand up to $8 thousand yearly. |
5. Technological and innovation potential |
|||
5.1 |
Problems in the field of implementation of standards of Technical regulation of the Customs union ‘On the safety of wheeled vehicles’ (TR of CU 018/2011) |
Obstacle elimination offers: 1. To arrange in the Kazakhstan regions at least two certification centers, where it will be possible to obtain the approval of motor vehicle type and its compliance certificate; 2. To arrange in Kazakhstan the network of testing laboratories to inspect the systems and devices for emergency call (EVAK system) and the satellite navigation devices for the compliance with requirements of technical regulations. |
Creation of the conditions for the implementation of requirements of Technical regulation of the Customs union ‘On the safety of wheeled vehicles’ (TR of CU 018/2011) |
6. Governmental regulation measures and legislation initiatives |
|||
6.1 |
Non-satisfactory transport control. |
Each month the Ministry of investments and development of Republic of Kazakhstan shall post on the web-site of Transport Committee the following information: 1. Total number of foreign motor vehicles, which were entering Kazakhstan through the external border of Eurasian Economic Union (EAEU). Including: 1) number of foreign motor vehicles, which were entering the territory of Kazakhstan with notifications of absence of the appropriate Kazakhstan permits and the necessity to obtain the required documents before arrival at to the territory of Republic of Kazakhstan, obtained at the outer border of EAEU; 2) number of foreign transporters, who registered at the transport control authorities the notification, obtained at the outer border with entering of all the appropriate records ; 3) number of foreign motor vehicles, which were using Kazakhstan permits, and then registered at the transport control authorities the completion of international haulage by tearing off the part of a permit containing the mark of control authority; 4) number of foreign transporter brought to administrative responsibility (penalties imposed) at the territory of Republic of Kazakhstan for breaching of the permission system of international haulage, and the amount of penalties collected pursuant to cl. 573 of Administrative violations Code of Republic of Kazakhstan. 5) Copies of letters (information), forwarded to the relevant ministries of states, which transporter have breached the permission system of international haulages at the territory of Kazakhstan, and information about the preventive activities implemented. 2. To prepare the offers to Eurasian economic commission regarding the imposing of particular sanctions to the permission system breakers (international haulages permission revoke, Kazakhstan permission issue rejection). 3. To complete the check-out (adjustment) of customs electronic control system at the outer border of EAEU and bodies of transport control at the territory of Kazakhstan within the shortest time possible, to be able to transfer the data on-line. To implement the Procedure of transport (car) control at the outer border of Eurasian Economic Union (attachment No.1 to Protocol on the coordinated (reconciled) transport policy (attachment 24 to Agreement on Eurasian Economic Union)), transport (car) control bodies shall: ‘2) exchange the data obtained as a result of transport (car) control mutually and regularly. Form and procedure of the aforementioned data exchange, and its content shall be determined by the transport (car) control bodies; 3) arrange the keeping of a database for vehicles which travel through the territory of one state member to the other state member, and exchange mutually with this data’. As for now, customs bodies of Belarus republic and Kazakhstan republic the on-line transfer of information regarding the violations revealed at the outer borders, but from the part of Russia outer border such information has not been provided since the beginning of the year, which was explained as the system adjustment. This entails the obtaining of nonobjective data (those which are not subject to control) regarding the breaching of Kazakhstan permission system, which entails the creation of conditions for control bodies corruption and allows to foreign transporter to carry out the transportations to Kazakhstan with no appropriate Kazakhstan permissions (using the old ones again). |
The implementation of international agreements standards under EAEU and provoking of effective competition at the international haulage market. Each year 7000 of foreign vehicles minimum carry out the transportations to Kazakhstan with no relevant Kazakhstan permissions. If the offered measures are implemented, Kazakhstan provision can be increased by 7000 х $10 000 = $70 Mio $70 х 0,08 = $5,6 Mio budget payments. |
6.2 |
Impromptness (untimeliness) of regulatory acts preparation which cover international car transportation around the territory of Republic of Kazakhstan. |
1. To speed up the entry of Protocol dd. 7th November, 2014 on introduction of amendments to Agreement between government of Republic of Kazakhstan and government of Kyrgyz republic for the international motor service (25.12.2003) into effect, or to accept other legal decision which will provide the cargo transportations to/from the third countries by Kyrgyz operators basing upon Kazakhstan decisions only. 1.1. To take measures for early validation of Protocol dd. 7th November, 2014 by Kyrgyz party. 2. To bring back again the standard, which provides (when transporting the outsized and heavy-weight cargo) issue of special permits for indivisible lads transportation only, to Law of Republic of Kazakhstan ‘On automobile transport’. 3. To make even the amount of penalty sanctions imposed on the private persons and legal entities (foreign transporters) for absence of Kazakhstan permission in the Administrative violations Code of Kazakhstan Republic. Pursuant to cl. 573 of AV Code of Kazakhstan the absence of Kazakhstan permission entails the penalty impose: foreign vehicles driver - 25 MCI, legal entities - 500 MCI. We deem it as reasonable to increase the penalty amount for private individuals to the level of legal entities, i.e. up to 500 MCI. 4. To accept the regulatory acts (introduce the offers for AV Code amendment), which allow to impose on the foreign transporters at the territory of Kazakhstan the activities similar to the ones which are implemented to Kazakhstan transporters at the territory of these foreign countries. At first, the adequate sanctions shall be introduced for the cases if there is no record of regulatory bodies in the notification, issued to foreign transporters at the outer border of EAEU. The amendments to the rules of traffic around the territory of Republic of Kazakhstan shall be introduced and issue of permissible documents, approved by the Order of Kazakhstan government dd. 31st December, 2008 No.1345, having amended chapter 2 with the point 16 of the following content: ‘16. Foreign transporter who received the notification on the absence of transportation authority permit for trip around Kazakhstan territory at the outer border of EAEU, is obliged to obtain the permit for a trip and to make a relevant notification record made by officials of the authority which carries out the transport control’. Clause 573 of AV Code shall be updated with p.6 of the following content: ‘6. Carrying out of the international haulage by a foreign transporter with the notification issued by an authorized body of a transport (vehicle) control at the outer border of Eurasian Economic Unity with no appropriate record of the official whose company carries out the transport control, on the elimination of breaching – entails the penalty imposed on the vehicle driver in amount of one hundred monthly estimated rates’ |
Provoking of effective competition at the international haulage market. See p.6.1 |
6.3 |
The increase of government regulation role within the field of international haulage services is required. |
1. To prepare the offers regarding the development of State development program for international automobile transportations in Kazakhstan, having provided the protection of national operators interests. State program shall include: 1) state international automobile transportations market protection (part of national transporters shall comprise 50% in the total share of total scope of international car transportations), including: – restitution of a state body (Ministry of transport and communications), which is responsible for motor transport too; – preparation of the offers for harmonizing of national legislation with standards and provisions, which provide the conditions no just as well as those, established in EAEU countries; – preparation of the offers for signing and joining to international agreements and conventions within the sphere of international car transportations, and the arrangement and supervision over their implementation; – protection of interests, worthful and effective representation of national operators at the bilateral and plurilateral meetings, negotiations, intergovernmental commissions and other international media outlets; – provision of proper transport control over the international haulages performance at the territory of Republic of Kazakhstan; 2) protection of interests of national transporters who carry out the international automobile transportations, including: – development of a national motor-car construction (tractor units, trucks, which comply with requirements of Euro 5 ecological class); – creation of the relevant conditions (provision of benefits, preferences, concessional lending, participation in the investment projects etc.) for the international automobile transportations in the part of fleet updating and replenishment; – development of mechanism for permission documents exchange with foreign states upon the parity basis; – provision of diplomatic accompaniment for international automobile transportations in the foreign countries and provision of required help; – restoration of TIR system at the territory of EAEU; – creation of conditions (certification centers equipment with appropriate devices) to obtain the approval of vehicles type (certificates of wheel vehicle structures safety) in the certification bodies of Republic of Kazakhstan; 3) formation of transport infrastructure which complies with modern requirements and standards, arrangement of motorway service (technical servicing centers, filling stations, truck parking lots, food services areas, hotels etc.); 4) offer regarding the state co-financing of E-category driver trainings; 2. To restore the state structure which regulates the motor vehicle sector, including international car transportations. Having analyzed the situation, the executor came to the conclusion that there is a necessity to restore the Ministry of transport and communication of Republic of Kazakhstan where there should be at least one Motor vehicles department, which shall include the structure subdivision, which shall regulate the international car transportations. Judging by our experience, we may say that at the territory of former Soviet Union there is no State which does not have the relevant (transportation) ministry or department (as in Uzbekistan). |
Development of the international haulages market and increase of its part of Kazakhstan operators. All the measures offered will allow increasing of the part of Kazakhstan transporters in general scope of international haulages up to 50%. This will allow increasing of the part of Kazakhstan provision by $160 Mio per year and to enhance budget payments by $12.8 Mio yearly. |
7. Other specific sector obstacles |
|||
7.1 |
Difficulties with updating and replenishment of vehicle fleet for international car transportations. |
1. To resolve the issue of vehicles commission, purchased from the third countries of 3-years operational life, in compliance with Technical regulation of the Customs Union ‘On wheeled vehicles safety’ (TP of CU 018/2011). It means to arrange in the regions of Kazakhstan at least two certification centers, where it will be possible to obtain the approval of motor vehicle type and vehicle compliance certificate. Judging by the places of operators dislocation (concentration) who perform the international automobile transportations (table 34), we deem it as reasonable to arrange such centers in the cities of Karaganda and Almaty. 2. To reconsider the issue of regulatory document of Republic of Kazakhstan adoption, which provide the possibility of import of vehicles from the third countries with operational life over 3 years, as founder’s contribution in authorized capital, implementing the customs duty zero rates; 3. To update the Goods list, regarding which the tariff preferences (order of з Ministry of National Economy dd. 30th March, 2015 No.279) with the following vehicles: TN VED 8704239907 code – second hand vehicles for cargo transportation with crankshaft combustion engine, full vehicle weight - over 20 tones, 5 year from the production date maximum; TN VED 8704239905 code – second hand vehicles for cargo transportation with crankshaft combustion engine, full vehicle weight - over 20 tones, over 5 up to 7 years from the production date maximum; It means that for the nearest two years the commercial organizations and individual entrepreneurs shall be released from the import customs duties when aforementioned TN VED vehicles enter the territory of Republic of Kazakhstan, 800 units of trucks each year for international car transportation performance. At that the 800 of cars purchased will allow to increase Kazakhstan provision for a total amount of $80 Mio of transport services, to add the $6.4 Mio to the budget in the form of taxes, to create 1.6 thousand of new workplaces. 4. To conform with the Order of the Ministry of investments and development of Republic of Kazakhstan the existing agreement on the continuation of process on obtaining of investment preferences by international transporters to be released from the customs duties from 3 up to 5 years for the purchased vehicles. |
Update and replenishment of vehicle fleet, involved in the international cargo transportation. Each car for international haulages bought at the cost of these resources, provides the budget replenishment from 4 up to 8 thousand dollars each year. |
List of potential opportunities
Value chain analysis shows that the main disruptions are related to such fields as:
1. Provision of motor vehicles with winter fuel, absence of which entails the down time of 15 thousand machine-shifts, breaking down of engines;
2. Training of Drivers of E-category, since there is lack of international drivers;
3. Provision of access of international cat transporters to international system of Green Card transporters’ legal liability insurance.
1. Non-availability of winter fuel
As it is known, winter diesel oil fuel differs from the summer one by insignificant viscosity since there is no hydrocarbon wax fraction contained. For this reason to obtain the winter fuel, its dewaxing shall be carried out using different addition agents or other ways. Therefore it should be mentioned that since 31st December, 2012 at the territory of the Customs Union the 013/2011 TP of CU ‘On requirements for motor and aviation, diesel oil and marine, jet engines and heavy oil fuel’ has come into effect and it established the strict requirements for diesel oil fuel, addition agents (including the system of interstate standards) and the procedures of their letting in to the market.
Considering the above, it appears that the creation of any additional industries is not reasonable. Alongside with that, the experience of other countries, Russia in particular, shows that the formation of industrial clusters is not possible without Research and Technological development or Research and Development centers. At the basis of such centers the development and implementation of a new oil and gas processing technology could be carried out, specifically - the obtaining of winter and arctic diesel oil fuels using different dewaxing methods.
Other way of users’ winter fuel provision problem resolving – increase of oil processing companies’ interest for its production and supply to the internal market. To implement that condition, the task of internal market provision with winter fuel and the ways of its resolving shall be contained in the program and strategic documents of the Ministry of energetic of Republic of Kazakhstan.
2. Lack of international drivers
International haulage sector incurs the deficit of Drivers of E-category[1]. Old, experienced personnel leave and new one requires the appropriate education. Cost of 1 driver training comprises around 100 thousand Kazakhstan tenge.
Nowadays the preparation of drivers independently of the category is carried out by the educational establishments which specialize with vehicle drivers training, included into the Register of vehicle drivers training educational establishments. It should be mentioned that no document imposes the obligation to implement the all-categories driver training upon the educational establishment, due to this fact there is no Drivers of E-category training in some cities of Kazakhstan. The maximum cost of driver training is not regulated either.
It is considered to be necessary to public-private partnership within the sphere of Drivers of E-category training. State can undertake to finance the international drivers training expenses partially, i.e. the equipment of educational centers. Respectively the financial investments are required to arrange the complex, which includes the establishment with well-qualified teaching staff, car-racing track and training vehicle (tractors with trailers – semitrailers of different). In addition to driving school the courses of international automobile transportations specialists (managers).
The network of regional centers should be arranged in Kazakhstan where the international drivers will be able to undergo training; they can be located in the regional centers and the cities of republican status.
In compliance with the Attachment 9 of the II part of Customs Convention on International Transport of Goods Under Cover of TIR Carnets dd. 1975 Carrying out of the international automobile transportations requires the knowledge of TIR Convention implementation.
To implement the requirements of TIR Convention in educational and certification center of Kazakhstan Automobile Transporters Union there the regular courses for director, managers and drivers of autotransport companies, which implement the international haulages of cargos according to TIR system.
Courses programs developed by IRU Academy comply with the international standards and include the studying of international conventions and agreements, to which Kazakhstan is involved, and the national regulatory documents which regulate the activity of automobile transport.
Specialists and drivers of automobile companies, who have undergone the training, shall get the certificates of professional competence (CPC) and diplomas of IRU Academy. But this requirement does not cover the international haulage permission. As a result of this, the transporters who do not have the required education and are not aware of modern tendencies of international automobile transportations market suffer the significant losses caused by down times, expenses, penalties, losses of services quality etc. Training and obtaining of CPC Certificate increases the level of transporters’ competence and is necessary for the participants of international automobile transportations market to work properly and effectively. Subsequently, one of the solutions for personnel qualification improvement, involved into the sphere of international automobile transportation the necessity of TIR permission requirements (special training, professional knowledge improvement) update can be mentioned.
Increase of personnel’s erudition and education shall be taken into consideration as a milestone investment of long-term effect. Specialists who work within the industry shall be competent, qualified, and aware of modern technologies and equipment. As for now a lot of transporters complain about the unfair expeditor services. Market is full of expeditors’ services but the quality does not comply with the requirements expenses for their services. Therewith it shall be mentioned that the initial reason of problem occurrence is the fact that obtaining of ST RK 1294-2004 compliance certificate is optional, and at the official web-site of National expeditors associations of Republic of Kazakhstan it is indicated that only 30 companies have obtained such certificates. Subsequently, to improve the quality of services provided at the market it is necessary to introduce the receipt of ST RK 1294-2004 compliance certificate to the obligatory requirements for expeditors company start up.
One more perspective area is the execution of Memorandum of Understanding between non-governmental organization for drivers training, and Research and production Enterprises for international drivers training. For example, traffic safety law provides the creation and accreditation of professional association for vehicle drivers training. Such associations have the rights to carry out the outside control of vehicle drivers’ training level carried out by educational establishments, carrying out of advanced training courses for educational establishment teaching personnel and issue of certificates, development of teaching aids etc. Execution of Memorandum between such organization and Research and Development Enterprise will allow stimulating of the educational process of Drivers of E-category.
3. Provision of international transporters with access to the international system of Green Card International Motor Insurance System
Green card International insurance system provides the driver who is insured in his country with opportunity to carry out the trip to other countries with no policy of insurance required.
Systems was started at the territories of European countries and Scandinavia since 1sy January, 1953. Nowadays it unites the majority of European countries, several countries of North Africa, Mediterranean countries and Azerbaijan, Belorussia, Latvia, Moldova, Ukraine, Russia, Estonia.
When vehicle leaves the territory of countries which are the members of Green card system, his driver is obliged to purchase the Unified Certificate (policy). Green card policy price depends on the vehicle type, agreement term and country of visit.
System structure is made up of National bureaus of participant countries and insurance companies authorized for Green card policy selling.
The professional insurers association are the part of Green card National bureaus; these associations carry out the obligatorily motor insurance (OMI). Green card National bureaus are the part of a united organization – Council of Bureaus.
According to Medium-term plan of social and economic development of Republic of Kazakhstan for 2006-2008 (second phase) (approved by the Decision of government of Republic of Kazakhstan dd. 26th August, 2005 No. 884), joining the Green card international motor insurance system was one of the priorities. But as a result of low activity of insurance companies the issue was taken off from the agenda. One of the reasons of insurers’ low interest was the inability assess the potential market of Green card purchasers.
However, over the past period the scope of automobile transportations in the interstate communication, including the personal transport has increased significantly. It is considered as necessary to carry out the marketing research, according to the result of which the insurance organizations will be able to make a conclusion on possibility of development of this insurance branch.
Among the optional services in the service value chain the following ones have a certain development potential:
- service of trucks motorway service;
- development of ‘Roadside service’ along with the service provided in the countries of Western Europe, Russia (awhelp24.com, Volvo emergency help etc.);
- provision of services using telemetric, navigation systems:
- truck remote control, cargo control etc.;
- implementation and maintenance of fleet management systems. As a rule, such systems have several modules such as ‘Positioning’, ‘Fuel and environment’, ‘Driver’s working time’, ‘Texting’ etc., which allows enterprises to supervise all the operational processes.
SWOT
Strengths |
Weaknesses |
Industry in general |
|
External factors |
|
Developed network of transport communications and including of Kazakhstan to the system of international transport corridors (ASHD, roads of E-category, CAREC, EATL corridors), running of the New Silk Road through the territory of Kazakhstan |
Land-locked country, isolated location from the world economic development center, Kazakhstan is distanced from seaports for 3750 km.[2] |
Promotion of PRC initiative ‘One belt and one road’ including Silk Road Economic Belt project |
World economic crisis, followed by reduction of raw materials price, export and import demand, population’s purchasing power decrease. |
Improvement of economics of developed countries (acc. to IMF forecasts, 1.8% in 2014 will increase up to 2.1 % in 2015 and 2.4 % in 2016), trade volume between Europe and Asian, intraregional trade is expected to increase. |
Imbalance of import and export transportations. The level of import automobile transportation is by 1,3 time higher than the export one. At the European area the ratio comprises |
Internal factors |
|
Adjustment |
|
Non-involvement of government to the motor enterprises economic activity, limitation of state bodies inspections. Execution of intergovernmental agreements on the international motor communication with 40 countries, yearly exchange with permission documents. Participation in TIR international organizations, Conventions and agreements. Consideration of TIR issue in the strategy plans and programs of the government (Strategy-2020, State program of infrastructure development ‘Nurly Zhol’ for 2015 - 2019 etc.) Adoption of the regulatory documents under EAEU, aimed at the arrangement of international automobile transportations.
|
Insufficient state support for the regulatory acts preparation and adoption. Poor national transportation market protection mechanism. High price of the foreign permit. For example, in Belorussia the permit cost comprises $ 9.4 against approximately $30 in Kazakhstan. Absence of governmental support for the vehicle fleet replenishment. Discrimination of Kazakhstan transporters when implementing the administrative activities if the traffic rules were breached. |
Infrastructure |
|
Road network capacity reserves. Active road construction. Elimination of customs and transport control at the internal borders of EAEU. Adoption of regulatory documents under EAEU aimed at the arrangement of international automobile transportations.
|
70% of republican subordinance roads are in ‘satisfactory’ and ‘non-satisfactory’ conditions They were designed in the sixties years of the 20th century. Absence of the required amount of road service objects, which provide the services of the necessary assortment and quality. High level of traffic accidents and injuries. Reduce of fleet amount, involved into the international haulage, non-compliance of half of the fleet with the requirements of Euro-4 and Euro-5; Low level of innovations implementation and process automation. Underdevelopment of investment mechanisms. |
Services provision |
|
High portability of motor vehicles comparing to the other transport types. Door to door delivery. Possibility to deliver services twenty four hour all the year round |
Reduce of transportation services demand due to the population’s purchasing power decreasing. High rate (comparing to main competitors) due to the absence of reversed loading. |
[1] Pursuant to the Law on road traffic there are BE, CE, DE categories; The E category is referred to herein for the sake of convenience
[2] Susanna loef, Rol Janssens - Transport, transit and trade. Trade debottlenecking by the states which do not have access to sea, OBSE Magazine, June – July, 2007
Review of internal water transport sector
CONTENTS
DESCRIPTION
The territory of Kazakhstan is divided into eight water basins: the Aralo-Syrdarya, Balkhash-Alakol, Ertis, Uralo-Caspian, Ishim, Nura-Sarysu-Shu-Talas- Tobol-Turgay.
