Russian truckers looking good 14 in


Growth and investment prospects


the Russian


commercial road freight market are looking good again, according to a new report by that country’s Cross- Industry


Expert Council on


Road Transport Development (MOES). However, the market is still


very fragmented with a great potential for consolidation, which will benefit large,


professionally managed companies, according to the research carried out on behalf of MOES by the Higher School of Economics and Infomost Consulting. It also found a reorientation of growth in the market away from the Russia/ Europe corridor towards other markets such as Russia/China, although the Europe market has now stabilised. Following the Russian


rouble’s depreciation in 2014-15 and Moscow’s restrictions on food imports imposed in August 2014, the flow of goods from the EU to Russia in 2015-2016 fell by 30-45% compared to 2013. But according to figures


from the Russian government transport agency, Rosavtotrans, 2016 saw a sharp increase in freight traffic between Russia and China,


steadily growing from 1.57 million tons in 2012 to Ekol expands in Romania


Turkish-owned Ekol Logistics has signed a five-year lease for a new facility on the outskirts of Bucharest near the Pitesti highway. The new warehouse has nine


loading docks, two drive-in ramps, a capacity of 10,000 Euro pallets and a height of 12 meters and has been designed to TAPA security


standards It will handle traffic including


automotive, white and brown goods fast moving consumer goods and e-commerce. The logistics operator says that


the facility will create a better working


environment for its employees with high standards


of interior design, comfortable furniture and high quality materials. Country manager Ekol Romania,


Alecsandru Mucenic declared: “It shows Ekol is getting bigger and stronger in Romania. Since last year, we knew that this would be a necessary investment for us in


largest


Issue 1 2018 - Freight Business Journal


///RUSSIA - EAST EUROPE


over 2.5 million tons in 2016. The report also predicts that


Russia is likely to become the second


road freight


transportation market in Europe, after Germany. Following the recession


in 2014-15 the market has continued to grow and in the medium term, it is assumed that full truckload (FTL) transport will grow at 3.5% per year. The market has shown consistent


order to reinforce our presence in the Romanian market as an integrated logistics provider. This investment will help us take more business opportunities and also support our customers by offering them tailored made solutions.” Ekol Romania was established


in late 2011 and has branches in Bucharest and Timisoara , three facilities with a total of 14,000sq m, a fleet of almost 230 trucks and almost 400 employees.


Delamode evolves into Xpediator


Long-established East European freight specialist Delamode has a new holding company, Xpediator Group and is looking to expand its activities through mergers and acquisitions or franchising. Xpediator is the holding


company for freight management firm Xpediator Group. The original business, trading as Delamode, was established in 1988 by the Group’s chief executive officer, Stephen Blyth, providing freight forwarding services in the UK. It has since evolved into an


integrated freight management business operating in supply chain logistics and fulfilment across the UK and Europe with a particular focus on east Europe. In 2017, as part of the Company’s


growth strategy, the management team listed the company on the London Stock Exchange to


raise new capital and support its objective to grow organically and by acquisition. It was decided to introduce Xpediator as the holding company at the time of the IPO in August 2017, above the trading divisions, so that any new companies that were acquired could continue to trade under their existing brands. This is the case with Easy Managed Transport, acquired in March 2017, which will retain its existing name rather than changing it to Delamode. The well-known Delamode


name will however continue as the trading entity for the road freight arm, explained Blyth. The Xpediator Group currently


employs over 600 people, with an operational headquarters in Braintree, Essex, and country offices in Bulgaria, Lithuania, Estonia, Macedonia, Montenegro,


Moldova, Romania and Serbia over 22 sites. It operates regular, direct services between Western and Eastern Europe, the Balkans and the Baltics along with logistics and warehousing in the UK and Romania. While Delamode already


offers transport services into east European countries including Russia, Ukraine, Byelorussia and the central Asian ‘Stans’, Blyth believes that the Delamode name could be franchised and so allow services to be extended: “We’ve no desire to have our


own entity in these countries. It can be problematic, especially for a listed company like ours, so franchising is probably the safest route to expansion.” Possible target


countries for


Delamode franchise include the countries of former Yugoslavia


In the loop to East Europe


DSV in the UK has seen a significant growth in Eastern European markets with year-on-year increase in turnover of around 20% over the last few years. It has expanded its contracted


fleet of round-trip trucks that run in a continuous loop between the UK and all Eastern European countries, with Hungary, Poland, Czech Republic and the Balkans the most popular markets.


