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Friday, July 11, 2014, 10:39

Joining the new Silk Road

By Wong Joon San

Joining the new Silk Road

KTZ Express — a wholly-owned subsidiary of Kazakhstan Temir Zholy (KTZ), a company specializing in transportation and logistics services — is open for business in Hong Kong on a mission to expand the company’s network into one of the world’s major trading and logistics centers.

The new Hong Kong office will play a significant role, establishing Kazakhstan as an overland transport and logistics hub between the production centers of China and the markets of Europe, Askar U Mamin, president of KTZ, told China Daily in an exclusive interview during the June 24 official opening. The Hong Kong operation will be heavily oriented toward networking among mainland traders already well established in Hong Kong. 

“Our ultimate goal is to revive the Silk Road. We are investing $45 billion in our transport and logistics infrastructure in the coming years. We hope to increase our capacity to move goods through Kazakhstan from the current 117 million tonnes to 170 million tonnes by 2020,” he said.

The challenges facing the new Hong Kong office, headed by logistics veteran Henrik Christensen, include shaping transportation and logistics services, marketing and designing profitable partnerships and creating new demand for the services through Kazakhstan.

Joining the new Silk Road
KTZ president Askar U Mamin is optimistic about the New Silk Road rail service.
“KTZ’s activities will focus on the growth of cargo transit through Kazakhstan — Lianyungang, Chongqing, and Xi’an (as well as some additional points in the south and central part of the mainland),” said Christensen who has been named the KTZ Express president in Hong Kong. “KTZ Express integrates rail, sea, air and road transportation, seaport and airport infrastructure, as well as warehouse and terminal networks.”

“We expect industries marketing cars, computers, electronics and other consumer goods from all over China will distribute their products through the hubs KTZ is building at Xian, Shenzhen, Lianyungang, Urumqi, Chongqing and Tianjin. We want also to ship luxury goods like clothes, wine and so on,” Mamin explained.

A rail cargo service linking Chongqing Municipality in the southwest of China to Duisburg, Germany has been around since March 2011. The two terminal points at opposite ends of the new 11,000-km Silk Road economic belt were cited by President Xi Jinping as key engines for economic growth during his visits to Kazakhstan last year and to the port of Duisburg in March this year.

The new railway service operates through four countries — China, Kazakhstan, Russia, Poland and Germany. 

Cargo transfer

China Railways operates the first link between the port of Lianyungang and Kazakhstan, using its narrow gauge railway.  China calls the uninterrupted rail link between Lianyungang and Kazakhstan the “New Eurasian Land Bridge or Second Eurasian Continental Bridge”. (The first Eurasian Continental Bridge is the famous Trans Siberian railway).

Upon reaching Kazakhstan, the cargo is transferred to Kazakhstan’s railway that will carry the cargo on its wide gauge line through Russia and into Poland. Finally, the cargo is transferred to Polish trains traveling over narrow gauge tracks.

From Poland, the cargo is transported non-stop until it reaches the port of Duisburg in Germany.

Mamin said with transit times of 15 days from China to Europe, the rail service will provide time specific services direct to industrial and commercial centers, in one–third of the time required for ocean shipment (45 days).

Freight rates will be more consistent than ocean going rates, which tend to fluctuate substantially at times.

Trains travelling on the new KTZ route cover 1,000 kilometers per day, maintaining a moderate speed to ensure that cargo is not subjected to violent shaking. There are only two Customs points along the KTZ line — one at the start of the journey at Kazakhstan and another at the end of the journey at the port of Duisburg in Germany.

At the Chinese end, Chongqing is a major production center where companies such as Hewlett-Packard Co, Foxconn Technology, a supplier for Apple Inc, and Acer Inc operate production facilities. Duisberg holds the world’s largest inland harbor, serving as a leading European transport and logistics hub.

“We are not competing with shipping lines, but (we are) complementing them. For many industries, transit time is crucial and we provide opportunities for the fast delivery of their products. Hewlett Packard and Toyota Tsusho have already started to use the (rail) route,” Mamin stressed.

Even operating at full capacity, cargo block trains carry only a limited volume of cargo, unlike mega container ships that can carry over 18,000 “twenty-foot equivalent units” (the standard measure for container shipping) per load.

KTZ is also studying an airfreight link between Hong Kong International Airport and Kazakhstan’s Almaty International Airport, the largest airport in the country.

Air cargo would be assembled from the Pearl River Delta and other areas to connect to a chartered flight from Hong Kong initially. With sufficient volume in the future, the flight may become a regularly scheduled service.

KTZ also looks to Hong Kong as a potential fund raising platform, Mamin said. “Right now, we looking for the companies (subsidiaries) that we will decide to list. At the earliest, we may carry out our first listing next year.”

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