Market Report: Russia

From the January 2019 issue.

As the world’s largest nation, bordering European and Asian countries as well as the Pacific and Arctic oceans, Russia presents unique challenges for transport operators in the region. Global Trailer speaks with various manufacturers to learn more.

Russian trailer builder, Specpricep, claims to be one of the biggest low loader manufacturers in the country and has been in operation since 1999. It has felt the external pressures from the international community via imposed sanctions. “Russia has taken some legal regulations with the aim of import phase out,” the OEM says. “Due to several new restrictions it has become harder to import foreign goods. Simultaneously, the government spends funds to subsidy the domestic production of goods that are mostly imported, which is usually high-tech equipment and parts.”

Specpricep goes on to explain that tankers are quite popular due to demand for carting oil and gas, but the OEM focuses on the production of low beds, extendible trailers, self moving bogies and trailers with detachable goosenecks. While the sanctions are not easy to tackle, OEMs like Specpricep do not lose their optimism.

The Russian Government has reportedly been developing its wide-ranging transport and logistics development strategy since the turn of the decade. The event organisers of TransRussia confirm that Transport Strategy 2030 sets the rules, goals and laws that are helping create a better cargo carrying environment in the world’s largest country.

While the strategy document is as long and as thick as you would expect from a nationwide plan, there are some key programmatic aims of interest, including: high quality logistics services in freight traffic to meet national economic development requirements; an attempt to integrate Russia into the global transport system and tap the national transport system’s potential; eliminate bottlenecks that restrict transport system capacity; create a market of competitive and comprehensive transport and logistics services as well as provide freight shipping services in the sub-Arctic, Arctic, Siberian and Far Eastern regions and in other remote Russian regions, including the Northern Sea Route.

The TransRussia team say these are admirable goals to be sure, but in reality, this really means a national infrastructure construction and upgrade regime, as well as a look at how systemic change can be enacted across the wider sector.

In addition to improving rail and sea freight, there are plans for better trucking.

“Part of improving the cost-effectiveness of Russian transport is by tackling issues in the trucking industry,” according to TransRussia. “However, from initial observations, it looks like trucking costs will actually increase. Toll systems like, Platon, are expected to add 17 per cent to costs, while a further wave of regulations under the ‘On road freight transportations’ laws will add another 30 per cent.” There are some reportedly good reasons behind these rate rises, which go some way towards justifying increased costs. “Regulations are being improved to increase transparency and accountability in Russian trucking operations. As much as seven billion a year is lost on illegal auto transport in Russia each year.”

With new regulations coming in to play soon, standardisation in operating procedures, tax regimes and cargo tracking is reportedly set to increase in Russia. Will road freight operators be happy to pay extra fees to ensure their payload arrives safely and on-time?

Trucking companies now have the responsibility to ensure their vehicles are safe, and look out for employees’ health, bringing the nation in line with EU road transport standards. To put this all into perspective, in January-June 2017, freight turnover rose 2.9 per cent year-on-year, reaching 2.7 trillion tonnes/kilometre ration, with as much as $150 billion in transportation and freight handling deals available in Russia, according to TransRussia. This state of play has encouraged OEMs from around the world to conduct business locally in Russia.

Marco Andres of Faymonville  says the Belgian trailer builder has been actively selling road transport equipment in Russia since 1994. “In taking care of our customers and understanding the importance of support in the matter of training, supply of spare parts and repair of semi-trailers in operation, we made the strategic decision to build a local service centre in 2014,” he says.

“The Faymonville production and service centre in Noginsk (Moscow region) is the first Faymonville service centre in Russia, directly adjacent to the Gorky highway near the intersection with the A107.

“The centre offers customers a fast and complete repair service of semi-trailers. This includes: mechanics, brake control, electronics-pneumatics-hydraulics, welding works and much more. Additionally, we cover the sales of spare parts and materials for Faymonville and MAX Trailer, as well as for other brands of semi-trailers. Since 2016, the centre has also been manufacturing semi-trailers for the CIS market.”

According to Andres, Noginsk Service Centre maintains a supply of the most popular trailer models. He explains that ordered trailer equipment is delivered to this facility for immediate pre-delivery preparation and transfer to the customer.

“The semi-trailer storage site allows for purchasing stock vehicles immediately, without wasting precious time on production and delivery,” he says. “Here you can get any information regarding novelties, passing training and maintenance. Qualified experts will support you in the selection of the necessary vehicles precisely for your needs.”

