Express deliveries boom in Russia

Russian market of express deliveries is not big yet, but is developing rapidly. According to some express transporters, in 2001 their turnover in Russia grew by 30-40%. They explain their success primarily by revival of Russian business, because large companies use services of express delivery most often. It will be possible to improve quality of express delivery in Russia to the level of European countries only when the customs legislation and transport infrastructure of the country correspond to the same level.

Until recently services of express delivery were not in very big demand in Russia. All players of the Russian express delivery market are more or less unanimous in estimates of its volume. According to them, exports amount to $60-80 million a year and imports amount to approximately twice as much. Delivery of goods inside of Russia also earns up to one-fourth of all incomes. Thus, it is possible to estimate the Russian market roughly at $250-300 million, whereas the world turnover of the largest express transporters is counted in tens of billions of dollars a year. However, according to the speed of growth Russia outruns anyone. According to DHL, in 2001 organic growth of Russian market (that is the growth not connected with efforts of the market players) amounted to 20%. In 2002, this growth is expected to amount to 16%.

Four largest international players of the market of express delivery are represented on Russian market. These are United Parcel Service (UPS) with the headquarters in Atlanta (US), DHL (Brussels), TNT Express (Amsterdam) and FedEx with the headquarters in Memphis (US). Unlike the other three companies, FedEx works in Russia not directly but only through its agent, Elf-91 company. Each of these transporters is a giant with a developed international network, but it is difficult to evaluate their shares on Russian market. The companies do not disclose the absolute parameters of their operations in Russia, and their own estimates are not always objective. DHL, which came to Russia earlier than the others (back in 1984), now controls, according to its own estimates, 53% of all flows of all express cargoes coming to Russia from abroad. Tikhon Yevdokimov, until recently Commercial Director of DHL for the CIS countries, who has received an appointment in the headquarters of DHL in Brussels, says that the share of DHL varies depending on the city and on the region. In the North West it is not big, in Moscow it reaches 50 and beyond the Ural Mountains it amounts to 80%.

However, UPS considers this estimate to be not quite correct. General Director of the Russian division of this company Ivan Shatskikh states that DHL serves a half of exports only formally according to the quantity of shipments, but UPS earns more money. Representatives of UPS explain this difference saying that DHL ships mostly either documents or cargoes with small weight earning little income, whereas UPS serves mainly the cargo flows of manufacturers. "Warehousing business is developed in Russia very insufficiently, and companies either have to build their own warehouses, which is expensive, or to use services of express delivery," explains Shatskikh. Most often the clients prefer working not with one express transporter but with several at once. Harrow van Graafeiland, General Director of TNT Express for the CIS, says, "Very seldom a large company works only with us or with DHL or with FedEx."

So far it is possible to consider DHL and UPS leaders of the Russian market of express delivery according to turnover and value of transported cargoes, whereas FedEx and TNT have the second place. When Russian business develops, the market of express delivery will grow inevitably. Thus the situation may change many times.