BUSINESS PRACTICE. Forewarned Is Forearmed

 

Development is the most powerful weapon of any company in tussle over leadership.

Especially in transport logistics – the field that is most unpredictable and hard to foresee.

Sometimes factors, which can influence any field of the Russian economy change rapidly. We observe the growth of geopolitical tension between countries, the changes in domestic law or price increase of financial resources. Transport logistics is the main blood vessel of the whole ecosystem of the country. The head of the company should always keep one’s finger on the pulse of changes in the logistics field in order to move in the right direction. ACEX clients can benefit from Alliance expert opinion on the recent changes and forecasts at the market better than any monometer. Most of forwarders also listen to logistic specialists, who make thousands of projects in different business fields every day.

Well, what does the upcoming day hold for us?

Let’s try to foresee the future of transportation by truck. At the beginning of 2019 the changes in domestic law came into force. The requirements for commercial transportation are tightened and the fees for the owners of trucks keep getting higher. The repair of old and the building of new roads will be done with the help of budget revenue.

‘In my opinion, there will be a lack of trucks, caused by the increasing number of Platon automatic control system points and also because of the introduction of automatic weight and dimensional control. 60 % of the market consists of medium-sized transport companies, which have no regard to such fees. Therefore, if the transporter pays fees, established by the Russian government and avoids overload, it’s possible to increase the margin because of the lack of trucks.’ said Sergey Moskovchenko, General Director of Logistic Center MIR, ACEX member in Tomsk, commenting on the legislative tendencies.

And what about the railway?

‘The market of transportation by railway is worried about external factors, which influence the volume of discharge and the direction of transportation,’ points out Oleg Degtyarev, General Director of RusTrans, ACEX member in Moscow. ‘We work with large exporters in the gas field and metallurgists. For example, we have organized the offload of hydrocarbon at Belarus. The order of the Russian government concerning the introduction of tax manoeuvre in gas industry was signed at the end of 2018. The cost of transportation of hydrocarbon for Belarus increased. And, for example, the Baltics are ready to obtain our liquid gas, but there is an unofficial restriction on offloading.’

But nevertheless, Russian export opportunities are growing and require logistic services. The distance of transportations and reorientation of cargo export in Asia-Pacific region will grow. Thus, as of 1 January 2019, the agreement signed by heads of transport ministries of Russia and China came into force. It enables door-to-door cargo delivery.

‘This direction is very promising for Russian-Chinese logistics despite of numerous issues,’ pointed out Miroslav Zolotarev, ACEX Alliance Board Director. ‘In our opinion, there are still a lot of things to be done for the agreement to start working and bringing benefits to the participants of the market. For example, we must pay attention to the cost of transportation by truck and the possibility of subsidizing it for Russian forwarders and/or exporters.’

Besides China, another quite promising trade partner for Russia is Turkey. The trade turnover between the two countries exceeded pre-crisis level and continues to grow.

‘Despite political and economic problems of the past year, the commercial life of both countries improved at the beginning of 2019,’ pointed out Melis Oman, Head of the Development Department of AIRON Logistics, ACEX member in Turkey. ‘The situation of the logistics market looks promising in the long run. But it’s hard to make any forecast before the situation stabilises. I’m sure that export-import operations will resume with a new force after the elections in March.’

We have crossed Bosphorus and then...

Europe is waiting for the most important political event – the Great Britain’s exit from the European Union. It is planned for the 29 March 2019. Edvinas Neverovskis, CEO at ACEX Lithuania, listed the following main problems for transporters at European market in 2019:

  1. The lines at the border between France and Great Britain.
  2. The lack of competitiveness of British customs in document preparation.
  3. An increase in transport expenses.
  4. The prolongation of transportation time.
  5. Complicated procedures of document preparation.
  6. Avoiding the destination of Great Britain will lead to a lack of transport in this country.

‘‘Brexit’ is currently the main issue and ACEX Lithuania, together with other transporters, is getting ready for it. Only this will help us maintain our competitiveness in the market. We must be ready for any changes in order to provide stable and flexible services to our clients.’ says Edvinas Neverovskis.

The increasing pace of delivery

The fans of the popular British shop ASOS will obviously get their packages. ACEX member Boxberry is working hard on it. In the nearest future fast and convenient order delivery will be of great value. The speed and variety of delivery services grow every year. Changes in the needs of recipients and growth of the quantity of market places are the main logistics driving force for Russian e-commerce market.

‘The tendency of market place development will become global in 2019,’ stated Michael Konev, Head of Production Department of Boxberry delivery service. ‘Such market places invest in regional fulfilment. New distribution centres will appear almost in each federal district in the nearest future. Most of logistic companies will adapt to market demands and search for partners for the development of regional in-house terminals. Finally, the delivery of goods to the customer will become faster.’

Digital life

The development of new technologies in transport logistics will influence the speed of delivery in 2019. Digitalization of supply chains will help to complete physically complicated routine tasks. While people will concentrate on solving innovative, analytic and administrative tasks.

‘There is nowhere to go without digitalization of economy,’ says Oleg Degtyarev about the perspectives of transporting by rail. ‘Huge companies, including Russian Railway, will develop IT-platforms. Customers will have the possibility of ordering wagons and calculating related expenses online.’

‘IT-technologies and digital logistic decisions will connect all market participants, including logistics companies, forwarders and even the government, in one place,’ says Miroslav Zolotarev. ‘The development of state-private partnership in the field of automation and the implementation of technological systems in economics will help to diminish human factor and to organize a ‘seamless’ logistic process.’

And what about human staff?

Yet, despite robotisation and automation, some Force Majeure still might happen. In case of urgent and unpredictable orders, the decision can be made only by a human employee.

‘The situation in transportation by air is changing constantly due to the delay in equipment supply or industrial accidents. Transportation by air is used when other types of delivery are not possible.’ says Azat Mulgimov, General Director of Air Charter Service, ACEX member in Moscow. ‘That’s why in our field we need to be ready for client calls, asking for help in Force Majeure situations in the middle of the night and on weekends. For example, one Saturday we worked on an urgent request for a delivery of an aircraft engine for one of the airlines. The engine broke down and urgent replacement was required in order to continue regular passenger flights. On Sunday the flight was confirmed and on Monday evening the engine was in its place.’

So, the skills of adapting to new realities are necessary to maintain the leading positions in the transport logistics market. No progress – no profits. Expert opinions in the field will help to avoid problems, not to cope with them after it’s too late. Forewarned is forearmed.

 

The magazine SEA has been published since 1935
International business magazine JŪRA MOPE SEA has been published since 1999
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The magazine JŪRA has been published since 1935.
International business magazine JŪRA MOPE SEA has been
published since 1999.

ISSN 1392-7825

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