Kirill Vlasov, STS/RLS Logistics on 'Segment-based Approaches to the Russian 3PL Market'
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Transcript of Kirill Vlasov, STS/RLS Logistics on 'Segment-based Approaches to the Russian 3PL Market'
Segment-based approach to Russian 3PL market
Kirill VlasovStrategy Development Director
STS/RLS Logistics
7th European 3PL Summit24 November 2009
Company profile
STS/RLS – a leading Russian 3PL industry player
Key company facts and figures
� Established in 1990s
� Focused on Russia and CIS
� Combined 2008 revenues: ca. USD 350 million
� Over 1000 clients, among them many Russian and international blue chips
STS/RLS Logistics
Created by 2009 merger of STS Logistics and RLS
� International and domestic freight operations (air, sea, road, rail)
� Complex project solutions for oil/gas and power generation industries
� Integrated LP services (transport, warehousing, services) for FMCG, retail, automotive and chemicals industries
� Related services
> Customs clearance
> Insurance
> Logistics consulting
� Over 1000 clients, among them many Russian and international blue chips
� Combined staff: 1200 employees in HQ, 25 regional offices in Russia, 4 CIS and 3 overseas offices
� Warehouse space: 150 000 sq. m. A and B-class in 8 cities of Russia
� International partner network (China, Germany, Japan, Turkey)
Freight forwarding Project logistics Contract logistics Services
Business focus areas
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Russian logistics market – international comparisons
Russia: second largest logistics market in Europe
Size of logistics markets in USD bn (2008) Logistics costs compared to GDP (2008)
China2 20,0%
Russia 13,4%
1 300US
1 230Europe1
2
Logistics costs in Russia are relatively high compared to GDP, under the likely influence vast geography and poor infrastructure
1 EU27+Switzerland and Norway, 2007; 2 2006, estimate; 3 2007Source: Langley/Capgemini; Fraunhofer Institut
13,0%India2
US 9,7%
Germany3 8,4%
540China2
280Germany3
225Russia
150France3
Europe
Global avg. = 11,7%
2
Size and dynamics of STS/RLS market vs. German market and vs. GDP
Russian logistics market has been growing at >20%, but is hit hard by crisis
Russian STS/RLS target market vs. GDP German logistics market vs. GDP
RUR bn USD bn EUR bn
Drop 08-09FCRUR = -8%
Drop 08-09FCRUR = -12%
21 63023 290
25 180 26 59024 590
CAGR 05-08 RUR = 7%
2 1202 190
2 250 2 270
2 150
Drop 08-09FCEUR = -8%
USD bnDrop 08-09FC
EUR = -5%CAGR 05-08EUR = >2%
3
Russian logistics market has suffered strongly from crisis and rouble devaluation
Note: conversions at appropriate annual avg. rates for historical points; forecast using USD/RUR = 32,2 (average 2009 to date)Source: Rosstat; IMF; RBC; Fraunhofer Institut
CAGR 05-08 = EUR = 8%
USD = 14%
2005 2006 2007 2008 2009E
Market in USD bn Market in RUR bn GDP in RUR bn
USD = -32%CAGR 05-08 RUR = 17%USD = 22%
2 210
2 560
3 2003 520
80
90
125 142
2005 2006 2007 2008 2009E
3 100
98
EUR = -8%USD = -14%
276175
189205
218
218237
281
321
200
Market in USD bn Market in EUR bn GDP in EUR bn
3
Future growth scenarios
Russian logistics market most likely to return to growth in sync with GDP
Optimistic case(Council of National Strategy)
Pessimistic case(MERT)
Base case (IMF)
RUR bn USD bn
3 52093 94 96 99
Market, USD bn Market, RUR bn GDP, RUR bn
RUR bn USD bn
3 840142
101 106113 119
3 520
142
96 97 100104
RUR bn USD bn
CAGR 08-12 USD = - 8%
CAGR 08-12 USD = - 4%
CAGR 08-12 USD = - 9%
4
If RUR shows weakness, the market may not reach 2008 levels in USD terms in the next 3 years
Note: conversions at appropriate annual avg. rates for hist. points. FC with USD/RUR = 32,20112 (YTD 08/11/2009)Source: As indicated, STS/RLS estimates
� Commodity prices stabilize and continue growing
� Government stimulus packages help the economy return to stable growth
� Banks making credit available, favorable fiscal and monetary policy make investments affordable
� Commodity prices remain volatile but at acceptable current levels
� Economy loses only little momentum after expiry of governmental stimuli
� Lacking efficiency of Russian manufacturers makes them slow to benefit from recovery of world economy
� Slow recovery of world economy due to unemployment, diminished consumer spend, continuously limited credit availability, protectionism
� Stagnating commodity prices� Lacking efficiency/competitiveness
of Russian manufacturers
2008 2009FC 2010FC 2011FC 2012FC
2 990 3 0203 080
3 180
2008 2009FC 2010FC 2011FC 2012FC
3 520
3 2603 420
3 620
101 106 3 520
2008 2009FC 2010FC 2011FC 2012FC
3 100 3 130
3 220 3 340
96 97
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Addressable market potential estimates
Continued outsourcing of logistics may soon offset the effects of crisis
Share of outsourced logistics(current vs. forecast)
Europe 66%
Asia Pacific
62%
2009 E (Russia) 2014 E
74%
70%
Addressable market estimates (bn USD)
2008
Optimistic
In-house logisticsOutsourced logistics(addressable market)
92 50
65 54
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Depending on market scenario, outsourced logistics market may fully recover the pre-crisis level by 2012
Latin America
51%
Germany 49%
North America
47%