Water basins of Kazakhstan Fig.1
* according to the data of the Ministry of Agriculture of the Republic of Kazakhstan, 2015
Currently the navigable waterways of Kazakhstan can only be used for domestic and export shipments to Russian Federation. The main priority directions of development of freight transportation by internal water transport (IWT) are:
· Transportation of fuel and oil products from Russia by river fleet in tankers and / or in oil barges;
· Import of concrete goods and ceramsite concrete slabs from the city of Omsk;
· Delivery of timber from the Russian Federation (Omsk and Tyumen regions), industrial drying and sawing of wood materials;
· Transportation and handling of coal from Kazakhstan to the Russian Federation (Omsk region);
· Transportation and realization of gravel in Russia (Omsk region);
· Transportation of Pavlodar salt to the Russian Federation;
· Import of scrap metal from Russian Federation to Kazakhstan (Tyumen, Omsk regions);
· Organization of the transportation of pipe products from Pavlodar region to the Russian Federation;
· The organization of container shipping.
The main freights transported by water transport are the following ones: carbon; forest; inert materials (70% of transportation volume); oil and oil products, mineral construction freights; metal and metal constructions.
CONTRIBUTION TO THE ECONOMY AND MARKET CAPACITY POTENTIAL
The share of IWT in the turnover of the country is about 0.01% or 26.20 mln.tonskm (Fig.1). Freight turnover of IWT is formed due to domestic transportation and transportation from the Russian Federation.
Key indicators of internal waterway transport Fig.2
The freight turnover of all types of transport for the period 2008 – 2014. (bln. tonskm)
Air, mln.tonskm Sea Pipeline IWT, mln.tonskm Auto Railway transport
|
Axis name
|
* As per the data of the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan, 2014
Passenger transportation by IWT |
ths.pers. |
Volume of freight transportation (ths.tons) |
20
|
2014 |
2013 |
2012 |
2011 |
2010 |
2009 |
* As per the data of the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan, 2014
Within five years, the level of freight transportation is being stable in the volume of 1.4 million tons of freight per year. During the period from 2009 to 2014, on average 95 thousand of people were transported annually. Passenger transportation, including cruise ones were carried out within the territory of the Ertis and Ile-Balkhash basins.
It should be noted that a comparative analysis of freight transportation indices performed in 2013-2014 shows a downward trend in the overall transport industry. The main reason for the volumes decline is the impact of unfavourable external economic environment (general downward trend in the volume of freight transportation by all kinds of transport).
Revenues from passenger and freight transportation
by internal water transport (mln. tenge) Fig. 3
River freight transport River passenger transport |
* As per the data of the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan, 2014
Revenues from freight transportation by river transport in 2014 were at the level of 369.5 million tenge, which is 72% more than the level of revenue in 2013 (214.3 million tenge). The revenues from the passengers transportation by river transport were decreased by 7.7% compared to 2013 and were amounted to 27.6 million tenge (Fig. 4).
The availability of the rolling stock of internal water transport Fig.4
Amount of vessels |
The availability of the rolling stock of internal water transport |
* As per the data of the Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan, 2014
142 units of the rolling stock of internal water transport being into operation are registered in Kazakhstan. (Fig. 4), including the division according to the types: self-propelled vessels - 12 (dry freight vessels – 10, tank vessels - 2), the barges - 51 (dry freight vessels - 49, tank vessels - 2), trailers, pushers - 54, passenger, freight-and-passenger ships - 25.
MARKET CAPACITY POTENTIAL
Currently the volume of Kazakhstan's IWT is up to 1.5 million tons of freight per year and up to 67 thousand of passengers per navigation. At the same time the potential of its carrying capacity can reach 10 - 11 million tons of freight per year (the volume of freight transportation in 1991-1992). The role of internal water transport is significantly increased in the areas of joining of different kinds of transport, where mixed rail and water freight transportation is developed (multimodal transportation schemes). In Kazakhstan multimodal schemes involving IWT can be successfully implemented in the river port of Pavlodar city, which has its own railway sidings, the total length of which is 4 km.
Today in Kazakhstan the transportation of passengers and freight is carried out by private ship-owners: Ertis basin - 30 companies, Ile basin - 4 companies, Balkhash basin - 4 companies, Uralo-Caspian basin - 5 companies.
Therewith the index of tariffs for freight transportation by IWT (in %) within the period from 2008 to 2012 was at the next level (Table 1).
Table 1
end of period, in percent
up to December of the previous year
Transport |
2008 |
2009 |
2010 |
2011 |
2012 |
IWT |
109,9 |
99,6 |
164,9 |
114,7 |
104,3 |
* The statistical book “Transport in the Republic of Kazakhstan 2008 – 2012”
Table 2 (ths.tons)
Index |
2009 |
2010 |
2011 |
2012 |
Freight transported, in total including: |
900,9 |
1 119,9 |
1 082,0 |
1 290,7 |
- bituminous coal |
42,8 |
40,6 |
21,8 |
21,7 |
- timber freight |
3,0 |
- |
- |
- |
- construction freight |
632,9 |
934,1 |
878,7 |
1 055,4 |
- other freight |
222,3 |
145,2 |
181,5 |
213,6 |
* The statistical book “Transport in the Republic of Kazakhstan 2008 – 2012”
Main nomenclature of IWT freight for the period from 2009 to 2012 is shown in the Table 2. Dynamics of the freight volume being transported by IWT, shows a decrease of bituminous coal volumes due to the reorientation of the automotive type of transport. In the recent years there is a tendency of coal transportation to the border areas of the Russian Federation by automobile transport.
MAIN PARTICIPANTS
The top position of the freight transportation belongs to Pavlodar region, of the passenger transportation – to the East Kazakhstan region. More detailed information is given in the Table 3.
Table 3
Region |
Freight transported (ths.tons) |
Passengers transported (ths.pers) |
Almaty region |
0 |
9,9 |
Atyrau region |
40 |
0 |
East Kazakhstan region |
310 |
67 |
Karaganda region |
8,4 |
5,2 |
Pavlodar region |
780 |
10 |
West Kazakhstan region |
80 |
25 |
Total: |
1 218,4 |
117,1 |
* As per the data of the Committee of Transport of the Ministry of investment and development of the Republic of Kazakhstan, 2015
Transportation of passengers and freight by internal waterways is performed by private ship owners, the main ones of which are: “Irtyshtrans” LLP, “Altayimport” LLP, “Ulba-Transport” LLP, “Pavlodar river port” JSC in the Ertis river basin; “Flot” LLP, “Estoral” LLP, “Saga Terminal Logistics” LLP in Ural river basin; “Aina Su” LLP, “Company Balkhashbalyk” LLP, “Rybprom” LLP, “Alpina XXI” LLP in the Ile-Balkhash basin.
Passengers and freight transportation are carried out by private owners, whom 659 vessels belong to, 248 of which are in condition prohibited for use. The competitors map in the sphere of IWT clearly indicates that in general the participation share of each company is equal in this sphere of market. The strongest positions belong to “Pavlodar river port” JSC, which occupies 23% of IWT market services.
- freight transportation service providers:
Ertis basin: “Pavlodar river port” JSC; “Ulba Transport” LLP; “Irtyshtrans” LLP; “Altayimport” LLP; “Bukhtarma pier” LLP.
Uralo-Caspian basin: “Flot” LLP; “Estoral” LLP; “Atyrauozenports” JSC.
Ile-Balkhash basin: “Company Balkhashbalyk” LLP; “RYBPROM” LLP; “FISH MARKET” LLP;
- passengers transportation service providers:
Ertis basin: “Ulba Transport” LLP; “Pigarev” II; “PCF Titan” LLP; “Promholo” LLP"; “NurKaz PV” LLP; LLP “KDS Kazzinc” LLP; “Irtyshtrans” LLP; “Altayimport” LLP.
Uralo-Caspian basin: “Flot” LLP; “Estoral” LLP; “Atyrauozenports” JSC.
Ile-Balkhash basin: “Alpina XXI” LLP; “Aina Su” LLP
- vessel components providers:
Ertis basin: “ZDA” LLC; “Borusan Makina Kazakhstan” II; “Kratos-Pavlodar” LLP; “REMDIZEL” LLC; “Hydro mechanization plant” JSC; “Reserve Trade” LLC.
Uralo-Caspian basin: “Ship repair facility” LLP, “Flot” LLP; “Estoral” LLP; “Gidropribor” Research and Development Establishment.
Ile-Balkhash basin: “Aina Su” LLP.
- crew members training providers:
“College of Transport” Kazakhstan Municipal Utility Service
- Others:
Ertis basin: “Elling – PV” LLP – ship repairing elevator, “Omsk river port” LLP, “Jet-AL” LLP, “Sibtehkom” LLC - repair of ships and vessels.
Uralo-Caspian basin: “September” II - repairs of ships and vessels.
Ile-Balkhash basin: “AKS Kazakhstan” LLP - paint coating of the vessels; “Zavadsky” II - repairs of ships and vessels.
The basis of freight traffic flow in Kazakhstan is the Ertis cross-border river, on which the two-way freight transportation between Russia and Kazakhstan is carried out. Companies - consignees / consignors are: “Gidrotransservice” LLC, “Promlesresource” LLC, “TC Stroytrade” LLC.
“Gidrotransservice” LLC is the company dealing with the excavation of river sand and realization of Kazakhstan gravel of various particle sizes located in Tara city, Omsk region, Russian Federation. The company operates since 1996. The sphere of activity of “Gidrotransservice” LLC is: sale of river sand, delivery of bulk materials and concrete products to the north of Russia, gravel delivery from Kazakhstan, loading and unloading operations services.
“Promlesresource” LLC is a company registered in Omsk, Russia, which since 2011 has been carried out wholesale trade of wood, construction materials and sanitary fitments.
“TC Stroytrade” LLC is the company operating more than 10 years in the construction market of Ekaterinburg, Russia, the provider of various types of bricks: building, ceramic and silicate ones.
DEVELOPMENT FACTORS
Up to date, based on the level of tariffs for freight transportation, as well as depending on the transport distance, the average cost of freight transportation by road varies from 10 to 14 tenge per ton / km (depending on the direction of transport distances), by rail is 3.6 tenge per ton / km and by IWT is 2.75 tenge per ton / km.
A comparative analysis of the freight transportation by river, road and rail
Fig.5
* as per the data of Association of water users, water consumers and water transport “KAZWATER”, 2015
If to compare the cost of freight / tariff of the main kinds of transport: auto, train and IWT, the river transport, of course, is a leader in the market and has the most minimal freight rates (Fig. 5).
Up to date, based on the level of tariffs for freight transportation, as well as depending on the transport distance, the average cost of freight transportation by road varies from 10 to 14 tenge per ton / km (depending on the direction of transport distances), by rail is 3.6 tenge per ton / km and by IWT is 2.75 tenge per ton / km.
The strategic advantages of water transport are the low cost of transportation, the possibility of transportation of oversized and heavy freight, costs saving on freight storage in large quantities.
The cost of transportation of 1 ton of freight by barges by the water is cheaper than by rail on average in 38% and by road ton on average in 157% (Fig. 6).
Comparative analysis of the freight transportation by river, road and rail
44 railcars, 68 tons each
|
120 autos, 25 tons each
|
3000 tons
|
Water transport is more cost-effective and more safety for the environment
|
100 km
|
300 km
|
370 km
|
Transportation of 1 ton with equal energy consumption
|
BARRIERS AND LIMITATIONS
№ |
Problems and limitations (Barrier description) |
1 |
Permission system on Kazakh vessels passage into internal waterways of Russian Federation According to the current Agreement between the Government of the Russian Federation and the Government of the Republic of Kazakhstan on cooperation in the field of maritime transport, the passage within internal waterways of the Russian Federation can be carried out in accordance with Russian law. According to the rules of navigation in internal waterways of the Russian Federation, approved by the Order of the Russian Ministry of Transport No. 129 dd October 14, 2002, based on the Decision of the Russian Federation the navigation of the individual ship under the flag of a foreign state may be allowed, including for the purpose of transit, in the internal waterways. The vessels of the Republic of Kazakhstan are subject to this provision. Moreover, in order to obtain the permission of the Russian Government to navigate in the internal waterways of Russia, the ship owners have to apply to the Ministry of Transport of the Russian Federation not later than 60 days before the planned passage. Obtaining of the permission to navigate in the internal waterways of Russia by the vessels of the Republic of Kazakhstan is a very time-consuming procedure because the permission has to be agreed in the various federal authorities. However, it should be noted that the cross-border freight transportation by the Ertis river is governed by a separate Agreement between the Government of the Republic of Kazakhstan and the Government of the Russian Federation on the organization and the conditions of goods and passengers transportation by Kazakhstan and the Russian vessels in the Ertis river Basin (approved by Decree No. 907 of the Government of the Republic of Kazakhstan dd August 15, 2002). Developed draft of the Agreement on navigation, the approval of which is scheduled for November 2015, results in the cancelling of two valid agreements between Russia and Kazakhstan in the field of water transport. At the same time, there are risks that the new Agreement on navigation will not achieve its goals in terms of facilitating the procedures of the admission of Kazakhstan vessels to pass into the internal waterways of the Russian Federation. |
2 |
Lack of appropriate depth and other technical parameters of the navigable waterways of Kazakhstan at a level that allows to perform passenger and freight water transportation by more moulded vessels (over 1,000 tons) of allowed classes. |
3 |
Limitation of navigation on the Ural River during spawning period for 3.5 months. |
4 |
The lack of the navigation passes in the low stream-flow period.
Sufficient water levels for navigation play equally important role for the development of IWT transportation. Hydrological conditions of navigation greatly affect the operation of the fleet and handling equipment, besides they are changeable. For the accounting purposes the average annual data and the various factors of “weather reserve” are applied. Such orientation on average meaning either reduces the estimated productivity of vehicles or unreasonably increases it, and provides approximate calculations. As a result there is a distorted view of the values of through-put and carrying capacity of the river transport elements. A striking example of IWT dependence on the water level in the river is the Ertis river and water releases from Shulbinsk HPP.
Spring water releases from Shulbinsk hydroelectric power plant is performed by AES company. In 2012 the water did not leave the river bed and did not flood the meadows, “Flood plain of the Ertis River” specially protected natural territory, was not flooded. At that the water from the Shulbinsk reservoir repeatedly run down at other times of the year - in late summer and even in winter, when the nature does not require it (unauthorized water discharge). In addition, taking the hydroelectric power plant into the concession, AES Company undertook to finish the construction of the reservoir, to raise its walls.
To reach the design capacity of the reservoir volume it is necessary to build the second phase of the reservoir, which would allow the long-term control and regulation of the flow of the Ertis river and to solve the problematic issues of the status of the Ertis flood plain including the development of navigation. The Action Plan of the State Water Management Program for 2014-2020 covers the construction of the second phase of Shulbinsky reservoir. However, for various reasons until nowadays the issue on construction is still not resolved. Actually, scientific research and engineering and development works related to the ecological and hydrological condition of the flood plain of the Ertis river were stopped in 1976. During the period from 1976 to 2014 (the period of 38 years) no one research and development organization or design and engineering company has being dealing with the state of the ecological balance of the flood plain and its complex use. Until nowadays government and development organizations have being using the materials composed in 1961 by the “Lengiprovodikhoz” institute (the survey materials and hydrological data of the first stage of Shulbinskaya HPP construction).
The priority in the use of water reservoirs of the reservoirs cascade is hydropower. At the same time the prospects for the development of internal water transport in the Ertis river is not fully taken into the account. The ongoing releases provide only the minimum depth for the passage of ships in the low-flow period and, accordingly, it is required to analyse the possibility of increasing of navigational releases depending on the dryness of the year and the reservoirs filling. Such one-sided approach to the use of water resources has repeatedly resulted into the violation of the required optimum mode of the flood plain overflow. Due to the one-sided energetic direction of the release the ecological balance in the flood plain is violated, the degradation of wetlands, their salinity and steppe formation is started.
For reference only : Low-flow level, drought period is the time of the lowest water level in the river with the reduction of the runoff from the water spillway area in summer during dry weather when the river water content is maintained only by the ground water, and in winter when during the icy conditions. Releases are periodic or episodic water supply from the reservoir to regulate the flow discharge or water levels on the underlying area of the water flow or the water level in the reservoir.
|
5 |
Lack of the qualified staff for the crew of the vessels and ships, in particular the lack of specialists who are qualified for the work on the river-sea vessels. |
6 |
The lack of available financing projects and programs on acquisition and capital repair of the vessels.
One of the acute problems the domestic ship owners are faced with is to provide and secure the new vessels construction investment projects with the financial resources. Up to now, an effective mechanism for shipbuilding financing has not established in Kazakhstan, and shipping companies do not almost receive neither political, nor legal, financial support from the State. In this regard it is appropriate to establish a mechanism for financing projects of shipbuilding / ship repair, based on the international experience of similar financing projects.
|
7 |
Lack of funds for scientific and technological development in the field of internal water transport |
8 |
Lack of legal framework for the development of multimodal transportation by IWT.
IWT also plays essential role for the organization of multimodal transportation. Herein clear interaction between different kinds of transport has significant meaning. Coherent organization of their cooperation makes it possible to maximize the carrying capacity of the reserves of mobile assets, to improve the productivity, to reduce the time of the freight delivery, to reduce the transportation costs of other sectors.
To implement mutually agreed cooperation of subcontractors in water-carrying node, it is necessary to have a clear understanding of the technology of each kind of transport. Technology and organization of freight transfer during the transportation in a mixed direction has much in common regardless the kinds of transport. At the same time, significant differences are evident in separate elements of such transfer according to the variants of transport interaction: the river and rail transport, sea and river transport, river and road transport. The tasks of the water transport nodes operation in the navigation and inter-navigational periods are not constant. In the first case, the main task of the operational port, which all the other tasks are subject to, is timely processing and maintenance of the fleet. In the second case - the accumulation of freight in the warehouses of the port and work with adjacent kinds of transport. There are various forms of cooperation under the coordination of the activities of adjacent kinds of transport. The main of them is technological form. This form of cooperation is based on the work of the combined technologies of river, rail and road transport, implementing the routing of freight transportation and uniform technological processes of rolling stock maintenance in transhipment points. Technological interaction reduces the downtime of vessels, cars and vehicles; it ensures the rational use of each kind of transport and reduces the total cost of transportation. Currently in Kazakhstan under the program “100 actual steps on implementation of five institutional reforms” proposed by the Head of State a draft of the Law “On amendments and additions to some legislative acts of Kazakhstan on the development of road transport infrastructure, transport logistics and air transport” was prepared, which will create a legal framework for the multimodal transport organization. Herein, for the practical organization of multimodal transportation by IWT the development of a single technological process is required, which should be an integral part of the schedule of all kinds of transport, operating in a transport node. In this case, additional losses of time for the demurrage of the vessels, cars and trucks are eliminated; the rhythm of transhipment port operation is increased. A single technological process would allow to secure the order of organization, methods, deadlines and content of the joint works, links the operation of all departments of the port and station concerning the maintenance of vessels and cars, sets the characteristics of transhipment port and the railway station, the organization of operations on the rolling stock handling, the procedure for the recording and analysis of the work performed. In Kazakhstan the multimodal transportation by IWT can be organized on the Ertis river in Pavlodar river port and in the case of creation of conditions for further development of navigation – on the Ural river (Uralo-Caspian channel, Aktau and Atyrau ports). |
9 |
Taxation of the IWT companies
|
LIST OF POITENTIALS
1. Entrepreneurial business initiative for the production of gravel and its further transportation to the Russian Federation, including by IWT, and reverse timber loading.
