Alternative ways of the Asian goods shipment to Europe
Sea transits serve as the lifeblood of global trade, acting as the vital conduits connecting nations and facilitating the seamless movement of goods and resources worldwide. Yet, beneath the surface of their undeniable importance lies a complex tapestry of challenges and concerns that reverberate throughout the global transportation network. These challenges, rooted in a variety of factors, can disrupt trade routes, causing disruptions that span from mere hours to several years.
March 2021 bore witness to a stark reminder of the vulnerability of global trade when a single transport ship blocked the Suez Canal for an entire week. This incident sent shockwaves through the global trade community, with more than 400 vessels trapped in a traffic jam within a waterway responsible for approximately 12% of all global trade. The repercussions were immediate and far-reaching – delivery schedules were extended, fuel prices soared worldwide, and trade participants incurred losses amounting to billions of dollars. The incident underscored the fragility of supply chains worldwide, casting a long shadow on the trajectory of global trade and raising concerns about potential reductions in its growth.
For nations like Thailand, the imperative of maintaining a robust network for delivering goods is paramount. The impending conclusion of a Free Trade Agreement with the European Union by 2025 has heightened the urgency for establishing alternative routes that ensure the efficient delivery of goods from Asia to Europe. However, the contemporary international landscape is marred by tension and direct military clashes between certain countries, casting a shadow of uncertainty over established trade routes.
Amid these challenges, the current geopolitical environment demands the exploration of innovative approaches to intensify international trade. The spotlight turns to Kazakhstan, a nation emerging as a pivotal player in the reshaping of international trade routes. Kazakhstan plays an increasingly crucial role as a regional transport and logistics hub, bridging the Eurasian continent with the Asia-Pacific region.
As the world's largest landlocked country and sharing extensive borders with Russia and China, Kazakhstan accounts for approximately 85% of all land transit traffic from China to Europe. Recognizing the strategic importance of the transit transport industry, Kazakhstan has invested about $30 billion in its transport and logistics infrastructure over the past decade. The nation boasts 13 international transport corridors, including five railways and eight roads. Notably, the "Western Europe – Western China" transit road corridor offers the capability to deliver goods to Europe within a mere 10-12 days.
In 2022, Kazakhstan witnessed a significant upswing in transit volume, reaching 23.2 million tons of cargo – a 10% increase compared to the previous year. Through strategic measures to eliminate bottlenecks, transit times for goods along the Trans-Caspian International Transport Route are expected to decrease dramatically, from 38-53 days to just 14-18 days. Within Kazakhstan's borders, transit times will reduce from 12 to 5 days.
Kazakhstan, in partnership with Trans-Caspian International Transport Route (TITR) partners, continues to work towards the development of the Middle Corridor. Since 2017, the International TMTM Association has been actively operating, with participation of Kazakhstan, China, Azerbaijan, Georgia, Turkey, Romania, Poland, and Bulgaria. In a significant milestone achieved in November 2022, Kazakhstan, together with Azerbaijan, Georgia, and Turkey, signed a Roadmap aimed at synchronously eliminating transportation bottlenecks. The objective is to increase the throughput of TMTM from 6 to 10 million tons per year by 2027.
The construction of Kazakh terminals in Xi'an, China, and the Black Sea port of Poti in Georgia is in full swing. There are plans to build a third railway checkpoint at the Kazakh-Chinese border, establish "dry ports," create container hubs, and develop other critical infrastructure facilities. These endeavors are expected to significantly bolster transit volumes through Kazakhstan, potentially reaching 35 million tons by 2030.
Moody's, a renowned credit rating agency, notes that within the context of the evolving Trans-Caspian International Transport Route, which is gaining prominence as an alternative trade route between China and the European Union, new opportunities are opening up for Kazakhstan. Analysts predict favorable economic prospects for the nation.
Kazakhstan's economic program underscores the positive assessments by experts. Astana, the capital of Kazakhstan, has set an ambitious goal of doubling the nation's economy to $450 billion by 2029. To achieve this vision, the government aims to attract at least $150 billion in foreign investment during this period. Remarkably, in 2022, Kazakhstan achieved a significant milestone by attracting a record-breaking $28 billion in foreign direct investment over the last decade. These investments were primarily directed toward key sectors such as the mining and metallurgical complex, manufacturing industry, trade, transport, and the financial sector.
Kazakhstan's strategic advantages extend to its access to diverse markets. These include the Eurasian Economic Union (EAEU), a common market comprising Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia, with a combined consumer base of 180 million. Kazakhstan also enjoys proximity to western China, home to 300 million consumers, and other Central Asian countries representing an additional 50 million consumers. The absence of significant geopolitical disputes with Western nations positions Kazakhstan as a reliable and predictable partner, uniquely poised to connect Europe and Asia. This positioning bodes well for Kazakhstan's goal of expanding trade turnover. In the first half of 2023, Kazakhstan has already witnessed tangible results, with exports of Kazakh goods to EAEU countries surging by 36.8%. Likewise, trade turnover between Kazakhstan and China from January to August 2023 exhibited substantial growth, reaching $19.0 billion, marking a notable 22.6% increase.
In today's dynamic geopolitical landscape, the Belt and Road initiative has emerged as a sought-after international project and a major platform for cooperation. However, rivalries and conflicts around the world can impact sea transits, leading to trade sanctions, embargoes, and restrictions on vessel movements that disrupt global supply chains.
As the world continues to seek efficient and sustainable transportation routes, the route through Kazakhstan is likely to gain further prominence. The synergy of road, rail, and maritime transportation, along with the cooperation of multiple nations, underscores the interconnectedness of our world and the innovation of the logistics industry.
Kazakhstan's pivotal role as a regional transport and logistics hub offers a promising path forward for global trade, reaffirming its position as a bridge between Europe and Asia. As the nation continues to invest in infrastructure and foster international partnerships, Kazakhstan is poised to contribute significantly to the evolution of global trade dynamics in the years to come.
