Kazakhstan is situated at the crossroads of Central Asia and is home to the longest section of the ancient Silk Road. The volume of transit goods passing through Kazakhstan is estimated to reach 170 million metric tons in 2020, up from the current 117 million tons.
KTZ Express will inject an additional $100 million to build a freight and logistics center in Lianyungang, a port in Jiangsu province, on China's eastern coast.
The absence of a centralized port for cargo consolidation in China has long frustrated shippers, particularly those carrying smaller volumes.
"Since different companies are using different ports in Shanghai and Tianjin, it can take up to one month to wait until sufficient cargo volumes are received to fill a container," says Kanat Alpysbayev, vice-president of logistics at KTZ Express.
On completion, the 21-hectare logistics center is expected to quicken the entire process. It will handle 500,000 TEUs (20-foot equivalent units), or standard-size containers, every year, and help shippers from Japan, South Korea and Southeast Asia to move cargo to Kazakhstan by rail.
KTZ Express President Sanzhar Yelubayev describes this as a "very exciting development". Currently, Asia has to rely on ocean freight to Europe and then truck or rail to Central Asia.
Toyota has been one of the first Asian companies to tap into the overland Silk Road. The Japanese automaker used to ship cars and auto parts to Europe by sea through the Suez Canal, a process that takes 70 days, says Takuya Ichihashi, Toyota's chief representative in Kazakhstan and Central Asia.
Besides Toyota, dozens of electronic firms and carmakers from East Asia and Europe including BMW and Mercedes-Benz have switched to the overland route to accelerate the logistics flow for high-value, time-sensitive products, including high-tech and luxury goods.
Chinese high-tech companies such as Xiaomi Corp and Huawei Technologies Co Ltd are also using this route, says Norio Yamamoto, a United Nations Silk Road adviser and president of the nonprofit Global Infrastructure Fund Research Foundation, based in Japan.
A pioneer of using the overland route is Hewlett-Packard. The technology giant has set up factories in Chongqing to manufacture notebook computers. Since 2011, it has transported some 2,500 containers and 5 million products to Europe using the route.
Part of it has to do with investors' "go west" strategy. In recent years, a number of transnational companies operating in China have shifted their production base further inland from the eastern coast in search of low-cost labor. For instance, Foxconn from Taiwan, which makes products for Apple and Acer, also has factories in Chongqing.
However, the prospects for business on the overland Silk Road are not all that rosy.
Maritime transport still dominates over 95 percent of intercontinental trade. Of the 100 million tons of goods transported from China to Europe every year, the overland route accounts for less than 1 percent of the total, says KTZ's Alpysbayev.
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