Kazakhstan Railways: more comfort, better safety, bigger opportunities in light of Silk Road’s reincarnation

ASTANA – In an exclusive interview with The Astana Times, Kazakhstan Railways (KTZ) Chairman of the Management Board Kanat Alpysbayev spoke about the national logistic operator’s priorities, its development within the Digital Kazakhstan programme and the ways to make Kazakhstan more attractive for transit cargo traffic, an area that has seen remarkable changes as Kazakhstan’s Nurly Zhol infrastructure development programme and China’s Belt and Road Initiative have moved forward full steam ahead.

Kanat Alpysbayev. Photo credit: railways.kz

Kanat Alpysbayev. Photo credit: railways.kz

 

The creation of a railway transport engineering cluster is one of Kazakhstan’s priority areas. To date, the country has produced more than 5,000 railway products items (spare parts, components, units and equipment for rolling stock). What further tasks has KTZ set for the near future?

In partnership with world leaders in the machinery industry such as General Electric, Alstom, Patentes Talgo S.L. and Siemens, we established the production of modern rolling stock applying innovative technologies.

Freight and passenger diesel locomotives and electric locomotives, passenger and freight cars, materials of the upper structure of the railroad (rails, turnouts, crosses, ferroconcrete bars, sleepers, rail fasteners, repair kits, etc.) are made in Kazakhstan.

During 26 years of independence, 303 diesel locomotives, 62 electric locomotives, 552 passenger cars (including 116 with wide body), 7,321 freight cars and more than 200,000 tonnes of rails were produced in the country.

This fact encouraged producing more railway items (spare parts, components, units and equipment for rolling stock).

The domestic railway engineering cluster includes 189 small and medium-sized enterprises manufacturing components, materials and spare parts.

These enterprises recruited over 12,000 people and manufactured 5,120 types of railway products. Kazakhstan’s content occupies 30-50 percent of the output.

In 2016, Tulpar-Talgo started manufacturing wide body passenger carriages, thereby providing more comfortable conditions for passengers. Another 603 modified cars will be produced by 2020. Four trains underwent certification tests and now they are running in the most demanded directions domestically and internationally (Almaty-Tashkent).

Kazakhstan launched production of innovative freight rolling stock: gondola cars, grain trucks and fitting platforms with doubled capacity. The loading capacity was increased by 20 percent, as overhaul was improved by three times (from 160,000 kilometres to 500,000 kilometres).

The country also started producing TEP33A-series passenger diesel locomotives, KZ4AT-series passenger electric locomotives and heat-strengthened rails up to 120 metres long previously not produced in the Commonwealth of Independent States (CIS) countries.

The export potential of railway products is estimated at more than $3 billion and the geography of the sales market covers about 18 countries.

To date, products made in Kazakhstan worth over 36 billion tenge (US$109.08 million) have been supplied to Eurasian markets.

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On social networks, citizens of Kazakhstan note the increased quality of your company’s passenger traffic with the introduction of new wagons and locomotives. Your customers like the polite and caring passenger car attendants, clean and modern cars and locomotives that do not smell of diesel fuel. What are the future plans for passenger transportation?

As part of the efforts to speed up passenger traffic, 15 trains were launched from the Tulpar-Talgo plant, they connect all main of cities of Kazakhstan with Astana. The main advantage of those trains is a significantly shorter travel time.

In 2014, the electronic billing system under the auspices of KTZ was introduced in the country. Today, passengers can buy tickets through 17,000 self-service terminals, over ten websites, the KTJPortal mobile application and the Amadeus international system.

In addition, an automated passenger information system was introduced in order to increase the level of customer orientation. The project is integrated with the ticketing system and informs passengers about emergency situations or delays via SMS.

To increase onboard service, a multimedia entertainment portal has been provided in three branded and 11 commercial trains from Tulpar-Talgo.

The multimedia portal offers information about the train schedule, services, travel conditions and passengers’ rights and obligations with possibility of assessing the portal service quality. In addition, passengers can watch movies, cartoons, play games and listen to music on board.

