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ITE Transport and Logistics

Third party logistics in Russia: ready to deliver

Third party logistics (3pl), while heavily popular in well-established Western markets, remains comparatively underdeveloped in Russia. But instead of closing the door on expansion, this lack of maturity in the market opens it up to international investment and expertise.

Third party logistics in Russia: the state of the market

Even so, revenues generated by the sector totalled around $16.9 billion in 2015, according to logistics research company Armstrong & Associates. Russia’s market is by far the largest in the CIS, which collectively amounts to around $23.4 billion.

Outsourcing of transportation services takes a 22% market share in Russia, or roughly of a fifth of the entire transport and logistics industry. Comparatively, 3pl service providers cover 65% of the European market and 48% of China’s.

There are roughly 4000-6000 logistics companies in Russia. Out of these, only 100 can really be true logistics service providers. Some of the big names include Eurosib, Nienshants Logistics, STS Logistics and a subsidiary of Russia’s railway behemoth RZD, RZD Logistics.

Crucially, the unsaturated nature of the market means international firms are well positioned to advance into Russia. Why? Well, there are a few factors. Firstly, 3pl as an industry is a fairly new phenomenon in post-Soviet Russia. Misapprehensions regarding the type of services on offer, and the fact many Russian firms handle transportation in-house, hampers industry development too.

International 3pl firms score big in Russia

While domestic firms might be struggling to meet international service standards, foreign firms are making headways in Russia’s outsourced logistics industry. The big players are true global giants, such as DHL and Kuehne Nagel.

The fact that the Russian outsourced transport relatively unorganised creates space for international companies to make headway. There certainly is plenty of potential for the future – especially with trends such as exploding cross border e-commerce activity, suggesting a shake up in the market is coming soon.

Digital retail sales topped out at $4.2 billion in Q1 2017, up 14% year-on-year, with goods coming from Europe, China and even further afield. E-commerce is growing every year in Russia, suggesting a greater need for 3pl services will emerge going forward.

Itella, a Russia-centric postal and logistics service from Finland’s Posti Group, now offers dedicated e-commerce delivery and fulfilment options for its Russian customers as a result of the growth in online shopping across the country.

As well as cargo carrying, there is also warehousing, fulfilment, and logistics centre construction to consider too. All of these form part of third party services. While the big contemporary trend in Russia’s warehousing sector is built-to-suit facilities, more commercial properties are being built by outside developers.

In Moscow, in Q4 2016, 471,000 square metres of warehousing space was sold or built throughout the city. As of 2017, vacancy rates in Russia’s capital stood at around 12%, which highlights the strained nature of storage in Russia’s largest city.

So, third party logistics in Russia: underdeveloped, ready to expand, and fertile ground for international companies to grow their Russian operations.

Deliver third party logistics services at TransRussia

Whether you are looking to offer 3pl services in Russia, or are seeking third party partners, you can do so at TransRussia – Russia’s largest transport logistics event.
14,745 professionals from 53 countries took part in TransRussia 2017, showing the huge, dedicated audience your business can reach by taking part.
To book your stand, or to get more information on Russia’s leading transport and logistics event, contact us today.


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