· The direction of Kazakhstan-Russia (gravel)
· The direction of Russia-Kazakhstan (timber)
Alternatively, the prospective entrepreneurial initiatives are the projects on coal, fuels, combustive and lubricating materials, salt, metal supplies by IWT in the Ob-Ertis basin.
2. Entrepreneurial business initiative for the organization of the container freight transportation by IWT as a less costly kind of transport, the construction of a logistics center.
Within the framework of entrepreneurial initiatives it is proposed to organize the transportation of containerized freight, transiting through the territory of the Republic of Kazakhstan in the direction of China through the city of Omsk to the Russia's northern regions, namely to the settlements of Ob-Ertis basin. At the same time, the main goods transported in containers will be the consumer goods. The assumed scheme of work is: freight containers are transported by road and / or rail to the territory of the industrial base of “Pavlodar river port” JSC. Its unloading, storage and shipment to the river vessels is performed in the port.
3. Entrepreneurial business initiative for the organization and development of international tourism
The aim of the initiative of the project “Organization and development of international and domestic tourism on the water route of “Great Silk Road” on the Ile river” – is the development and organization of international tourism on water routes of Kapshagay reservoir and the Ile River, from Balkhash lake to the adjacent territory of China, kept the most valuable historical sights and unique nature with wonderful landscapes, scenery, flora and fauna.
Fig. 42
TABLE OF THE SHORTEST DISTANCES BETWEEN THE CITIES AND REGIONAL CENTERS BY HARD SURFACE ROADS |
Ballyk Bi |
Dzhansugurov |
Yesik |
Zharkent |
Kalchagay |
Karabulak |
Kaskelen |
* As per the data of “Shipping company “Ili” LLP, 2015
The main objective of the project is to develop its own, modern technically equipped, specialized and self-sufficient infrastructure, based on the principles of corporate and autonomous self-government of its participants, including investors.
In the plan of large-scale, long-term project development it is necessary to go for the merger and consolidation of land travel routes of Semirechya and Zailiysk Alatau with water routes as the final phase of travelling using ground transportation (buses, crossover utility vehicles), air transport (helicopters, hydroplanes) and water transport (hovercraft, modern yachts, etc.).
SWOT
Strengths |
Weaknesses |
Internal water transport ensures high carrying capacities. The low cost of transportation by internal water transport. Low capital intensity of water transport |
Low freight delivery speed by water transport. Seasonality of water transport. Water transport is dependent on the depth of rivers and reservoirs, navigation conditions. Limited possibility of delivery to points of consumption. Low frequency of shipments. Low geographic accessibility of water transport. |
Opportunities |
Threats |
Sharing of international experience in the organization of transport by internal water transport Availability of state support tools for the development of innovation. The development of regional economic integration within the Customs Union (the creation of the Common Economic Space) |
The implementation of inadequate laws by the State; Non-professional staff; Risk of motivation reduction and the outflow of qualified professionals; Insufficient understanding of the integration processes importance. |
Review on commercial navigation
Descrioption
Kazakhstan shore transport infrastructure in Caspian includes two active sea ports: Aktau and Bautino (cargo section of Aktau port). In Aktau port cargo transshipment for export is performed. 25% of cargo transportation in Caspian is provided by the Aktau port. Bautino is specialized as a support base for maritime oil operations. Main cargoes, transshipped in sea ports, are: oil, metal, grain, rock, wood, construction materials. Aktau port capacity is 16.5 million tons (including grain transportation of more than 600 thousand tons a year with one-time storage of 25 thousand tons), Bautino port (cargo section of Aktau port) with capacity more than 2.5 million tons. Ferry complex is being built in Kurik port with capacity 4 million tons per year. Moreover, there is an Atirau mouth port with capacity 500 thousand tons per year.
309 ships are recorder in Kazakhstan Registry (as of June, 1, 2015), including 171 ships that belong to Kazakhstan owners (recorded in the state ship maritime registry), 3 ships that belong to Kazakhstan owners and recorded in the international ship registry, 107 ships that are chartered by Kazakhstan foreign legal entities with temporary right for sailing under the flag of the Republic Kazakhstan (recorded berboat charter registry) and 5 ships that are in the ship log. Tanker fleet consists of 8 tankers with cargo capacity of 12 thousand tons each. Dry cargo fleet consists of 2 ships with dead weight 5000 tons each.
Contribution into economy
Share of sea transportation is still 1-2% of total amount of transported cargoes by all types of transport.
Dynamic of freight transportation by types of transport for all economies for 2009 – 2014, million tons
Type of transport |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Total |
2 103,3 |
2 439,4 |
2 974,9 |
3 231,8 |
3 508,0 |
3 634,4 |
Motor transport |
1 687,5 |
1 971,8 |
2 475,5 |
2 718,4 |
2 983,4 |
3 129,1 |
Railway transport |
248,4 |
267,9 |
279,7 |
294,8 |
293,7 |
275,3 |
Pipelines |
162,9 |
194,0 |
214,1 |
213,2 |
225,9 |
225,0 |
Sea transport |
3,6 |
4,7 |
4,6 |
4,0 |
4,0 |
3,6 |
Internal water transport |
0,9 |
1,1 |
1,1 |
1,3 |
1,1 |
1,3 |
Water transport |
0,0220 |
0,0289 |
0,0316 |
0,0220 |
0,0239 |
0,0191 |
Source: according to the data of the Statistic Committee of the Republic of Kazakhstan
Dynamic of freight turnover by types of transport for all economies for 2009 – 2014, million t*km
Type of transport |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Total |
337 000 |
385 300 |
448 800 |
478 000 |
495 400 |
490 804 |
Railway transport |
197 500 |
213 200 |
223 600 |
235 900 |
231 300 |
216 552 |
Motor and city electrical transport |
66 300 |
80 300 |
121 100 |
132 300 |
145 300 |
155 665 |
Pipelines |
71 700 |
88 600 |
100 700 |
106 900 |
116 000 |
116 041 |
Sea transport |
1 400 |
3 055 |
3 200 |
2 800 |
2 700 |
2 468 |
Air transport |
68 |
90 |
93 |
60 |
63 |
49 |
Internal water transport |
60 |
80 |
80 |
60 |
30 |
27 |
Source: according to the data of the Statistic Committee of the Republic of Kazakhstan
Crude oil is the main type of maritime freight.
Dynamic of freight transportation by types
Freight composition, thousand tons |
2010 |
2011 |
2012 |
2013 |
2014 |
Total |
4 655,0 |
4 557,0 |
4084,3 |
3 984,5 |
3 630,2 |
Crude oil |
2 926,2 |
4 037,7 |
3 816,3 |
3 791,8 |
3 630,2 |
Grain |
|
14,0 |
108,2 |
55,3 |
|
Frozen or cooled products |
|
|
|
2,4 |
|
Other freights |
1 728,8 |
505,2 |
123,8 |
134,9 |
|
Source: according to the data of the Statistic Committee of the Republic of Kazakhstan
Moreover, in accordance with statistic data, CIS countries are main direction of transportation
Transported freight, baggage, freight baggage, thousand tons
Direction |
2010 |
2011 |
2012 |
2013 |
2014 |
Inside republic |
1 728,8 |
505,2 |
|
|
|
CIS countries |
2 926,2 |
4 037,7 |
3 826,3 |
10 |
3 630,2 |
Other |
|
14 |
222 |
3 975,5 |
|
Total |
4 655,0 |
4 557,0 |
4084,3 |
3 984,5 |
3 630,2 |
Source: according to the data of the Statistic Committee of the Republic of Kazakhstan
Due to development of pipeline transportation and international Iran sanctions (swap-operations in Neka port), bulk-oil freight transportation dropped. When pipeline is built on the bed of Caspian, some oil will be transmitted from Kashagana to Europe through Azerbaijan by pipelines, but, probably, if Iran sanctions are withdrawn, swap-operations in Neka port will be resumed in exchange for equivalent delivery from Iran ports in the Persian Gulf.
In accordance with the State program of development and integration of infrastructure of transport system of the Republic of Kazakhstan till 2020, target water transport development indicators are: increase of capacity of ports of the Republic of Kazakhstan and increase of freight transportation by water transport.
Target indicators
Indicator |
Units |
Till the end of 2016 |
Till the end of2020 |
Increase of capacity of ports of the Republic of Kazakhstan |
Million tons |
20,5 |
20,5 |
Increase ofKazakhstan share in Caspian sea transportation |
% |
65 |
70 |
Source: according to the data of the Statistic Committee of the Republic of Kazakhstan
In order to reach these indicators, extension of Aktau port to north is envisaged. To increase competitive ability of Kazakhstan trade fleet it is planned to create the International Ship Registry of the Republic of Kazakhstan to create equal conditions for Kazakhstan shipping companies, which will be not worth than those for Caspian states. Moreover, it is planned to implement two universal ferries, three dry cargo ships till 2020 with Kazakhstan flags on Caspian sea against increase of dry and ferry freight turnover.
Marketcapacity
Main sea and seashore transport performances
Performance |
2010 |
2011 |
2012 |
2013 |
2014 |
Freight, baggage transportation, million tons |
4,7 |
4,6 |
4,0 |
4,0 |
3,6 |
Freight turnover, million tons |
3 055,7 |
3 189,7 |
2 752,8 |
2 709,4 |
2 468,5 |
Trans-shipment dynamic via Aktau port (million tons) |
12 850 |
12 176 |
11 006 |
9 671 |
10 264 |
Income - total, million tenge |
37 415,5 |
38 131,0 |
41 803,2 |
26 955,9 |
28 004,0 |
Income from freight and baggage transportation |
8 130,1 |
8 738,4 |
7 702,7 |
7 504,7 |
7 743,1 |
Income from auxiliary transportation |
4 360,1 |
1 316,8 |
9 941,4 |
7 496,4 |
8 431,1 |
Income from leasing of transports with crews |
24 925,2 |
28 675,8 |
24 159,1 |
11 954,7 |
11 829,8 |
Source: according to the data of the Statistic Committee of the Republic of Kazakhstan
Total sea transportation burden in Kazakhstan has increased in more than 18 times for the last 10 years from 0.2 million tons in 2005 to 3.6 million tons in 2014. However, it shall be noted that transportation peak was in 2010 when 4.7 million tons of freight were transported. At that, loading from Aktau increased transportation by Kazakhstan ships in several times, which means that some Kazakhstan freights are transported by Russian, Azerbaijan and Iran ships.
Main participants
Playing field in Kazakhstan freight market just several years ago consisted of foreign companies only, Wagenborg Kazakhstan, BUE, Caspian Service Group, Arcshipping. However, Kazakhstan shipping companies entered the market due to state programs on implementation of sea transport activity. Currently, there are more than 50 companies in Kazakhstan that work in Caspian region:
1) “National company “Aktau international sea trade port” joint-stock company;
2) “National sea shipping company “Kazmortransflot” joint-stock company, main national carrier;
3) “CircleMaritimeInvest” joint-stock company – main member of “Caspian Offshore Construction” partnership, which, in turns, owns 99% of “Caspian Offshore Construction Russia” joint-stock company, the second biggest Kazakh market participant, governs more than 40 ships: five 1828 ton deadweight ships, total deadweight 10 thousand tons approximately, two research ships with total deadweight more than 1100 tons, 5 1500 ton tugboats, two floating hotels with total tonnage 9000 tons, etc.;
4) «KTZ Express Shipping» partnership established by KTZ – Express, i.e. is a state-owned company, owns two 5000 ton dry cargo ship.
Development factors
· The process of sanctions against Iran withdrawal has started, which will cause rapid growth of dry cargo and oil transportation (renewal of oil swap-operations);
· Due to sanctions against RF, routes around RF are activated, such as TRASEKA;
· Azerbaijan, RF and Iran tanker fleets become obsolescence due to single-breasted tanker ban since 2016;
· Turkmenistanis developing as a maritime power, expending a port in Turkmenbashi and own fleet;
· Competitive land routes are actively developed: railway and motor routes, mixed transportation;
· There is every likelihood that Russia will refuse from “Eurasia” channel development (similar to Volga – Baltic one), because it considers it as an alternative to Transsib one.
Therefore, the situation for trade fleet development is advantageous – traffic growth and the majority of Caspian ships aging against the background of worldwide crisis and landslide of market prices for ships. Certainly, Caspian countries as soon as possible will try to compensate the elimination of their ships by production of new ships (which is confirmed by plans on shipyards development and modernization) as well as by purchase of ships on an open market. However, Kazakhstan has huge investment potential and cargo traffic on its territory, which allows to implement ship procurement strategy successfully from the worldwide market with their subsequent usage for cargo transportation in Caspian.
Barries and limitation
Access to maritime services market.
Sector participants have noted that specialized training centers for first-time maritime entrepreneurs, intended to provide ground in maritime case to conduct maritime business, such as bareboat charter, ship supply, legalization of ship documents, etc. are not available, which impedes development of maritime services market.
Other barriers are related to infrastructure limitations, for example, wheat harvest was high and prices for wheat were high in Iran in 2012, but all interested parties could not ship freight by AkBiday terminals in Aktau port, which caused serious conflicts with terminal administration.
Operational ferry in Aktau port has some limited capacity as well, which can be quite problematic during favorable state of the market.
Many other small consignors can create ship consignments with required dimensions themselves (normally, more than 3000 ton) and appropriate operators are not available for this purpose.
Operation of Kazakh dry cargo ships is complicated by the fact that an agreement on equal access to port services with Iran is not available, that causes our ships to stay in the roads for many days because Iran port unloads Iran ships first of all.
Some Iran ports are managed by private companies (Astara, for example), which in addition to official fees requires additional payment for entering port.
Concerning Atirau port, navigation restriction for 4 months during spawning constitutes sufficient problem because previously such restriction lasted 1 month.
Some territories near some ports (Bautino, Atirau) are cluttered up and owned by different owners, which complicates development of ports.
As reported by forwarding agents, there were overrates for spur tracks in Aktau port of more than 100 $ per carriage, which exceeds shipping rates sufficiently and makes transportation non-value-added.
Access to national market
Shipping market is mainly represented by provision of maritime operations in Caspian for “Kashagan” deposit. Cabotage transportation between Kazakh ports is not popular.
Main customers for maritime services in Caspian are: “North Caspian Operating Company N.V.”, “Saypem”, “Epsay”, “Parker drilling”, “Tengiz Shevroil”. In order to became a supplier for such companies, each supplier shall be selected in accordance with “local content” program, which envisages employment and training of Kazakh specialists.
The local content is monitored by the Steering Committee of the Republic Kazakhstan, but when Kazakhstan enters WTO, local content requirements can be recognized as incompliant with WTO requirements.
Access to international market
Ural River has low level of navigability due to water delay in the territory of Russia (Iriklin reservoir) and this fact does not allow to use South Ural (Russia) – Western Kazakhstan – Iran – Gulf States route.
Pass through internal Russian waterways from / to Caspian is extremely complicated for Kazakh companies (permission from the Ministry of Transport of RF shall be obtained within 60 days).
A navigation agreement is not concluded with Iran, which prevents establishment of equal port fees for two countries. In accordance with such agreements, ships of one country have a right to participate in shipment between maritime ports of another country and third countries. Moreover, host port fees must be equal to fees, defined for own ships. Likewise, the agreement defines documents that can be accepted by the parties. Iran companies that deliver freight from Kazakhstan to Iran ports by Iran shipping companies obtains 15% compensation from freight cost.
Kazakhstan is not included into “White list” of International Maritime Organization (IMO). Therefore, documents, issued by authorities and educational establishments, are not accepted abroad. Finally, ships, sailing with Kazakhstan flags, can be delayed by foreign state port inspectors, and Kazakhstan sailors with Kazakhstan diplomas and certificates, cannot be employed by foreign companies.
Lack of maritime infrastructure
· The following disadvantages can be noted:
· Absence of Ship Traffic Control System (STCS) in Aktau, Kurik and Atirau ports (implementation is scheduled for 2016);
· Shipping companies are not provided with Caspian sea maps in full (with coordinates), which complicates their activity. Often there are no buoys on routes, prohibited zones, not defined by buoys, are available,
· Shortage of ship repair bases;
· Shortage of representative offices of equipment manufacturers such as: Wartsila, MAN, AALBORG, Marflex, AlfaLaval;
· Shortage of specialised literature, absence of trade journal;
· There are no specialized exhibitions, dedicated to navigation goods and services.
Barrier designation
Shortage of shipping navigation and hydrographical provision, such as: constant data acquisition is required for all current researches and works to single cartography and geodesic database, increase of lighthouses financing, ice buoys provision, communication development and support between hydrography service, shipping companies and port administration.
Availability of qualified staff
Sailors training system does not comply with international requirements. Total number of sailing personnel in Kazakhstan is 1400 people, but Kazakhs constitute 51% of this number only, command staff includes 28% of Kazakhs (in accordance with the Ministry of Development and Investments of the Republic Kazakhstan).
Authorized examination organization for educational institutions that provide training or advanced training for sea transport personnel and sea training centers personnel is not defined (as provided by item 55-8, para. 3, clause 4 of the Law of the Republic Kazakhstan “About trade navigation”). As a result, educational organizations are not examined, which means that such organizations are outside a legal framework of the Law of the Republic Kazakhstan “About trade navigation”.
Availability of funds
There is neather special leasing company nor division in operating company inKazakhstan, which would invest into shops procurement or bareboat in local currency. Finally, if an entrepreneur deals with a foreign financial company or local financial company in foreign currency, he shall bare currency risks. At that, the market demand is considered equal to tens million tenge. For example, state trade fleet development program for 2006 – 2012 required more than 104 billion tenge and the majority of funds were going to be spent for ships procurement (60 billion tenge approximately).
However, the program was not implemented.
Local companies, that provide maintenance of “Kashagan” deposit, find own and loaned funds without direct state support.
Technological and innovative potential
Currently there are no scientific and trade navigation research institutions in Kazakhstan, but there are companies that have private licenses for development of repair procedures, for example, “Directorship for companies under construction”.
There are minimum technical standards and requirements, sufficient for safety provision, approved by IMO, on, for example, satellite navigation systems, communication means, etc.
Moreover, ship holders and shipping companies use some state of the art technologies and technical innovations.
· Automation of all ship operations; as a result, for instance, huge tanks with deadweight of more than hundreds tons can require 10-20 people only;
· Transfer to liquefied gas, which allows to safe on fuel in one and a half times;
· Development of specialized ships, mega container carriers and subsequent containerization of transportation, ships for liquefied gas transportation, universal ferries and ro-ro ferries;
· Processing technologies, loading – unloading and other paperless operations with freights in ports;
· IT technologies: cloud, paperless, mobile technologies, dispatch technologies, navigation and multisystem technologies, payments for services, legalization, IT security;
· Multimodal distribution, shipment and storage systems that combine different types of transport into sophisticated complexes;
· Security systems, including non-lethal protection means against pirates, annunciation, control, rescue systems, systems for cargo, baggage, passenger inspection;
· Frame technologies; simulators and IT training technologies, accounting and verification technologies, sampling technologies.
