TBY talks to Ken Robertson, Country Manager of DHL, on his company’s core activities, transport infrastructure, and warehouse services.
TBY When did DHL begin its operations in Kazakhstan?
KEN ROBERTSON DHL began its operations in Kazakhstan in 1991, and its first customer was the National Bank of Kazakhstan. DHL entered the USSR in 1984, and was one of the only foreign companies doing business there at the time. DHL mostly serviced embassies based in Moscow. Once the USSR split up, DHL moved into the various countries that had gained independence.
What are your core activities here?
Our key activity is the movement of time-sensitive material in, out of, and across the country. We primarily transport our shipments by air. We naturally do a lot of business with companies in the oil and gas industry, but lately there has been more demand from consumer product companies that need more day-definite-type services. Therefore, instead of getting shipments to their destinations the next day at 9.00 am, we can deliver orders of, say, 1,000 kilograms to Astana from Almaty in three days.
How do you evaluate the quality of Kazakhstan’s internal transport infrastructure?
The air network isn’t very well developed, although it’s our main mode of delivery. We also use the land network; however, it is not as practical as air due to the size of the country. Domestically, we work closely with Air Astana. The government has been investing greatly in the transportation sector, and we hope that will continue. Regardless of the challenges or difficulties, DHL always aims to deliver shipments on the due date without exception.
Where is DHL most active in the country?
Our center of operations is in Almaty and it has the biggest share of trade volume. It has the largest population and most businesses still have their main offices in the city. That being said, we are seeing a shift to the capital Astana. The percentage share of Almaty is decreasing year by year, while Astana is increasing its share in our overall business. We also deal with the Caspian region a lot, and our clients there are pretty much exclusively from the oil and gas sector.
Who are your main clients?
We concentrate mostly on corporate customers, although we also have many retail customers. We primarily focus on the business-to-business sector, although we also do business-to-consumer or consumer-to-consumer trade, which invariably goes through our retail outlets.
What are the challenges for DHL in the domestic market?
The main challenge for us is probably the low barriers of entry in the domestic market. All that is required to make a delivery is a man and a truck, and therefore we have to compete with cheaper alternatives, but of course the advantage we offer is that we guarantee delivery and boast a worldwide network with credentials of an impeccable quality. Overall, in terms of delivery speed, our research shows that DHL is about a day quicker than 60% of its competition.
What about warehouse services?
In Kazakhstan we have no need for the kind of massive 10,000 sqm facilities that DHL operates in other countries; however, we do offer spare part distribution centers that are focused on carrying emergency items, which means items that must be delivered within 24 hours. Let’s say a server goes down in Atyrau. Rather than delivering the goods from Astana to Atyrau, we hold a small inventory of backups for parts that need to be replaced frequently and locally. That way we can facilitate a 2- to 4-hour delivery. This is specifically focused on important, high-value, high-obsolescence goods. Needless to say, it’s our customers that supply those goods.
What measures could be implemented to increase and improve freight transport into and out of Kazakhstan?
There are measures being taken to improve access to western Kazakhstan, which is very important. Also, the government is investing a lot in the transportation sector, in the rail, road, and air network. That is crucial, especially in our line of business. Nevertheless, Kazakhstan has improved steadily, and the country’s logistics infrastructure today is incomparable to even 10 years ago.
Now that the economic situation is improving, what trends have you observed in the Kazakhstani economy over the last year?
In terms of our own business, our improved performance in terms of volume of shipments reflects the growth of GDP over the last year. There’s a direct correlation. There is buoyancy in the oil and gas sector, as well as a general improvement across other sectors, including banking and finance, consumer products, and so forth. Consumer companies might still be slightly pessimistic in 2011, but the trend is on the up. Our customers are starting to ship more, and that suggests things are picking up.
What are your strategic goals in 2011?
DHL needs to start investing in its infrastructure. That means additional flights between cities, and buildings with greater storage capacity to support our operations. We will be opening a new facility in Astana in 2011, for example, and we also have another project planned for Aktau. We also want to focus on advertising and promotion, training, and making sure we can provide salary increases for our staff. We’re going to be bringing in training methods from countries such as Turkey, where our colleagues are very innovative. So in short, we want to be faster, we want even better trained people, and we want to have bigger facilities to process shipments. All of that will be of the greatest benefit to our clients.
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