At the Automotive Logistics Russia conference in Moscow last week, the consensus among carmakers, service providers and dealers was that logistics had become even more vital in safeguarding precious cash flow.
"The issue for us today is no longer the lack of (road transport) fleets or capacity," said Natalia Petrenko, Vehicle Logistics director for Ford in Russia. "Our job has actually become more difficult as we have to improve lead times to meet our customers' expectations."
Sergey Sherbinin of Rolf Retail added that, a year ago, there was a twelve month wait for certain popular vehicle models, but today, if the required car is not available immediately, a customer will simply take his business elsewhere.
Conference chairman Louis Yiakoumi is reviewing the feedback from delegates at four other regional Automotive Logistics conferences held so far this year in India, Western Europe, China and South America, and says that the sales decline in Russia has been more dramatic than in most global markets.
Russia's new car sales to date are down 50% on last year's 3.6 million. The Association of Russian Automaker's optimistic forecasts predict only 1.9 million this year, while PriceWaterhouseCooper and VW predict just 1.4 million.
Consequently, local production has been significantly cut. Imports have dived, with truck imports almost disappearing following a nearly tenfold decline, said Vladislav Zaslavskij, president of the Association of Car Importers & Customs Brokers. The association's forecast is that imports of cars and trucks this year will not exceed 800,000, compared with 2.2 million last year.
Government action has been an extra drag on the market, with conference delegates putting government policy, including customs, as the most significant current challenge for logistics in Russia, above issues such as infrastructure or investment.
Zaslavskij pointed out that duties and taxes rose from 46% last year to 53% of the purchase price of a new car, and anti-corruption measures have made it difficult for customs officials to initiate any new measures. "The managers of the federal customs feel as though they are participants in a reality TV show, as all of their offices and cars are bugged and being recorded."
However Barbara Koncewicz of Adampol, which provides car transport and storage via Poland as well as within Russia, identified the opportunity to tackle border queues caused by the poor IT used by customs, and encouraged IT and software providers to go to the Russian government with customs clearance solutions.
However, supply chain and logistics executives from OEMs and Tier suppliers continue to plan for the longer term. Despite market conditions, overall investment in the Russian auto industry continues.
Alexander Zhuralev, chief executive of Major AutoTrans, said the company considered halting development on its vehicle distribution centre in Chismena outside Moscow, but customers helped it to continue and it will open in a month.
Maxim Akimov, deputy governor of the auto manufacturing region of Kaluga, said that only two of the 42 projects and €3 billion worth of previously committed investment for the region had been postponed or cancelled so far. The region has three industrial parks, plus new road and rail links to serve plants for VW, PSA Group, Volvo Trucks, Mitsubishi and their suppliers.
Konstantin Skovoroda of Russian Transport Lines said his company is developing a new terminal at Ust-Luga, and said that investors should look beyond the current crisis. "Nobody knows exactly when the situation will change, but waiting for something good is more dangerous than making a decision today."
[Source: www.automotivelogisticsrussia.com]