Since 2016, Faymonville Russia has been assembling semi-trailers at the centre as per the CKD (Complete Knock Down) process.

Andres says the centre provides the perfect environment to make sure the trailer gets to Faymonville customers in the fastest possible way. “The highly qualified personnel, as well as many years of experience enable us to deliver a high-quality product,” he says. “To guarantee the highest quality, Faymonville Russia uses advanced technologies, modern materials, standardised components and coherent production processes.”

Faymonville reportedly has a well-established supply chain system that allows for the swift delivery of materials and components. It also sells a range of semi-trailers, low bed trailers and modular trailers via its Faymonville and MAX Trailer brands in Russia and also offers the Cometto self-propelled trailers.

For German OEM, Kögel, it has had a presence in the Russian market for over 35 years under the business name of Kögel Trailer RU. It has a head office with sales and administration staff in the city of Moscow as well as a branch office in Jerlokovo, which is 30 kilometres outside of the capital. The site area is approximately 35,000 square metres and features an assembly site, repair shop with sandblasting and painting facilities, a repair workshop for sandwich panels and a spare parts warehouse. There are also other dealer locations with demonstration vehicles and spare parts warehouses in Krasnodar, St. Petersburg and Ekaterinenburg. A new dealership is being prepared in Rostov am Don.

Patrick Wanner, Kögel’s Head of Public Relations, says that the OEM maintains an excellent business rapport with transport company, SovTransAvto, and is pushing ahead with localisation in Russia, which is necessary to remain competitive with domestic and importing companies. He adds that about 650 Kögel Cargo tarpaulin semi-trailers have been built up in Russia since the start of the OEM’s Russia 2018 project.

Since exhibiting at the international Commercial Vehicle Auto Show, ComTrans, Wanner explains that the standard Kögel Cargo tarpaulin semi-trailer, assembled with partial components from Russia, proves to be a popular option for Russian fleet operators.

“Russia is an important sales market for Kögel, which is why we will expand local production in the future,” Wanner says.

Another European influence to trade in the largest nation in the world is Wielton Group, which has been active in east European markets since 2000. Its portfolio includes commercial companies located in Ukraine (since 2005), Russia (since 2006) and Belarus (since 2011). Moreover, in 2012 the Group opened an assembly plant for semi-trailers and car bodies in Sheremetyevo near Moscow. The plant produces tipper bodies on chassis supplied by leading manufacturers, such as Scania, Volvo, Renault and Mercedes, as well as tipper semi-trailers, curtain semi-trailers, and high volume combinations assembled from parts supplied by the Group’s main production plant in Wielu.

Wielton Group considers Russia as one of its strategic markets. The Group has been active in Russia for quite some time and is perceived as a technological leader and a western supplier of premium solutions for the transport industry. The solutions offered by Wielton in Russia allow for the needs of local clients and the specific nature of the market. Unique in their segment, tipper semi-trailers of Konisch and square type are an example of such localised solutions. It should be emphasised that Wielton steel tipper semi-trailers feature outstanding unladen weight ratio and are made of reinforced Hardox and S700 wear-resistant steel.

Wielton’s presence in Russia is of a long-term nature. Although the plant in Russia currently focuses on assembly work, the Group is also conducting research in order to expand its activities in that country to a full production cycle.

Wielton believes that the Russian market will develop in a manner similar to the European markets; therefore, in the coming years it wants to promote products with features similar to those offered in Europe, which includes aluminium tippers as well as light versions of box and curtain semi-trailers and container semi-trailers.

Kässbohrer has also been representing the latest in German innovation, adapting its trailer builds for Russian applications. Since 2012, Since 2012, Kässbohrer has been investing in its Tula facility with an open area of 54,000 square metres and a closed area of 11,000 square metres.

The OEM exhibited at Russia’s biggest construction fair, Bauma CTT, in June 2018, and demonstrated its industry product portfolio which includes non-tipping silo trailers, tippers, platform and low bed semi-trailers that overcome the unique climate and geographical conditions of Russia.

Kässbohrer launched two vehicles at Bauma CTT that are engineered for Russian customers and showcased two other vehicles. K. SLL 2, a two-axle hydraulic steering low loader that is robust for sustainable performance in the roughest conditions and K.SCX XXL, a 16.5-metre curtainsider.

