​​Freight forwarding and outsourced logistics are gaining traction in Russia

With this comes plenty of opportunities for freight forwarders and third-party logistics (3pl) in Russia.

But what’s the state of the market?

Freight forwarding and 3pl in Russia

The current state of play for logistics outsourcing

Many companies are currently contracting third-party companies to provide logistics and freight forwarding operations, but there are still many difficulties and outsourcing in Russia has not yet become common practice.

Below are some specific problems Russian problems that logistics companies believe are major obstacles to developing third party logistics in the country.

One is the lack of competent and powerful logistics operators in the market in order for it cope with the management of a large logistics network. Quite rarely are they given the functions that affect the image of the company in the eyes of customers.

The source of these problem lies in the lack of information about the activities of logistics providers.

There are roughly 4,000-6,000 logistics companies in Russia, but only around 100 are true third-party logistics or freight forwarding service providers. Some of the big names include Eurosib, Nienshants Logistics, STS Logistics and RZD Logistics, which is a subsidiary of the RZD stated-owned railways.

Foreign firms are making headway into Russia’s outsourced logistics industry and the main players are true global giants like DHL and Kuehne + Nagel.

Of Russia’s total GDP $1.5 trillion figure in 2017, logistics accounted for 16.1% or $245.9 billion. Of the logistics share of GDP, however, third party logistics only accounted for 7.8%, or $19.2bn.

On the other hand, the market for third party logistics in Russia has very significant potential.

3pl & Freight forwarding’s Russian market potential

Third party services are generally undervalued in Russia, despite the cost savings they provide for freight owners.

For 21% of Russian companies, transportation accounts for 11-20% of their operating costs, and a for a further 18%, this rises to the 21-30% range.

No matter the size and scope of the company, this is a substantial chunk of overall operating revenues to lose each month. As such, the market potential for outsourced logistics in Russia is full of potential.

The third-party logistics market is expected to increase as service providers move towards the use of automated freight payment and audit services to lower their costs.

These providers are gaining competitive advantages by:

  • Reducing their capital expenditure (CAPEX)
  • Mitigating risks
  • Managing their inventories
  • Focusing on the core competencies of their business operations

The emergence of Big Data and the availability of industry-specific logistics services are expected to be key driving factors in boosting the industry’s growth in the next few years.

The implementation of automatic systems has led to improved logistics performance and increased efficiency.

For instance, intelligent warehouse automation enhances efficiency, reduces errors, and improves the logistics process.

As providers seek ways to maximise their throughput, they are increasingly adopting automated systems.

Retail chains are among the most promising Russian clients for logistics operators. Those developing chains of discount stores are particularly interested because of their high growth rates, even in times of economic recession when the population’s disposable income falls.

The permanently high share of retailers among warehouse property leasers is a tell-tale sign of their unmet demand for these logistics services.

Download your copy of Russia Market Report: Transport & Logistics today

With $150bn in contract potential, Russia is a land brimming with possibilities for all transport & logistics professionals.

Our guide to the sector, Russia Market Report: Transport & Logistics, prepared with Menas Associates, will help you find them.

This 25-page report covers all you need to know about one of the largest developing transport & logistics sectors in the world. Inside, you’ll find:

  • Russia’s logistics sector by transport mode, including road, rail, maritime and 3PL
  • The role of foreign countries in Russian logistics
  • A special focus on intralogistics
  • More practicable information

Ready for TransRussia 2020?

As Russia’s only international transport and logistics exhibition, this is an event you want to mark in your calendar for 2020. For exhibitors, you can meet nearly 17,000 cargo owners freight forwarders, retailers and others in need of transportation services and technologies on the Russian market.

Visitors are primed for purchasing, and more than two thirds will only attend TransRussia amongst industry events.

Book your stand today and get ahead of your competitors in the market.

To find out more, contact our team for more information on this industry-leading international event.