Farid Abdulganiev: ‘Tatarstan businesses have formed a request to reduce the cost of logistics and delivery time’

Mr Abdulganiev, container transportation is actually an alternative type of transportation in terms of economic efficiency. However, their share in foreign trade logistics in Tatarstan is only 14%. At the same time, in Russia — about 40%, and in the European Union — over 70%. Why is it so, what a historical injustice it is?

Indeed, the invention of universal standard reusable containers as a way of transporting goods can rightfully be called the main invention of the 20th century in the field of logistics. Without this, the world economy would not have become truly global.

In the “pre-container era”, the transfer of cargo from ships to trains was extremely slow — it took about a week to load and unload large vessels. Now, it takes a few hours to load a giant container ship carrying 20 thousand containers, all loading and unloading operations are automated as much as possible. According to statistics, about 90% of all goods purchased in the world today are transported in containers.

Answering your question about the “historical injustice”: it's hard to believe now, but the fact remains that in the 7190s, when the Soviet Union actively supplied its goods around the world, the level of containerisation in the country exceeded the same indicator in Western Europe.

However, in the 1990s, when only oil and gas remained from export goods, the entire container transportation system in Russia declined and ceased to exist as a single organism. Only isolated pockets around seaports were preserved — for receiving foreign cargo. And only since the mid-2000s, with the growth of the economy and the resumption of foreign economic operations, the demand for container transportation in Russia began to grow again.

Nevertheless, in the global volume of container traffic, which is more than 200 million TEU (the equivalent of a twenty-foot container), Russia occupies less than 3%. For example: on average, there are 104 TEU for every thousand people in the world, 155 TEU — in the USA, 150 TEU — in Turkey, 138 TEU — in the European Union, 39 TEU — in Russia.

You personally and your team have made titanic efforts to create the conditions, the necessary infrastructure and attract investment in the containerisation of logistics in Tatarstan. What are the results of this work?

At the beginning of 2020, during the dialogue we organised with representatives of large businesses of the Republic of Tatarstan, a request was formed to reduce the cost of logistics, delivery times and the organsation of regular services. In the same year, the government of the Republic of Tatarstan set the task of launching direct container trains. The key idea is to link Tatarstan with the main ports of Russia — St. Petersburg, Vladivostok and Novorossiysk.

Besides, we found out that the Republic of Tatarstan boasts a high balance of export and import cargo flows. This allows us to talk about a significant potential of the entire region in terms of the organisation of container logistics in the direction of seaports.

As in the case of the task set for us at about the same time to develop the e-commerce market, first of all we asked ourselves the question of attracting market leaders to Tatarstan. For e-commerce, these were the largest Wildberries (0+) and Ozon (0+) marketplaces, which built and launched their distribution centres here, and in the case of transportation, we started working with the world leader in this field, Maersk.

On June 30, 2021, an agreement was signed that provided for strategic cooperation between Tatarstan and Maersk in the field of investments in the transport infrastructure of the region, the creation of regular container routes between Tatarstan and the largest Russian ports, the connection of Tatarstan enterprises to Maersk's global digital platforms by order and organisation of international transportation. As part of this agreement, in September 2021, the first regular container service was launched between the terminal of Alabuga SEZ and the port of St. Petersburg with a transit time of 5 days, linking the import and export chains.

In parallel, negotiations were also conducted with major Russian transport and logistics companies, such as Transcontainer PJSC (Delo Group), Delovye Linii Group, FESCO and Modul JSC.

Unfortunately, in the spring of this year, Maersk curtailed its activities in Russia. But, as you know, the market abhors a vacuum. The withdrawal of the market leader only increased the activity of Russian transport companies, which received a historic chance to increase their share in the domestic and international container transportation market.

As a result, the management of Delovye Linii Group presented its proposals on the expansion of trunk logistics to Tatarstan, and on September 6, 2022, within the framework of the Eastern Economic Forum, Tatarstan President Rustam Minnikhanov signed a cooperation agreement with FESCO transport group, one of the largest private transport and logistics companies in Russia with assets in the field of port, railway and integrated logistics business. And on September 19, the first FESCO container train already arrived from the port of Vladivostok to Kazan.