The multimedia entertainment portal is expected to be introduced in the company’s all passenger trains next year.

In addition, access to the Internet was provided in the Tulpar-Talgo trains on the Astana-Almaty route this year. The number of trains with Internet access is planned to be increased in the future.

 

What new technologies does your company plan to use? How is KTZ’s automation carried out? Is the company ready to contribute to the Digital Kazakhstan programme?

KTZ developed the Strategy for the Development of Information Technologies until 2025 – Digital Railway for 2017-2025. Under the strategy, the company outlined seven strategic directions for development. They are management of multimodal transport, intelligent systems of planning and management over freight traffic, digital railway infrastructure, digital service for passengers, intelligent transport security, automation of corporate processes and single technological infrastructure.

We began implementing projects applying IoT, BigData and other elements of the fourth industrial revolution.

KTZ plans to implement several projects within Digital Kazakhstan programme. The first is Digital Station designed to ensure audio-visual information about the arrival/departure of trains, as well as to display advertising texts, graphics and video and voice information.

An important task is to provide easy access to the station building for low-mobility categories of people. For this purpose, entry points are equipped with special call buttons (emergency button and help button). When one presses this button, a person receives the necessary help; the attendants come down and help to enter the building. The call button will be installed at a convenient distance from the ground.

Also, we want to provide access to digital services through seamless Wi-Fi network. There are also plans to expand current mobile application functions in terms of online schedule, availability of seats on the train, map of the country’s railway network and the cafe and restaurant menus in the station building.

The project of the Automated Control System (ACS) – Magistral, implemented by KTZ jointly with Transtelecom which uses of modern railroad condition diagnostics systems. It is designed to ensure a gradual transition from planned repairs to actual repair conditions.

Magistral is an automated system of complex monitoring and diagnostics of infrastructure condition. ACS looks like a car-diagnostic complex with special equipment that captures a wide range of different parameters at once. This data is processed by special software and becomes available for specialists. Therefore the work becomes more operational and absolutely transparent.

With ACS, the management will be able to track where, when and how the repair of a track is carried out and much more. This will improve the quality of the diagnostics and significantly reduce the costs of repair works.

To ensure the planned car traffic and movement of freight trains according to the schedule, KTZ decided to introduce an automated system to develop forecast (optional) train traffic schedules.

In accordance with the Digital Railway strategy, we constantly analyse and look for digital solutions to improve the rail service quality provided to customers.

 

In recent years, the volume of transit container traffic through Kazakhstan has significantly increased. What is the reason? What are the further prospects in this area? How do you resolve the certain contradiction between the relatively higher costs of rail transport in comparison with the maritime shipping? Is there a kind of ceiling in the number of containers that the country plans to transport?

Today, the speed of container trains via Kazakhstan has grown to 1,100 kilometres per day. This indicates that we are ready to deliver cargo from the South Eastern provinces of China to distant countries such as Spain or Great Britain within 15-17 days. In future, we plan to increase the average speed to 1,500 kilometres per day. In partnership with 17 provinces of China, a regular container service has been developed from China through Kazakhstan to Europe, Turkey, Central Asian countries, Afghanistan and the Persian Gulf. In 2016, the growth doubled in the China-Europe-China direction compared to 2015 (from 49,900 twenty-foot equivalent unit (TEUs) containers to 105,000 containers per year). In 2017, the growth rate stood at the same level. We expect an increase in container traffic to over 200,000 TEUs by the end of the year.

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Thanks to the alliances and regional cooperation, where the KTZ Group participates, completely new directions and services are being developed; new multimodal logistics solutions for the delivery of goods are being introduced. In recent years, the reciprocal loading in mutual trade of these countries has been increasing with backload from Europe to China of 60 percent. The achievement of target parameters for the growth of transit traffic volumes is ensured amid tough competition with alternative routes and existing logistics supply chains.

In order to develop the Northern Trans-Asian route through Kazakhstan, Russia and Belarus to Europe, a business alliance was established with Russia and Belarus railway companies, the United Transport and Logistics Company (UTLC). This business platform provides an integrated service from China to Europe based on unified technology, quality standards and pricing.

