Trucking & road transport in Russia: the state of the market
Published on 10/07/2017
Think of Russian transport and chances are you’re picturing a lengthy freight train, outfitted with loaded wagons, pioneering through the wilderness. And while this has long been the case, rail is not actually Russia’s biggest transport mode. That honour falls to road.
Road transport is Russia’s key cargo carrier
All told, road transportation covers the bulk of Russian non-containerised trade – and the stats give great insight into just how significant the market is. From January-October 2016, trucking accounted for 69.4% of Russia’s total cargo turnover.
Collectively this represented a ton-to-kilometre ratio of 191.8 billion ton/km, according Rosavtodor, Russia’s Federal Road Agency. Impressive – and this also marks a 1.8% recovery over 2015’s level.
Recovery is certainly the operative word. As Russia’s economic crisis deepened during 2015, trucking as a whole suffered. Costs skyrocketed, with the fall of the rouble, putting a large number of independent drivers and small-to-medium enterprises out of business. Up to 80% of road logistics specialists are private enterprises – and the stagnation of Russia’s economy played havoc with their operations.
However, as touched on above, recovery is well on its way. Truck based exports, mostly heading to Europe, were up 20% in the first half of 2017, for example, suggesting a greater deal of freight is being carried by Russian truckers.
At the same time, the domestic share of containerised cargo shipments carried by road has grown 6%. 6% growth in any industry is encouraging, not least in one so rocked by economic downturns as Russia’s trucking sector, so this could herald a newer, confident road transportation segment in Russia as the decade closes out.
Part of the reason for trucking’s renaissance is a lack of rolling stock in some regions of Russia putting pressure on railway services. Some cargoes normally transported by train, including ferrous metals, building materials, or food items, thusly found themselves not in wagons, but in trucks.
Russia’s trucking capacity still uncertain
While recovery is on the way, there are several measures being implemented that necessitate caution for operators looking to move freight through Russia. The biggest is Russia’s Platon toll system.
Rolled out in 2015, the system has proved to be a contentious issue for Russia’s transport and logistics industry. In April 2017, Platon tolls rose 25% - increasing trucking companies’ overheads, and having a knock-on effect for their customers. Higher tolls equals higher delivery costs – and trucking outlays could rise between 15-17% by the year’s end.
Additionally, there are less trucks on the road in Russia. Over the last two years, fleet sizes have shrunk by an average of 10% across Russia. Smaller capacities has led to a trend of consolidation and merging between SMEs in this logistics sector nationwide – but it is not all bad news.
Sales and domestic production of trucks are matching the industry’s gradual recovery. The total market volume rose 4.2% throughout 2016, according to Russian automotive analysts Autostat, hitting 53,000 units.
The size of these trucks will depend on the stability of the market, but it appears road logistics operators are keen to see bigger vehicles on the road. Generally, trucks tend to measure 20 metres long, with weights no higher than 40 tons, in Russia.
With truckers keen to expand their share of containerised freight, larger lorries will have to be bought.
Infrastructure holding back industry
It’s the same old story we’ve been seeing time and again in Russia: a lack of appropriate infrastructure in hampering industry expansion. The Far East and Siberia, huge yet sparsely populated regions, in particular suffer here – where roads have been compared to those out in the Australian outback (only with far more extreme winters).
President Putin seems to be aware of the road and highway situation in Russia. Back in 2014, Putin ordered the road network length to be doubled by 2022. If completed, this would mean Russia would boast over 2.4 million kilometres of road, including highways and rural routes.
Until that time, other transport modes may be better suited to differing cargoes. It is still cheaper to send a container by rail over a distance of 2,000 kilometres than by road. Major building work will be needed to lower this cost-aspect of Russia’s trucking sector.
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