With over $150bn in deal potential available to international companies, Russia’s transport & logistics market is looking healthy. Market expansion is on the cards, but do you know what’s driving this phenomenon?
Multiple factors are making Russia’s outsource logistics and transportation markets increasingly active and enticing. At TransRussia, you can find plenty of amazing deal opportunities — many of them being fuelled by the trends and topics below.
The factors fuelling Russia’s transport & logistics sector
Russia’s a big nation with a big economy and a big population. Transport services are the country’s lifeblood, responsible for keeping much needed goods flowing in and out of the country. And as the 21st century hurtles along, more factors are changing Russian logistics services for the better.
Russia’s economy in growth mode
Just over four years ago, Russia plunged into a recession. International sanctions took their toll on the economy, and things did look bleak for a while.
Well it’s time forget those dark days because, four years hence, Russia’s economy is back in action strengthening year-on-year.
IMF forecasts suggests Russia will grow at a healthy 1.9% in 2019, higher than France’s 1.7% and the UK’s 1.2%. For context, Russia’s projected GDP growth is charted at the same as Russia’s, and given Germany’s historic robustness that’s a very good sign.
If the IMF’s forecasts are correct, then Russian companies, exporters and logistics operators will have more cash in their pockets. More money means higher investment and spending from key players — and increased budgets to spend on working with international transport & logistics partners.
Higher freight volumes hit Russia
Coinciding with Russia’s economic recovery is an increase in domestic and international freight volumes. Throughout Jan-October 2017, for example, the volume of goods transported through the Russian Federation reach 6.39bn tons. That’s a 2.7% increase against 2016’s figures.
The above trend has continued through 2018. Looking at cargo turnover now, the ton-to-kilometre transport ratio rose 2.9% in the first half of the year, compared with 2017. That’s 2.7 trillion tons of freight transported per kilometre travelled.
Foreign trade is rising. For instance, Russo-EU trade grew 24.9% over 2017’s first nine months, for a turnover of $172.3bn. That’s not bad, considering the icy diplomatic relations between Russia and its European partners, as well as certain products from the EU under Russian embargo.
Increase import/export activity can be seen at Russia’s major ports. Baltic facilities saw a net drop in traffic. This is due to Russia choosing to ship oil & gas loads from Eastward-facing ports. Asian energy demand means more of those cargoes are leaving maritime hubs in Russia’s Far East instead of their traditional Baltic start point.
In other territories, the story is much different. Take a look at traffic growth at Russian port locations:
• Azov-Black Sea Basin — 133.3mt — 5.8% traffic growth
• Arctic Ports — 69,100t — 3.7% traffic growth
• Caspian Sea — 420,990t — 6.8% traffic growth
• Caspian ports — 122mt — 1.6% traffic growth
• Far East — 37mt — 2.3% traffic growth
Higher freight volumes point towards heightened market growth and activity, so keep watching Russia to see where the deals are.
Russia invests in new transport routes & infrastructure
Catering for current growth in both economics and trade, as well as providing a bedrock for future growth, Russia is investing heavily in infrastructure.
Russian Railways (RZD) for example has long-term goals in mind. Part of its strategy from now until 2030 is to increase the already impressive length of the Russian rail network. RZD plans to build 13,500km of new track during this period at a cost of a not-insignificant $10bn.
Elsewhere, ports are being hit with a range of construction projects, including the building of completely new sea transport hubs. The Arctic, despite its sub-zero temperatures, is the hottest region for port building, thanks to development of the Northern-Sea Route corridor.
As such a new deep-water port is being built 50 kilometres north of Archangelsk. As much as 35m tons of cargo could be added to Russia’s huge current sea cargo capacity once construction is complete.
The influence of China on Russian transport policy is quite major too. Out East, Russia is investing $43bn in new multi-modal corridors to snare more freight from Asia’s largest economy. One Belt One Road is redefining how goods move from East to West, and Russia wants in at the ground level, hence this major Far Eastern investment drive.
Government policy puts transport first
Much like RZD, the Russian Government has transport firmly in its sights for a massive overhaul.
“Transport Strategy 2030” is a policy document outlining governmental transport goals. It’s a nationwide plan with some clear aims:
• Provide affordable, high quality logistics services in freight traffic to meet national economic development requirements
• Integrate Russia into the global transport system and tap into the national transport system’s potential
• Eliminate gaps and bottlenecks that restrict the transport system’s capacity
• Create a market of competitive and comprehensive transport and logistics services
• Provide affordable freight shipping services in the sub-Arctic, Arctic, Siberian and Far Eastern regions, as well as in other remote Russian regions, including the Northern Sea Route
Long-term commitment to creating a better transport & logistics environment, and ultimately a better business environment, is a top governmental priority. From the above investment and freight traffic increases, it appears the Russian government’s strategy is paying off.
Strong transport & logistics market fundamentals in Russia right now
It’s clear to see Russia’s transportation sector has come a long way since the dark days of 2014. A confident economic outlook, matched with rising international trade and higher sector investment from the Russian government, are playing a big role in stabilising the market.
Opportunities to pair with Russian companies, or to transport goods in and out of Russia, are emerging day by day. TransRussia is the place to find them.
TransRussia: Russia’s only international transport & logistics exhibition
TransRussia is the only event of its kind in Russia.
For exhibitors, It’s the place to meet nearly 17,000 cargo owners, freight forwarders, retailers and others in need of transportation services and technologies on the Russian market.
79% of visitors purchase as a result of the exhibition and a further 71% of visitors only attend TransRussia amongst industry events. If it’s exclusively you’re after, you’ll find it at TransRussia.
Book your stand today and get ahead of your competition.
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