• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 5 hours Bad news for e-cars keeps coming
  • 9 hours How Far Have We Really Gotten With Alternative Energy
  • 13 days What fool thought this was a good idea...
  • 2 days The U.S. Is Determined to Revolutionize Its Microchip Industry
  • 11 days A question...
Putin Meets With Xi Jinping As Sanctions Weigh on Russian Economy

Putin Meets With Xi Jinping As Sanctions Weigh on Russian Economy

Russian President Vladimir Putin visited…

Will Raisi's Death Lead to Softer Iranian Policy Towards the West?

Will Raisi's Death Lead to Softer Iranian Policy Towards the West?

President Raisi's unexpected death raises…

Russia Loses Ground to China in Central Asian Trade

Russia Loses Ground to China in Central Asian Trade

Kyrgyzstan has a significant trade…



Eurasianet is an independent news organization that covers news from and about the South Caucasus and Central Asia, providing on-the-ground reporting and critical perspectives on…

More Info

Premium Content

Shifting Trade Flows Create Logistical Problems In Central Asia

  • Russia is depending on Central Asia to bring in $20 billion worth of goods through parallel imports.
  • Shortage of warehouse space across the Commonwealth of Independent States (CIS) is threatening Russia's parallel imports strategy.
  • Online retailers and logistics operators in Russia are facing a shortage of vacant sites to expand their warehouse capacity in Central Asia.

When the flow of Western goods to Russia was choked in the wake of the Ukraine invasion, attention turned to Central Asia.

In part by funneling goods through Kazakhstan and Kyrgyzstan, Russia managed to bring in $20 billion worth of goods between March and December 2022, Kommersant business daily reported on April 10. Other countries relied upon for this parallel import strategy include Armenia, Belarus, Georgia, and Uzbekistan.

Industry insiders are warning, however, that there is a ceiling to capacity for this arrangement because the nations that are most heavily used for parallel imports are suffering from a chronic shortage of warehouse space.

Demand for foreign-sited warehouses from Russian logistics companies and retailers has doubled since last spring, around the time when Moscow embarked on its invasion of Ukraine, according to analysts cited by Kommersant. Real estate consulting company NF Group said Russian companies looked for almost 400,000 square meters of warehouse space over that period. 

But the space is simply not there.

A shortfall of skilled logistics facilities developers across the Commonwealth of Independent States (or CIS, common Russian industry shorthand for describing a large chunk of the former Soviet Union) means fixing this problem will not be easy. Russian companies are said to be able and willing to take up the challenge, but then there is the lack of suitable, ready-to-go construction sites to worry about.

Armenia, Georgia, Kazakhstan, Kyrgyzstan, and Tajikistan are said by analysts to have no vacant sites. Uzbekistan has some marginal capacity to offer newcomers.

Kommersant cited NF Group as saying that the demand for fresh warehouse capacity in the CIS is coming from online retailers and logistics operators. According to Alexander Perfilyev, commercial director at Ghelamco, a logistics park developer, fully 80 percent of requests are coming from two companies alone: Wildberries and Ozon. 

Wildberries is focusing considerable energy on Kazakhstan.

In February, the mayor of Almaty, Yerbolat Dosayev, met with Wildberries founder Tatyana Bakalchuk to discuss plans for building a $100 million logistics facility in the city. Bakalchuk talked up this investment as an opportunity for Kazakh producers to sell more of their goods abroad, but the real prize may lie, for as long as Russia is trapped in a state of diplomatic and economic isolation from the West, in the re-export market.

The road has been far from straightforward for Wildberries, though. 

In December, Trade and Integration Minister Serik Zhumangarin traveled to Moscow to meet with Bakalchuk to discuss a number of options. One was to set up a cross-border hub in Khorgos, a giant trade zone on the border with China. Contrary to what analysts told Kommersant, Zhumangarin seemed to suggest this location did in fact have free areas for building new warehouses. 

Another idea pushed by the Kazakh government was to create a cross-border trade center dubbed Eurasia in the West Kazakhstan region, which shares a long border with southern Russia. Zhumangarin said the center could capitalize on continent-straddling transport corridors running north-south and west-east.

But it does not sound like Wildberries is especially interested in all this lofty talk. It just needs to solve a pressing business problem and wants to do so without incurring too much financial pain. This strong pragmatism may be ruffling some feathers in Astana. 

Only a few days after Zhumangarin returned from Moscow, deputy Foreign Minister Almas Aidarov complained that Wildberries had laid out what he considered to be unreasonable conditions for coming to Kazakhstan and investing in the construction of warehouses. 

“During our very first negotiations, Wildberries demanded exemption from taxes for a period of 30 years, as well as assistance in constructing warehouses,” Aidarov said. “Naturally, we have not agreed to such conditions.”

It is not known, meanwhile, what kinds of terms Dosayev, the Almaty mayor, discussed with the company.


Ozon has had a more fruitful time of things. 

The company announced in March that it had completed construction of a 38,000-square-meter fulfilment center in Astana. Facilities of this kind, modeled after the fashion of U.S. e-commerce titan Amazon, are used to both store goods and handle their delivery to customers.

Ozon says this hub will be able to store 9 million items, anything from food and electronic goods to building materials, and process 260,000 orders daily. Delivery times to buyers in Russia are being slashed as a result, Ozon said. The facility is due to start work this month.

By Eurasianet.org

More Top Reads From Oilprice.com:

Download The Free Oilprice App Today

Back to homepage

Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News