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30 Jun, 2008 03:59

Counting the cost of transportation in Russia

One of the few Russian logistics operators operating in the country, Smart Logistics Group, has opened a new warehouse facility, which it says is the largest in Europe. Though aiming to make life easier for hundreds of cargo owners, this warehouse will no

The centre, near Moscow’s Domodedovo airport, will provide thousands of square metres of storage.

Smart Logistics say the landscape of logistics in the country is changing.

“Five years ago there were no high-class storage facilities and logistics operators in the country and large FMCG (fast moving consumer goods) companies were forced to solve logistics tasks themselves. Although the situation is improving companies still have to work with several logistic operators,” says Eduard Fedoseev, CEO of Smart Logistics Group.

No logistics operator in the country can provide a full range of services such as sea, rail and road transport, to storage and final delivery to the customer.

The head of one drink producer's logistics department told RT that they have to deal with several contractors and this drives up transport costs up to 40% of the final product price.

Operators cannot link several transportation companies in the logistics chain due to different standards in documentation.

“Today, the most logistics operators can do is link sea and road transport in one chain and offer these services to the cargo owner. To add transit by rail for example is more complicated as the Russian Railroad Company has its own document standards requiring new cargo registration,” explains Aleksey Bezborodov, a logistics analyst at Infranews.

Cargo owners complain there is no stable price tariff for transportation and storage as the market is fragmented.

They say the situation is likely to persist for at least another five years and this will inevitably drive up costs and retail prices.