In addition to launching those trailer combinations, Kässbohrer showcased its ‘Made in Russia’ 31 metre-cubed Non-Tipping Silo K. SSL 31 that is reportedly strengthened with welded construction brackets, the circular cross-section and self-supporting tank in lightweight construction and 24-metre-cubed Tipper K.SKS.

In terms of aftersales support in Russia, Kässbohrer has access to a vast network of 80 authorised service agents. With more than 12,000 services points across the globe,  and depending on the recovery site, the OEM’s road assistance program provides solutions at site which is available in 23 languages and in 27 countries, including Russia.

In 2017, as a result of mutual trust, Kässbohrer and Russia’s Association of International Road Carriers (AIRC) decided to start a cooperation, where the OEM offers AIRC members vehicles that are equipped with the latest technologies and are suited for the country’s climate conditions. Through 2018, Kässbohrer claims to have reached remarkable results and has no doubt that this collaboration will gain momentum in the years to come.

Also showing signs of industrious momentum is one of Russia’s biggest trailer builders, Tonar. According to Denis Krivstov, General Manager, the OEM had a plan at the end of 2018 to manufacture 3,000 trailers.

“Our main speciality is tipping semi-trailers, but we are also strong with curtainsiders, container chassis and logging trailers,” he says.

“Along with road trailers, Tonar is developing agricultural trailers and special mining equipment. Production facilities are about 60,000-square-metres in size and are fitted with modern equipment. About  80 per cent of all welding is done by 20 robots, another 4 robots are for painting. All the robotic lines were developed locally by Tonar engineers.

“We export our equipment to 35 countries, but our main market is still Russia – a 10,000-kilometre-long country with 11 time zones.

“You can see palm trees in the southern part of Russia which are in the same latitude with French Nice and our northern customers only stop their operations when temperature drops lower -50°C. We have to be everywhere with our service and spare parts and be ready for all conditions.

“The biggest part of Russia’s 150 million population is concentrated in the western part, but main natural resources are on the east. It creates huge demand for transportation along the country. In the Soviet Union, rail road was developing as the main means of transport, but now trucks gain more and more due to their speed and flexibility. More trucks require more roads and infrastructure, number of roads and their quality are still far away from western countries level. So government is increasing its investments to infrastructure and demand for tippers will be always there.

“In the mining sector most of mines were developed long time ago during Soviet Union when they always build a railroad close to mine. Now these mines are empty and the distance to railroad station or to factory is constantly increasing. New owners choose trucks as they require much less investments comparing with rail transport. This is a good opportunity for us to use Australian experience and offer road trains to the market. Where else you can see 200-tonne vehicles on a private 180km long road in the middle of nowhere? Tonar was the first to offer B-double road train in Russia and now is developing power trailer combination.”

Krivstov says the political situation in Russia, due to sanctions and its relationship with the international community has affected business.

“When oil prices dramatically dropped in 2014 the Government had a huge hangover after its policy of globalisation,” he says. “Suddenly they realised that their idea of free market when we only sell oil and gas all over the world and import all other goods doesn’t work anymore – it’s too expensive to buy everything and our western friends dictate their conditions of trade. It was almost too late for the local industry which was strong during Soviet times, but lost to international giants when markets were open and Rubble was too strong.

The Russian Government, according to Krivstov, is deploying large scale programs for local companies stimulating research and development, new technologies, market growth and export. “International companies are also welcome, but  required localisation level is quite high, for trailers, for example, frame, body and axles must be fabricated in Russia to have all government support, which is quite sensitive and attractive,” he says. “To help local manufacturers, government finally stopped the import of used trailers from Europe which for many years took almost 50 per cent of the market. Thanks to this policy, Tonar increased production in 2018 quite significantly and plan further investments to gain bigger market share in the future.”

Fast Fact
Czech Republic–based logistics company, EGT Express, launched consolidated transport services and less-than-truckload shipping options from its Vilnius hub to cities in the Saint Petersburg region of Russia in 2018. By providing a direct line with a base in Lithuania, EGT Express reportedly shortened transit times by up to three days.

“We are incessantly bringing together better solutions to provide a first class customer service,” said Irina Stepanaviciene of EGT Express. “The line ensures that we get cargo to Russia via our own local transport network which is also interconnected to other lines covering the whole of Asia or to all other countries in Europe. Our services are available for exports and imports freight requirements alike.”

The new groupage line will allow EGT Express customers to ship any kind of cargo as its vehicles and warehouses handle general cargo as well as refrigerated goods, hazardous materials and heavy equipment.

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