The Chairman of the Board of the Group of Companies «PTC Holding» Timur Karabayev in an interview with the publication «The Eurasian» told about market trends and recent changes in the work of his brainchild.

– Timur Zhumartovich, what changes have taken place in the Group of Companies in this difficult 2020 year, including in connection with the pandemic?

– In the spring we tested the remote format of the work, which has passed to 100% of our employees. Some processes have changed, but on the whole we have successfully coped. At the same time, since the beginning of the quarantine we have not reduced any staff unit, the level of salaries, bonuses and employee benefits also remained the same.

The remote format of the work gave us great time savings, many conferences and negotiations we conducted online, and to this came all our customers, partners, despite age and other factors, everyone had to rebuild. But it brought convenience. If I used to have to fly a lot of times to negotiate from one city to another, now I just connect to the conversation online. By the way, negotiations with our Russian partners were also conducted online, and the final part of the contract was agreed in a remote format.

At the end of 2019, our company acquired a stake in the Group of Companies «PETROLEUM». This acquisition has enabled us to increase our market share and overall growth. In the future, the merger will give us clearer control over the quality of service. Through the «PETROLEUM» infrastructure we will be able to control more effectively all processes related to the filling and transportation of oil products, tank preparation. In 2018-2019. We have experience with other types of rolling stock – semi-cars, fittings platforms, indoor cars.

– is it because you have entered the Russian market?

– We entered the Russian market last year. Before that, we had long negotiations with potential customers in Russia. In July 2019, a one-year contract was signed. Despite the fierce competition, we have fulfilled all of our obligations. The first year of work in the Russian Federation was not easy. It is another country, other regulatory framework and taxation, and competition there is higher. But the client was satisfied, in June this year we signed a long-term contract. This experience has shown us that Kazakh companies, having experience and competence, can successfully participate in Russian transport. We are already known, and we can work with more confidence.

– What helped you in the first place?

– First of all – the understanding of the market, experience, continuity of shipments, which is provided by our professional team – technical specialists and managers. We knew roughly what difficulties could be waiting for us in Russia, and simulating the situation helps well. The volume of the first contract was one million tons.

Our team, which we collected in crumbs – this is one of the biggest achievements of these years. We are operating on a 24/7 basis, and I am grateful to the staff who worked without interruption during the quarantine period to redistribute the workload.

The company, as you understand, must ensure the continuity of transportation. Even at the beginning of the pandemic, we developed three variants of an anti-crisis production plan. Of course, financially it was for all force majeure. In the spring, there was a serious decline in traffic for two to three months, as traffic throughout the country was limited. However, we realized that we could not reduce the staff, because after the fall, there will be a rise. Recovery began gradually in July, and the second stage of the quarantine is, of course, softer than the first.

– Do you have market forecasts for the rest of the year?

– In addition to the anti-crisis plan «A», «B» and «C», we have prepared several versions of the budget – optimistic, pessimistic and transitional. No one knows which of these scenarios will happen. But, according to the Ministry of Health, the situation is improving, it inspires hope for early recovery.

– How did the digitalization and automation processes you launched earlier help you in this situation?

– We started this work from the very beginning of our activity, and before the merger with «PETROLEUM» some of the processes were digitized. Currently, some processes need to be reformatted. We have a team of specialists that links operational transportation processes with operational processes of wagon preparation, integration will take place before the end of the year.

– Do you have market forecasts for the rest of the year?

– In addition to the anti-crisis plan «A», «B» and «C», we have prepared several versions of the budget – optimistic, pessimistic and transitional. No one knows which of these scenarios will happen. But, according to the Ministry of Health, the situation is improving, it inspires hope for early recovery.

– How did the digitalization and automation processes you launched earlier help you in this situation?

– We started this work from the very beginning of our activity, and before the merger with «PETROLEUM» some of the processes were digitized. Currently, some processes need to be reformatted. We have a team of specialists that links operational transportation processes with operational processes of wagon preparation, integration will take place before the end of the year.

– What are the three strongest things in your company?

– The first is, of course, the team. The second is the competence, and during the work we have accumulated good experience and knowledge of the market. This is something that can not be bought. From the very beginning of the company we created a strong analytical center, before signing the contract, in the same Russia, we carefully studied the market, competitors and the overall situation.

