Russian CEP market maintains growth despite financial crisis

Russia has been one of the world’s fastest-growing express and parcel markets in recent years thanks to strong GDP growth, foreign investment and soaring demand. Although market growth will drop back significantly due to the impact of the international financial crisis on the country’s economy, medium-term growth will nevertheless remain at double-digit levels, according to a new “ CEP Market Report Russia” from CEP-Research.

As one of the four fast-growing BRIC economies (Brazil, Russia, India, China), Russia has moved into the focus of international investors’ and multinational companies’ attention in recent years. The world’s sixth-largest economy has benefited from exploding world market prices for its main export commodities (crude oil and natural gas), high single-digit GDP growth and a relatively stable political climate that helped restore the trust of foreign investors, even though substantial regulatory hurdles and risks still remain.

However, the ongoing financial crisis and the simultaneous slump of commodity prices have made previous forecasts for annual economic growth of 5-6% in the next few years less certain. Sharply falling world market prices for oil (down by 68% since July) and gas have dragged the Russian RTS stock index down by almost 75% since July. The World Bank has also observed a substantial drop in capital flows to BRIC economies since the beginning of the crisis.

The Russian courier, express and parcel (CEP) market is not immune to these trends, the Hamburg-based market researchers highlight in their report. With annual growth rates in the 30% – 40% range in recent years, the sector benefited strongly from booming demand, the country’s economic growth and heavy foreign investment and reached an estimated value of €670m in 2007. There has been a slight cooling this year, however, pushing growth downwards towards the 20% level, and this weakening is expected to continue in the short term.

Based on the latest trends and data, the Russian express and parcels market will thus decelerate to grow at an average annual rate of 10% over the next few years, CEP-Research predicts. Positive factors such as the influx of foreign direct investment, logistics infrastructure improvements and service and network expansion by CEP providers will nevertheless outweigh the uncertain macro-economic environment. Moreover, the domestic market, which accounts for the lion’s share of the overall CEP sector, is expected to be less affected by the economic crisis than the international market, where growth is likely to slow substantially.

With an overall market share of around 26%, DHL is the undisputed leader in both the international and the domestic segments, the CEP Market Report Russia reveals. While international CEP flows in Russia are dominated by the integrators, Russian players have been able to maintain leading positions in the domestic market. As well as presenting detailed market shares, the report also profiles the positioning, product portfolio and networks of the major CEP operators.

In addition, the CEP Market Report Russia outlines the key macro-economic trends and driving forces in Russia, examines the wider logistics sector, and details the development and structure of the country’s CEP market as well as the key market trends.

The market report is targeted at strategic decision-makers, sales executives and operational managers in international and regional express and parcel companies, as well as the wider transport and logistics industry and other interested parties. The price of the study is € 950.-.