Shifting Tides in Russian Shipping
The Russian shipping and transportation sector has undergone significant changes due to tighter sanctions and the departure of central logistics and transport companies. The Russian-Ukrainian military conflict in February last year impacted the market negatively, but it also presented growth opportunities for domestic businesses to replace foreign competitors.
Maxim Tolstobrov, commercial director of СDEK, one of Russia’s largest express companies, shared insights on how Russian carriers adapted by building new routes after FedEx, UPS, and DHL ceased operations there.
Adjusting to New Restrictions
The Russian government banned international road freight transport from “unfriendly countries” on September 29, 2022. Consequently, road carriers from the EU, UK, Norway, and Ukraine must hand cargo to Russian carriers before crossing the border. This restriction, however, does not apply to the Kaliningrad region.
To maintain connections with China and compensate for lost sky routes, Russian carriers and shippers increased the number of ground routes to the south. However, this resulted in a slight increase in delivery time.
Challenges in Spare Parts and Components
Tolstobrov revealed that carriers face two significant challenges in acquiring spare parts and components. Firstly, they cannot pay foreign currency bills, and secondly, some goods are under sanctions and cannot be exported from Europe easily. International carriers resolved this issue by servicing vehicles abroad – a solution Russian carriers cannot utilize.
Emerging Transportation Hubs
The southern route has become critical for cross-border trade since sanctions were imposed. Turkey, the UAE, and Bahrain are now major transportation hubs for most international cargo, with final delivery points in Europe and the United States. Eastern routes via China and Southeast Asian countries have suffered less than the West; however, logistics have become more complicated due to reduced capacity from Russian air cargo carriers.
Pioneering New Routes
Spokespersons for Delovye Linii, one of Russia’s largest logistics companies, said that recent events had dramatically changed the Russian freight market. The withdrawal of European players disrupted logistics flows to Russia, leading to the establishment of new routes. The direction of cargo transportation has diversified to include Kazakhstan, Uzbekistan, China, India, and Turkey, with the latter experiencing a 30% increase in demand.
Adapting and Investing in E-commerce
Delovye Linii adapted to new conditions by changing logistics schemes and establishing a sea route for container transportation from Turkey. This route is in high demand and meets customers’ cost and delivery time requirements. The company also expressed high hopes for growth in the e-commerce sector.
Russia’s shipping and transportation industry has proven its resilience and adaptability in navigating the challenges posed by an increasingly complex global market. The sector continues to innovate and invest in new routes, adapting to the changing landscape and finding opportunities for growth amid adversity.