Mutually beneficial commercial and technological cooperation allows UTLC to demonstrate a high dynamics of traffic growth and facilitate realisation of Kazakhstan’s transit potential. This strategic alliance is a key element in the process of linking Eurasian economic integration and the Silk Road Economic Belt.

Kazakhstan develops transportation along the Trans-Caspian route. The Nomad Express container service from China to Turkey has been formed through the sea logistics infrastructure of Kazakhstan in the Caspian Sea. The route is extended to Ukraine and Poland by a single technology with a complex rate per container. The existing and new modern infrastructure of Kazakhstan is actively involved in the transportation process of this global service. They are border checkpoints of Kazakhstan and China at Khorgos – Eastern Gate, transport and logistics centres in the regions of the country, new railway stations and trunk lines to the international ports of Aktau and Kuryk in the Caspian Sea.

Over the past nine years, the total investment in the development of infrastructure, transport and logistics assets and competencies amounted to approximately $26 billion. These are investments in new railways and motorways, modernisation of infrastructure, new centres for warehouse logistics on trans-Kazakhstan transport corridors for consolidation and reorientation of cargo flows and transport assets of container and wagon logistics.

Aktau port

Aktau port

At present, there are several ways of transporting goods from China to Europe and backwards. Traditionally this cargo is transported by sea at cheaper rates. However, the delivery time by sea can take from 45 to 60 days. This is not suitable for goods that are sensitive to delivery times, such as electronics, pharmaceuticals, food, FMCG goods, etc. In this case, air transportation can significantly shorten the time of goods delivery at a higher transportation cost. Thus, transportation by rail is the most optimal solution in terms of time and cost of delivery.

Khorgos - Eastern Gate port

Khorgos – Eastern Gate

By 2020, the growth of container traffic in the region in transit through Kazakhstan is estimated at more than 2 million TEUs. This will allow the country’s transport sector to generate revenues of US$5 billion.

Transit freight flows are represented by traditional and commercial transportation. Traditional cargo flows go from Russia and the CIS countries to the countries of Central Asia and in the opposite direction transporting such cargoes as timber, oil products, ferrous metals, foodstuffs, fertilisers, and construction-related cargoes.

Commercial cargo flows serve ferrous metals, machinery and equipment, cotton, chemicals, consumer goods, and container transportation from China to Russia, the countries of Central Asia and backwards.

At the same time, the analysis of the Kazakhstan’s cargo transportation market confirms that Kazakhstan’s container transit market has the largest growth potential.

Over 10 months this year, the number of transported containers in transit through the territory of Kazakhstan reached about 270,000 TEUs, which is 40 percent more compared to the same period in 2016. Thus, in the direction China/Asia-Europe-China/Asia, there were 147,000 TEU, which is 1.5 times more compared to the same period in 2016. In the direction China-Central Asia-China there were 89,000 TEUs, which is 31 percent more compared to the same period last year.

KTZ believes the volume of the container transit through Kazakhstan is largely determined by the competitiveness of its services for exporting consignors in China and European countries regarding alternative routes – sea, air transportation. Given that Kazakhstan occupies only 0.2 percent of the transit market from China to the EU, the key factor in the reorientation of freight flows is not the growth rate of trade between China and the EU, but the rate of increase in the company’s share in this flow.

To develop the most promising transit container transportation services through Kazakhstan and achieve the target of 2 million TEUs per year by 2020, the company intends to strengthen the functions of marketing and sales; increase the level of return loading through the intensification of sales efforts to shippers in target markets; optimise transportation costs through further implementation of cost reduction programmes and maintain competitive delivery terms within 12-14 days with a significant increase in the volume of transit to the target levels.

To ensure the growth in the volume of transit traffic, we continue our work within the established strategic alliances along the main corridors. In particular, within the framework of the Joint Transport and Logistics Company in partnership with the Russian and Belarusian Railways, we try to maintain the dynamics of an annual double increase in the volume of transit traffic along the Asia-Europe route and bring the volume to 800,000 TEUs per year by 2020. At the same time, the back loading in the direction of EU-China is ensured at the level of at least 55 percent.

