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continued from page 15 networks. There is serious


peak hour congestion in the major cities, often far worse than London or Paris. Shrinkage and security issues


are prevalent in all countries, and Russia is no exception. This is a major issue for high value shipments and for time sensitive or refrigerated/frozen loads. Using a reputable 3PL is


RUSSIA / EASTERN EUROpE


often the default position for many clients, but this does not necessarily guarantee western style delivery performance and KPI measurement. Western 3PLs are as susceptible to transport issues as local companies. In fact, in a number of situations, we have found local Russian 3PLs to be as reliable, robust, resilient and professional as well known


and trusted western companies. Clearly, knowledge of who these companies are, what value they can bring and how to contact and negotiate with them is essential. There are other significant


issues to be aware of. Supply chain and consumer data is essential for the modelling of any new venture, yet we have found


that the availability, reliability and consistency of data is often an issue. Knowing what to ask for, who to ask for it and how to assess it, is often as important as the data itself. Clients often expect to


be able to implement their standard western KPIs or process improvement principles to their operations. Measuring


the effectiveness of your Russian supply chain can be difficult to implement; consider carefully what you measure and how. Despite all these potential


issues, the one message we are always keen to reinforce, is to never underestimate your Russian counterparts. In all our time in Russia, we are never


ISSUE 3 2010


surprised by the capability, resilience and determination of the supply chain professionals we deal with. The contacts we have


developed over the years have become trusted members of our wider team, and we always look forward to creating new opportunities for our clients in Russia.


Will going private cure Russian railways ills?


Sergey Stanovkin, a board member at Russian private multimodal operator DVTG says that around 60% of rail traffic in Russia is in private hands, a trend that stemmed from the state railways acute lack of funds a few years ago. “This led to DVTG and other private companies investing in terminals and infrastructure.” The state railways are still


quite cash-strapped, says Mr Stanovkin. “For instance, they built only 52km of new railway last year, which in a country


the size of Russia is almost nothing.” The biggest frustration for


the private operators continues to be getting the state railways to connect private terminals and sidings to the main lines. “It may just be a matter of building 100 metres of line, but there are no fast-track procedures,” Stanovkin complains. In fact, he adds, the situation is now worse than it was a few years ago, because all such decisions have been taken away from local railway area managers and centralised in


Moscow. “That means you can sometimes wait for years for a decision.” The situation is beginning to


worry the Russian government, “because without the right infrastructure, Russia can’t develop.” The country is very dependent on its railways. There are few convenient waterways and road transport often isn’t an option because of the distances and, in many remoter regions, there are no proper roads at all. The cost of building new roads is another thorn in the sides


Wallenius adds options with new joint venture


Car shipping specialist Wallenius Wilhelmsen Logistics is getting involved in the Russian market with a new joint venture with the ROLF Group. The two partners expect to finalise a joint venture – at the end of the year to operate the auto and ro ro terminals in Kotka in Finland, Petrolesport port in St Petersburg and Vostochny in Russia’s far east. ROLF SCS is one of Russia’s


leading providers of finished vehicle and spare parts logistics services to the automotive industry. As well as acquiring


St. Petersburg-based Elit- Trans, it has signed exclusive contracts with ports in St. Petersburg (Petrolseport) and Nakhodka (Vostochny) port in the far east, and has opened its first specialized automotive warehouse, a distribution hub in St. Petersburg and its first regional terminal in Naberazhnye Chelny. The ROLF Group is Russia’s


largest importer and retailer of foreign-made cars in the country. ROLF Retail sells cars from nine brands through 28 dealerships in Moscow


and St. Petersburg. Its ROLF Distribution arm operates the largest independent foreign car distribution organisation in Russia, while its ROLF Import business has an exclusive agreement


to distribute


Mitsubishi vehicles in Russia until 2014. ROLF SCS is the logistics operation with services including warehousing, port facilities, rail delivery and spare parts distribution. Wallenius Wilhelmsen


Logistics’ CEO, for region Europe, Anders Boman, explains: “While we have


Wallenius is in Russia for the long term


been involved in the Russian market via Kotka and have had a relationship with the Rolf Group for many years, until now there was not a complete Russian solution. This is a big step for us, as we will be able to offer a range of options including direct delivery into St Petersburg, or operations via Finland.” WWL has been operating in Russia since 2003, and established a branch office in St Petersburg in 2009. In January 2009 the company made its first call at the port of St Petersburg and set up a transshipment service for high and heavy ro ro cargoes from the Americas and Asia. Both methods of operation


have their pros and cons. For urgently required goods, operating direct into St Petersburg wins time and can


offer lower inland distribution costs. But operating into a city


centre port like St Petersburg also has its issues, particularly space, which the Finnish port has plenty of. Kotka is also the closest major port to the Russian border and it is a relatively short journey by road to St Petersburg, Moscow and other Russian cities. Shipping from Kotka to St Petersburg is another option. The border crossing from Finland to Russia runs quite smoothly, unlike some of the others. “Finland is reliable – you know it works,” says Anders Boman. During the boom years, WWL


did occasionally put its mainline vessels direct into St Petersburg, but nowadays volumes are handled on connecting short- sea ships, mostly operated


of industry, says Stanovkin. “It can be five times higher than in Norway or Finland, which have similar climatic conditions, because there is no competition in the Russian road-building sector.” He also blames a lack of transparency in government road-building contracts. The infrastructure problems


are beginning to have an effect. Already, motor manufacturer Suzuki has pulled out of St Petersburg because of the problems. However, there is some light at


the end of the tunnel, Stanovkin believes. The Government is at last beginning to realise what the cost to the economy of the transport infrastructure problems and is beginning to provide tailor-made support to individual projects. DVTG and other private operators are being given more leeway to work alongside the state railways and develop their own terminals. DVTG for instance has container operations in several areas including Moscow and the Russian far east. “We


have our own rolling stock too – everything, in fact except main line locomotives, and that could also come too,” he says . Importantly, interest rates


in Russia are beginning to come down, not least because competition is starting to open up in the banking sector, and this could encourage further development. A sign of the times is the joint venture development of the port of Nakhodka in partnership with the port of Pusan which was funded by the Korean national bank.


by its partner UECC. Winter operation for deepsea vessels was never an option, as none of WWL’s large ships are ice class but a few of the short-sea ships used are. WWL sees Vostochny as


an alternative foothold in the Russian market. The far eastern port could be used as an alternative gateway to the central Russian belt and even possibly Moscow or St Petersburg for Asian- manufactured vehicles via the Transiberian railway. Some of WWL’s customers have tried this routing in summer and it does work, though shipping vehicles overland in the depths of the Russian winter could pose serious problems, says Anders Boman. Cars in the hold of a ship are comparatively well-protected even when the outside temperature is 40 degrees below, but on open rail wagons rubber seals and lubricants could all be seriously damaged. “This joint venture is a


milestone in developing our presence in Russia. Despite the recent downturn, we believe in this market for the long term. I am happy that now, through our cooperation with ROLF SCS, we can offer customers our entire supply chain portfolio for the Russia and CIS market - ocean services, terminal and technical services, inland transport and supply chain management.“


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