Ongoing transformation
There are opportunities to develop new transport connections in Central Asia, located as it is in the triangle between China, Turkey and Iran. Nikolaus Kohler, Militzer & Münch’s director for the Middle East / Central Asia, elaborated thereon in a conversation with Christian Doepgen.
Which trends characterise Central Asian markets most strongly for you?
Many developments that are perceived only vaguely here play a major role there. The concept of China’s New Silk Road is one such thing. The hangover after the end of the oil and gas industry boom, which bestowed record growth rates on Central Asia a few years ago, is gradually making way for new initiatives and a modest recovery.
What are the concrete ramifications on the region’s individual states?
It varies greatly. Uzbekistan, with its 32 million or so inhabitants, for example, can absorb a degree of the impact through its strong local market. In Kazakhstan, the area’s largest state by area, the massive devaluation of the national currency, the Tenge (KZT), cut into imports. In its trade with Russia The country benefits from the fact that the ruble has also lost some of its value. There’s been a slight recovery there since the beginning of 2016.
And in the other three Central Asian states?
The potential of the economy is only just developing in Kyrgyzstan, where Europeans don’t need a visa, by the way. The same also applies to Tajikistan, to a certain extent. Turkmenistan, in turn, whose market is strongly regulated, is banking especially on its currency, the new Turkmenistan manat (TMT): every bill has to be issued in manat. Consumer goods imports have not collapsed, however.
From the point of view of a logistician: what opportunities are there?
If you have the necessary experience in the various markets, and you can link them, then regular transport services as well as project logistics solutions have a good chance. Making use of every mode of transport, and processing customs clearance efficiently, are some of the key elements.
Has the lifting of some sanction on Iran in January shifted regional weightings?
Even if the sanction have not been completely removed, the step nevertheless represents an important impulse. One result is that some transport routes in and through the region have been shortened substantially.
Have you benefited yet?
Yes indeed. One example was a project logistics order we carried out, hauling heavy cranes to an offshore platform located in Tajikistan. We routed the shipment via the Iranian port of Bandar Abbas.
How did the task proceed?
Satisfactorily. Processing in Bandar Abbas and in the hinterland was handled professionally by our tried-and-tested local partners. Financial transactions remain a problem, however.
What type of traffic is traditionally routed through Bandar Abbas?
A large proportion of the raw materials exported from Central Asian countries, including cotton and minerals, are hauled on the north–south railway from Mashhad to its southern end in Bandar Abbas. There the goods are transferred to ships.
You’re talking about bulk goods. What about the transit of containerised wares?
That is not so easy to accomplish. The preference today is to transport containers on chassis from Bandar Abbas to Central Asia. The concomitant costs are rather high, however. These days they come to about USD 2,500 per box to Ashgabat (Turkmenistan), and around USD 7,500 for Almaty (Kazakhstan).
The containers, each of which has to be accompanied by its own transit document, have to be warranted. If there is an imbalance in the goods flows, then the box returns to Bandar Abbas empty. So the process is still relatively expensive.
So empty container management is a bit of a headache. Are there any alternatives?
We sometimes succeed in covering the entire route to and from the CIS on the roads, with the collaboration of our contracted haulage partners. This process sometimes also makes it easier to find exports that can be shipped back in the opposite direction in the containers.
In the past there were frequent conflicts between Iran and Turkey that stymied trade flows between the two nations...
The background to this is the following, amongst other things. The cost of diesel is subsidised by the state in Turkmenistan and Iran, which means that it is sold at a discount at petrol stations. Turkish entrepreneurs are exempted from this bonus and have to pay a premium for diesel in Iran and Turkmenistan.
Turkish businessmen consider this approach rather unfair, and the Turkish transport ministry has retaliated by initiating the introduction of counter measures. These include a surcharge for Iranian vehicles transiting through Turkey, amongst other things.
There used to be a number of Iranian vehicles playing their trade between the European Union and Turkey on the one hand and Iran and Turkmenistan on the other. In the meantime, however, this freight market is largely in the hands of Turkish operators.
Has a solution been found in the meantime?
Bilateral tensions that resulted in border closures – the last blockage was at the end of 2015 – have been overcome. In the meantime Turkish vehicles don’t have to pay a surcharge any more if they seal their petrol tanks at the border upon entering Iran and leave the country again with the seal intact. The same regulation applies to traffic through Turkey for Iranian vehicles.
The collapse in the value of the ruble has resulted in some Belarusian and Russian road hauliers now managing a certain amount of the transport services between the European Union and Turkmenistan.