Besides, on September 13, Rustam Minnikhanov held talks in the Kazan Kremlin with Sergey Shishkarev, the chairman of the boards of directors of Delo Group and TransContainer PJSC, following which an agreement was reached to prepare the draft comprehensive agreement on cooperation between the Republic of Tatarstan and Delo Group of Companies in the field of increasing the volume of containerisation of the cargo base in the republic and the organisation of container transportation.

According to experts, the transition to regular container shipments will optimise the logistics of Tatarstan enterprises by 15-25% and reduce the delivery time by more than two times. The economic effect of the large-scale transition to multimodal container transportation during export-import operations of Tatarstan manufacturers gives tens of billions of rubles of additional revenue and, accordingly, will increase tax revenues to the budget of the republic.

Also, Tatarstan's connection to the global container cargo transportation network will lead to an increase in multibillion-dollar investments in the development of our terminal infrastructure, in the creation of new production facilities. As a result, tax revenues to the budget of the republic will increase, new jobs will be created.

In addition to the long-term economic effect, switching cargo to transportation as part of regular container trains has the most positive impact in terms of reducing the load of heavy vehicles on the road network, reducing harmful emissions into the atmosphere.

All this gives me reason to say that container transportation is an unused reserve for the growth of the economy of Tatarstan.

To realise this reserve, it is necessary to take comprehensive measures to develop transport and logistics infrastructure in the republic, attract leading market participants, as well as to restructure internal processes in the railway industry and in Tatarstan manufacturers themselves.

What needs to be changed in the internal processes of Tatarstan enterprises so that they are engaged in container logistics? For which industries is this type of cargo transportation most suitable?

We have to create an effective system of cargo consolidation from different enterprises, which will reduce the cost of cargo transportation and increase the frequency of container train departures. There is no doubt that in this case, neighbouring regions will join the service with their own volumes of traffic.

Intermodal deliveries of goods in containers on a fixed schedule may be most in demand by enterprises considering the expansion of international deliveries, as well as those interested in improving operational efficiency by reducing transport delays.

We are talking about enterprises in the industrial sector — primarily machine builders and petrochemists. We also see significant potential in the development of regular transportation of food, as well as electronics and consumer goods in need of sustainable and efficient international logistics solutions.

Container transportation is an unused reserve for the growth of Tatarstan's economy

Recently, a decree of the Government of the Russian Federation has been signed on the launch of an experiment to create bonded zones in Russia, you personally went to Moscow to negotiate with the Russian Post. What stage they are being at, when Kazan should expect the opening of the bond zone, where it will appear, what it will give to the region?

The decree of the Government of Russia launches an experiment to create the first bonded warehouses in Russia on April 1, 2023. This is a truly long-awaited event for the entire Russian e-commerce market. And it is very important that the Republic of Tatarstan actually initiated this project in the middle of 2020.

Let me remind you that at the end of July 2020, President of the Republic of Tatarstan Rustam Minnikhanov sent an appeal to the Prime Minister of Russia Mikhail Mishustin about the republic's readiness to participate in an experiment to create the first bonded warehouse in Russia. In August of the same year, an agreement was signed with the Russian Post on the intention to implement a pilot project on the territory of Tatarstan to create Russia's first bonded warehouse with simplified customs regulation on the basis of a separate structural subdivision of the Russian Post JSC located at the Kazan International Airport.

The bonded zone in Tatarstan can become a hub between Europe and Asia. The bonded warehouse will shorten the delivery time of goods purchased on the Internet and will enable small and medium-sized businesses to consolidate goods, display them on electronic trading platforms and deliver them from the warehouse, using the logistics capabilities of the Russian Post, to the consumer.

What are the advantages of launching a bonded zone in Tatarstan?

In August 2020, we organised a representative conference on bonded warehouses in Kazan, which was attended by almost all leaders of the Russian eCom market. This conference confirmed their great interest in creating such a zone in Tatarstan, as geographically the most successful place to conduct the experiment, and where the most comfortable conditions for the development of electronic commerce are created.

If we talk about Tatarstan itself, the launch of the bonded warehouse in our country will lead to new investments in the development of transport and logistics infrastructure, create new production facilities and additional jobs, which will lead to an increase in revenues to the republic's budget.