Trade navigation in Kazakhstan is in a process of formation, which allows to use and purchase modern equipment and technologies, which, in turns, allows to improve effectiveness and avoid expenditures on disposal, maintenance, operation of obsolete solutions. For example, IMO ban on usage of old single-breasted tankers immediately eliminated Azerbaijan and Russian tanker fleet advantages in Caspian, while Kazakhstan fleet mainly comply with modern requirements.
List of potential opportunities
Opening of crewing company
Economy personnel demand in particular seasons can be as high as 700 people. Currently, 200 – 300 people graduate from appropriate institutes a year. Number of market participants exceed one hundred, including domestic supervising and monitoring authorities, ports, trade shipping companies, fleet servicing companies, seashore service infrastructure companies.
Moreover, when Kazakhstan personnel is re-trained in accordance with international standards, which can lead to acceptance of Kazakhstan books and diplomas abroad, it will become possible to employ Kazakhstan sailors to fleets of other water areas. Currently, ship personnel are highly demanded all around the world.
Opening of equipment supplier representative offices
Despite fleet development, there are no representative offices of leading equipment suppliers for ships in Kazakhstan. If cost is reasonable, such representative offices can be responsible for marketing and help to select equipment, to import it, to get customs clearance for such equipment, to participate in legalization, maintenance and diagnostic.
Issue of economy periodicals (newspapers, journals), opening of an Internet site
A number of employees in the industry (several thousand people), economy corporative participants (more than one hundred and each can get several samples) and potential foreign subscribers, including Kazakh partners from Caspian states, is quite sufficient, which means that a number of potential subscribers for periodicals, reference book and Internet site. On the site it is possible to arrange advertisement of equipment suppliers, market participants, proposed services (researches, consulting, recruiting).
Opening of shipping companies
In this field situations happen when ship-owners who came from other fields and do not have an experience of operation of ships had to sell their ships with losses, some ships were broken and were not liquid. A business model took hold in world practice when ship-owners transfer ships to specialized shipping companies, which operate these ships for a percentage from income and responsible for a search of freight, maintenance, crew recruiting and management. Therefore, non-specialized investors came into this field, including institutional ones. For example, some financial investment foundations purchase ships, taking advantage of movement of the state of the market of new ships and ships that were in service, transfer them to shipping companies, get income from operation and from selling them at higher price. Such transactions at the international market can be attractive for Kazakh investors as well.
Development of dry cargo fleet
“KTZ Express Shipping” Company was founded in 2013 and this company purchased 2 dry cargo ships by 1.9 billion tenge each. By the end of 2015 it was planned to buy 3 dry cargo ships with dead weight 5 – 7 thousand tons. Moreover, this company has an intention to have 20 ships by 2020. In accordance with KTZ evaluations, as dry cargo ship fleet growth, tax payments to budget will increase by tens million tenge per year, the company will buy more fuel from Kazakh suppliers by more than 3.5 billion tenge, it will buy more food for crew by more than 200 million tenge, it will pay more salary to crew by 100 million tenge, insurance will increase by more than 500 million tenge a year. Kazakhstan freight will be transported by Kazakh carriers.
Development of Atirau port
More than 6.2 million tons of steel, ferroalloys, rolled metal were manufactured in Kazakhstan in 2014. Normally, export to Iran was equal to 25% of total Kazakhstan export of this product or more than 1 million tons per a year. In accordance with Scott Wilson forecast, steel export to Iran will increase by 5% every year, including shipment through Caspian ports, i.e. by 50 – 100 thousand per year.
During harvests, Kazakhstan exports approximately 11 million tons of grain, during ordinary years – 6 – 8 million ton of grain. Normally, approximately 1 million tons is exported to Iran and more than a half of million tons is exported to Azerbaijan. In average, transferring grain stock in Kazakhstan is 5 million tons, which means that this grain is not exported. Export to Iran is mainly provided by railway, partly by sea. Due to difficulties, related to cargo transportation through Uzbekistan (Serax), direct sea route through Caspian is more convenient even despite forthcoming opening of a railway from Kazakhstan with 8 – 9 million tons a year capacity to Iran (to Gorgan). Moreover, Iran wheat demand is up to 5 million tons per year, corn demand – 0.7 million tons per year. Not less than 1 million tons can be delivered to Iraq through Iran ports provided the price is competitive.
Kazakh oil has high sulfur content and oil-producing companies produce approximately 1.4 million tons of sulfur a year, which is exported to more than 20 countries. The majority of sulfur is exported to Ukrainian ports by railway, some portion is used for oil producing, by sea transportation potential is sufficient.
Atyrau NPZ after modernization will produce 5 million tons of oil, 800 thousand tons of petrol, 90 thousand tons of aircraft fuel, 1.4 million tons of diesel, up to 600 thousand tons of high-octane petrol, 133 thousand tons of benzyl, almost 500 thousand tons of paraxylol after processing of 5 million tons of oil per year. It is planned to build a butadiene (229 thousand ton per year) and polybutadieneun vulcanized rubber (125 thousand ton per year) production complex in Atyrau oblast. By 2017 it will work with planned production capacity. Moreover, “Kazakhstan Petrochemical Industries Inc.” integrated gas-chemical complex is being built in the oblast with the following capacity: 500 thousand tons per year of polypropylene and 750 thousand tons per year of polyethylene. Another company, butadiene and polybutadieneun vulcanized rubber production complex is going to produce approximately 350 thousand tons of product. “Aktobechimcombinat KELI” partnership, “Aktyubinsk chrome connections plant” JSC and other companies work in adjacent Aktyubinsk oblast. Considering this information, 1.8 – 2 million tons of products can be shipped through “Atyrau” port a year:
Potential trans-shipment through Atyrau port
Freight designation |
Quantity, thousand tons a year |
Oil-chemicalproducts(non raw materials) |
300-600 |
Agricultural products |
500-700 |
Metal, coop, other dry cargoes |
200-400 |
Containers |
200-300 |
Total |
1 200 – 1 800 |
Ferry complex construction and development of ferry fleet in Kurik settlement
Currently, a ferry complex is being constructed in Kurik settlement, it is planned to complete construction in 2016, cost of the complex is 32 billion tenge approximately, capacity is up to 4 million tons per year, staff is 250 people, cost of the ferry fleet is more than USD 70 million. Kazakhstan ferry launch will allow cargo trans-shipment without processing (or with insufficient processing) by an Azerbaijan ferry from Aktau port, i.e. coal, liquidized gas, sulfur, scrap metal, containers, wagons, oil products.
Dispatcher and stevedore companies
Since flow of traffic, first of all, traffic of dry specific exported freights, growth, consignors requires specific services (dispatch services). Moreover, further development of ports requires involvement of stevedore companies.
Opening of specialized research institution
Field development requires expert services for evaluation and selection of project development perspectives. Even minor repair requires certified services on examination, designing, author and technical supervision. Specialized research and development institutions can perform the following functions:
· Maritime transport investigations;
· Development of ship and seashore infrastructure repair and manufacturing procedures;
· Development of domestic regulations and standards and their harmonization with international regulations and standards;
· Issue of specialized publications, field site maintenance;
· Development of business cases, rendering of consulting services;
· Other intellectual activity.
Legal and consulting services
International water lines are serviced by different institutions, such as consignees, consignors, ports, stevedores, dispatchers, carriers, insurance companies, so qualified legal and consulting services are needed on evaluation, management and protection against risks, responsibilities structuring and participant rights fixing.
Staff training, aimed to obtain employment certificates
Currently, several thousand people are employed in the field, including 1500 crew members. In accordance with IMO international standard each crew member is obliged to be trained for at least 12 months in order to obtain an employment certificate, appropriate for specific position, when a position is taken over, when a higher position is taken over, when a person is transferred to a similar position or to another ship, etc. On-job training must be provided on working ships, while additional short training must be provided in certifying educational organizations. Considering average cost of training of 100 – 150 Euro/hour, total number of personnel, transfer dynamic and total duration of training, it is not difficult to see that potential market is equal to tens million euro per year as minimum.
Navigation training for cadets is defined by necessity of procurement of a training ship for one Kazakh educational institution, where cadets would be able to have on-job training and to obtain international employment certificates. Moreover, such ships are traditionally available in maritime educational institution (“Sedov” for example).
SWOT
Trade navigation strength in Kazakhstan:
· The biggest portion of freights for maritime transportation by Caspian is formed in Kazakhstan (oil, metals, grain, other freights);
· Kazakh port capacities as well as capacities for acceptance of Kazakh freights in other Caspian ports are expanded constantly. First of all such capacity is increased in Iran (grain terminal in Amirabad), in Shakhid port, oil trans-shipment facilities in Neka;
· When sanctions are withdrawn from Iran, it is expected that transportation with grow even more;
· Trade fleet grows;
· Ship building and ship repair capacities are being developed;
· A ferry is being built in Kuryk, new berths and facilities are being built in Aktau and Bautino;
· Standards and regulations are prepared – “Law about trade navigation” and more than 20 standard acts, Kazakhstan joined to main IMO conventions;
· Aktau maritime administration, which performs many important functions in the field, started to work;
· Maritime Academy at KBTU has been opened, simulators and navigation classes have been provided in the main field university named after Esenov, four collages have started to work, navigation training on Kazakhstan ships has been initiated, more Kazakh employees work for shipping companies.
Field weaknesses:
· Oil transportation ramp-down due to reorientation to pipeline transport;
· Unfavourable mode of Kazakhstant ships operation in Iran ports;
· Lack of fleet to facilitate a cargo traffic from Kazakhstant, gry cargoes, first of all;
· Delay of bringing into service of Kashagan port, which caused decline of fleet demand for maritime operations;
· Deficiency of experienced staff;
· Incompliance of diplomas with international standards, incompliance and absence of labour and short-term dimplomas, absence of sailors database, other problems, related to staff training;
· Navigation restrictions in upper part of Caspian, including Atyrau port, due to ice conditions and spawning.
Possibilities for field development:
· To provide maximum workload for ports after succesful modernisation;
· To provide fleet support for Kashagan deposit since 2016;
· Transfer to international sailor traning standards and to meet personnel requirements by Kazakh employees;
· National fleet development in Caspian to facilitate transportation of all freights, dispatced from Kazakhstan ports;
· National fleet development outside Caspian (in Black, Baltic and other seas);
· Development of oil swap shippment for Iran (Kazakhstan oil is shipped to Iran port in exchange to Iran oil shippment through the Gulf). Therefore, mutual oil trade is avaliable between oil-producing states in one region;
· Development of the second stage of Volga-Don channel, which will allow to increase transportation fron Caspian to Black sea basin. Currently, capacity is limited by 15 thousand tons deadweight and equal to 6 – 8 tons depending on water level, including “river – sea“ tankers, which constitute a core of a tanker fleet in Caspian.
Threats for the field successful development:
· Kashagan mastering delay, decline of oil production due to oil cost decrease;
· Keeping of sanctions for Iran;
· Worthening of military and political situation in the region and promary around Iran, sea militarisation;
· Keeping and hardening of sanctions to RF, which will cause decline of growth rates and international trade in the region;
· Outflow of cargo traffic to alternative projects, to, for example, railway or motor traffic between Kazakhstan, Iran, Turkmenia (opening of a new 8 million tons railway, highways development). However, it is more expensive to carry grain by the new highway as compared with maritime transportation, moreover, there are some hard-to-solve phisical barriers – low capacity of bridges in Gorgana region and a tunnel to Mary, absence of intergovermental fee agreements between member states, in perticular with Turkmenistan;
· Accidents and incidents that lead to large-scale pollutions, harmfull for water area of Caspian sea;
· Non-efficient operation of petroleum refinery in Rumania, that belongs to KMG. As a result, KMTF aframax tankers will not be used for transportation in Black sea;
· Lack of funds for the field development due to financial crisis, caused by oil, metals and other raw materials cost drop.
Review of civil aviation
Content
List of potential opportunities
Description
The largest components of civil aviation in Kazakhstan are air navigation, airport and aerodrome activity, as well as air traffic and aerial work.
Currently more than 50 operators function in Kazakhstan, among them 4 airline companies are involved in the scheduled air services, 20 airline companies carry out non-scheduled services, and the others perform aerial work.
439 aircraft are registered as of May 2015. Among them 69 aircraft were maintained in scheduled air services, and 57 of which are of western-made type such as Airbus, Boeing, Fokker, Embraer.
18 airports function, 6 of which are in private ownership, 3 airports – in communal ownership, and 9 airports - in confidential management.
This branch is developing at a fast rate of 10-15% per year as opposed to 5-6% per year in the world.
Contribution to the economy
During the transition period from 1990 to 1999 the number of passengers, moved by air in Kazakhstan, decreased 10 times. In the period of dynamic economic growth in 2003-2007 air passengers’ conveyance increased by 108%. The global financial crisis of 2007-2008 suspended, but did not reduce the growth of passenger carriage by air in Kazakhstan. The renewal of economic growth in 2009-2014 increased the air passengers’ conveyance by 100%. Thus, over the last 10 years under favorable economic conditions the airline companies in Kazakhstan doubled the number of passengers every 5-6 years (0).
Number of passengers, carried by air transport in Kazakhstan in 1990-2014, mln. people.
Source: according to the Statistics Committee of the MNE of RK, 2015.
Over the last 5 years the number of passengers, annually carried by Kazakhstan airlines, increased by 60% - from 3 379 to 5 435 thousand people, and the passenger revenue increased by 75% - from 100 to 175 billion tenge. At that the earnings from carriage per one passenger increased by 8% - from 29.8 to 32.3 thousand tenge (0).
The passenger revenues of Kazakhstan airlines
№ |
Name |
2010 |
2011 |
2012 |
2013 |
2014 |
1 |
Revenues from air-passenger operations, mln. tenge |
100 679 |
123 471 |
135 343 |
148 659 |
175 271 |
2 |
Passenger traffic, thousand people. |
3 379 |
4 131 |
4 510 |
4 986 |
5 435 |
3 |
The average income from one passenger carriage, tenge (page 1: page 2 x 1000) |
29 794 |
29 887 |
30 009 |
29 818 |
32 251 |
Source: according to the Statistics Committee of the MNE of RK, 2015.
Compared with the level of 1990 year the quantitative indicators of cargo carriage by Kazakhstan air transport decreased 2 times during 3 years. Hereafter the volume of cargo traffic varied beyond the directly dependence on the economic environment. At average the total weight of annually transported goods ranged from 9 to 32 thousand tons (0).
The quantity of cargo carried by air transport in Kazakhstan in 1990-2014, thous. tons.
Source: according to the Statistics Committee of the MNE of RK, 2015.
Over the last 5 years the quantity of cargo annually carried by Kazakhstan airlines decreased by 34% - from 29 to 19 thousand tons, and the revenues from cargo carriage reduced by 19% - from 6.1 to 4.9 billion tenge. It is necessary to take into account that the quantity of carried cargo fluctuates annually and has no well-defined trend. The transportation revenues per one ton of cargo transported increased by 22 percent from 210.7 to 256.8 thous. tenge (0).
The revenues from cargo carriage by Kazakhstan airlines
№ |
Name |
2010 |
2011 |
2012 |
2013 |
2014 |
1 |
Revenues from air freight operations, mln. tenge |
6 083 |
6 289 |
4 465 |
5 286 |
4 900 |
2 |
Cargo traffic, thous. tons |
29 |
32 |
22 |
24 |
19 |
3 |
The average income from the carriage of one ton of cargo, tenge (page 1: page 2 x 1000) |
210 695 |
199 288 |
203 364 |
221 404 |
256 771 |
Source: according to the Statistics Committee of the MNE of RK, 2015.
In the domestic market of air transportation in Kazakhstan there are only regional airlines. On international air routes of Kazakhstan the share of Kazakhstan airlines is: in passenger traffic - up to 50%, in freight traffic - up to 20% (0).
The calculation of the share of regional airlines in the international traffic of RK
№ |
Name |
Passengers, thous. people. |
Cargo, ton |
||
2013 |
2014 |
2013 |
2014 |
||
1 |
Traffic of RK airlines, including: |
4 986 |
5 435 |
23 874 |
19 082 |
2 |
Interrepublican |
2 976 |
3 273 |
11 587 |
9 737 |
3 |
International |
2 007 |
2 162 |
12 287 |
9 345 |
4 |
Served at RK airports |
10 170 |
10 903 |
88 919 |
89 345 |
5 |
Traffic of external airlines (page 4 – page 2 х 2 - page 3) |
2 211 |
2 196 |
53 459 |
60 525 |
6 |
TOTAL external airlines (page 3 + page 5) |
4 218 |
4 357 |
65 746 |
69 870 |
7 |
Share of RK airlines (page 3 / page 6) |
48% |
50% |
19% |
13% |
Source: according to the Statistics Committee of the MNE of RK, Civil Aeronautics Board of the MID of RK, 2015
The share of regional airlines in the international traffic remains unchanged due to the parity principle of access granting to Kazakhstan international routes for the external airlines. The liberalization of access to Kazakhstan international traffic for foreign companies can significantly reduce the share of Kazakhstan airlines in them. The high portion of external airlines in the international air carriage in Kazakhstan is stipulated by the significant amount of import of consumer goods from abroad.
Over the last 5 years the total revenue of small aircraft in Kazakhstan increased by 73 percent - from 3.2 to 5.5 billion tenge (0). The revenues of small aircraft in Kazakhstan are formed mainly at the expense of state service order from the ministries related to veterinary and phytosanitary measures, measures to protect forest resources. “Euro-Asia-Air” Airline” JSC, being 100% owned subsidiary company of “KazMunaiGas” JSC, is engaged in oil and gas infrastructure maintenance with the use of small aircraft.
The revenues of the small aircraft of RK in 2010-2014, mln.tenge
|
Name |
2010 |
2011 |
2012 |
2013 |
2014 |
1 |
Veterinary measures |
0 |
0 |
0 |
170 |
211 |
2 |
Phytosanitary measures (aerial distribution of chemicals) |
685 |
708 |
768 |
1 073 |
2 226 |
3 |
Measures to protect forest resources |
682 |
1 066 |
1 129 |
1 192 |
1 132 |
4 |
Oil and gas infrastructure maintenance |
1 801 |
1 811 |
1 952 |
1 538 |
1 733 |
|
TOTAL: |
3 168 |
3 585 |
3 849 |
3 973 |
5 302 |
Sources: The Ministry of Agriculture of RK, “Euro-Asia-Air” Airline” JSC, 2015.
Market capacity
The number of passengers annually carried by air in Kazakhstan in 1990 reached 8.6 million people. The regional transportation and various types of works were actively performed in addition to medium and long-haul traffic. In the 70-80-s the total number of small aircraft such as AN-2, Yak-12, “Morava” was about 700 units. In Kazakhstan there were more than 400 domestic aerodromes. Every day about 10 - 15 regular flights were made from the regional airport to remote districts.
In the early 2000s there was the growth of passenger carrying operations in domestic airlines. Over the last 10 years the average annual rate of passenger carriage growth amounted to 10-15%. During the period from 2004 to 2014 the number of passengers carried by Kazakhstan domestic airlines increased 3.8 times from 865 to 3 273 thousand people per year. The growth of air-passengers carrying operations is provided by the increase in incomes of the population: GDP per capita over the same period developed closely proportional - 4.3 times from 3 to 12 thousand dollars. The decline of GDP per capita due to the global financial and economic crisis of 2007-2008 caused a stop of traffic growth almost immediately, followed by the resumption of growth rates after economic recovery (0).
Domestic air-passenger operations and GDP per capita in Kazakhstan in 2004-2014
(Air-passenger operations, thous. people (left scale)
GDP per capita, doll. (right scale))
Source: according to the Statistics Committee of the MNE of RK, 2015.