– Although the Russian market is very attractive…

– … but very difficult. For example, in Kazakhstan there are 132,000 different cars, and in Russia the top 5 large transport companies have a fleet of more than 200,000 cars. And in total in Russia about 1.1-1.2 million cars, that is, in terms of volumes they are 10 times larger than us on this indicator. And they have many strategies to compete very hard. We understood that, and not everything was simple in our first contract with Russia.

And our third strength is, our strategy, which means we clearly understand what we want and where we are going. We are very lucky that we have modern and pragmatic shareholders who are well versed in business. There is no such thing as “good weather”, something will happen: crises, devaluations, pandemics… And during the existence of the company not everything was perfect. But at the same time, the company must grow, seize new markets. This is the basis of our strategy. Yes, these are risks. And when we come with a marketing strategy to the shareholders’ board for support, we are trusted.

– Now not everyone can afford to make bold development plans. What plan do you have?

– Our internal plans are for 5-7 years, because we are also an investment company, actively investing in logistics. In terms of transport, we rely on the production plans of the main shippers, usually five-year plans. Our strategy is based on this. We plan to increase our presence not only in the transportation of petroleum products. In 2018, we launched two investment projects, bought 600 fittings for the transport of large-tonnage containers, as well as 1,000 wagons for the transport of dry and bulk goods. In these areas – the transport of dry cargo and containers – we will increase our presence. We also intend to develop outside Kazakhstan. The first experience of working in Russia is already there. From the Soviet Union, we, the CIS and Baltic countries, inherited the so-called «track 1520» (width). And this is the market that we need to focus on now. Geography of our shipments – ports of Russia, far abroad, Uzbekistan, Kyrgyzstan, Tajikistan, Afghanistan… The more loading points there are, the more flexible, accessible and pragmatic the logical chains can be built. Therefore, expansion of our company outside the country is a priority for us.

– What market trends could you have noticed?

– In the logistics of industrial goods, several factors are important. The first is the presence of a cargo base, and it is not static. The more pipes are built, the more the cargo base for transport in tanks decreases. The coal industry is going through difficult times, as the prices of this type of fuel have fallen, and this is also reflected in the cargo base. It is an indicator on which the logistics market is oriented.

The second factor is the shortage or surplus of rolling stock. For example, in Russia and Kazakhstan at the time retired a large number of semi-cars with the service life expired. As a result, there was a shortage of carriages, and the reliance on them increased exponentially. Over the years, in response to the high demand of the market, a record number of semi-cars were built. For example, in 2019 alone, about 80,000 units. The market overheated, and the stakes went down. There are problems with spare parts. The market is affected by the nuances of inter-state relations. All this shows how to develop further.

– What can you tell us about our country’s transit capacity?

– Kazakhstan, as is known, is the link between China, Russia, Central Asia and Europe. This potential for transit is a gold mine for our country. And if Kazakhstan’s transport companies want to be successful, they should not ignore the Chinese market. The transport industry should provide this transit potential with the necessary resources for development, which is a well-designed infrastructure, tariff policy, people. There is also a need for highly competent companies in which employees are fluent not only in English but also in Chinese. We, for example, specifically employ students who graduate from Chinese universities, generally trying to understand the key needs of the Chinese market.

In 2019, the Academy “El Basy” launched a project to identify industry leaders. It was important to identify the real industry managers and set specific targets for them. I took part in the selection and now together with a professional team we have to work out a set of measures to improve the rating of Kazakhstan in the global rating of the World Bank LPI. The result of our work will be a package of measures to improve the logistical potential of Kazakhstan. The key aspect is the development of competition. Exports, imports and transit are areas in which Kazakhstan’s transport companies can and should compete with international logistics holdings. Customer loyalty, flexible pricing and transport safety are priorities.

Domestic business is ready to invest in the construction of infrastructure, but it is necessary to create the appropriate conditions and guarantees. And if there is fierce competition between strong and competent players, the prices for our foreign customers will be affordable, and the services are quality. The country needs to maintain its market share and expand it where possible. For example, China recently opened a new transport corridor to Uzbekistan, bypassing Kazakhstan. It will be the first part of the international corridor from China to Europe without the participation of Kazakhstan and Russia. We as a country should not lose a leading position in this transit. After all, this is our future development, and it is hundreds of thousands of new jobs.