Central Asia – driver of Eurasian logistics

The road freight market in Russia this year has changed its guidelines. The closure of European borders for trucks from the Russian Federation did not stop trade with EU countries but significantly reduced it. But transportation in new international directions has sharply increased, and this is especially true for imports – the loss of supplies from the West can be compensated (partially or completely) at the expense of the East.

Denis Abramov/RIA Novosti

At the same time, we do not notice particularly pronounced dynamics in trade with China – perhaps because road transportation in this direction is traditionally inferior in railway profitability. But in the restructuring of supply chains, the Central Asian republics, as well as the countries of Transcaucasia, played an important role. Thanks to them, transport companies mastered new routes and cargo delivery schemes and were able to continue transportation, despite an increase in their cost.

The demand for transportation in these regions has increased by a multiple. Thus, in the third quarter on the ATI.SU exchange, the number of applications for transportation to Russia from Armenia increased by about ten times compared to last year, the demand for delivery of goods from Turkey, Iran and Azerbaijan increased five times, the demand for transportation from Kyrgyzstan, Kazakhstan, Georgia and Uzbekistan increased several times.

Logistics problems impede the real growth of cargo traffic with the countries of Transcaucasia – the so called Georgian Military Road remains virtually the only transport artery along which goods are moving, and it has long been overloaded, and the Upper Lars checkpoint, even after an increase in capacity, has not yet coped with sharply increased demand.

But the Central Asian republics got the opportunity to realize their transit potential at full capacity and become full-fledged participants in the world supply chains. The question is, are they ready for such a sharp increase in cargo traffic?

According to our November survey, 29% of shippers and carriers face some nuances when working with Central Asian logistics markets. The main ones are document flow and payment delays. Each country has its own rules for the registration of transportation and goods, which raise many questions. Slow business processes and difficulties with international bank transfers, including those related to sanctions, affect the timing of payment for orders.

Also, 26% of respondents note that in the countries of Central Asia there is a low level of comfort for drivers, there is no infrastructure and roadside service, poor road quality. Safety concerns 23% of respondents. Only 10% of shippers and carriers have no problems, and they have successfully mastered new routes.

Of course, such problems are not quickly solved, but in Kazakhstan, Uzbekistan, and Kyrgyzstan, with the support of the state, large infrastructure projects are already being implemented, roads are being repaired, the demand for automation of logistics processes is growing, cross-border procedures are being optimized.

Due to a significant increase in cargo traffic, Central Asian companies today are forced to rebuild and automate their business processes, introduce digital tools for working with counterparties, analysts of demand, supply, and prices. Such changes have a positive effect on the markets as a whole – they are gradually becoming more mature and more promising for Russian companies.

By Sviatoslav Wilde, Founder and Director of the Freight Exchange ATI.SU

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