Russia and DACH: the transport & logistics opportunities

Relations between Russia and the German-speaking are world flourishing when it comes to trade. With billions in goods passing between Austria, Germany, Switzerland and Russia, the transport & logistics business is healthy

TransRussia provides a platform for DACH firms to reach Russian cargo owners, so why should they be there? Apart from the peerless face-to-face networking opportunities on offer, there’s more for German, Austrian and Swiss companies to enjoy in Russia.

What is trade like between DACH countries & Russia?

It varies from country to country, but Russia’s trade with its partners in the German-speaking sphere is very good. Bilateral trade has risen in recent years, with certain nations posting huge increases in value.

A note on sanctions

The EU has placed trade sanctions on Russia.

Before we start, it is worth pointing out that Germany and Austria are members of the EU. As such, their Russia-facing goods flow does face some obstacles. Certain products, such as fruits and vegetables, oil & gas equipment, and others, are under mutual embargo. This has affected bilateral trade somewhat.

Then there is Switzerland. While it has been a proud exponent of international neutrality for over two centuries, the Swiss government has raised its own sanctions against Russian businesses. However, these affect Russian companies’ ability to use Switzerland’s financial services. Swiss arms exports to Russia are also prohibited.

That said, the financial aspect of the Swiss measures, as well as the nature of arms cargoes, means they are unlikely to fall under the purview of transport & logistics businesses.

Examining merchandise trade between Russia & DACH partners

Trade between DACH countries and Russia is rising.

Let’s start alphabetically by taking a look at Austria’s activity. Reports from Russia’s trade representative in Austria Aleksandr Potemkin suggest trade between the two is particularly robust.

According to Potemkin, the volume of trade has risen almost 60% reaching a total of $4.2bn.

“Solid steps have been made towards strengthening of trade and economic cooperation between Russia and Austria over the past two years,” Potemkin said in November 2018. “Among EU countries with Russian trade turnover exceeding $4bn, Austria is the first in terms of growth.”

Austria’s key import commodity from Russia is crude oil. It also imports large amounts of raw aluminium and other metal goods, as well as raw and finished timber products.

On the reverse, Austrian cargoes take the form of packaged medicine, steel and metal goods, and heavy machinery. Think objects like cranes, lifting equipment, hydraulic turbines and large construction vehicles.

Skipping Germany, which requires more of a focus, let’s take a trip to Switzerland.

The latest full-year figures for bilateral Russo-Swiss trade between, from 2017, values it at $3.5bn. Switzerland’s main export products include packaged medicines, like Austria, as well as machinery such as air pumps, high-voltage protection equipment, gas turbines and other items of that nature. Watches, a Swiss speciality, are also a major export product.

Looking at Russia’s exports to Switzerland, they are mainly metal goods. Gold is the biggest by value, but not by weight. Construction materials and raw metal materials are also imported en masse by Swiss companies.

Russo-German trade rises by a quarter

Germany is a key trading partner for Russia.

Russia is a top twenty bilateral trading partner for Germany, which is being reflected in rising trade volumes.

Between January-October 2018, overall volumes rose a quarter overall. Russia’s exports to Germany were worth $22.1bn during the review period, registering growth of 35%. Germany’s reciprocal exports rose by 12%, totalling $16.9bn.

“The foundations of German and Russian economic relations are solid, even in times of sanctions,” German-Russian Chamber of Commerce Chairman Matthias Schepp told RT.

Indeed, trade has been historically strong between these two nations. In 2017, for example, the value of bilateral economic activity was worth in excess of $50bn.

Like its other DACH neighbours, Germany mainly imports bulk commodities from Russia, such as hydrocarbons and metals. Refined copper, raw aluminium, titanium and nickel are in especially high-demand.

Germany, meanwhile, relies on its engineering expertise to receive heavy import interest from Russia. Cars are the largest individual segment, covering 1/16th of overall exports. BMW, Audi and Mercedes-Benz are favourite marques for many Russian drivers, particularly those with the wherewithal to purchase luxury vehicles.

DACH transporters optimistic towards Russia

DACH transport & logistics companies are feeling good towards Russia.

With the above has come an unbridled sense of optimism regarding Russia for transport & logistics firms operating in the DACH territories. As well as that, DACH-owned and run businesses are seeing opportunities emerge in Russia.

InterRail, a multi-modal firm with a focus on rail, is anticipating high demand for its rail-based services in Russia going forward.

When asked how optimistic it felt towards its Russian business, InterRail told the TransRussia team it was anticipating 25% growth in the next years.

“We believe in the Russian economy. Time comes and goes, but the economy stays. It will grow again. Money is still being invested,” the spokesperson said. “Many, many reasons and factors make Russia important for us, starting with the size of the country, the size of the market, and its strategic location.”

Elsewhere, German-owned company Nicolas mirrored InterRail’s sentiments: “Russia is a prospective market that our management looks towards every year. Russia is considered a growing, developing country, so we’re looking forward to growing sales there. Every year we grow step by step, little by little but still there is growth and development.”

TransRussia: the place to build on this transport & logistics optimism

TransRussia, Russia’s no.1 transport and logistics exhibition, is a place to network, do business, and secure contracts in a $150 billion market.

As well as InterRail Nicolas, and more companies from the DACH territories, hundreds of industry-leading companies use the show to meet new and existing clients, display their services, and find new business opportunities.

Firms like ZSSK Cargo, Greencarrier and B.I.C trust the show to take their operations to the next level.

To miss it is to miss out.

Interested in taking part? Click here to book your stand for TransRussia 2019.

To discuss your participation options, please contact our team today.