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RUSSIA\\\ costs remain a concern Unifeeder first to Ust-Luga Logistics boom but


Mike Oliver, director at Total Logistics Supply Chain Consultants, says that his clients in Russia are most concerned about wage inflation, projected at around 10% year on year, although volumes are expected to increase by around 15-20%. Total Logistics works with a range of


companies in the fast-moving consumer goods and retail sectors. Initially, many of these were western firms seeking to break into the market but the consultancy now has an increasing number of Russian clients too. “Operations in Russia are back to pre-


crisis levels,” Oliver continues. “And no one in western Europe is planning on that sort of growth.” Clients are also looking to develop


outside the Moscow region, which has been the main beneficiary of growth since the fall of the Communists. Firms are realising that adding 50 more stores to an existing 300-strong network in greater Moscow just dilutes the market, whereas there is genuine growth to be had outside the capital. “Regional expansion is critical,” Oliver says. There are two essential approaches


to this, he continues. One is to open up outlets in each of the major provincial population centres. The other is to create clusters in specific city regions – say, a dozen or so in Yekatarinburg, Novosibirsk, Rostov or Krasnodar, for instance. Then there is the question of


whether to use a third party logistics company to serve these places, and whether it should be a western owned one or a local firm. “Some Russian 3PLs are much more competent now,” says Oliver. “At the same time, there are global logistics operators who purport to offer a worldwide service but in fact all they have in Russia is a forwarder’s representative office.” Logistics property is another issue.


Several firms have developed ‘Class A’ warehousing in Russia, to the extent that there is now a glut of such capacity in some areas. However, it tends to


Shortsea operator Unifeeder started calls to the new Russian deep-water port at Ust-Luga with the 1440teu vessel Emotion on 29 December, becoming the first line to call at the terminal. Unifeeder’s CEO Jesper Kristensen said the port would be “a sound alternative to the St. Petersburg city terminals.


Mike Oliver


be expensive and many firms are questioning whether a less up-to-date property, provided it is dry, secure and rat- free – cannot do the same job. Companies do however tend to want sophisticated IT


and warehouse management


systems and the providers of these can look askance if asked to install their kit in what is essentially a large cowshed. Automation is growing in most


sectors of Russian logistics, spurred on by labour quality and cost issues. Much is made of the poor quality


of Russian roads and transport infrastructure generally. However, it is important not to be too influenced by pictures of trucks up to their axles in snow or mud, says Oliver, who points out that pictures of last winter’s chaos would give a similar impression that UK logistics was chronically seized up. “Transport infrastructure is not as backward as is sometimes made out,” he says. One of the biggest frustrations


Total Logistics faces in Russia – one of its biggest markets – is nothing to do with transport. Germany has made a lot of the running in selling systems and services to Russia, not because its offerings are inherently superior to the UK’s but because it is very difficult for Russian business people to get visas to come and see what British firms have to offer – while they face no such problems in visiting Germany. Part of the reason may be bound up in politics, but that doesn’t help firms trying to persuade Russians to come and see British software and applications in action.


Wallenius in Moscow


Wallenius Wilhelmsen Logistics has opened a second Russian office in Moscow in addition to its presence in St Petersburg. Managing director for WWL Russia, Søren Tousgaard Jensen explained: “Automotive and rolling equipment importers as well as foreign companies building up local production have their main offices in Moscow, and we want to be close in order to support their


logistics needs in the best possible way,” The city is also a hub for several rail and trucking companies. The Moscow office will be run by


Boris Kaportsev, corporate account manager for rolling equipment customers, and Dmitri Vostrikov, corporate account manager


for


auto customers. St Petersburg will continue to be the WWL head office in Russia.


Its geographical location offers the possibility to reduce the impact of the harsh winter on operation, and it will be able to easily accommodate cargo going to the St. Petersburg, Moscow and Kaluga areas through well established infrastructure. It is the new gateway into Russia.” The new service will offer fixed


weekly connections between Ust- Luga terminal and the major hub ports Hamburg and Rotterdam. Unifeeder now offers seven weekly calls to the St Petersburg area. Ust-Luga in the Luga Bay of the


Gulf of Finland, offers all-year- around operation with a shorter ice channelling period than in


St Petersburg. The container terminal with 440m of quay is fully equipped with rail tracks and road links. While the multipurpose port is still under construction, its current capacity is already 440,000teu and by 2019 it is expected to handle more than 2.8m teu a year.


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