BLG recognize an improved situation in Russia
Guest commentary by Uwe Seliger
The core competencies of BLG Logistics Group AG & Co. KG lie in automotive, contract, and container logistics. We supply holistic system solutions in these fields. The company’s roots reach back to 1877. Today, BLG Logistics is a growing enterprise that has developed into a global player. We are active worldwide at more than 100 locations in Europe, America, Africa, and Asia. Currently BLG Logistics, including all its participations, provides 18,000 jobs.
BLG Logistics run a branch in St. Petersburg since 2008. In 2010, we started a cooperation with Sea Port of St. Petersburg to handle freight there. Three years later, operations expanded into transport. With the help of European quality standards and a modern IT system, our company attracted two major anchor customers for the transport area: VW and Glovis (a member of Hyundai Motor Group). In the case of VW, this means BLG Logistics covers the entire transport chain from the production works in Germany via the hub port in Bremerhaven to port handling in St. Petersburg, right up to dealers in Russia. At the beginning of this year, operative port business was relocated from St. Petersburg to Bronka and a strategic partnership formed with the port operator LLC Fenix.
Let me explain developments in recent years as well as the reasons for the new partnership in Bronka. In 2014, political uncertainties followed by sanctions imposed by Western countries and the collapse in oil prices led to a devaluation of the ruble, high inflation, and falling real incomes. The Central Bank reacted with a double-digit interest level that made loans difficult for both companies and consumers. This development has caused the consumer-driven automobile market to crash by more than 50 percent since 2013. Last year, the market saw just 1.4 million new vehicle registrations.
Since the beginning of this year, the Russian automotive market is displaying the first signs of positive growth. The ruble has largely stabilized, and inflation is falling steadily. New vehicle registrations are up, fueling expectations of moderate growth in the coming years. In the long term, we expect the Russian vehicle market to recover, with registration figures back to their pre-crisis level of more than three million.
We’ve shown that BLG is confident of the country’s potential by relocating operative port activities from St. Petersburg’s city port to the newly built Bronka port. At the beginning of the year, BLG Logistics Automobile SPb and LLC Fenix, owner and operator of the Russian port of Bronka, signed a long-term cooperation contract for automotive handling via the port in Bronka. Our own activities will cover port handling as well as vehicle storage. With direct access to the ring road as well as six berths for marine vessels, and direct railroad access, Bronka port offers ideal conditions for the import and export of vehicles and other ro-ro goods. Together with Fenix, we initially launched our new business activities on an area covering 12 hectares, with 25 loading and discharging ramps for trucks. However, in the future we plan to successively expand our range in Bronka.
We remain committed to the goal of covering the complete transport chain for vehicles in Russia. Our vision is to build a network similar to the one we have in Western Europe in which BLG operates along the entire chain from the factory or import port right through to the dealers. The size of the country alone means that rail and inland waterways are the best transport forms in Russia. The more the Eastern regions develop, the more the demand for corresponding transport services will rise. This requires increased investment in multi-modal terminals and handling centers.
By transferring our activities to Bronka and operating our own port handling and storage activities, we’ve taken the first step toward establishing our automotive hub in Russia. Bronka offers us excellent infrastructure with direct connections to the Russian Federation’s road and rail networks.
“The Russian automotive market is recovering from the crisis of the past years.”
Uwe Seliger, Managing Director of BLG Automobile Logistics GmbH & Co.KG, Eastern Europe & Russia Business Area