News

According to the President of Delo Group and a member of the Forbes list Sergey Shishkarev, the digitalization, the overcapacity, the transit of sanctioned cargo via the territory of Russia and the changes in the logistics of the state companies are the four new trends in the logistics market.

In November 2019, Delo Group bought a 50% stake in the largest container operator TransContainer from the Russian Railways at an auction and having consolidated almost 100% in March 2020 became the largest multi-industry logistics operator in Russia. This year was supposed to be a year of the Group’s assets integration, a search for synergies and a platform formation to build a national transport champion.

But COVID-19 changed the world by shifting the priorities and setting the new challenges. By the beginning of April, we felt the consequences of border closure, the enterprises’ shutdown and the restrictions imposed in the regions. The cargo transportation suffered less compared to the other industries. In most countries, the borders for the cargo transportation remained open. If the cargo flow stopped there would be no Internet delivery, which we particularly appreciated in the self-isolation mode, the supermarkets would be empty and the necessary medical goods would not reach the hospitals and the pharmacies.

As a result, during the first months of 2020 we tried to ensure that the restrictions caused by the coronavirus pandemic did not affect our clients. And after the lifting of the restrictions, there will be no return back. The world is increasingly dependent on online trading.

Here are some new trends in global logistics.

DIGITALIZATION

Fact

In early May, the Chinese port of Xiamen demonstrated a fully automated port complex based on 5G technology and the Internet of things. An unmanned port crane took the container from the vessel and loaded it onto an unmanned platform, which delivered it to the transshipment point for further transportation.

In five years, Xiamen intends to automate completely the port operations.

Trend

The Chinese are not the first to embark on this course. Our partners from the world’s largest transport operator Maersk have moved in this direction quite far. The digitalization and automation are rapidly invading the conservative port business. The transport and logistics flows have become so complex that it is increasingly difficult for a person to keep track of millions of operations and tens of thousands of destinations where the cargo should go from only one super container vessel that arrived at the port. In addition, “non-contact” ports with a minimum of human interaction will solve many other tasks: it will be easier to deal with an illegal trade, theft, cargo damage, not to mention the compliance with sanitary and epidemiological requirements.

Delo Group is already working on the efficient technological solutions to propose a roadmap for their implementation. The Group operates several ports, we have enough sites to test and implement the advanced technologies and probably to offer the universal solutions for the Russian market. We still have a long way to go, more than a year, but the automation and digitalization of the terminal operations is the future. In online trading, the speed of cargo handling is critical. It is impossible to achieve the results required by the online shoppers without the digitalization.

OVERCAPACITY

Fact

At the end of April the largest container vessel that can carry 24,000 containers in South Korea in the presence of the country’s president. And in mid-May it left the port with a record load of almost 20,000 containers. In the next couple of years, about 20 of such vessels may be launched. As a result, a serious surplus of capacities may arise in the ocean transportation market.

Trend

As the owners of Russia's largest container carrier we have our concerns. The TransContainer development program includes a significant increase in container transit through Russia.

The geographical extent is the same resource for Russia as well as oil and gas. There is no one other country in the world that has simultaneous land access to so many sea basins and markets. Therefore, the President of Russia in his “May Decree” of 2018 set the task of increasing the transit of containers through Russia from East to West by four times by 2024. However, the massive construction of large container vessels in view of the epidemic will lead to the shipping rates drop to minimum and the Russian transit route with a higher transportation speed will be uncompetitive in price.

Therefore, we proposed the state to introduce a program for subsidizing the container transportation through Russia to increase transit volumes. The subsidizing of about a third of the current tariff for the transportation of one container (about $ 900–1.000) will attract new customers from Asian and European companies. This will create a multiplier effect on the territory of Russia along the entire supply chain - from the new jobs in the logistics industry to the new infrastructure facilities and tax payments.

There are examples of state support for the logistics industry. China has actively subsidized the overland transit of containers through its territory in particular within the framework of the geopolitical project “One Belt, One Way”, increasing transit indicators by more than 10 times in recent years. Egypt owns the Suez Canal and has recently invested billions of dollars in its modernization, it has reduced tariffs for the passage of vessels along a number of routes to 75% of the base tariffs for the period of the pandemic in order to save traffic.

TRANSIT OF SANCTIONED CARGO THROUGH RUSSIA

Fact

In April-May, a test container with sanctioned cargo passed through Russia without a risk of violating the sanctions regime. The container was unloaded at the First Container Terminal on the Baltic Sea, sealed with an electronic seal, transit passed through the territory of our country and left Russia through the Vostochnaya Stevedoring Company in Nakhodka.

Trend

The both terminals that handled the transit belong to Global Ports, where Delo Group is a shareholder. A major shift has occurred in the transit sanctioned cargo. It became possible after the introduction of the electronic navigation seals that operate on the GLONASS system. The interest for the European food products in Asia and particularly in China is huge.

And obviously it is better for perishable products, a 15-day trip is preferable to a 40-day trip across three oceans. But our country could not even take the theoretical risk of violating the sanctions and counter-sanctions regime.

Electronic seals controlled by a satellite grouping have solved this problem.

CHANGE IN THE LOGISTICS OF STATE-OWNED COMPANIES

Fact

In the recent months, several state-owned corporations have turned to the Delo Group with a request to calculate the logistics organization for them.

Trend

Large companies now carefully calculate costs and logistics is one of the obvious ways to optimize costs without cutting jobs and reducing capacity utilization.

Usual in-house logistics solutions will give way to a professional approach, which will ultimately lead to saving of state recourses. This will not happen at once and the logistics companies have yet to prove that they will be able to fulfill very specific orders from the state.

However, the signals coming from the market inspire the optimism – the transparency for all the participants, including the state, will seriously increase.


Source – Forbes dated 08.06.2020