22 Few forwarders


Issue 1 2012 Russian freight: handle with care can boast as


long a pedigree in Russia as FS Mackenzie, which can trace its involvement in the country back over more than two decades. Its network in the country has grown to four offices, in Moscow, St Petersburg, Novosibirsk and Novorossiysk and its staff strength is now over 100. (The company also has three locations in neighbouring Ukraine - Kiev, Odessa and Lvov.) It handles freight by all modes


of transport from all parts of the world into Russia and it has also diversified into distribution, warehousing and special projects such as pick and pack. Four offices in over 20 years may


not sound like rapid expansion but a little caution is advisable in what is still a potentially tricky market. Director of FS Mackenzie International


Lisa Hemmings explains: “One thing you need to


have in Russia is a really, really good manager and we were lucky in that we had that.” But you also need time to find trustworthy partners and employees, to get to know the local culture, how the authorities work and be able to keep on top of local developments. “Regulations are ever changing and you need to be able to keep on top of them,” Hemmings explains. Companies that rush headlong into Russia tend to come unstuck. Russian customs is in a transition


phase – arguably it has been in such a state ever since the fall of the Communist government – and is now migrating from a centralised system with most consignments cleared in Moscow to one where more of the work is done at the border stations. But the process is very opaque and the situation – and interpretation of the rules - is liable to change almost day by day. FS Mackenzie moves freight


from all parts of the world, including the UK. Traffic from the latter is more or less equally split between sea containers and trailers but over the year the proportions fluctuate; sea volumes tend to go down when the Baltic Sea freezes over in winter and freight rates – trailer and container – tend to go up by around 20-25% at this time also. Despite this, freight volumes


in December tend to increase. Christmas Day – which in any case is celebrated on 7 January not 25 December by the Russian Orthodox Church - is not the main present-giving occasion in Russia but New Year’s Day, so retailers in Russia tend to want goods on the shelves in pretty much the same timescale as western Europe. Business has been good in


the past few months and the economy is still reasonably strong but conditions are getting tougher, says Hemmings.


Until a few years ago,


FS Mackenzie‘s traffic was overwhelmingly centred on Moscow but more shipments are moving direct to Novosibirsk and Novorossiysk – many of them by rail from central Asia or China. Infrastructure in the vast country is still a problem, but it is improving. FS Mackenzie generally moves goods around Russia by truck and the choice of local hauliers is improving, though again you have to be careful who your partners are. “We only use a haulier if they have been vetted by senior management,” says Hemmings. For the future, the forwarder certainly


will consider more


offices in Russia, “but we will need the right people, the right location and the right reasons,” Hemmings says. “If you don’t ensure all those conditions are met, things can come back and bite you.”


Don’t let going East make your company go west, says leading insurer


Freight forwarders and logistics companies are offering their customers more and more services – but have they considered the insurance implications, a freight industry gathering in Moscow was asked. Speaking at the Cargo and Freight


Insurance Annual Conference in Moscow on 8 December, Andrew Kemp, TT Club’s European Regional Director at the International transport liability insurer TT Club pointed out that manufacturers, retailers and other users of transport and logistics services are expecting their suppliers to undertake many more and different tasks as they continue to outsource more of their sub- assembly, inventory handling and distribution processes. Although Andrew Kemp’s remarks


were not specifically addressed to a Russian audience, this is one of the markets in which the freight industry has broadened its scope in recent years. Many retailers, starting operations in Russia for the first time, and with a clean sheet of paper, have


often subcontracted operations to their logistics service providers to a greater extent than in more mature markets. It certainly is becoming a bigger issue as the sorts of outsourcing activities that initially were offered in the West are increasingly rolled out into markets like Russia. However: “Those traditional freight


forwarders who have in the recent past seen the opportunity to expand the service role by offering extended warehousing, packaging, delivery fulfilment and even purchasing functions for many shippers, are not always fully aware of the liabilities for cargo loss and third-party damages that these additional tasks are opening them up to,” said Kemp. As supply chains continue to