DSV’s strategy will be to further


develop its own controlled round- trip trucks. General manager, Michael Morberg Madsen explains: “Having a fleet of drivers fully controlled by DSV means we are able to provide our customers with an even better service. It enables us to give quicker response times


to enquiries, improves


operational performance and very importantly, means we can reduce


our costs, which in turn, we are able to pass on to our customers.” He adds: “It is very pleasing


to see that both our export and import lanes are growing at an equal rate which makes it possible to control the imbalance of freight volumes between the UK and Eastern Europe. As we are operating in a very competitive market we knew we would only be able to grow the business if we


that it does not already serve (it already has a presence in Serbia, Macedonia and Montenegro) including Slovenia, Croatia and Bosnia. He believes that there are


nationally-based hauliers, transport and courier companies that would benefit from the international forwarding interface that Delamode could provide. Blyth adds that there is a lot


happening in the region. “For example, there are people looking to run container ships from Poti in Georgia into Constanza, in Romania. And there are plans for high speed rail tracks across Russia, which could transform transport from the Far East.” As well as the regular trailer


groupage services between eastern and Western Europe, Xpediator has also held the franchise for Pallex in


could reduce our costs. We felt we would be able to do this by having a round-trip fleet, rather than just using one-way hauliers, which is the norm for most UK based forwarders.” He continues: “DSV now has a


strong dedicated and experienced team with expert knowledge that can offer flexible, tailor-made solutions for customers shipping to and from Eastern Europe. And we are working closely with our sales team across the UK to develop new opportunities.”


Bulgaria and Bulgaria since 2012. The two pallet delivery networks are now handling around 50,000 pallets a month. Trading under the Affinity


brand, Xpediator also offers DKV fuel cards in Eastern Europe with a base of around 15,000 truckers and offers a drop-box delivery solution for online buyers in Latvia, Lithuania, Estonia and Romania under the EshopWedrop. com brand. This allows buyers in those countries to purchase on, say, a UK retailer’s site, and nominate the eshopwedrop depot as the UK delivery point. From there, Delamode’s trailer services move the goods to the country of destination, where a courier company performs the final delivery – a much more economical solution in many cases than using the delivery option available on the original retailer’s site, where that is available at all to Eastern Europe, says Blyth.


A key advantage, he says,


is DSV’s network of offices throughout Eastern Europe and this, combined with DSV Road UK’s direct departures from the UK, ensures fast transit times and full visibility from collection to delivery: “This has enabled us to build excellent relationships with an expanding customer base with small and medium sized manufactures as well as larger blue chip companies that require bespoke logistics solutions.” DSV UK’s future Eastern Europe


He adds: “It’s something we’re


looking to roll out worldwide, franchising it to national courier companies across Europe. We’ve proven the concept in the Baltics, where we’re moving around 4,000 parcels a week.” Xpediator actually owns


EshopWedrop in that region, but Blyth sees franchising as a faster- growing business model. Xpediator has made its first


country franchise awards to manage the brand in Cyprus and Albania to Kronos Express and


Albanian Courier SHPK


respectively. The agreements involve an upfront fee for the exclusive country franchises and a commitment to invest in promoting the EshopWedrop brand in their markets. The group gains because it can use marginal capacity on its groupage trailer services to move e-commerce consignments much more economically than a completely stand-alone operation.


strategy will be to focus on the smaller markets whilst building on the successes it has achieved in the larger ones like Poland, Czech Republic and Hungary. Madsen concludes: “We


anticipate further growth especially in the Baltic markets, Romania, Greece and Turkey. This will be achieved by increasing departure days to and from the UK and by offering a price competitive service by expanding the concept of our round-trip fleet in new markets.”


month-on-month growth in freight volumes in 2017, with total volume up by 6.6% in the first eight months of the year in comparison with 2016. Internally, while the largest


market is in the European part of Russia, the Urals and Siberia are showing more rapid growth. Indeed, the report suggested that the decline in flows from the EU to Russia led to an intensification in domestic flows along with other international routes such as Russia/Kazakhstan.


In terms of market segments


the most promising is FTL transportation for retailers and fast-moving consumer goods companies, while an additional impetus has come from e-commerce. The value of the e-commerce market in Russia, according to the Association of Internet Trade Companies (AKIT) grew by 21% in 2016 compared to 2015 and amounted to 920 billion roubles. AKIT predicts that this market will be more than 1.1 trillion roubles (+19.5%) in 2017.


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