More than 50% of passengers in domestic airlines are accounted for Almaty and Astana cities that are centers of business and political life. Up to 10% of passenger flow accrues to the administrative centers of oil regions - Aktau and Atyrau cities. The other regions significantly fall behind in the number of carried passengers (0). The terminal point of destination of the most regular flights from other cities is 4 abovementioned cities.
Departure of passengers in domestic airlines in Kazakhstan in 2010-2014, thous. people
№ |
Place of departure |
2010 |
2011 |
2012 |
2013 |
2014 |
Average |
Share |
1 |
Almaty |
744.1 |
873.2 |
951.6 |
1 006.2 |
1 069.1 |
928.8 |
33.1% |
2 |
Astana |
571.0 |
670.0 |
758.9 |
830.2 |
882.0 |
742.4 |
26.5% |
3 |
Aktau |
196.8 |
230.9 |
243.3 |
257.5 |
273.6 |
240.4 |
8.6% |
4 |
Atyrau |
178.5 |
209.5 |
236.5 |
250.4 |
266.0 |
228.2 |
8.1% |
5 |
Shymkent |
95.3 |
111.8 |
140.6 |
154.2 |
163.8 |
133.1 |
4.7% |
6 |
Aktobe |
96.4 |
113.2 |
120.4 |
122.6 |
130.3 |
116.6 |
4.2% |
7 |
Oskemen |
71.1 |
83.5 |
99.0 |
98.8 |
104.9 |
91.5 |
3.3% |
8 |
Kyzylorda |
55.1 |
64.7 |
72.3 |
75.6 |
80.3 |
69.6 |
2.5% |
9 |
Oral |
58.2 |
68.3 |
66.2 |
61.4 |
65.2 |
63.9 |
2.3% |
10 |
Karaganda |
36.5 |
42.8 |
48.2 |
52.4 |
55.7 |
47.1 |
1.7% |
11 |
Pavlodar |
25.0 |
29.4 |
43.3 |
43.8 |
46.5 |
37.6 |
1.3% |
12 |
Kostanay |
29.8 |
35.0 |
37.1 |
42.0 |
44.6 |
37.7 |
1.3% |
15 |
Taraz |
23.7 |
27.8 |
23.3 |
16.1 |
17.1 |
21.6 |
0.8% |
13 |
Semey |
6.2 |
7.3 |
5.5 |
26.8 |
28.5 |
14.9 |
0.5% |
14 |
Zheskazgan |
3.3 |
3.8 |
n/a |
18.7 |
19.9 |
11.4 |
0.4% |
16 |
Taldykorgan |
3.6 |
4.2 |
17.3 |
11.0 |
11.6 |
9.5 |
0.3% |
18 |
Kokshetau |
n/a |
n/a |
n/a |
5.5 |
5.8 |
5.7 |
0.2% |
17 |
Petropavl |
0.4 |
0.5 |
6.7 |
7.3 |
7.8 |
4.5 |
0.2% |
TOTAL: |
2 195.0 |
2 575.9 |
2 870.1 |
3 080.4 |
3 272.9 |
2 804.5 |
100% |
Source: according to the Civil Aeronautics Board of the MID of RK, 2015
Note: the data of 2010 and 2014 years were obtained by KASA by calculation
In total the data of the Civil Aeronautics Board on passengers’ departure in internal airlines slightly differs from the data of the Statistics Committee on the passenger traffic. The reason may be the inaccuracy and errors under information gathering.
Airport in Almaty is in private ownership, the flight strip in Uralsk is state-owned, but the airport itself is private. Airport in Aktau has been transferred to trust management to “ATM Grup Uluslararası Havalimanı Yapım Yatırım ve Işletme limited” (Turkey) till 2035. “Airport Management Group” Llp (AMG) was created in “Kazakhstan Temir Zholy” NC” JSC in November 2013 and attracted Zurich Airport International AG (Switzerland) as a partner. In September 2014 AMG received the government’s stakes of Astana, Kokshetau, Petropavl, Kostanay, Shymkent, Kyzylorda airports in trust management for a period of 7 years, and the airports in Aktobe, Atyrau, Pavlodar are also transferred from the management of “Samruk-Kazyna” NWF, the airports in Oskemen and Semey – from the ownership of East Kazakhstan Region.
Airports, except in Astana and Almaty, are chronically unprofitable. The main reasons are:
- low level of passenger flow
- high costs for maintaining of outdated infrastructure
- part of service is not paid by users
- as a result of modernization the airports have to pay high taxes (on property)
- the cost of 80% of the airport services is regulated by the antimonopoly authority, having limited profitability
According to calculations of AMG Holding, who manages Kazakhstan airports, the need for investments into the state airports is about 167 billion tenge till 2020: 62 billion tenge is to meet the minimum technological requirements, 105 billion tenge is for development. In the period from 2015 to 2017 there is the reconstruction of flight strip, passenger terminals and airfield infrastructure at the airports of Astana, Petropavl and Kostanay, the passenger terminals have been constructed at the airports of Astana, Kyzylorda and Shymkent. Thus, the terminals of Astana airport with the area of 40 thousand square meters will allow serving 7.6 million passengers per year (currently it is 3.5 million passengers per year). The project of Shymkent airport is rather interesting with the terminal of 34 thousand square meters, in the result of which there will be created an integrated transportation air, automotive and railway hub. Most of the operating incomes the airports get due to fuel implementation, and the small part - from other handling services, the revenues from non-aeronautical commercial activities were minimal. However, the revenues from non-aeronautical activities may amount to 50% or more of the revenues of the airports in the world. Kazakhstan intends to develop this practice, thus at Astana airport the concession fees have been imposed on the services of foodservice outlets, taxi official carrier has been determined, and on completing of terminal construction the considerable areas will be allocated for sales outlets, other services.
However by 2030 the airports in Kokshetau, Petropavl and Semey will not reach the threshold level of 200 thousand passengers per year (AMG data) and remain unprofitable.
AMG authorities believe that it is necessary to introduce the sponsorship to unprofitable regional airports in accordance with the global practice.
It is proposed the liberalization of airport services, leaving services on takeoff and landing, passenger terminal and security as monopoly ones. Other services can be licensed by the airports to the third-party suppliers to ensure sufficient quality and safety level in accordance with ICAO / IATA standards.
ALG international experts proposed the introduction of tariff calculation system for monopoly services with the use of return on invested capital method, coordination of tariff decisions with the volume and quality of services, acceptance of long-term tariff regulation, alignment of the level of airport charges (tariffs) under the package (class) of minimum required services by benchmarking method.
Freight traffic (internal)
During the period from 2004 to 2014 the amount of cargo transported by internal airlines in Kazakhstan increased from 2 629 to 9 737 tons per year, by 3.7 times (0). The development of air cargo carriage is provided by economic growth: country’s GDP over the same period increased 5 times from 43 to 218 billion dollars. Opposed to the air-passenger operations the global financial and economic crisis of 2007-2008 did not stop the growth of freight traffic. Some decrease in freight traffic was recorded only in 2014. The main reasons of cargo carriage volume reduction are:
· international competition, including the carriers from Russia and China
· high cost of fuel
imperfection of ground-based technical infrastructure (high duration of discharge), lack of transit and transfer zones for goods at large international airports in the Republic of Kazakhstan, outdated fleet of Soviet-made crafts
· low level of service on the part of freight forwarders
· problems with the speed and quality of customs clearance (it is required, for instance, the confirmation of the deposit, ensuring the customs payments and taxes), whereas in Russia, for example, “e-Freight” international system of electronic declaration of goods, which are still in flight, but already passing customs clearance procedures, is being introduced.
Domestic air-freight operations and GDP in Kazakhstan in 2004-2014
(Air-freight operations, tons (left scale)
GDP in Kazakhstan, biln.doll. (right scale)
Source: according to the Statistics Committee of the MNE of RK, 2015.
More than 75% of the total amount of cargo in domestic routes is taken off from Almaty, which is the largest shopping center in Kazakhstan according to the wholesale trade of consumer goods from China. Up to 10% of cargo is taken off from Astana. Administrative centers of oil regions of Aktau and Atyrau account for 5-6% of cargo. The share of other cities in the internal air-freight operations is negligible (0).
Cargo dispatch in domestic airlines in Kazakhstan in 2010-2014, thous. tons
№ |
Place of departure |
2010 |
2011 |
2012 |
2013 |
2014 |
Average |
Share |
1 |
Almaty |
3 954 |
4 654 |
5 410 |
5 432 |
4 565 |
4 803 |
75.7% |
2 |
Astana |
470 |
553 |
701 |
791 |
664 |
636 |
10.0% |
3 |
Atyrau |
160 |
188 |
677 |
262 |
220 |
301 |
4.8% |
4 |
Aktau |
277 |
326 |
274 |
203 |
171 |
250 |
3.9% |
5 |
Aktobe |
60 |
70 |
87 |
93 |
78 |
78 |
1.2% |
6 |
Oral |
77 |
90 |
63 |
64 |
54 |
70 |
1.1% |
7 |
Oskemen |
53 |
63 |
48 |
84 |
70 |
64 |
1.0% |
8 |
Shymkent |
20 |
24 |
23 |
88 |
74 |
46 |
0.7% |
9 |
Karaganda |
13 |
16 |
68 |
16 |
13 |
25 |
0.4% |
10 |
Pavlodar |
11 |
13 |
23 |
27 |
23 |
19 |
0.3% |
11 |
Kostanay |
12 |
15 |
19 |
25 |
21 |
18 |
0.3% |
12 |
Kokshetau |
- |
- |
- |
29 |
24 |
11 |
0.2% |
15 |
Petropavl |
- |
- |
16 |
8 |
7 |
6 |
0.1% |
13 |
Kyzylorda |
2 |
3 |
7 |
9 |
8 |
6 |
0.1% |
14 |
Taraz |
4 |
5 |
7 |
6 |
5 |
5 |
0.1% |
16 |
Semey |
1 |
1 |
5 |
8 |
7 |
4 |
0.1% |
18 |
Zheskazgan |
0 |
1 |
- |
- |
- |
0 |
0.0% |
17 |
Taldykorgan |
- |
- |
- |
- |
- |
- |
0.0% |
TOTAL: |
5 115 |
6 021 |
7 427 |
7 144 |
6 004 |
6 342 |
100% |
Source: according to the Civil Aeronautics Board of the MID of RK, 2015
Note: the data of 2010 and 2014 years were obtained by KASA by calculation
In total the data of the Civil Aeronautics Board on cargo dispatch in internal airlines slightly differs from the data of the Statistics Committee on the freight traffic. The reason may be the inaccuracy and errors under information gathering.
Aerial works on forest protection
Aerial works on forest protection are performed by “Kazakh base of aviation protection of forests and forestry services” Republican National Enterprise of the Committee of Forestry and Fauna of the Ministry of Agriculture (hereinafter - “Kazavialesoohrana” Republican National Enterprise).
According to the Decree of the Government of the Republic of Kazakhstan dated January 19, 2004 N 53 “On approval of rules and regulations on conservation, protection, use of forest resources, reforestation and afforestation in the territory of the state forest fund” [01] the enterprise patrols 8 869 mln. ha of forest areas with the purpose of fire protection.
“Kazavialesoohrana” Republican National Enterprise performs the following functions, determined by the charter of the enterprise:
· timely detection and extinguishing of forest fires, revealing and prevention of violations of forest legislation;
· performance of works on conservation and protection of forests and specially protected natural areas;
· performance of forest pathology supervision, execution of aerial chemical works on pests and diseases control;
· flight operations for the needs of forestry, hunting industry, and specially protected natural areas;
· mass agitation, awareness raising activity, organization of promotional and PR-activities in the field of conservation and protection of forests and wildlife.
According to the presented data the volume of purchased aerial works ranged from 682.2 mln. tenge in 2010 to 1 131.6 mln. tenge in 2014 (0).
The volume of aerial works on protection of forest areas, mln. tenge
Source: according to the Committee of Forestry and Fauna of the Ministry of Agriculture of RK, 2015
These works are carried out with the use of the own helicopter and through procurement of services on aerial works of outside organizations. Squadrons of the enterprise are located in Jambyl, Almaty, Karaganda, East Kazakhstan, Pavlodar, Akmola, North Kazakhstan and Kostanay regions.
Aerial chemical works
According to the Ministry of Agriculture since 2010 the volume of aerial chemical works financed from the state budget has been increased more than 3-folds. The total volume of aerial chemical works paid from the state budget in 2014 amounted to 2.2 billion tenge. Aerial chemical works are carried out by the operators on a competitive basis. The market volume is estimated at least to 2.2 bln. tenge, because in addition to the state order the aerial chemical works are carried out also by private enterprises at the own expense of private entrepreneurs. For example “Center of Ag flying Kazakhstan” Llp performs aerial chemical works for private entrepreneurs in Jambyl region, “Avia-Jaynar” Llp, a subsidiary of “Ivolga Holding”, also carries out aerial chemical works in North Kazakhstan
The volume of aerial chemical works against highly dangerous pests in terms of value, mln. tenge
(planes aircraft of ultra light aviation (ULA)
Source: according to the Committee of State Inspection of the Ministry of Agriculture of RK, 2015
The area of the territory covered by the aerial chemical works since 2010 has been increased by 44% from 2.2 mln. ha in 2010 to 3.2 million. ha in 2014, but the main growth was recorded from 2013 to 2014.
The area of the territory covered by the aerial chemical works against highly dangerous pests, thous. ha
(planes aircraft of ultra light aviation (ULA)
Source: according to the Committee of State Inspection of the Ministry of Agriculture of RK, 2015
Light and ultra light aircraft are used in equal proportions in aerial chemical works, but there is a tendency of increase of ultra light aircraft.
Nowadays the share of aviation in the chemical treatment of agricultural crops covers 43%, there is considerable potential for aviation use in this area with account of the competitive advantages of the aircraft.
The share of aerial and ground-based activities in the chemical treatment of agricultural crops
(aerial works ground-based activities)
Source: according to the Committee of State Inspection of the Ministry of Agriculture of RK, 2015
The use of aircraft in agriculture significantly increases the efficiency of agricultural works. Thus under application of aviation equipment for chemical treatment of agricultural crops the use of equipment is reduced 10 times, the use of machine operators – 20 times, fuel consumption – 40 times, water consumption – 50 times. Also due to the use of aviation equipment the crop losses, which appeared under the wheels of ground-based equipment, are reduced by 10%. The cost value per 1 ha of treatment with the use of aircraft is 2.7-fold lower than with the use of ground-based equipment.
In veterinary medicine the aviation is used during vaccination of wild carnivores against rabies through air-spreading of baits. The use of aviation in veterinary medicine has begun since 2013 and the works are carried out by public procurement of services.
The volume of aerial works in veterinary medicine in 2013-2014.
Characteristic |
2013 |
2014 |
The volume of works conducted for vaccination of wild animals through air-spreading of baits and doses |
976 830 |
1 245 640 |
The monetary amount of works conducted for vaccination of wild animals through air-spreading of baits, thous. tenge |
169 866.9 |
210 513.2 |
Source: according to the Committee of veterinary control and supervision of the Ministry of Agriculture of RK, 2015
Main participants
The largest market is the market of scheduled air services, where five Kazakhstan airlines are registered – they are:
1. “Air Astana” JSC (Astana);
2. “SCAT Airline” JSC (Shymkent);
3. “ Zhezkazgan-Air Airline” JSC (Zhezkazgan);
4. “ Zhetysu Airline” JSC (Taldykorgan);
5. “BEK AIR” JSC (Almaty).
The market shares of Kazakhstan airlines, performing scheduled passenger operations.
Air Astana SCAT BEK AIR Zhetysu Zhezkazgan-Air
Source: according to the Civil Aeronautics Board of the MID of RK, 2015
According to the Civil Aeronautics Board the mentioned airlines carried 5.4 mln. passengers and almost 19 thousand tons of cargo in 2014.
A significant portion in amount of passengers in the Republic of Kazakhstan, carried in scheduled flights, is taken by “Air Astana” airline with 3.7 million passengers or 70% of the market, followed by “SCAT” airline with 1.2 million passengers or 23%, “BEK AIR” airline covers 7% of the market.
In international air transport services from/to the Republic of Kazakhstan the share of Kazakhstan airlines is about 50% in passenger traffic. On the results of 2014 Kazakhstan carriers implemented 51% of international traffic (45% in 2013). In case of introduction of the “open sky” principle over Astana in connection with the Expo 2017 the share of foreign carriers will increase in order to serve the advanced passenger flow.
Development factors
· Advantageous geographical location of the country. Kazakhstan airports are mainly located in the path of air routes, linking Europe with Asia, Southeast Asia, so there is significant potential for expansion of international air services and increase in flying of Kazakhstan airlines to the neighboring countries and beyond.
· Well-developed airport network, covering most of the country.
· Well-developed infrastructure of the related types of transport.
· The effort of the Government to strengthen the interregional relations as reflected in “Kazakhstan 2050” strategy.
· Stable position of principal national carriers, allowing them to prepare for competition growth in the future.
· Beginning of the modernization process in “Kazaeronavigatsia” Republican State Enterprise. The profit will be a guarantee of future investments.