develop in emerging markets, where the cargo owners are not always willing to invest in their own distribution infrastructure, out- sourcing of such tasks will proliferate in countries such as Russia. On the one hand, this can bring significant new business opportunities to logistics


companies, which had previously limited their


service offerings to


freight forwarding activities, but the additional procedures can be complex,


Kemp says: “A typical


new type of activity would be the packaging, for the local retail market of an item with a sales promotion attached (price discount or two for one offer). This task is straightforward in itself but brings with it risks of errors and possible damage to the items. This would be something not experienced by transport operators in the past.” Cargo owners are also increasingly


requiring forwarders to cover the full value of their goods throughout an often lengthy and involved supply chain. This can be an onerous and unfamiliar risk for the forwarder, who is seeing his contractual obligations extended beyond what used to be accepted as standard terms and conditions. Some forwarders can take on


operations without seeking the approval of their own insurance or


risk management departments or they don’t properly factor it into the price charged to the customer. That said, the cost of the additional


insurance, if properly arranged from the outset, need not necessarily be large, points out Andrew Kemp. Sometimes, it might be provided as part of an existing package. But freight companies need to be open and upfront with their insurers first, he stresses. Generally, speaking, the lower value the cargo, the less likely it is that the insurance cost will increase. “That could be true if it was below the liability limits contained in the Warsaw Convention, for instance.” From the responses from the


Russian members of the audience, it was clear that many people in the industry there were in fact well- informed of the issue, he added. More generally, Russia’s reputation


as the ‘Wild East’ where cargo was frequently pilfered or trucks hijacked by organised criminals is no longer really true. Andrew Kemp adds. “There has been widespread use of safe parking areas, and we don’t see any increasing trend in claims. This suggests that operators are taking the right steps,” he said. In many ways, the risks might be greater in perceived lower-risk countries such as the UK where operators are not in the habit of using secure parking areas (and where they are often not available anyway).


///RUSSIA


Fourth new IL-76 for Volga-Dnepr


Volga-Dnepr Airlines’ fourth IL-76TD-90VD cargo aircraſt completed its first commercial flight on 31 December from Moscow’s Domodedovo Airport to Bahrain. The carrier’s vice president


for sales, Dennis Gliznoutsa, said the addition to the fleet would allow Volga-Dnepr to respond to market demand more flexibly and expeditiously.


It would also


facilitate plans to gain a larger share of the cargo market for shipments in the up to 50 tons category of the international market. The new version of the plane can operate globally without restrictions and older versions of the aircraſt are gradually being taken off the market, he added. He added that the Volga-Dnepr


Group expects to take delivery of its fiſth IL-76TD-90VD in May 2012.


Panalpina steps up security in Moscow


Panalpina has opened a new


logistics centre near Moscow aimed at high-value cargo. It lies inside the fenced Krekshino logistics park with controlled entry and exit gates and an electronic access and alarm system. The area is monitored by over 100 high-resolution CCTV cameras, with the security team and video monitoring under direct Panalpina control. Area head of marketing


and sales, Cyrill Gaechter, said: “Security is one of our customers’ top concerns when doing business in Russia. We have over five years’


experience with high-value cargo and end-to-end solutions. Not only can we offer a highly secured logistics center, we can even provide armed security convoys for the distribution of high-value cargo within Russia.” The site offers 6,000sq m of


storage area, 2,500sq m dedicated to cross-docking activities and close to 1,500sq m for value-added logistics in a mezzanine area. The new centre is aimed at the


particularly high-tech,


automotive, high-end fashion, telecom and healthcare sectors.


Poland - St Petersburg link


Containerships has added a weekly sailing from Szczecin in Poland to St. Petersburg. The service also offers a fast transit time from East and North- East Germany to Russia using 45ft,


high cube pallet wide containers with a 33 euro pallet capacity, equivalent to road trailers. Door to door services including customs clearance services in Russia will be available.


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