Grain Moves, Gas Doesn’t: Kazakhstan’s Freight Sector Faces a Two-Speed Reality

Kazakhstan’s rail freight sector is hitting new highs—and new hurdles. With record-breaking grain exports, fresh government subsidies, and growing links to Europe and Asia, the momentum is clear. But blocked LPG shipments at the Polish border reveal just how fragile cross-border trust still is.

Kazakhstan has posted record-breaking grain rail transport volumes in Q1 2025, with state-owned operator Kazakhstan Temir Zholy (KTZ) reporting over 3.6 million tonnes moved between January and March. This marks a 49% increase compared to the same period in 2024, according to Rail-news.kz.

Exports dominated the surge, with 2.8 million tonnes shipped abroad—a 52% rise year-on-year. Domestic shipments reached 788,000 tonnes, up 38%. The March figures alone represent a five-year record, with 1.2 million tonnes loaded, reflecting a 63% increase over March 2024. KTZ attributes this success to improved logistics coordination, expanded port access, and a ready fleet of railcars and locomotives, noting the company remains fully prepared to meet declared shipping volumes.

Export Routes Expand from Central Asia to Europe and China

Export growth was registered in all major directions, with Central Asia accounting for 463,000 tonnes—a 48% increase. As APK-Inform reports, shipments to Uzbekistan rose 28%, Tajikistan 80%, Turkmenistan 18%, and Kyrgyzstan sixfold, proving growing demand across the region. Meanwhile, shipments to Iran rose 11-fold, primarily via the Aktau and Kuryk ports, demonstrating the growing importance of Trans-Caspian routes. Exports to the Baltic states increased tenfold, while volumes through Baltic ports rose by 26%, and Black Sea ports by 35%. At the same time, shipments to China exceeded 500,000 tonnes, particularly in the form of processed agricultural goods like compound feed. These exports grew 5.5 times compared to the previous year, signaling about Kazakhstan’s rising value-added agri-export capacity.

Government Introduces Subsidies to Sustain Export Momentum

To maintain this export push, Kazakhstan’s Ministry of Agriculture launched a wheat export subsidy scheme in March 2025, covering the period from 1 January to 1 September. According to ElDala.kz, the programme is aimed at clearing storage capacity and reducing surplus stock, preventing oversupply in the domestic market. The government has allocated 40 billion tenge (approx. EUR 80 million) to subsidise the shipment of 2 million tonnes of wheat. Depending on the route, the subsidy ranges from 20,000 to 30,000 tenge per tonne. This includes routes via:

• Russia to Baltic, Black, and Azov ports
• Russia, Latvia, Lithuania, Estonia, Azerbaijan, Georgia
• Turkmenistan to Afghanistan and Iran
• China to Southeast Asia
• Direct exports to the Caucasus (Azerbaijan, Georgia, Armenia)

Additionally, Kazakhstan’s state grain holding (Prodcorporation) is eligible for subsidies on shipments to Uzbekistan, Turkmenistan, Tajikistan, and China, further strengthening support for national exporters.

Rail Freight’s Bright Spot Marred by Sanctions-Driven LPG Delays

While the grain sector enjoys record numbers, Kazakhstan’s rail freight market faces mounting difficulties elsewhere—particularly in the transport of liquefied petroleum gas (LPG). As RAILTARGET reported, back in January, over 100 Kazakh rail tankers carrying LPG were stranded at the Belarus-Poland border, held up by EU customs authorities wary of sanctions circumvention involving Russian energy as a response to the Russian full-scale invasion of Ukraine. The railcars, many loaded by Tengizchevroil (TCO), were halted at Brest-Central, Brest-East, and Baranovichi-Central. EU regulators are demanding additional documentation to prove non-Russian origin, given Kazakhstan’s close economic ties with Russia and fears of re-exporting Russian LPG under Kazakh labels.

The Central Directorate of Railway Transport imposed a temporary ban on transport of #grain and oilseeds from #Kazakhstan to #Russia
Except for direct transshipment to Novorossiysk and St. Petersburg ports 👇//t.co/WllTzxoyH8 //t.co/Rhj9CwGHW5

— Spiga Dorata (@spiga_dorata) March 21, 2025

Since the EU’s ban on Russian LPG imports came into effect on 20 December 2023, scrutiny has intensified. Despite Kazakhstan’s claims of independence in its energy exports, European customs remain unconvinced, resulting in delays, reputational damage, and a growing shortage of tank wagons in the Kazakh domestic network. Kazakhstan has attempted to resolve the crisis through diplomatic channels, engaging the EU Commissioner for Sanctions Enforcement. However, progress has been minimal. This is further complicated by Kazakhstan’s inability to fully decouple from Russian logistics corridors, a persistent concern among European regulators.

Sources: Rail-news.kz; ElDala.kz; RAILTARGET; APK-Inform