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ITE Transport and Logistics

Why St. Petersburg is your next transport & logistics market

St. Petersburg. Russia’s second city. The former Russian capital, sat proudly beside the Baltic Sea, is home to over five million people and enjoys an enviable status as the nation’s leading cultural centre. What’s more, according to a report from ICT Logistics, the city and surrounding region boasts a gross regional product of over $1.2 trillion.
Far from being a historical throwback to the days of Peter the Great, St. Petersburg continues to thrive as a hotbed of industrial activity and is a major transport and logistics hub. So why should you do business in one of Russia’s most dynamic cities?
A thriving transport & logistics sector
As of January 2015, 25,809 transport and logistics organisations operate out of St. Petersburg, with an annual turnover of $9.9 billion. Due to its strategic location, St. Petersburg is well served by motorways, airports and, of course, the Port of St. Petersburg. 
Transport and communications is one of the largest sectors of international investment in the city. 20% of all investments in St Petersburg in 2014 were made in this sector.
Due to its vital status, St. Petersburg is subject to huge levels of international investment – around $7.8 billion annually.
Geographic advantages
St. Petersburg was founded with the intention of giving Russia a Baltic Sea port that would not freeze during the winters. As such, it was almost purpose built to handle huge amounts of cargo every day of the year, regardless of weather conditions.
The Port of St. Petersburg allows exporters and importers access to Russia via the Baltic Sea, allowing trade across Scandinavia, Europe and beyond. Additionally, St. Petersburg is where a number of international trade corridors either begin or terminate. It will be an important destination on the developing Western Europe-Western China International Transit Corridor and the proposed North-South Corridor linking Russia to India.
As such, St. Petersburg is an ideal base of operations for transport and logistics companies, linking, as it does, Russia to the entire world.
The Port of St. Petersburg: Russia’s biggest Baltic Sea freight facility
The Port of St. Petersburg is one of Russia’s busiest, with 20% of all cargo travelling to and from Russia passing through it. 
Port authorities are keen to ensure their facilities remain world class. Approximately $712,000 worth of investment was made in the first quarter of 2016 alone, which is four times the amount invested during the same period in 2015. 
51.5 million tonnes of cargo, the equivalent of 456,836 TEUs passed through the Port of St. Petersburg in 2015, making it not only Russia’s biggest Baltic cargo port but also the busiest on the Baltic Sea as a whole.
Pulkovo Airport: A major Russian air freight stop
Pulkovo airport is Russia’s third largest in terms of passenger turnover, and also acts as a major air freight centre. It is serviced by a 12,000 square metre cargo facility, which features 6,000 square metres of warehousing space, freight acceptance and delivery areas.
This is the largest such air freight handling complex in Russia’s North-Western region, and ranks in the top five Russian cargo terminals. 
Air freight has been identified by local authorities as an area for considerable development. In 2014, the Inventive Program for Cargo Flights was put into place. 
Under this scheme, airlines starting regular cargo flights can now enjoy significant discounts - up to 45% on take-off and landing and aviation security fees alongside an additional 40% off ground handling services, acting as further enticement for logistics firms to make St. Petersburg a critical destination for their operations. 
The road to Russia and beyond
Finland, the Scandinavian Peninsula and Continental Europe are just some of the myriad destinations accessible via St. Petersburg. The port and city itself are serviced by some major highways, including:
• M10 – “Scandinavia” – connects St. Petersburg, Moscow & the Finnish border
• M11 – “Narva” – connects St. Petersburg & the Estonian border
• M18 – “Kola” – connects St. Petersburg, Petrozavodsk & Murmansk
• M20 – connects St. Petersburg, Pskov & the Belarussian border
The M10 and M20 highways form sections of Corridor No.9 as part of the Pan-European transport system.  
Truck and road transport is well represented in St. Petersburg’s logistics make up, with 2014 recording a kilometre-to-tonne turnover of 2.9 million tonnes. A favourable location, and strong motorway links, ensures road transport and trucking is essential to the success of St. Petersburg as a logistics hub. 
The multitudinous locations available via the city, and the importance of freight to the region, makes St. Petersburg perfect for road transport operators who should find ample opportunities for Russian expansion here.
St. Petersburg is an important rail freight hub
While rail freight is handled by the state owned Russian Railways (RZD) throughout Russia, cargo forwarders and handlers realise the importance of St. Petersburg. Indeed, it is North-Western Russia’s second biggest railway junction, behind Moscow, with a total track length of 423 kilometres.
The freight railway node handles 110 million tonnes of freight annually. Currently the railway junction of St. Petersburg performs the functions of a sorting centre for foreign trade flows and enterprises of other Russian regions directed towards Finland, the Baltic countries and the Baltic Sea ports.
Further development of St. Petersburg rail freight sector is underway, as RZD stated in mid-2015 a new terminal and logistics centre is planned. This will increase the role of the Shushary urban freight station considerably. In addition, a railway-port connection is developing too, which aims to considerably reduce delivery and dispatch times between the port and St. Petersburg’s rail cargo stations.
Why St. Petersburg?
There are many reasons to invest in, or start, freight operations in Russia’s second city, with the main points being:
• A well-established transport & logistics sector
• Open to significant international investment
• Access to Europe, Mainland Russia, the Far East & South-East Asia
• Local investment in development of fundamental logistics sectors
On the European side of Russia, St. Petersburg is perhaps the most indispensable city for transport and logistics. Operators are advised to utilise the city as a hub for Russian expansion and success.

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