Russian business lacks capacity for delivery from Turkey

The volume of cargo transportation of Russian retailers and logistics companies from Turkey in 2022 increased by almost five times year-on-year, according to an analytical review of the multiservice logistics operator PEK. But the transport capacity is not up to the task. Due to the lack of sea services, ferries and traffic jams at road border crossings, the delivery time from Turkey to Russia in the winter period increased by 1-2 weeks. Prices have also grown: the cost of sea transportation - by 50-70%, auto-delivery - twice, ferry transportation - four times year on year.

Shipping

Over the year, Russia has more than doubled its trade turnover with Turkey, in addition, the Republic has become the main transit hub for the delivery of goods by sea from Europe, India and remote regions - Africa, Latin America. At the same time, the number of maritime services between Russia and Turkey has also decreased due to the departure of global lines. “Seven major operators have suspended shipments to domestic ports,” says Yulia Vecherskaya, head of international logistics at Melon Fashion Group. - Now new lines are operating in the direction, including Russian, Turkish and Chinese ones. The rest of the cargo is delivered by small-capacity feeder vessels (up to 1000 TEU), which the companies charter with a crew on a time charter basis. 

There are not enough containers on the route. They are provided only to ports or major cities in Russia, the issue of their return back to the owners has not yet been resolved, which provokes low turnover.

Difficulties also arise at the end point of the arrival of sea cargo from Turkey - the port of Novorossiysk. In winter, ships regularly stay idle for up to two weeks due to storm warnings. There are also failures in the clearance of goods. For example, customs at the bonded warehouse in Novorossiysk cannot track the status of goods that are released prior to the filing of an authorized economic operator (AEO) declaration. The systems of the Electronic Declaration Center and the temporary storage warehouse in the city are not integrated. Cargo owners are forced to provide paper-based customs and commercial documents at the location of the cargo, due to which the time for processing cargo from Turkey for AEOs increases by 10-30%. 

Due to the lack of marine services and equipment, the delivery time from Turkey to Russia has increased from 16 to 25 days. According to logistics operators, the cost of sea transportation has increased by 50-70%. At Eurasian Logistics Solutions, in January 2023, the tariff was $8,5 thousand. Pony Express spoke about a threefold increase in the cost of shipping RO-RO ferries for transit cargo in the direction of Turkey-Russia.

The companies also report an acute shortage of po-po ferries. “Delivery by ferry is 30% faster than in containers by sea, including due to the elimination of reloading at the end point of the route,” explains Adil Akavov, CEO of Eurasian Logistics Solutions. “But so far, only three ferries with a total capacity of up to 150 road trains operate on the line between Russia and Turkey, which is disproportionately small in the face of growing imports.” 

Automobile transportation

Ground border crossings, which companies use when delivering goods from Turkey to Russia by road, also lack capacity.

“With a design capacity of 400 trucks, up to 650 such vehicles per day can pass through Upper Lars. In winter, regular snowstorms and avalanches hinder the transportation of goods. It is for this reason that the movement of cargo vehicles at the Upper Lars checkpoint is closed until further notice. A multi-kilometer traffic jam has accumulated from drivers who hope that the border crossing will be opened in the near future, ”says Oksana Feoktistova, director of the PEK business unit: GLOBAL.

Since the Verkhny Lars checkpoint is often closed due to weather conditions and cannot cope with the volumes, the companies are forced to redirect part of the cargo flows to the border crossings between Azerbaijan and Dagestan (the Yarag-Kazmalyar checkpoint and the Tagirkent-Kazmalyar checkpoint). This increases the logistic shoulder by an average of 1000 km and the delivery time from Turkey by 1-2 days. The capacity of the checkpoint "Yarag - Kazmalyar" is 210 vehicles per day. To avoid congestion, two temporary lanes for heavy trucks were set up at the neighboring Tagirkent-Kazmalyar, but given the growth rate of cargo traffic, the capacity of both border crossings is not enough.

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According to the SPAK trucking company, as of February 6, the delivery time from Turkey has increased to 30 days. The cost of transportation by the 4th quarter of 2022 increased from $4,9 thousand to $9,8 thousand. 

According to the results of last year, the number of deliveries from Turkey to Russia from retailers and logistics companies increased by 1,5-3 times year on year. The volume of cargo transportation of the Snow Queen increased by 35%, STS Logistics - by 50%, PEK - by 97%. The cargo turnover of SPAK and Arivist increased by 150%, Pony Express - by 250%, Eurasian Logistics Solutions - by 360%. Most often, the services of carriers are used to deliver goods such as clothing and footwear, equipment and spare parts, consumer goods, cars and agricultural equipment. 

What measures will help increase throughput 

According to experts, an increase in the number of sea services, containers and container ships, as well as a reduction in the time for cargo clearance in the port of Novorossiysk, on the border in Upper Lars, will help to cope with the growing cargo flow from Turkey.

“It is necessary to dynamically increase the number of maritime services and increase the number of container ships with a carrying capacity of more than 3500 TEU,” says Maxim Maurin, commercial director of Pony Express. Also, according to the head of the STS Logistics division in Novorossiysk, Nikolay Melikyan, it is important that transit cargoes heading to Russia be handled by Turkish ports in the same conditions as the rest. “Now priority is given to Turkish-made goods, the rest are waiting in line,” he says.

Aleksey Ermakov, Logistics Director of the Snow Queen, believes that it will be necessary to double the number of containers in the direction and regulate the issue of their return.

And according to Yulia Vecherskaya, the process of cargo clearance in the port of Novorossiysk should be accelerated. “Now, if the weight and size characteristics have changed, the company expects an adjusted document on acceptance of the cargo up to two days. “It is worth accelerating this process and finalizing the integration of data between the CED and the Novorossiysk port,” she believes.

According to Adil Akvov, to solve the problem, it will be necessary to triple the number of po-po ferries that regularly run between Turkish and Russian ports. This will significantly increase the share of goods that are delivered from the Republic promptly - in 14 days.

In turn, Oksana Feoktistova, director of the PEK business unit: GLOBAL, believes that in order to optimize logistics, it will be necessary to reconstruct the Upper Lars and Yarag-Kazmalyar automobile border crossings at an accelerated pace. This year, the Ministry of Transport launched traffic on 12 new lanes on Upper Lars, which increases the capacity by 100-200 trucks. So far, as practice shows, this is not enough. There is hope that its reconstruction in 2023 will help unload the border crossing, as the throughput will increase to 2,5 thousand vehicles per day. The capacity of the Yarag-Kazmalyar checkpoint is planned to be increased to 630 vehicles per day, and the number of lanes to be expanded to 10, but only by 2026.

Six of the nine companies participating in the survey, following the growth in cargo traffic, have already opened their own branches in Turkey and plan to develop a delivery network. However, the Russian business is facing a shortage of logistics operators that can deliver small shipments from Turkey, weighing from 1 to 100 kg. Therefore, it is important to increase the number of regular services for the delivery of groupage cargo. Such services are being developed by SDEK, while PEK and Pony Express have launched regular consolidated cargo transportation in this direction. In the new year, PEK plans to create a unified delivery route network that will unite large cities in Turkey with small cities with a population of less than 100 people.