Largest Logistics Operators to Increase Market Share

More than half of Russia’s largest logistics operators are planning on seriously increasing their warehouse area in 2017, according to survey results from Knight Frank.

The survey interviewed representatives from 24 companies, which accounts for over a third of the logistical services market.  

The percentage of logistics companies who took part in transactions on Moscow’s warehouse market increased by 46% in 2016, accounting for 19% of all transactions, and in Russia’s market overall, transactions increased by 54% to 17%. Compared to mature and stable market in the UK, the percentage of Russian logistics operators in different years has been 1.5-2 times lower. In 2016, logistics companies made up 27% of all transactions on the British market.

Currently, the percentage of logistics companies in terms of total space occupied in Moscow is 18.5%, and in all of Russia, 8%. According to this factor, the largest operators in the metropolitan region are FM Logistic, Itella, Delovye Linii, RosLogistics, and ID Logistic.

Today, 33% of logistics operators own warehouses, 42% rent, and 25% combine owning and renting; 56% of companies have their own fleet of vehicles, and 44% of operators use hired transportation.

The main clients for logistics companies are: the consumer sector at 29%, car and spare parts dealers at 18%, and suppliers of telecommunication equipment, as well as electronics and household appliances at 9%. The categories clothing, pharmaceuticals and perfume, and building materials occupy 7% of all logistic services, while the categories production and chemistry occupy 4%, with online commerce, furniture, and advertising and printing products at 2%.

Logistics services, with the exception of loading and unloading, grew more expensive from 2012 to 2014, but fell during the crisis to levels of 2011. For example, one pallet storage currently costs 12 rubles per day, instead of 13.1 rubles a day in 2011, order pickup is 8 rubles per box instead of 9 rubles per box, and secure storage services cost from 3,900 rubles per square meter a year to 3,800 rubles per square meter a year.

Today, logistics charges make up 19% of Russia’s entire GDP, while in the West, this figure ranges between 7-11%, according to data from the World Bank.

Maksim Zagoruyko, the Director of the Department of Warehouse and Industrial Real Estate for Knight Frank, said: "Today we can talk about three emerging trends in the market for contract logistics: first, in Russia, the share of logistics operators, compared with Europe, is small, and we see an increase in demand for high-quality facilities from their side in the future. Secondly, a growing number of online retailers among 3PL operator clients who require service fulfillment solutions or turnkey logistics. Thirdly, a stable trend has developed on the market for major companies to rent warehouse space, then outsource all internal logistics with professional 3PL operators, substantially reducing costs.”