Barriers and limitations
№ |
Problems and limitations (barrier description) |
Problem-solving
proposal |
Expectation |
Access to national, international markets, public procurement and ensuring the needs of defense
|
|||
1 |
The volume of domestic air service market is limited by effective demand and relatively small population of the country. The ratio of air mobility of the population, which characterizes the average amount of air travel as per one person per year, happened to be at the level of 0.18 in domestic flights in Kazakhstan. The greatest number of air travel in domestic flights accounts for the residents of Astana, Almaty, Atyrau and Mangistau regions. In Kazakhstan the increase/decrease of GDP per capita by 1 000 dollars will be followed by increase/decrease in volume of air services by 150-200 thous. passengers per year. Over the last three years GDP per capita was at the level of 12-13 thousand US dollars, the average income per capita is 7660 US dollars. At average 20 US dollars is the expense on the flight per one person or it is 0.2% of revenues. According to the forecast of socio-economic development of the Republic of Kazakhstan for 2016-2020 years, prepared by the Ministry of National Economy of RK, approved at the meeting of the Government of the Republic of Kazakhstan (Minutes №35 dated August 29, 2015), in 2016-2020 the GDP per capita in Kazakhstan is expected to change from 9.9 to 13.2 thous. US dollars/person. According to the given estimates the air mobility ratio in Kazakhstan should decrease to 0.14 and then increase to 0.16. This will reduce the volume of the domestic market of scheduled passenger operations by 20%. |
In order to save air mobility of the population and increase the volume of the domestic air service market it is recommended to take a number of measures: · Improvement of competition in the domestic market through the creation of favorable conditions for the access of new low-cost airlines to the market, including foreign ones, in order to reduce air service prices; · Systematic implementation of state programs on the development of the economy, including those marked by the President of the Republic of Kazakhstan in the Kazakh-Japanese business forum in Astana on October 27, 2015: the second program of industrial-innovative development, “Nurly Zhol” program, International Financial Centre in the capital of the Republic of Kazakhstan and recently declared privatization of state-owned shares. · Introduction of “open sky” principle, the necessity of which is addressed to Astana airport for successful realization of “Astana EXPO-2017” International specialized exhibition |
Preservation of air mobility of the population of Kazakhstan at the level of 0.18 flights per one person per year. |
2 |
Kazakhstan airlines have been included into the “black list” of ICAO, and they are forbidden to make regular flights to Europe and open new international directions, except for current routes of “Air Astana” airline. The last ICAO audit has revealed a discrepancy of Kazakhstan structure of the aviation industry according to the following positions: · Aviation legislation of the Republic of Kazakhstan corresponds to the international standards to 45.45% (in 2009 this figure was at the level of 33.33%), · Airworthiness authorities of the country - to 66.67% (63.64% previously), · Licensing of aviation personnel and its training - to 33.33% (25.64% previously) · Aircraft employment – to 36.8% (26.02% previously), · Airworthiness of aircraft - to 58.62% (34.55% previously), · Investigation of air accidents - to 52.08% (previously the check was not performed) · Air navigation service - to 69.23% (29.02% previously), · Aerodromes and ground handling - to 49.32% (45.58% previously). The main ICAO remarks concern the lack of separation of powers into legislative and technical regulation in the industry, which are now carried out by one body in the name of the Civil Aeronautics Board of the MID of RK. Also the experts have serious questions to the quality of training of Kazakhstan aviation inspectors.
|
It is necessary to improve the percentage of compliance of RK aviation with the ICAO standards up to 80%. To achieve this follow the steps below. Concerning the compliance of the aviation legislation of RK with the international standards it is required to: · Harmonize national legislation with the Chicago Convention (Convention on International Civil Aviation); · Establish the regulatory framework, which governs the following issues: o Safety practice on the flight strip, o Secondary legislation for all certified operators of the aerodromes; o Establish clear limits of powers of aviation inspectors in the legal acts; o The system of examiners’ proficiency and skills maintenance; o The system to support the experience and competence of the teachers of aviation educational institutions. Concerning the compliance of the airworthiness authorities of the country with ICAO requirements it is necessary to: · Divide the powers in the field of legislative and technical regulation of aviation issues among the various public authorities; · Provide sufficient funding of the bodies responsible for flight safety. Concerning the licensing of aviation personnel and its training it is necessary to: · Train and recruit a sufficient number of competent and qualified inspectors in various technical specialties; · Carry out the certification of aviation inspectors in order to perform the functions of certification and control in the field of flight safety. Concerning aircraft operation and provision of airworthiness it is necessary to: · Develop the regulations on emissions and repair of aircraft engines; · Control the documentation relating to the work of flight recorders, perform their periodic calibration and maintenance works; · Create conditions for protection of archived records of flight recorders of each aircraft. Concerning investigation of air accidents it is required to provide the necessary staff to the divisions dealing with the investigation of air incidents. Concerning aerodromes and ground handling it is required to: · Develop safety programs for the flight strips; · Install operating minimum (flight strip visibility in fog) at all aerodromes of the country. Concerning the air navigation it is necessary to improve the information content of the aeronautical charts of Kazakhstan, so that they are inclusive and exact, and kept in the current status. |
The restrictions will be removed on flights of Kazakhstan air carriers to the European countries, imposed by the ICAO. |
3 |
In Kazakhstan the conditions on international air routes, on amount of carriers, flight rate and capacity are stipulated in bilateral interstate agreements of the Republic of Kazakhstan that significantly limits the development of international traffic. Currently Kazakhstan has signed 36 intergovernmental agreements on air communication with foreign countries, including 11 countries of European Community. Today there are 91 international routes.
|
A step-by-step approach to liberalization of international air service. Based on the recommendations of ALG international consulting agency Kazakhstan can carry out liberalization in three stages. Short-term (2013-2017), where a range of actions is provided, including removal of ICAO notes, deletion out of the community list. Medium-term (2017-2020), where a range of actions is provided, including liberalization in air agreements, where local and foreign airlines are limited. Long-term (2020-2045), where a range of actions is provided, including liberalization in air agreements, where foreign airlines are limited. |
Market expansion for Kazakhstan airlines operating on international air routes in average by 30% until 2045. |
4 |
At the present time it is planned the introduction of competition for existing routes for international traffic, which can lead to the substitution of Kazakhstan air carriers by foreign airlines. |
The competitions only for new international routes reduce the risk of substitution of Kazakhstan airlines by foreign carriers with potential introduction of “open sky” principles |
Preservation of routes of Kazakhstan airlines |
5 |
Some airlines actually perform scheduled flights, but register them as charter ones (non-scheduled) |
To require the transfer to the status of scheduled flights |
Preservation of the air accidents level not lower than in 2015 |
6 |
Increase in tariffs for domestic traffic in order to finance investment development programs for “Kazaeronavigatsia” Republican State Enterprise, although it has large profit from the provision of transit traffic services. |
To enter the cross-subsidization of aeronautical tariffs imposed by “Kazaeronavigatsia”, i.e. allow the company to use transit revenues to finance the development of navigation systems at airports in order to avoid the growth of tariffs for internal operations. |
Increase in financing of the infrastructure development of “Kazaeronavigatsia” Republican State Enterprise by 20% due to cross-subsidization of aeronautical tariffs.
|
7 |
The financial condition of the majority of airports in Kazakhstan is unstable mainly due to low employment. At that the airport services as locally monopolized are the subject to anti-monopoly regulation, which causes a number of negative consequences: low rate of return - about 5%, reduction in price policy efficiency under increase of the cost of services, the closure of access to alternative providers of airport services. The world practice shows that only some types of airport services are locally monopolized: terminal services for passengers, provision of take-off and landing safety. |
It is proposed to liberalize the services of major airports (three largest airports in Kazakhstan), leaving only three types in the monopoly sector: terminal services for passengers, provision of take-off and landing, safety provision, upon condition of the sufficient and transparent certification of service providers. |
Deregulation of airports activity, which is planned as a part of general deregulation of the economic entities in 2017, is supposed to execute in 2016. This allows airports to carry out a flexible tariff policy, for example, to reduce some tariffs in order to compete with airports in other countries, and increase some tariffs in order to provide payback of new technology. For example, existing regulations on operational costs, amortization of airport machinery and equipment are outdated, that does not allow purchasing new equipment, and relating its costs to reasonable expenses of tariffs. The corresponding increase in airports profitability is more than 5% as a result of the implementation of the complex of proposed measures. |
8 |
At this time the airports are strategic objects that makes the state control and regulation of their activities more rigorous. |
It is proposed to leave in the strategic target list the flight strip, fuel filling infrastructure, signaling equipment for take-off and landing, and other objects of the airports should be removed from the strategic target list. |
Deregulation of airports activity in this part, which is coupled with the removal of a number of services from the sector regulated by the antimonopoly authority, will allow execution of flexible tariff policy and provision of total revenue growth by 5-15% per year. |
9 |
Currently there is a problem of cargo and mail delivery to the depressed regions and regions with poor transport infrastructure. The solution is to deliver cargo and mail by operators of small aircraft, who perform aerial work. However under the current legislation the cargo and mail delivery is not included into the list of aerial works. |
It is proposed to make amendments to the Decree of the Government of the Republic of Kazakhstan dated January 18, 2012 №103 “On approval of the Basic rules of flights in the airspace of the Republic of Kazakhstan” in part of addition of the mail and cargo carriage to the list of aerial works. |
A twofold increase of the market of aerial works due to expansion of the functional of small aircraft will lead to socio-economic development and prosperity in the depressed regions and regions with poor transport infrastructure. |
10 |
The procedure of public procurement of services on aerial works provides the conclusion of the contract for a period of 1 year. For entrepreneurs this regulation significantly limits the opportunities for expansion, as the investment in the acquisition of aircraft to provide services for one year is too risky for entrepreneurs, because there is no confidence in receipt of incomes in the long run. Projects payback period in aviation is usually not less than seven years. |
In order to remove this barrier it is proposed to include the regulation on the possibility of signing the contract on aerial works execution for 3-4 years into the article 37 of the Law of RK “On public procurements”. |
Increase of investments into small aircraft industry is not less than 10% per year in connection with the possibility of signing the contract on aerial works execution for a long term. This measure will improve the quality of services provided due to aircraft fleet renewal, increase in the number of providers of aerial works. |
11 |
It is planned the introduction of the regulation on the possibility of procurement of services from one operator of helicopter operations, which could lead to the monopolization of the market of services, advance of their value by one and a half or twofold, and removal from the market of 12 companies providing these services to the state bodies, national companies, government-sponsored enterprises |
Not to introduce this regulation
|
Provision of competitive environment in the market of helicopter operations. Preservation of the part of the market of private companies at the level of at least 25% of the total volume of provided helicopter services. |
12 |
The lack of free access to the airports of Russian Federation for foreign pilots, working in Kazakhstan companies, makes it difficult to work due to their large number. |
To develop and implement at the international level the mechanism of free access for foreign pilots, working in Kazakhstan companies, along with the pilots, who are citizens of Kazakhstan. |
Removal of administrative barrier, the growth of performance of companies activity. |
The presence or absence of transport and logistics, energy, industrial infrastructure |
|||
1 |
The practice has shown that intra-regional routes in Kazakhstan, as a rule, are unprofitable and require significant subsidies. However, local budgets have no funds for subsidies and the development of airports infrastructure. During the Soviet period there were more than 50 local aerodromes in the regional centers in Kazakhstan (almost in every second regional center). Currently there are only 6 aerodromes: East Kazakhstan region (Zaisan Urzhar, Ayagoz, Katonkaragay and Kurshim), Akmola oblast (Stepnogorsk). At that the airports in East Kazakhstan region are supported by the subsidies from local executive authorities. In other regions the routes were opened, but then stopped because of funding shortage. (Example - Oral -Kastalovka-Janybek-Sayahin- Oral). The lack of small airports prevents air communication with regions. In the Soviet period the financing of small aircraft was made mainly due to the cross-subsidization by means of basic incomes of “Aeroflot”. The global practice also shows the feasibility of financing of intraregional routes at the expense of centralized state fund. The so-called “essential air services (EAS) and necessary routes for the development of tourism” are noted in the EU. As a rule these regions are economically depressive, and they require non-competitive transport air services to maintain the normal life of residents and tourists (PSO - public services obligations). Such routes are subsidized centrally on the basis of standard costs. Subsidies from the centralized government funds are due to the fact that, as a rule, the regions with poor transport connection are depressive in the whole and have critical local budgets. This concept has been recently supported by ICAO and the World Tourism Organization. The Russian government also allocates a list of more than hundred settlements (Siberia, the Far East, subpolar regions) which seasonally or permanently do not have any transport link with the rest of the world, except aviation. The federal government distributes the subsidies among airlines on a competitive basis. The US subsidizes about 5% to 90% of the tariff for socially important regional and local air traffic in 32 states, as well as in Hawaii and Alaska, the grants are provided for the development of local airports. In Canada the large significant and small airports are subsidized. |
The following changes are proposed in the action plan for the development of international air lines: · review the list of settlements for the development of local airports with the marking of those which have the worst transport connection (the current list is specified in Appendix 2) · airports construction is fully provided by means of the republican budget, the cost of construction, according to calculations, may be about 150 mln. tenge · provide subsidies for the activities of local airports by means of the republican budget on the basis of economically and technologically justified standards · provide subsidies for local intraregional routes by means of the republican budget on the basis of economically and technologically justified standards, providing profit margin, as well as placing them for orders on a competitive basis · subsidies for routes should be allocated for a period up to five years in order to provide the guarantees of carriers loading so that they can carry out the procurement of aircraft for these purposes · cancel the navigation and meteorological fees for them · subsidize 50% of insured benefits for insured accidents with the third-party liability · simplify the requirements for certification of regional and local airports with low intensity of flights: reduction of the personnel to technologically necessary minimum. No need to keep, security services and others · extension of the preferential tariff treatment of aircraft import by 2018, which will reduce their costs and ultimately cut the cost of tickets. · consider the possibility of reduction of the certification requirements for the operators, engaged in such carriage · attract potential investors and consider their conditions for creation/development of regional airlines on the basis of existing operators for current flights execution, including the use of twin-engine aircraft.
|
Bringing the number of local aerodromes up to 50 units by 2045. Reduction of the number of rural settlements with the lack of transport communication to 75 units. Implementation of these recommendations will ensure state social obligations on transport accessibility for the residents of remote settlements. The operation of twin-engine planes will also give the opportunity for the pilots to gain the necessary experience, which is required in large airlines.
|
2 |
Existing regulations on construction and operation of airports do not allow the construction and operation of maximum simplified and cheapen flight strips (similar to those used in the Soviet period) for passenger traffic on international air lines, which leads to their appreciation (about 2 million dollars) and prevents the development of international air lines. |
Develop the standards for construction and operation of the flight strips, temporary airfields, allowing commissioning of facilities for international air lines, develop pilot regional development programs for international air lines, explore sources of funding for their implementation, including subsidies of routes |
Provision of accessibility for at least 50 remote settlements and those which have limited availability, provision of postal, medical, security and other priority public services.
|
Availability and provision with human resources, presence of slikked personnel, dependence on foreign experts |
|||
1 |
Provision with aviation personnel in Kazakhstan remains high enough. According to Civil Aeronautics Board of the MID of RK nowadays about 17 thous. people work in the civil aviation of the Republic of Kazakhstan. Among them 1 873 people are pilot personnel, 828 – dispatchers of air traffic management, 1066 – aircraft maintenance specialists, 1672 – flight stewards, about 11.5 thous. people are support personnel. By 2020 it is expected the increase in demand for aviation personnel in Kazakhstan. The need for personnel will be the following: up to 200 pilots, about 100 dispatchers of air traffic management, about 130 aircraft maintenance specialists, additionally there will be required about 200 flight stewards and about 1400 other aviation personnel, as well as up to 150 people to replace foreign pilots by Kazakh specialists. |
It is necessary to provide conditions for training and employment of about 200 pilots, about 100 dispatchers of air traffic management, about 130 aircraft maintenance specialists, about 200 flight stewards and about 1400 other aviation personnel, as well as up to 150 people to replace foreign pilots by Kazakh specialists. To do this the following activities should be done: · Equip with new training facilities and carry out certification according to international requirements of the training center of Civil Aviation Academy for training of aviation professionals: pilots, dispatchers of air traffic management, maintenance specialists, flight stewards. · Create a functioning network of local airlines, equipped with two-engine passenger aircraft to provide the possibility of flight up to 500 hours within preparation of airline pilots. · Create the preliminary training system for youth to be employed in the aviation industry through opening of the aeronautic clubs for 20 thous. people, technical schools with aeronautic direction for children and young people for 2 thous. people. |
Conditions will be created for additional provision of civil aviation industry with the national staff with a total number of not less than 2200 aviation specialists by 2020. |
2 |
It is estimated that up to 35% of foreign pilots, engaged in the management of western made aircraft, work in Kazakhstan. |
To create a national pilot training system due to the following measures: · Reduction of barriers and creation of conditions for small aircraft development, as a link in the initial phase of pilot training; · Creation of conditions for training of pilots for passenger aircraft in local educational institutions; · Support of in-company training programs for pilots of major airlines. |
Conditions will be created to bring the share of Kazakh pilots in Kazakhstan airlines up to 80% in 2018, up to 100% in 2020. |
Availability of financial resources |
|||
1 |
Financial capacity of RK small airlines do not allow purchasing of new aircraft that force to acquire aircraft, which have already been in operation. At the same time the maintenance of such aircraft is complicated with insufficiently developed material and technical base of small airlines. The so-called “wet leasing” allows the maintenance of the aircraft on the basis of leasing companies - companies specialized in the “wet leasing”. In addition there is the possibility of providing services of flight personnel from the leasing company. In Kazakhstan there are no specialized companies, providing “wet leasing” aircraft. The acquisition of aircraft by Kazakhstan airlines on “wet leasing” from foreign companies is limited by legal requirements on the operational control. |
In order to implement the “wet leasing” scheme in accordance with the Chicago Convention the agreement on transference of operational control should be concluded between the country of the leasing company and the country of the airline. The conclusion of such agreement should be initiated by the Civil Aeronautics Board of the MID of RK. |
The opening of “wet leasing” opportunities increases the availability of aircraft acquisition by small airlines. This in turn will lead to the expansion of the aircraft fleet at least by 20%, and consequently to the increase of the number of scheduled flights, reduction of prices for civil aviation services and improvement of competitiveness of the aviation industry in Kazakhstan in the whole. |
2 |
In the global practice of the civil aviation the most common financial instrument for aircraft acquisition is financial leasing. As a rule the leasing company is a related company of aircraft manufacturer. Transactions are concluded in foreign currency. Such transactions for Kazakhstan airlines involve currency risks caused by different currency returns and upcoming lease payments. |
It is necessary to create in Kazakhstan the “State leasing company” similar to State Transport Leasing Company in Russia, which will provide the equipment on lease under more favorable terms than in the international financial market: in tenge, that eliminates currency risks, with a contribution of 10%, for a period of 10 years, with tax exemptions on property, accelerated depreciation and other. |
Establishment of the State leasing company will lead to minimization of currency risks when purchasing aircraft. This will stabilize the expenditure side of the cash flow of the airlines, since the significant part of money is spent on support of obligations for leasing in foreign currency. In turn this will reduce the impact of changes in the national currency on the cost of air services, retail price of airline tickets and air freight operations. Due to the relatively high cost of services the leasing company would receive additional income and also use financial instruments for foreign currency hedging. |
Technological and innovative potential |
|||
1 |
Kazakhstan civil aviation industry is characterized by low level of introduction of technological and innovative solutions, particularly in ground infrastructure and personnel training that nowadays reduce the competitiveness of the industry, increase costs and suppress the realization of the potential for industry development. In particular there are the following problems: · Lack of aerodrome charts in WGS-84 coordinate system · Lack of advanced aircraft landing systems · Lack of automatic system of processing and customs declaration of baggage, · Lack of alternative methods for monitoring from air with the use of UAVs and drones · Lack of automated systems for passenger and baggage check at most airports in Kazakhstan · Imperfection of related services for passengers, including transit.
|
The following technologies should be introduced for improvement of the industry efficiency and flights safety: · review of aerodrome charts in all airports in the Republic of Kazakhstan and publication of aeronautical data in WGS-84 coordinate system by 2016; · introduction of new development systems of satellites landing, received internationally designation as GLS - Global Landing System; · implementation of IATA e-Freight standard in air freight operations; · introduction of automated baggage handling system - BHS (Germany) · use of drones with GPS technology to control the flight for monitoring purposes; It is also necessary to introduce the following technologies at the country's airports (some of them are partially implemented at Almaty and Astana airports): · desk for passengers self-registration and desk for self-registration at border terminals (introduced by the AirAstana airline at the airports of Astana and Almaty); · navigation with the help of smartphone application at the airport on the basis of “bluetooth” communication protocols; · new inspection systems, allowing passengers not to take off belts and shoes, not remove laptops from the bags; · hotels in the transit area, capsule hotels for passengers with long flight connection; · short sigh-seeing tours for transit passengers (without visa); In addition in order to enhance the introduction of technological developments it is necessary to stimulate innovations with the use of the state budget, grant programs, including international organizations. |
The implementation of technological and innovative potential of the civil aviation industry in Kazakhstan in order to improve the efficiency of such industry. The introduction of at least 10 innovative technologies in the industry by 2030. |
2 |
The absence of e-freight customs declaration system leads to the loss of income from freight traffic, which passes to competing airports in the bordering countries (such as Uzbekistan). There is a threat of greater loss of income after the Russian joining to the Montreal Convention and implementation of this system in the Russian Federation. |
To apply best efforts especially on the part of the Customs Control Committee of the MF of RK, for the early e-freight system implementation throughout the year, for which an audit of the information systems of participants (airports, airlines) should be done, a secure data exchange protocols between private and public information systems (customs) should be developed, financing for implementation should be provided. |
Growth in revenues due to freight traffic of Kazakhstan airlines from 5 to 20%. |
Measures of state regulation and legislative initiatives |
|||
1 |
At the present time to carry out activities in the field of light and ultra light aircraft certification the certification fee rate, established in the Tax Code of the Republic of Kazakhstan, is a major limitation of business development in this sector. The certification fee rates are prohibitively high. A detailed barrier description is provided in the section “3.3.7. Legal restrictions and initiatives” |
To remove this barrier it is necessary to make amendments to the article 476-3 of the Tax Code of the Republic of Kazakhstan in terms of: · Reduction of certification fee rate for the operator certification, who is engaged in aerial work with the staff number up to 50 people, 78 MCI instead of 743 MCI. · Exceptions of certification fees for airworthiness of light and ultra light aircraft. · Reduction of certification fee rate for specimen of civil aircraft for the plane is up to 10 MCI instead of 1000 MCI, for helicopter – up to 20 MCI instead of 2000 MCI, for other aircraft – up to 5 MCI instead of 500 MCI. · Exemption for light and ultra light aircraft of fees for certification of organizations who perform maintenance of assemblies and components for aircrafts in the laboratory, fees for certification of organizations who apply non-destructive inspection methods of the status of aircraft and their components and assemblies. · Reduction of certification fee rate for organizations carrying out controlling and recovery works (repair and restoration works) on airframes of aircraft, engines and components of aircraft, operated without full repair, with the staff number up to 10 people - to 47 MCI, with the staff number up to 40 people -to 69 MCI · Exception of fees for certification of D, E and F classes’ aerodromes. · Exception of fees for certification of aviation training centers. |
Reduction and elimination of certification fee rate for light aircraft will improve the investment attractiveness of various sub-sectors of the aviation industry (aerial work, training, maintenance and repair, individual flights, commercial non-scheduled flights, etc.), all of which will make a synergistic effect on the development of the industry in the whole. There is expected a double growth in the number of subjects of small aircraft and a corresponding increase in the market of aviation services, development of competition, improvement of quality of services rendered. These initiatives will further increase the fleet of small aircraft to 20 units per year.
