Gross income from railway, auto Income from shipment by channels, KZT bln and air shipment amounted to KZT

3PL-THE DRIVER OF RETAIL DEVEPOMENT 938 bln in 2018, including 772 bln 1,400 generated by railway , 149 bln by au- to and 7 bln by air. Despite highest 1,200 uring the recent years Kaz- the limited capacity of railway tran- 9.7% and pipeline transport – 6.9%. income brought by railway, we still 1,000 akhstan has actively expan- Air transportation sportation in . Railway ded its potential as the tran- Average annual increase in ship- observe larger growth in automobile The results of 2018 indicate the 800 sit passage connecting Eu- ment volumes during the last four shipment: 33% growth in 2018 com- overall transportation volumes via all years comprised 3%, with forecasted pared with 12% increase in railway D 600 rope and Asia with noticeable develop- channels of 4,104 mln tons, 82% of growth of 7% in 2022. shipment. In addition, air transpor- ment in automobile and air transpor- that volume is related to automobile tation is expected to have dynamic 400 tation. This mainly happened due to transportation, railway comprises average annual growth with 16% Trucks 200 projected growth during the 5 years span vs. 8% in auto shipment. 0 2013 2014 2015 2016 2017 2018 2019* 2020* 2021* 2022* 2023* Shipment by all types of transport, mln tons Analysis of shipment in terms of * Baker Tilly's calculations volume (4,104 mln tons) by region in Source: Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan Main products of Shipment by all types of transport, 2018 shows larger share of transpor- shipments in 2018, tons mln tons 5,449 tation in Karagandy region (20%) and In addition to that, only 3 regions and 3%, respectively. crude oil Total East-Kazakhstan region (15%). This is conduct air transportation, with Nur- Kazakhstan has a strategically bene- Railway and 5,075 477 oil products Pipeline transport is attributable to mining industry in Sultan being the leader (88% from ficial location which leads to high Trucking 4,728 these regions, which also demonstrates total volume), followed by transit potential. Warehouse logistics 25% 456 333 Other low level of own national production. and West-Kazakhstan region with 9% is another important factor 4,404 436 319

Coal 4,104 416 and chark 3,946 306 TOP-5 Shipment volumes by regions in physical terms 3,734 3,729 398 294 20% 387 341 339 281 233 North Kazakhstan 215 206 Region Nur-Sultan Natural <2% Kostanay gas 2-5% Region 13% >6% 7% Construction West Kazakhstan 4,635 materials Region 4,296 6% 3,982 3,691 3,421 Iron ore 3,322 20% 15%15% 3,174 3,181 3% Non-ferrous metals Mangystau 3% Region 6% Jambyl Region

Other South Kazakhstan 6% 30% 2015 2016 2017 2018 2019* 2020* 2021* 2022* Region * Baker Tilly's calculations Almaty

Source: Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan Source: Statistics Committee of the Ministry of National Economy of the Republic of Kazakhstan attributing to transit passage deve- and 3.6% are located in Nur-Sultan and Currently it is important to develop This results in higher logistics “Kazakhstan-New Silk way”. The lopment. It is crucial to have an ade- Shymkent cities, respectively. warehouse logistics in Kazakhstan in expenses incurred by companies successful project realization and quate supply of 3PL operators which Potential market for warehouses is order to service production retail which which in turn inflate prices on finish- strong potential for further industry will provide a wide range of services 7.73 mln.sq.m. Therefore, we observe will further contribute to growth of ed goods. Also, Kazakhstan expe- development is supported by higher in line with international standards. a deficit of high-quality warehouses in trade network in regions and decrease riences a shortage of high class ware- level of shipment during the latest Warehouse logistics Kazakhstan. Large storage complexes disorganized product trade. In 2018 houses almost in all regions of the years provide their services only for domes- around 50% of warehouses in Kazak- country. Despite that, Kazakhstan This analysis was prepared by Baker Warehouse construction relates to Tilly Qazaqstan Advisory in the scope of tic market and do not engage in tran- hstan were occupied by products of still successfully follows its strategy 65th step of “Nation plan – 100 steps" project marketing development for one of sit stream servicing as there is no such distributor companies, while Russia has – “Integration of Kazakhstan interna- largest participants in 3PL logistics. need. Transit streams’ servicing is limi- much lower ration of 35%. Therefore, tional transport & communication ted to container processing at cross- exis- ing logistic operators mainly streams”. According to Baker Tilly ana- Werehouse clients in Kazakhstan Warehouse clients in Russian Federation border terminals and shipment. A-class target distribu- tors and wholesalers, lysis, the overall area of storage facili- warehouses are expected to gradually with turnover of 40-45 days. In more ties comprises 4.17 mln sq.meters. The implement 4PL services and B-class developed counties 3PL operators coefficient of population provision wi- warehouses – 3PL services in the near- mainly focus on work with product th storage facilities is 227 sq.meters est future. Logistics sector is somewhat retail and companies engaging in per 1,000 people, which is much lower an indicator of country’s economic de- e–comcommerce. Currently, logistic e of Europe’s coefficient of 420 sq.m. velopment. Warehouse capacity indi- expenses in Kazakhstan are relatively There is an apparent shortage of 3PL cates the level of trade as import and high and significantly exceed those in operators which could provide the full export are strongly connected to it. developed countries. The share of spectrum of logistic services in Kazak- 5050 % % 3535 % % Despite approximately equal rent rates, logistic expenses may sometimes reach hstan, especially in northern regions 3 %3 % an average occupancy of A class ware- 25% of finished good’s price, while of the country. The highest demand is 6 %6 % 35 % houses in Almaty during 2015-2019 average world indicator is at 11%. The 50 % 2424 % % for “A” class storages. During the last comprised 76%, while those located in main problem of A class warehouses is 3 % year, the overall volume of A class 7 %7 % 6 % Nur-Sultan showed only 57%. Rent that the most of them provides a warehouses comprised 562 thousand 2020 % % 24 % rates varied from KZT 1,442 per palett relatively limited range of services, 2525 % % sq.m., with 426 thousand sq.m. locat- 2020 % % 7 % spot in Almaty to 1,433 in Nur-Sultan. which does not cover all 3PL. ed in Almaty city. The other 20.6% 20 % 1010 % % 25 % 20 % "A" class warehouses 10 %

Empty 43% ДистрибьюторскиеДистрибьюторские компании компании Розничная Розничная торговля торговля Occupied МестныеМестные производители производители Транспор Транспорт ит логистика и логистика Прочие Прочие 57% Distributor companies Retail trade Local producers Transport & Logistics Other

Nur-Sultan 116,000 м2 Source: Baker Tilly's analysis

Empty 24%

Occupied 76%

Baker Tilly Qazaqstan Advisory LLP trading as Baker Tilly is an independent member of Baker Tilly International. Baker Tilly Shymkent Almaty International Limited is an English company. The name Baker Tilly and its associated logo is used under license from Baker Tilly 2 2 20,000 м 426,000 м International Limited. www.bakertilly.global Source: Baker Tilly's analysis office 201, Block 2B, BC “Nurly Tau”, Al-Farabi Ave., Almaty, 050059, Kazakhstan +7 (727) 355 47 57, [email protected], www.bakertilly.kz