On the Trans-Caspian International Transport Route, we are attracting new participants and extend the corridor with the inclusion of the Ukrainian transport network.

In October this year, a new railway section of Kars-Akhalkalaki was put into operation on the border between Turkey and Georgia, which will give an additional impetus to the development of transit traffic along this route.

We coordinate work with the railways of Iran and Turkmenistan to attract cargo flows along the North-South corridor. And, as I said, we conduct work with all 17 cargo-generating Chinese provinces to increase cargo flows to international transport corridors through the territory of Kazakhstan.

 

The transportation market has been established. Major transport companies are working in this market. What measures need to be taken to make the transport corridor through Kazakhstan even more attractive and profitable in monetary terms, as well as speed up the transportation of cargo?

First, it is important to ensure delivery speed of at least 1,100 km/day and close cooperation with other railway administrations and partners on the entire route during 14-15 days. Secondly, it is necessary to provide preliminary information on suitable cargo for optimising the time of cargo clearance, as well as timely provision of rolling stock at borders. Also, it is essential to ensure the back loading and looping of routes. This generally has a positive effect on the competitiveness of tariff conditions for these transportations. All this is the work of container train operators. In the next 5-10 years, the speed of goods delivery is expected to increase up to the level of passenger transportation. This is a completely different type of transportation and a new market of freight base, a completely different price and economy of transportation.

 

KTZ has many plans and many different programmes for the development of transport corridors: China-Europe, China-Turkey, China-Caucasus and others. We see that China is an important player for all known reasons. What are the plans for transportation from China and to China for the next year?

For 2018, the planned volume of transit traffic through Kazakhstan is more than 500,000 TEUs, including in the direction of China – the EU countries – China, China – Turkmenistan/the countries of the Persian Gulf, China – Turkey/Caucasus – China, and China – Russia/Baltic countries – the countries of Central Asia – China.

Currently, as mentioned KTZ works with 17 Chinese provinces and a number of Southeast Asian countries. At the same time, constant work is carried out to expand the geography of routes, comprehensive logistics is being improved. I would like to note that this year the back loading from Europe to China was ensured at 60 percent, which is 10 percent more compared to the last year.

 

Could you please tell us about KTZ’s plans for the development of the ports of Khorgos and Kuryk?

On May 15 this year, an investment agreement was signed with the COSCO Shipping Corporation and the Port of Lianyungang on the joint development of the Special Economic Zone Khorgos – Eastern Gate. The agreement is aimed at further development of cooperation between Kazakhstan and China in the transport and logistics sphere facilitating the integration of the Nurly Zhol programme with the Chinese Road and Belt programme. Thus, the Chinese partners (Cosco Shipping and Lianyungang Port) acquired 49 percent of the shares in the charter capital of the Khorgos Gateway Dry Port project.

At the Khorgos Special Economic Zone (SEZ), we are implementing joint plans to increase the volumes of handling containers and cargoes, using such mechanisms as joint use of the Cosco and KTZ container park expanding the range of multimodal logistics and improving terminal services and infrastructure facilities (terminals, ports) to ensure optimal logistics and distribution of goods, as well as the integration of IT platforms of companies (Lianyungang Port, COSCO) and other activities aimed at the development.

In December 2016, President Nursultan Nazarbayev launched the railway ferry complex in the port of Kuryk, which has processed more than one million tonnes of cargo so far.

Today, the Kuryk port is one of key logistics link in transportation along the Trans-Caspian International Transport Corridor.

The construction of an automobile pier and the logistics infrastructure of the Kuryk port is about to be completed in the near future.

The port’s capacity will exceed 6 million tonnes per year of railway ferry cargo. Moreover, measures are being carried out to improve the logistics services along the Trans-Caspian route. Recently created Nomad Express container service will attract approximately 300,000 additional container traffic by 2020. An additional impetus for the development of transportation through the Caspian infrastructure will be provided by the new Baku-Tbilisi-Kars railway line, introduced recently in October this year.