TBY talks to the directors of two top logistics firms on the strength of the sector, regional integration, and the potential for foreign investment.
What makes Kazakhstan a strong market for logistics?
YAKUP TUGHRA This is a growing economy. There are lots of foreign investments and positive hopes for the future. There are two main reasons behind this. The first is the strong government support we are seeing for different industries. I have met with many government officials that I have found helpful and supportive. They also encourage foreign international companies to be involved in the development of this country. This is a very good sign. The second reason is that this country is very rich in terms of minerals and natural resources. It makes sense to come here. There are opportunities for work and development in various sectors. We as a logistics company act as a bridge, and can assist all kinds of clients in many ways. If an upstream oil company sets up operations here, it will need high-tech equipment from many different sources. We therefore offer the best package, as we will do whatever it takes to facilitate operations through innovative solutions.
What business opportunities led Move One to launch its operations in Kazakhstan?
SEAN KOSA Move One first launched its Central Asian operations in Uzbekistan in 2002 as a subcontractor to UPS for shipments to US forces in Afghanistan. Later on, the company followed the market and moved to Kyrgyzstan when military shipments to Afghanistan were rerouted through Manas. As the volume of military cargo gradually decreased in Uzbekistan, the company started to shift focus to relocation services for the expatriate community in the region, making Kazakhstan an obvious market. During that time we also opened up offices in Tajikistan and Turkmenistan, which gave us strategic office locations in all the key countries in the region. What was first established as a representative office in Almaty has now grown into a full-time team of moving and cargo professionals, providing service to key sectors such as oil and gas and mining in Astana and across the Caspian states. Move One’s entry into the market brought much needed life and competition to the region, as prior to our entry into the local market the only comparable service provider held a regional monopoly. Although the company has grown to work alongside major global relocation companies, its strength and specialty remains its ability to service remote places. We have made a point of blending our skill in tackling rugged and challenging environments with unmatched personal service. Although Move One engages directly with a company’s HR department, the services offered are always specifically tailored to the individual needs of the assignee moving to Kazakhstan.
What trends have you observed in trade volumes from Kazakhstan to other CIS countries in the region?
YT Kazakhstan is very well located in terms of connecting Russia, China, Central Asia, and the Caspian Sea region to one another. If a cargo load is brought from one of the said locations to Kazakhstan, it can then be moved all over the world. It is a huge landmass, and it has an important function as our hub due to its proximity to all these regions. From here we can reach other countries easily.
What sort of issues do you believe need to be addressed to improve the efficiency of freight transport into and out of Kazakhstan?
SK Although Kazakhstan is far ahead of the other Central Asian nations in this respect, the infrastructure still leaves a lot to be desired. In regards to road connections to the ports and cargo terminals, there is a long way to go developmentally. Having said that, one of Move One’s greatest strengths is in managing the type of issues inherent to emerging market locations. The basic key is having the knowledge base of expert local staff and applying up-to-the-minute international service standards. We do see signs of progress though, such as earlier in 2011 when state-owned national Russian logistics company TransContainer purchased a majority share of Keden Trans Service, the company that operates Kazakhstan’s cargo terminals. With the new capital investment that this will represent, the heavily used terminals should be able to put much-needed upgrades in place to make operations more efficient, with the intention of boosting traffic between Central Asia and Europe. The results have yet to be seen, but this does look like a step in the right direction.
What opportunities does Kazakhstan’s transport sector still hold for foreign investors?
YT Agility has the largest warehouses in the Middle East and Turkey. However, in Kazakhstan, there is not a lot of cold storage with temperature-controlled facilities for food products. For foreign investors, that might be a good niche to look at. Also, for overland transportation, refrigerated trucks are a good target. I am also expecting to see an increase in poultry and livestock projects, and these could be good areas for a foreign investor to look at too. Kazakhstan presents opportunities for companies of all sizes. In terms of industry, production will continue to increase. Kazakhstan is also the best location for marketing products to the region. Furthermore, it has all the necessary means of transportation. Kazakhstan is upgrading much of its logistics infrastructure. Everywhere one looks there are new facilities being developed. It really is a good place for the investor.
What is your outlook for 2011?
SK Our outlook is overall very positive. Each year, Move One enjoys steady growth in Kazakhstan, and as we move toward our fifth year here we still see huge potential in gaining market share via new customers and broadening the scope of our services. Along with its reputation as a world player in the natural resource sector, Kazakhstan’s participation in hosting the OSCE Summit and Asian Games has raised its international profile. This has gone a long way to show the world that it is an attractive destination for investment and new business opportunities. With our strong track record, and fresh approach, we believe that the sky is the limit in Kazakhstan for Move One.
© The Business Year