WORLD OF INDUSTRIES 04/2019 (EN)

CeMAT Russia: fuelling growth in
Russia’s logistics and transport sector
NEWS AND MARKETS
Russia’s transport and logistics sector is fertile ground
for foreign companies. Opportunities are plentiful
across the length and breadth of the country. Investors
and companies should certainly look to the world’s
biggest nation as their next market for investment or
expansion.
S
tretching across 17 million sq. kilometers, Russia is world’s largest
country by size. It’s so huge that it’s geography is both a blessing
and curse. It’s very size demands an extensive transport and logistics
network. In order to cater to its 145 million inhabitants with
all the goods and services, air, sea, road and rail logistics are in high
demand. With over 86,000 kilometers in rail track, a road network
over 1.4 million kilometers, plus numerous airports and seaports,
Russia has a well-established intermodal network hub.
Despite existing transport links, Russia ranks 85 out of 167 countries
in the world bank’s logistics performance index. One of the
reasons for this lackluster performance has been the bleeding of
Russian economy mainly due to sanctions imposed by western
countries and declining oil prices. But since 2016, Russian economy
has been recovering at a steady pace so has been the transport and
logistics sector. Country’s current logistics performance, however,
Author: Sushen Doshi, International Correspondent for World of Industries
points towards major opportunities for investment, as Russia is in
need of modern technologies and scientific attitude when it comes
to logistics. Domestic suppliers are competing with international
companies to provide comprehensive services, but increasing participation
from international companies will truly help this sector
overcome its challenges.
Considering the infrastructure and logistics competence there is
room for Russia to improve and expand. The Russian transport and
logistics market potential is estimated to be around $ 150 billion.
Warehouses equipped with new technologies, modernized cargo
handling facilities at ports, new airports, railway hubs and logistics
centers are needed to satisfy the country’s rising demand. Foreign
firms are positioned better than domestic ones to play a major role
in development of Russia’s logistics sector. Due to a lack of competitiveness
in domestic operators, foreign logistics businesses
have already been invited for investment – often in the form of tieups,
joint ventures or operational co-operation. Overseas investors
and companies with interest, experience and skills are injecting
large amounts into transport and logistics sector. For example,
Dubai’s DP World, global port infrastructure and management specialists,
inked a deal with the Russia Direct Investment Fund. The
$ 2 billion investment is mainly targeted at enhancing Russia’s port
infrastructure networks. Other foreign firms, such as DHL or Finnish
company Itella Russia, are already well established in the market.
Technological advantages, plus efficient operations and experience,
puts international brands at a significant advantage. Russian
government has welcomed these dynamic, cost-effective transport
and logistics solutions, so international operators should look at the
bigger opportunities present in Russia.
12 WORLD OF INDUSTRIES 2019