Freight delays have been reported at the Kazakhstan – China border points since October 2020, when the Chinese authorities imposed COVID-19 quarantine measures at the Horgas – Khorgos and Dostky – Alashankou checkpoints for the passage of rail and road freight from Kazakhstan entering China. The restriction, which is still in effect as of this writing, has greatly affected the export and import sectors, particularly Kazakhstan’s agricultural exports, such as grain and oilseed products. According to reports on January 6, about 7,500 trucks remain stranded for up to 42 days at the Dostky – Alashankou border crossing with only 8 to 12 units allowed to cross the border points each day.
Under the 2016 bilateral freight forwarding services agreement, China is contractually obliged to intake at least 18 freight trains from Kazakhstan. However, the global pandemic in 2020 has resulted in the alteration of the Kazakhstan–China cross border trade, which includes suspension of non-scheduled China Railway Express. While the suspension had minor impact on the China – Europe container trains as the majority of them are scheduled, customs regulations remain unclear for Kazakhstan’s exports into China.
Although Kazakhstan temporarily imposed an export ban on agricultural products initially when the pandemic broke out, the government reopened its trade border crossings with China on July 1, 2020. In order to ramp up its trade volume, Kazakhstan opened a new minor trade road at Kalzhat and Maikapshagai in addition to the two existing border crossings. However, congestion began to pile up by October 2020 and the situation deteriorated after a new pandemic-related restriction was introduced in November by China and later accepted only a maximum of 10 to 11 trains per day.
Similarly, trucks have faced delays at the Nur Zholy- Khorgos road crossing. Prior to the restriction, about 100 to 150 vehicles passed through the border daily; however at present, only 20 to 30 vehicles are able to pass. Truck drivers have reportedly faced extortion by local Kazakh customs officers and the new contactless electronic queue system at Nur Zholy post also exacerbated the congestion.
Cargo backlog exacerbates logistics operations
The downtime at the borders have subsequently affected cargo delivery times, non-fulfillment of contractual obligations, and delivery by Kazakh freight forwards to their business partners in China. Lack of official documents and regulatory transparency from China has also affected the Kazakh export sector. Forwarders were not able to address the issue of delayed goods without declaring official force majeure, while Chinese business partners threatened its Kazakh counterparts with fines for disruption of supplies. The dire situation prompted the Kazakh Ministry of Industry and Infrastructure Development only in December to issue an official confirmation letter on cargo delays at the border for local exporters.
Border congestion slightly improved after the Kazakh government held multiple rounds of talks with China. This has facilitated the passage of 12 to 13 trains per day, while prior to December 1, China had only accepted 7 trains daily. According to KTZ-Freight Transportation LLP, the total backlog of rail wagons at the border reduced from 9,000 to 7,000 in December with priority given to agricultural commodities for export. While this is a slight improvement, only 60 wagons carrying grain exports out of 438 have been able to pass through the borders until December due to a lack of transparency on China’s customs procedures for Kazakh exports.
Border congestion expected to remain a challenge
Kazakhstan sits on the corridor between East Asia and Europe and the country serves as an important land-linked gateway for the European Union (EU) and East Asia. The massive grounding of airlines during the initial COVID-19 outbreak in 2020 contributed to the rapid expansion of rail frequency and container volumes via the Trans-Eurasian freight routes, as rail became one of several alternative transport modes for international supply chains.
Recent reports indicate that the value of goods per rail container from EU to China is estimated to be five times than that of marine transport last year and the Kazakh rail system played a major role in handling 90 percent of transit flows for the EU – Asia cargo link.
Winter season is a peak period for shipments between the EU and China. Increments in the volumes of goods via rail amid the pandemic have also exacerbated the current cargo bottleneck at the borders. According to the Kazakhstan Ministry of Trade and Integration, China is facing similar congestion with its other land border countries Kyrgyzstan, Russia, and Mongolia. Therefore, the backlog at the China – Kazakhstan border is expected to remain a challenge at least until the first quarter of 2021.
Resilience360 customers with suppliers based in China relying on imports through Kazakhstan should anticipate capacity reduction via truck and rail freight in the coming months. Moreover, border closures or restrictions on short-notice are possible in the coming months as China’s Xinjiang Uygur autonomous region that borders Kazakhstan has experienced on and off COVID-19 related lockdowns since October 2020 due to a surge in cases.