Decentralization paves the way to efficient logistics

In Russia, Moscow is the center of cargo distribution in most cases even if imports flow via the Far East and consumers are in the Volga Federal District. Aleksey Sudakov, Advisor to the Presidential staff of the Republic of Tatarstan for logistics development, tells IAA PortNews about logistics decentralization issues in the region.

Russia’s leading companies, owners of retail chains specializing in the sale of computer and digital equipment and household appliances, as well as in the production of computers, are building a centralized logistics. Goods manufactured in the Southeast Asia are delivered in containers by sea to the ports of Vladivostok. Then they are sent by railway to the Central Federal District for deconsolidation and monthly delivery by trucks to regional warehouses. At the same time, the high loading of the Moscow transport hub makes the time and cost of the cargo processing higher.

Similar situation is observed in the logistics of DIY, food, pharmaceuticals and other essential segments.

Optimization of these scenarios is possible with the decentralization of logistics, or the delivery of goods to the region of consumption. A similar scheme is already being applied in the Republic of Tatarstan. According to Delo Group, the transition to regular direct container shipments will optimize the logistics of companies in Tatarstan by 15-25% and cut the delivery time by over a half.

In 2021, the first regular container service between the terminal of the special economic zone “Alabuga” and the port of Saint-Petersburg was launched together with Maersk. Previously, Tatarstan manufacturers had to send their cargoes to the Central Federal District for consolidation before they were exported, hence lower competitiveness of the products in the foreign markets. Import containers were first delivered to the SEZ and then were reloaded from the railway onto the road transport for further delivery to the clients within a radius of 400 km. So, Alabuga container terminal was included into the global system of Maersk.

Activities of large national carriers intensified when foreign container operators withdrew from the Russia market. In September 2022, FESCO Transportation Group launched the first regular  import service from Vladivostok, Fesco Kazan Shuttle, with cargoes from the Asia-Pacific Region. The company is looking into building a container terminal in the Republic of Tatarstan. It will also handle cargo of other operators. The planned capacity of the hub is 150 thousand TEU per year.

Regular container services via the regional hub of FESCO will let the local manufacturers reduce logistics costs. With the tariffs set for Vladivostok-Kazan and back routes, savings on cargo transportation in 20-foot containers may total RUB 5.9 to RUB 9.8 billion. Transportation of 40-foot containers will let reduce the company’s expenses up to RUB 8 billion as compared with transportation via Moscow.

In December 2022, another large container carrier, TransContainer (Delo Group), completed the reconstruction of its own terminal at the Lagernaya station in Kazan. Its throughput capacity increased by 60% to 31 thousand TEU per year. The next phase of modernization is to increase the capacity by additional 16 thousand TEU.

Such projects can contribute a lot to optimization of logistics flows in the country. The next essential phase of logistics decentralization will be the development of the basic logistics infrastructure – a network of regional centers for deconsolidation of cargo.

Aleksey Sudakov, Advisor to the Presidential staff of the Republic of Tatarstan for logistics development

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