|
2 |
Nowadays Kazakhstan airports are chronically unprofitable. One of the reasons is high tax expenses. As a result of modernization the airports are forced to pay high property taxes. |
To make amendments to the Tax Code of the Republic of Kazakhstan in terms of reduction of property tax for the airports to 0.1% of the cost. |
As a result it is expected to optimize the expenditure side of the airports by 3-5%, and consequently to reduce the airport services cost for airlines. |
3 |
VAT return mechanism for services of petroleum products provision for foreign airlines leads to a significant increase of airport expenses, difficulties in salary payment to employees. If there is up to one bad VAT payer in the chain of suppliers of petroleum products, materials, services, etc. the VAT return to the airport by tax authorities is immediately frozen, although the airport does not control the supply chain further 1 level (its counterpart). |
To provide a simplified procedure for VAT return to the airports as strategic objects |
Revenue growth of the airports up to 2%, in unprofitable conditions of almost all of them will improve the quality of services, maintain and renew the outdated material and technical base, ensure flights safety. |
4 |
For light and ultra light aviation the commission rates are unreasonably high. For example, compared with the airlines, rendering passenger services on large aircraft, the costs of operators of light and ultra light aviation in ANO for the carriage of one person or one kilogram of cargo is 13-17 times more. The detailed description of this barrier is given in the section “2.4.3. Regulation of air navigation” and in the section “3.3.7. Legal restrictions and initiatives”. |
In order to remove this barrier it is recommended to exclude aeronautical and meteorological fees for domestic flights of aircraft weighing less than 5700 kg, flying in the lower airspace under visual navigation rules.
|
“Kazaeronavigatsia” Republican state enterprise receives from the small aircraft about 200 mln. tenge per year, or less than 1% of the total of income. Exception of aeronautical and meteorological fees increases the income of small aircraft to the amount, which will increase the aircraft fleet by 20 units per year. |
5 |
Nowadays the terms of rendering of public certification services take a long time from 21 to 90 calendar days, whereas in Russia, for example, the time for operator certificate obtaining does not exceed 10 working days. There are cases of loss of documents, provided by aviators, which together with the long period of consideration lead to the disruption of the flying season. In addition according to the ICAO audit the Civil Aeronautics Board concentrates many of the functions to be performed by independent agents that also have an impact on the certification procedures. The detailed description of this barrier is given in the section “2.4.1. Legislation” and in the section “3.3.7. Legal restrictions and initiatives”. |
In order to eliminate this barrier it is proposed to give a permanent airworthiness certificate and put on record the technical compliance of the aircraft by the Special Inspectorate of the self-regulatory organization (KASA), i.e. the Civil Aeronautics Board grants to the operators, not involved in commercial air transport operations, permanent airworthiness certificates for small aircraft with annual state assessment and validity determination of the aircraft, made by the Standing technical commission of “KASA” association of legal entities.
|
Reduction of terms of rendering of public primary certification services up to 10-15 working days; Reduction of licensing procedures for operators, who perform aerial works, by issuing certificates for admission to aerial works for an indefinite term; |
6 |
Long terms, high standards, high frequency, expensiveness and centralization of passing of flying medical examination for admission of pilots of small aircraft, who are subject to the same regulations as the professional airline pilots, conducting scheduled operations of large aircrafts with passengers. So, such examination takes place in Astana, except the cost for travel and accommodation, the cost of medical examination amounts to a few tens of thousands tenge. After 40 years old the examination should be made more often (every 6 months or 12 months depending on the type of aircraft managed), and in case of chronic diseases - every six months. For this reason the barrier is prohibitively high, both for professionals, working in the industry (due to relatively low incomes), and even for entrepreneurs, owning aircraft as non-specialists (due to lack of time). At the same time the ICAO standards allow the general practitioners to give admission to small aircraft as in the UK (i.e., family physicians), in Kyrgyzstan - on the basis of a driving license. The ICAO Standards do not impose such simplified procedure, leaving the possibility of taking into account country specifics, but in Kazakhstan the medical requirements and control for pilots of small aircraft are obviously exaggerated. |
Simplify the procedures of medical examination, at the first stage - at least at the level of regional clinics certified for this purpose by medical professionals. Reduce the cost of procedures, frequency, requirement levels, making it comparable to the level of requirements for professional drivers, with possible exception of the requirements for resistance to air overloads. |
Reduction of administrative barriers, aviators expenses, transition to the ICAO practice, increase in the number of pilots, decrease in the number of violators, flying without admission and certificates that lead to accidents, human losses and damages (already two cases since the beginning of the year). |
7 |
Since the Soviet period in the structure of airspace there are lots of prohibited areas, primarily on and near the military training areas. Usage of training areas has been declined significantly, they are not used, but their areas exist. Also a large number of zones and prohibited strips are near the big cities, former residencies of the country's leaders, and other objects that are no longer important, but the restrictions persist. The big problem is the coordination of temporary landing airfields for helicopters, gyroplanes and other aircraft with the national security agencies, although in fact they are widely used. In comparison with the international practice the areas around the airports are several times bigger. |
Reduce the size and number of prohibited areas and restrictions. Bring the structure of the airspace in balance with the recommended practices and international standards, revise the boundaries of controlled airspace, extend the boundaries of uncontrolled airspace (“Kazaeronavigatsia” RSE and the main centre of air traffic control of MD need to revise the boundaries of zones of responsibility of the airports, within which should be provided a fixed radio communication in FM band) Do not determine the boundaries of responsibility of control towers by the pattern and make adjustments to the boundaries of the controlled area vertically, providing the exception of the surfaced layer from the controlled area, where there is no fixed radio communication. Develop a guide of recommended and most common routes with air bills for general aviation. Open a free call center of “Kazaeronavigatsia” for pilots consulting on prohibitions, restrictions, coordination of routes because of training, flights, etc. |
Optimization of airspace structure and its accessibility for general aviation, increase of flight safety of general aviation as a result of publication of the guide of routes, opening of call centre for consultations. |
8 |
The obligation of the airports to carry out safety checks of visitors at the 1 Line (the entrance to the airport): - leads to unnecessary expenses for acquisition and maintenance of scanners (several million tenge for each check point), wages of employees; - not provided by the legislation of the Republic of Kazakhstan, as the employees of aviation security support of the airport have the right to examine the passengers only (after flight check-in), but not all visitors to the airport. |
Transfer the execution of this function to the Ministry of Internal Affairs of the Republic of Kazakhstan, provide financing for the rent or purchase of scanners, additional staff, training
|
Reduction of airport expenses for security control to 10%. |
9 |
Nowadays the passing of the IOSA audit (International Air Transport Association Operational Safety Audit (IATA Operational Safety Audit) should be obligatory in Kazakhstan. This audit is conducted by auditors accredited by the noncommercial International Air Transport Association, IATA. According to IATA requirements all airlines -IATA members should pass the IOSA audit. In Kazakhstan the IOSA audit was made by AirAstana and SKAT. In some countries the IOSA audit is obligatory, including in Kazakhstan - according to the rules of admission of the airlines to perform scheduled flights from 2013. The airline carriers’ expenses for preparation and passage of initial IOSA certification amount to 1.5 million US dollars, repeated certification - about 1 million US dollars. |
Instead of obligatory passage of this audit it is necessary to provide non-regulatory principle for this provision, which is necessary for airlines flying to the EU countries. |
Reduction of expenses for the airlines in respect to the cost of the audit. |
10 |
Nowadays there is no accreditation of foreign carriers in Kazakhstan at the same time a mandatory accreditation of Kazakh carriers takes place abroad |
Make the accreditation of foreign carriers in Kazakhstan in order to guarantee the performance of their services, traffic safety. |
Growth of flight safety, reduction of the risk of loss of the value of paid flight tickets by the passengers |
Other industry-specific barriers |
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1 |
Nowadays the civil aviation has no single source of information on all changes in the industry, legislative initiatives, statistics data, cooperation with international organizations. |
Suggest the Civil Aeronautics Board to create and register the periodical literature for publication of industry-specific information as well as creation of dedicated portal in the Internet. |
As a result there will be created an information field in civil aviation for the effective functioning of all subjects of the branches. |
List of potential opportunities
Organization of assembly form ready-made kits
Upon introduction of amendments to the Tax Code of the RK (more details in the section “7.6 Legal restrictions”) in part of reduction of certification rates for specimen of the civil aircraft, exemption of certification fees for airworthiness of light and ultra light aircraft, here is possible the organization of kits assembly for individual and tourist flights as well as for aerial works.
Funds for the kits purchase usually do not exceed 1.5 million tenge. By reducing the fees the economical availability of kit acquisition increases, that in turn creates the market and demand for this type of activity.
Use of drones to monitor natural resources (forest, water), pipelines, railways
The use of unmanned air vehicles is possible for various purposes in the sphere of monitoring, agriculture and so on. The use of this category of aircraft has become more available due to development of microelectronics and computer technology, as well as GPS technology - Global Navigation Satellite Systems (GNSS).
The economic feasibility of the use of such machines involves the reduction of operating expenses, mainly due to fuel, wages for pilots, aircraft cost. Cost of operation as compared with the use of general aircraft is hundred-fold lower.
Development of the network of helicopter platforms and air services
One of the factors, limiting the use and operation of helicopter transport, is underdeveloped infrastructure, in particular, a network of helicopter platforms, equipped with the material and technical base for service and storage. Operation of helicopter platforms directly on the areas of existing airports is undesirable because of possible interference and flight safety hazards of scheduled airlines.
As an example a business model of Russian company called “Heliports of Russia” may be examined, whose activity began with equipment of one helicopter platform and hangar for personal needs of the founder. Strong demand on the part of the owners of private helicopters provided business expansion. Today the company not only provides infrastructure services, but is engaged in sale and maintenance of helicopters, provides services for passenger carriage. The company's network covers 9 cities in Russia
Opening of flying schools in the region
Creation of certified simulator centre for airline pilots practice
Nowadays airline pilots take training practice in simulator centers in Turkey, Baltic States and other foreign countries on a paid basis. Creation of a certified simulator center on the basis of the Civil Aviation Academy for provision of regular obligatory training practice of airline pilots on a paid basis will replace the fees for such centers abroad. About 300 pilots per year can pass such practice, payment for which is several thousand dollars or more depending on the type of practice.
Development of the aviation tourism
In recent years the aviation tourism has become very popular, i.e. traveling on own or rented light plane (helicopter) in specially allocated air routes. This type of service has received a wide advertisement in the EU, US and China. In Kazakhstan the obstacles are airspace structure inappropriate to international standards, as well as oversized air navigation charges and widespread of prohibited areas, lack of opportunity to rent light aircraft. With the reduction of these barriers there is possible the development of international tourism in this area.
Creation of local airlines operators
To carry out scheduled flights of local airlines it is necessary to create separate airlines, which would have technical opportunity of such flights.
This requires the implementation of standardized requirements for flight operations support:
· according to availability of the required type of aircraft, which can carry out take-off and landing at the local airports in amount, sufficient to carry out scheduled flights and according to the presence of the aircraft reserve;
· according to the presence of personnel appropriately qualified to ensure flight safety.
Aircraft suitable for use in the local airlines are listed below.
Aircraft suitable for use in the local airlines
Aircraft Industries (Czech Republic) |
Harbin Y-12 (China) |
PZL M-28 Skytruck (Poland) |
|
|
|
L-410 |
Y-12 |
M-28 |
Investment volume in one such company will amount to 600 million tenge. One airline may be created in every region.
In order to organize scheduled flights at regional carriage through 52 airports of the local airlines the necessity to update the aircraft fleet is estimated at over 15 bln. tenge.
Development of the network of youth sports technical schools for aeronautical types of sports
To promote aviation professions it is necessary to create the conditions for a natural interest of children and young people to aviation sports. Depending on the age aeronautical clubs may be offered to young children, computer simulators - to older children, flying clubs (sky jumping, aeroplaners, delta planes) – to the children of even older age, ultra light aviation – to high school students. The volume of investments is no more than 300-400 thousand dollars per one such center, at the first stage such centers are possible to create in each administrative center, then - in the regional centers with the existing airports. The total volume of investments is about 5-6 million US dollars.
SWOT
The strengths of this sector include:
· Advantageous geographical location of the country. Kazakhstan airports are mainly located in the path of air routes, linking Europe with Asia, Southeast Asia, so there is significant potential for expansion of international air services and increase in flying of Kazakhstan airlines to the neighboring countries and beyond.
· High rates of economic growth, relatively young population and high level of GDP per capita in the region. A significant number of relations of Kazakhstan population with the citizens left abroad after the collapse of the Soviet Union that may contribute to migration flows.
· Stable growth in air services volume over the last 10 years, especially after the global slump in 2009.
· Well-developed airport network, covering most of the country.
· Well-developed infrastructure of the related types of transport.
· The effort of the Government to strengthen the interregional relations as reflected in “Kazakhstan 2050” strategy.
· Stable position of principal national carriers, allowing them to prepare for competition growth in the future.
· Beginning of the modernization process in “Kazaeronavigatsia” Republican State Enterprise. The profit will be a guarantee of future investments.
The weaknesses of this sector include:
· Imperfect institutional structure of the industry. There is no clear separation between the legislative and technical regulation bodies, as well as proper division of responsibilities.
· Failure to comply with international safety standards;
· Poor condition of infrastructure facilities and insufficient carrying capacity of the terminals at certain airports.
· Low level of competition in the market, availability of significant barriers for foreign companies’ access into the market.
· Lack of coordination between traffic participants.
· Lack of flexible tariff policy, strict regulation of the services costs by governmental bodies do not allow airports fully implement measures to attract foreign aircraft for technical, transit landings at the airports.
· Expensive jet fuel and lack of its production at domestic oil-processing plants lead to cost increase of aviation services.
· Depreciation of production capital funds (flight strips and terminals) and lack of modern machinery to serve the western-made aircraft at regional airports.
This sector has the following opportunities:
· Expected maintenance of stable economic growth on average by 3-4% per year. This growth along with the young age of the population of the country should contribute to the increase in demand for domestic and international air services.
· Increase in commercial volume of air services in the Caspian region.
· Ability of Kazakhstan airlines to take leading positions in the distribution of traffic across the CIS countries.
· Progressive liberalization of market access for the growth in traffic volume and reduction of the cost of air carriage and airport services.
· More flexible use of airspace can improve the current production figures.
· Upon implementation of a coherent strategy on the basis of some airports it is possible to create large transport centers (hubs)
The potential threats of the sector may include:
· The reduction in demand for transport services is possible in case of macroeconomic risks implementation.
· The bordering countries of Kazakhstan carry out the work on reorientation of air transit traffic flows through their territories that can create a threat to transit transport potential of Kazakhstan.
· Availability of aging and many-typed aircraft fleet, the maintenance of which in good technical condition requires considerable effort and resources, economically inefficient in fuel respect that does not meet environmental standards adopted in most countries of the world and unattractive for passengers.
· A significant number of unprofitable airlines, existence of which is not justified by the reasonable needs of the airlines and economic considerations. In case of reduction of budgetary financing these airlines may be closed.
· The necessity of improvement of the air traffic control and the use of the world geodetic system of coordinates calculation to comply with the requirements of international standards and certification.
· Kazakhstan companies are included in the “black list” on the basis of the ICAO audit that creates a threat and significant barrier for the development of international traffic.
· A significant barrier for the development of carriage is the airports infrastructure (especially two main centers of the country, Astana and Almaty).
· Lack of balanced and careful approach to liberalization can be a threat for national carriers. Development of future liberalization schemes should take into account the need to minimize the negative impact on the national aviation industry, particularly on the airlines.
Review on motor transport industry
Content
contribution to the economy and market capacity
List of potential opportunities
Description
Kazakhstan is located in close proximity to the dynamic growth poles, such as Turkey, Russia, India and China (representing more than half of global economic and trade growth). In this regard the transport sector is an important segment of the economy of Kazakhstan.
The greatest number of employees, involved in small and medium-sized businesses (600 thousand people), work in the motor transport industry. Over 14 years the volume of freight traffic by the motor transport increased 3 times, and the turnover – 5 times; the volume of passenger carriage and passenger turnover - 2.5 times.
According to the experts’ estimates in the Republic of Kazakhstan about 700 medium-sized automobile companies and tens of thousands of individual entrepreneurs carry out motor transportation. At the disposal of entrepreneurs there are more than 400 thousand trucks and about 100 thousand buses.
contribution to the economy and market capacity
The motor transport takes a stable leading position in the total traffic volume, its share accounts for more than 80% of the total volume of cargo transportation. Over 2009-2014 years the share of the turnover has risen from 20% to 32%
Motor transport
Railway transport
Air transport
Sea transport
Inland water transport
Picture 1. Dynamics of the volume of cargo transportation according to transport types (excluding pipelines) in all sectors of economy for the period of 2009-2014.
Source: Statistics Committee of the MNE of RK
Motor transport
Railway transport
Air transport
Sea transport
Inland water transport
Picture 2. Dynamics of cargo turnover according to transport types (excluding pipelines) in all sectors of economy for the period of 2009-2014.
Source: Statistics Committee of the MNE of RK
The passenger motor transport of the Republic of Kazakhstan for the period of 2009-2014 has a steady annual increase, the passenger turnover and the number of passenger carriage by bus has increased by 1.9.
Picture 3. Dynamics of passenger carriage by bus and passenger turnover over the period of 2009 -2014.
Dynamics of the passenger turnover by bus over the period of 2009 -2014
Note: prepared on the base of the data of RK statistical agency.[SA1]
Freight revenues for the period of 2009-2014 increased 2.8 times, passenger transportation revenues - 2.2 times.
Table 1. Revenues from freight and passenger transportation for the period of 2009-2014
Years |
2009 |
2010 |
2011 |
2012 |
2013 |
2014 |
Freight revenues, mln. tenge |
29 502.9 |
37 460.1 |
48 544.3 |
56 151.1 |
72 971.8 |
83 053.5 |
Passenger transportation revenues, mln. tenge |
34 037.0 |
36 672.4 |
42 095.3 |
51 642.0 |
61 102.7 |
75 242.5 |
Note: prepared on the basis of the analysis of the Union of Kazakhstan transport workers
Over the period of 2009-2013 the number of freight companies increased from 605 units in 2009 to 833 units in 2013, only by 228 units. Over the period of 2009-2013 the number of passenger transportation companies increased from 351 units in 2009 to 367 units in 2013, in total by 16 units.
Table 2. Number of the motor transport companies for the period of 2009-2013
Years |
2009 |
2010 |
2011 |
2012 |
2013 |
Number of freight companies, units |
605 |
605 |
679 |
759 |
833 |
Number of bus companies, units |
351 |
347 |
358 |
343 |
367 |
Note: prepared on the basis of the analysis of the Union of Kazakhstan transport workers
Over the period of 2009-2014 the total number of motor vehicles increased from 3 162.4 thousand units in 2009 to 4 533.7 thousand units in 2014. The average annual growth rate of the number of motor vehicles amounted to 228.6 thousand units. Quantitative increase of motor vehicles is mainly due to light motor vehicles, the share of which accounts to approximately 85-88%.
A significant increase in the number of trucks and buses took place in the period of 2005-2008. Over the recent years their number slightly varies.
Picture 4. Dynamics of truck availability over the period of 2009-2014
Note: prepared according to the data of the MIA of RK
Dynamics of bus availability in RK over the period of 2009-2014, thous.un.
Note: prepared according to the data of the MIA of RK
The share of trucks and buses at the disposal of individual entrepreneurs exceeds one half of the total number of these types of vehicles. It is connected with the massive acquisition of vehicles and transition of owners to the preferential taxation regime in the patent system. Implementation of activities within individual enterprise minimizes a tax payment that provides a financial and economic advantage over automobile companies in conditions of severe competition.
Picture 5. Dynamics of availability of trucks at the disposal of individual entrepreneurs over of period of 2009-2014
Note: prepared according to the data of the MIA of RK
Dynamics of availability of buses at the disposal of individual entrepreneurs, thous.un.
Note: prepared according to the data of the MIA of RK
25.2% of the bus fleet has the age of more than 25 years, 13.9% is 21-25 years, 10.8% is 16-20 years, 18.2% is under the age of 11-15 years, 17.6 % has the age of 6-10 years and 13.5% is less than 5 years. About 40% of buses have the age of more than 20 years.
Table 3. Distribution of motor vehicles by the year of manufacture (motor vehicles age)
№ |
Type |
Quantity |
1960- 1990 |
1991-1905 |
||
1 |
Trucks |
434 665 |
207204 |
47.67% |
81325 |
18.71% |
2 |
Buses |
98 954 |
24956 |
25.22% |
13724 |
13.87% |
№ |
Type |
Quantity |
1996- 2000 |
2001- 2005 |
||
1 |
Trucks |
434 665 |
24167 |
5.56% |
29905 |
6.88% |
2 |
Buses |
98 954 |
10647 |
10.76% |
18049 |
18.24% |
№ |
Type |
Quantity |
2006-2010 |
2011-201 |
||
1 |
Trucks |
434 665 |
51638 |
11.88% |
40901 |
9.41% |
2 |
Buses |
98 954 |
17386 |
17.57% |
14190 |
14.34% |
Note: prepared on the basis of the analysis of the Union of Kazakhstan transport workers
25.2% of the bus fleet has the age of more than 25 years, 13.9% is 21-25 years, 10.8% is 16-20 years, 18.2% is under the age of 11-15 years, 17.6 % has the age of 6-10 years and 13.5% is less than 5 years. About 40% of buses have the age of more than 20 years
The presence of a large number of old trucks and buses has significant negative consequences for their application and lead to increased transportation costs. The vehicles which are older than 10 years do not meet the present environmental requirements and provide increased polluting emissions.
The motor vehicle fleet is characterized by dominated ownership of trucks and buses by individuals. 60.68% of trucks are owned by individuals, 39.32% of trucks belong to the legal entities. Also 59.53% of buses are owned by individuals and 40.47% - by legal entities. Lots of buses belong to small and medium-sized entrepreneurs.
Table 3. Distribution of motor vehicles by ownership – legal entities and private persons, 2014
№ |
Type |
Quantity |
Legal entity |
Private person |
||
Quantity |
(%) |
Quantity |
(%) |
|||
1 |
Trucks |
434 665 |
170910 |
39.32% |
263754 |
60.68% |
3 |
Buses |
98 954 |
40046 |
40.47% |
58729 |
59.53% |
Note: analysis of the Union of Kazakhstan transport workers
Number of trucks according to the cargo-carrying capacity is distributed evenly. At the same time 20.6% of trucks have a small cargo-carrying capacity (weight is 0-3500 kg), 24.6% of trucks have a medium cargo-carrying capacity (weight is 3500-7500 kg), 27.5% of trucks have a high cargo-carrying capacity (weight is 7500- 16000 kg) and 27.3% of trucks have extra high cargo-carrying capacity (weight is 16 000 kg or more).
Table 4. Distribution of trucks by weight, kg, 2014.
Type |
Quantity |
0-3500 kg |
3500-7500 kg |
7500-16000 kg |
> 16000 kg |
||||
Quantity |
(%) |
Quantity |
(%) |
Quantity |
(%) |
Quantity |
(%) |
||
Trucks |
434665 |
89540 |
20.6 |
106927 |
24.6 |
119532 |
27.5 |
118663 |
27.3 |
Note: according to the analysis of the Union of Kazakhstan transport workers
66.2% of buses have a small capacity of 20 seats, 35.90% of buses have a capacity of 20-60 seats and 0.82% of buses have a capacity of more than 60 seats. This shows a significant lack of buses with high passenger capacity.
Table 5. Distribution of buses by the number of seats, 2014.
Type |
Quantity |
0-20 seats |
20-60 seats |
>60 seats |
|||
Quantity |
(%) |
Quantity |
(%) |
Quantity |
(%) |
||
Buses |
98 954 |
65527 |
66.22 |
35524 |
35.90 |
811 |
0.82 |
Note: according to the analysis of the Union of Kazakhstan transport workers
78.92% of trucks are Russian and CIS-manufactured, 21.08% of trucks are of foreign manufacture. 57.51% of buses are Russian and CIS-manufactured, 42.49% of buses are of foreign manufacture.
Table 6. Distribution of motor transport by the place of production -national (CIS, Russia) and foreign-manufactured (EU, USA, Japan and others), 2014.
Type |
Quantity |
National |
Foreign |
||
Quantity |
(%) |
Quantity |
(%) |
||
Trucks |
434 665 |
343037 |
78.92% |
91627 |
21.08% |
Buses |
98 954 |
56908 |
57.51% |
42045 |
42.49% |
Note: according to the analysis of the Union of Kazakhstan transport workers
65.6% of trucks and 80.7% of buses run on petrol, 29.0% trucks and 17.2% of buses run on diesel fuel, and about 1% of trucks and buses run on gas fuel.
The motor vehicle fleet has insufficient proportion of diesel vehicles and vehicles running on gas fuel, a large number of vehicles run on petrol.
Table 7. Distribution of motor transport by the type of fuel used, 2014.
Type |
Quantity, units |
Petrol-operated |
Diesel-operated |
Gas-operated |
|||
Quantity |
(%) |
Quantity |
(%) |
Quantity |
(%) |
||
Trucks |
434665 |
303907 |
69.92% |
126183 |
29.03% |
4563 |
1.05% |
Buses |
98954 |
80805 |
81.66% |
17069 |
17.25% |
1078 |
1.09% |
Note: according to the analysis of the Union of Kazakhstan transport workers
A special attention should be paid to the situation of the motor vehicle fleet amortization in the country. The age of 47% of trucks, beeing at the disposal of entrepreneurs, is more than 25 years (!), the age of 24% of trucks is more than 15 years (!), the age of 6.6% of trucks is more than 10 years. Thus in operation there are more than 340 thousand units of the motor vehicle fleet (78.5%), actually beeing worn out and subject to disposal. 21 935 buses, representing 25.2% of the total number, are operated more than 25 years, 21 416 (24.6%) - more than 15 years, 15 868 (18.2%) - more than 10 years. Thus the buses in operation constitute 68% of the park, beeing the subject to disposal!
The abovementioned facts, by all means, negatively affect on road traffic safety, environment, productivity and fleet utilization efficiency. In particular according to the experts of “Road traffic safety II” TRACECA project (Transport Corridor Europe-Caucasus-Asia) Kazakhstan has the highest death rate on the roads among the countries of Central Asia - 30.6 deaths per 100 thousand residents.
The largest volume of traffic and the largest number of the carrying equipment in Kazakhstan freight traffic is observed in urban transportation of packaged goods. It is basically the transportation of food stuff from the wholesale markets to grocery stores, transportation of building materials in small quantity around the city, delivery of drinking water, one-time transportation of different things around the city, etc. As a rule these services are provided by pickup trucks with small cargo carrying capacity of “Gazelle” type. This situation is explained by the buying habits of population and small business in the massive demand for transportation: as you know, more than half of the population (55%) employs in the service sector.
The information represented below is the national statistics on cargo transportation by road according to the load classification by enterprises, who give reports on their activities to the tax authorities
Table 8. Cargo transportation by road in the section of load classification, thous. ton
Description of cargo |
Transportation mode |
||||
international |
interrepublican |
suburban |
urban |
total |
|
Total |
1 277.8 |
19 732.0 |
18 132.0 |
48459.0 |
87 600.8 |
Oil |
10.3 |
2 309.5 |
21.8 |
6.4 |
2 341.6 |
Oil products |
28.5 |
458.0 |
4.2 |
6.4 |
497.0 |
Other liquid and gaseous cargo |
2.9 |
88.3 |
34.7 |
- |
126.0 |
Hard coal |
- |
474.0 |
941.9 |
1 968.8 |
3 384.7 |
Non-ferrous metal ores |
10.1 |
1 215.0 |
7 826.1 |
940.7 |
9 991.9 |
Sulfuric stock |
- |
412.1 |
- |
- |
412.1 |
Ferrous metals |
7.5 |
95.3 |
2.4 |
1 019.7 |
1 125.0 |
Ferrous steel scarp |
3.6 |
9.9 |
943.2 |
- |
956.7 |
Timber cargo |
5.9 |
1.1 |
2.7 |
- |
9.6 |
Construction materials |
118.5 |
9 422.2 |
6 421.3 |
4 012.4 |
19 974.4 |
Chemical and mineral cargo |
14.6 |
16.6 |
- |
- |
31.1 |
Grain |
0.3 |
1 016.2 |
62.2 |
231.4 |
1 310.2 |
Frozen or cooled cargo |
48.8 |
7.3 |
- |
1.3 |
57.4 |
|
0.4 |
- |
- |
- |
0.4 |
Furniture |
0.8 |
0.1 |
- |
- |
0.9 |
Fruits and vegetables |
23.0 |
8.0 |
- |
- |
30.9 |
Live animals |
- |
24.6 |
- |
- |
24.6 |
Other cargo |
1 002.7 |
3 521.9 |
1 867.7 |
40 278.3 |
46 670.6 |
Incl.: dangerous goods |
10.2 |
2 083.6 |
9.6 |
0.1 |
2 103.5 |
containerized cargo |
3.5 |
14.2 |
9.2 |
55.3 |
82.2 |
Note: according to the Statistical agency of RK
As it is seen from the comparison of data on the volume of cargo traffic the overall volume amounts to 3.1 bln. ton, and the volume of enterprises, kept in reports, is 87.6 mln. ton), the difference between the accounted volume and the volume, determined on the basis of calculation, is huge – by 35 times. Therefore in order to assess the work scope of trucks in this area it is necessary to adhere to qualitative factors.
main participants
Nowadays in the country about 700 medium-sized automobile companies and tens of thousands of individual entrepreneurs carry out motor transportation. In general a great number of carriers is explained by the current tax legislation, when entrepreneurs “crushes” business into small companies to work as individual entrepreneurs. Large and medium-sized motor transport business cannot compete with small business.
Legal entities in the form of limited liability companies have 170 910 trucks and 58729 individual entrepreneurs have 263754 units. Legal entities in the form of limited liability companies have 40046 buses and 58729 individual entrepreneurs have 58729 units. As a result individual entrepreneurs in the country possess about 60% of trucks and buses.
Thus dumping, unfair competition, which prevents obtaining of fair value of transport and the development of entrepreneurship in general, are widespread in freight traffic.
In turn the passenger transportation by bus attracts individual bus owners to maintenance routes, the tender for which is gained by enterprises.
The simplified taxation system and tax relief for individual entrepreneurs with small income were claimed by time and were appropriate in the transitional period from planned to market economy. This pursued the aim of establishing and strengthening of the private industry.
But nowadays this factor has led to unequal conditions of carriers with large and medium-size business as compared to entrepreneurs, working under the scheme of small business.
development factors
Lots of key factors contribute the development of motor transportation. First of all it is the location of Kazakhstan at the joint of Europe and Asia. According to the IMF the Asia region is a driving force in world trade (6.1%), led by China (8.8%) and West Asia countries (8.6%). In the future there will be a rising demand in Europe, and consequently the development of trade flows in Eurasian communication.
Kazakhstan is located in the zone of “One Belt and One Road” China's initiative, which provides the concentration of efforts of the countries concerned in key directions: simplification of trade and investment procedures, including through the development of trans-border crossings, infrastructure improvement, expansion of sub-regional economic cooperation; financial cooperation development.
Another important factor is the presence of developed road network in Kazakhstan and in the region generally. Roads are the part of Asian highways, E-category road network, defined by the European Agreement on Main International Traffic Arteries, CAREC corridors, EATL routes (Euro-Asian transport links).
A distinctive feature of motor transport is its high mobility and transportability to any remote regions. Also motor transport provides the possibility of implementing of very important principle of delivery of goods directly from the manufacturer's warehouse to users’ warehouse (“Door to Door”) without additional overloads and provides high transport speed. Motor transport is relatively easy in transport management. Due to market containment of tariffs on motor vehicles under annual growth of railway tariffs, this type of transport is frequently used in transportation over long distances, including in international traffic.
barriers and limitations
№ |
Problems and limitations (barrier description) |
2 |
Access to the national market of industry services Existing norms of law due to the absence of licensing (except international freight traffic and international (interregional) bus passenger traffic) and simplified tax regime provide easy access to the transport market of entrepreneurs, who have decided to work in the motor transport industry. In addition the simplified tax regime creates the situation where the actual admission to professional activity is made by the tax authorities upon the fact of registration of individuals. The tax authorities do not present any requirements, related to professional suitability, compliance of future carriers with requirements for equipment of buildings, constructions and facilities. This regulation requires a review due to the fact that motor transport refers to the high-risk facilities. The access to transport activities should be determined by specifically created authorities.
|
3 |
Availability and provision with human resources, presence of slikked personnel The problem of the existing training system for drivers of motor vehicles is that the Ministry of Interior Affairs, authorized to issue licenses for this kind of activity, has no incentive and interest in the quality of education. Lack of interest in the final result of entrepreneurs’ activity on training, is a reason of uncontrolled issuance of licenses for driver's training.
|
4 |
There is no government support in provision of access to financing with interest rates subsidies on second tier bank loans, aimed at fleet renewal. The vast majority of entrepreneurs have no property, interested for the bank, for guaranty. The critical wear-out rate of motor vehicle fleet of Kazakhstan entrepreneurs deteriorates the situation of road traffic safety, negatively affects on the environment and industrial efficiency, increasing maintenance and repair costs, reduces competitiveness, etc. National policy, relying on critical wear-out rate of motor vehicles, presenting more than 78.5% of trucks and more than 68% of buses, should promote and provide fleet renovation to ensure the competitiveness of the national carrier in terms of EEU. This requires renewal of trucks and buses up to 50 thousand units per year that is about 10% of the total fleet to the amount of 700 bln. tenge.
|
6 |
Poor performance of the requirements and objectives of the Law “On Automobile Transport” by the competent authorities has led to the aggravation of motor transport problems. The main reason is that the development of a large part of normative legal acts, regulating the activity of entrepreneurs, is exercised through the management of motor transport, which initially contains a conflict of interest of the supervisory structure and businesses. The experience clearly shows the barriers, which prevent the development of business and economy due to the rule-making activity of the regulatory body.
|
7 |
The lack of standard requirements to local executive authorities on organizing of bus transportation, the poor state of legislative acts, involving low quality of regulations, hard to perform upon the absence of their equal interpretation, has resulted in a variety of judicial processes between carriers and local authorities in the regions.
|
8 |
Unfair competition, infringing the interests of law-abiding entrepreneurs, is one of the main problems of public passenger transport, appearing on scheduled routes upon attraction of the third parties. Collection of passenger fare is not fixed, the control of cash circulation is absent, in consequence of which the process of income acquisition remains in sidelines that allows unfair entrepreneurs do not pay taxes. This problem about passenger motor transport is not covered in the legislative acts, including the Law of the Republic of Kazakhstan “On Competition”, that wash out the line between fair and unfair competition. Thus the current system forces the law-abiding entrepreneurs to go underground.
|
9 |
Rapidly developing illegal transportation, representing the shady business, displaces the law-abiding entrepreneurs from the market, being the major factor of deterioration of road traffic safety. This situation is specified by the loss of control and supervision for observation of the law on the roads.
|
10 |
Existing tax benefits for entrepreneurs create unjustified advantages before entrepreneurs, who have registered their companies for passenger bus transportation in the form of legal entities. Thus the regulatory framework promotes division and re-registration of business into individual enterprises. Existing taxation forces the entrepreneurs to go underground.
|
11 |
In connection with the establishment of passenger fare with low cost price by local executive bodies and widespread lack of subsidizing of losses of entrepreneurs, engaged in urban and suburban passenger bus transportation, financial position of automobile companies is characterized as critical. In this connection the carriers have no possibility to update the motor vehicle fleet, to attract qualified staff, etc.
|
12 |
Nowadays in Kazakhstan there are significant problems in the sphere of state regulation and control of motor industry. The challenges facing entrepreneurs and preventing its development in the country have steadily deteriorating nature. In Kazakhstan there is a situation where the competent authority is unable to ensure the implementation of an effective policy of entrepreneurship development in the sector, but the private sector is ready to take responsibility for self-regulation. The international experience shows that at the certain stage of development of the national economy it is reasonable and efficient to transfer a number of state functions to private sector for self-regulation.
|
List of potential opportunities
When the state agency arranges the regulatory legal acts by axial loads, the national economy obtains an urgent need in specialized vehicles for the transportation of undivided heavy-lift cargo and heavy equipment.
This type of transport includes multi-axial and multi-wheel trawls and trailers (semitrailers) which provide equal distribution of load on the axes without exceeding the stipulated limits.
It should be noted that the limitation of the weight load by 10 tons per axis in order to provide the safety of highways will significantly increase the transportation volume that will lead to the settlement of the market value of carriage with the establishment of fair competitive prices and will contribute to the elimination of dumping, which is used by individual entrepreneurs, working with overweight.
Taking into account the development of the travel industry under the implementation of the state support to entrepreneurs for acquisition of vehicles on lease and direct lending, the bus transportation also has significant potential for tourism services.
The projects on development of motorway service, such as repair and maintenance services, food and rest along the highways of Kazakhstan, also have significant potential for business initiatives.
At the same time the investment projects can be implemented in the following units:
1. Maintenance and repair stations (points) for motor vehicles, separately or in complex of motorway service. The volume of investments is about 100.0 - 150.0 mln. tenge per one unit;
2. Filling stations. The volume of investments is about 150.0 - 200.0 mln. tenge per one unit;
3. Motels and car parks. The volume of investments is about 50.0 - 150.0 mln. tenge per one unit;
4. Food and trade services area. The volume of investments is about 50.0 - 150.0 mln. tenge per one unit.
SWOT
Strengths |
Opportunities |
The main volume of traffic is carried by motor transport. |
Development of transit potential.
|
Mobility and efficiency of traffic as compared with other types of transport. |
The use of ecological vehicles. |
High competition, free pricing and open access to the transportation market. |
Renovation of the motor vehicle fleet.
|
Effective public associations who protect the legal interests of transport workers |
Legalization of shadow economy on urban and suburban routes through introduction of electronic fare payment. |
Legally provided subsidizing of losses of passenger motor transportation (needs improvement). |
Development of shipping logistics and inner-city route networks |
|
Improvement of road traffic safety, passenger traffic safety |
Weaknesses |
Threats |
Heavy wearout of motor vehicles. |
Growth of road traffic accidents.
|
Imperfection of the regulatory framework, governing the activities of motor sector subjects |
Growth of the shadow transportation market.
|
Low investment attractiveness of the motor transport sector |
Reduction of the transit potential.
|
Presence of illegal bus carriers. |
Decline in tax revenues to the budget |
Shortage of qualified bus drivers - low level of training in driving schools |
Increase of popular discontent
|
|
Lack of transparency of financial activities of the carriers, lack of the system for revenue account and ticket sale. |
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