Russia 30-40% 50-55%
60%
57%
54%
Base
Pessimistic
2012E
Assumptions: by 2012 market gains 60% of projected increase from 30-40% to 50-55%; all calculation based on constant USD
1 Data used for calculation: 35% outsourced in 2008; 52,5% outsourcing level to be reached by 2014Source: Langley/Capgemini; Fraunhofer Institut; STS/RLS estimates
57 47
55 46
2014Forecast
5
Selected Russian domestic logistics market segments (USD bn, 2008)
STS/RLS serve some of the largest Russian logistics market segments
Estimates
FMCG 17,7 20 1,8
Alcoholic beverages 3,7 19 1,8
Fashion/Footwear 3,4 18 2,1
Furniture/DIY 2,2 17 5,3
Consumer/Commercial vehicles 1,7 16 7,4
Pharma/Biotech 1,7 15 7,5
Fresh 1,3 14 9,2
Consumer electronics 0,8 13 10,8
Machinery, equipment, vehicles 7,0 12 0,7
Finished consumer
goods
7,0
0,8
1,3
1,7
1,7
2,2
3,4
3,7
17,7
Source: GKS; RZD; Industry research$ STS/RLS analysis
Machinery, equipment, vehicles 7,0 12 0,7
Construction components/materials 8,3 11 3,5
Intermediate goods 3,5 10 8,3
Parts/Components 0,7 9 7,0
Coal 10,8 8 0,8
Oil, LNG, chemicals (except pipelines) 9,2 7 1,3
Ferrous metallurgy products 7,5 6 1,7
Agriculture products 7,4 5 1,7
Bulk construction materials 5,3 4 2,2
Ore 2,1 3 3,4
Forestry products 1,8 2 3,7
Fertilizers 1,8 1 17,7
Industrial products
Commodities
and bulk products
1,8
1,8
2,1
5,3
7,4
7,5
9,2
10,8
0,7
3,5
8,3
7,0
6
Segment profile
Vast experience in industrial and complex project logistics
� Complex project logistics� Transportation of oversized and overweight
equipment� Provision of all types of transport (air, road, rail,
sea)� Provision of tailored infrastructure solutions
> Land transportation in severe conditions (e.g., Arctic)
Service portfolio
Oil/Gas
� Baker Hughes� Caspian Pipeline
Consortium� CentrCaspneftegaz� Neftegazengineering� Rosneft
Key clients
Power generation
• Boguchanskaya Hydroelectric Plant Bureyskaya Hydroelectric Plant
• Kambaratynskaya Hydroelectric Plant
Industrial and project logistics
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STS/RLS is able to deliver any equipment to any destination
(e.g., Arctic)> Temporary installations (jetties, roads, bridges)> Lifting of power lines
� Intermediate storage � Project customs clearance, including in all major
seaports of Russia
� Rosneft� Tenaris� TNK-BP
Hydroelectric Plant
7
Ability to provide complex, tailored solutions inside Russia and CIS
Transportation of generator wheel for
Kambaratynskaya HEP (Kyrgyzstan)
Airlifting of generator wheel for Bureyskaya HEP (Russia)
Industrial and project logistics
Delivery of railway engine from manufacturingplant in Russia to Iraq
Transportation of sodium powder Using sealed containers
8
Segment profile
Wide range of services in parts’ logistics
� Cargo pick-up at consignee warehouse� Transportation between distribution centers� Break-bulk cross-docking � Delivery to final destination� Handling of large SKU assortment (> 30k SKUs)� Transportation and storage of special goods
> Oversize (above standard pallet size)> Fragile (glass)
Service portfolio
Consumer/Commercial
� Ford� Mazda� Pirelli
Key clients
Industrial
� Komatsu� OTIS
Automotive and parts logistics
> Fragile (glass)> High value (delivery in cages)
� Customs clearance� Value-added services
> Insurance (freight, liability)> Shipment tracking> Return of proof-of-delivery documentation
� Storage and delivery of rubber tires
Our flexibility allows us to provide tailored solutions to most of our clients
9
Ability to cover door-to-door supply chain of our clients in Russia & CIS
Automotive and parts logistics
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Segment profile
A leading LSP for Russian FMCG and retail industry
Service portfolio
FMCG
� Baltika � Beiersdorf � Efes � Kraft � L’Oreal � Mars
Key clients
Retail
� Auchan� Metro� X5 Retail Group
FMCG and Retail logistics
� Transportation using all modes of transport� FTL, FCL, LTL solutions� Warehousing
> Network of A-/B-class warehouses in all cities with population over 1 million
> Storage and cross-docking� Handling of large SKU assortment (> 30k SKUs)� Transportation and storage of special goods
STS/RLS is serving (or have served in the past) a large part of Russia’s FMCG leaders
� Mars � Nestle � PepsiCo � Procter & Gamble� SCA Hygiene
…and 500 morecompanies
� Transportation and storage of special goods> Temperature control> Humidity control
� Customs clearance� Value-added services
> Insurance (freight, liability)> Shipment tracking> Return of proof-of-delivery documentation
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Tailored solution for transportation and warehousing
FMCG and Retail logistics
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Summary
Our drive for quality and high service level never stops
� CRM/ERP (IWIS, developed locally)
� WMS (Logistic Vision)
� E-services (tracing of shipments and client notification)
� Commercial department includes a team of Key Account Managers (KAMs)
� KAM fulfill the roles of “one-point-of-contact problem solvers” for clients
� KAM role split based on industry specialization
IT systems development
Key accountmanagement
� Certified by Bureau Veritas
� Maintained since 2004
� Fast receipt of proof-of-delivery documentation
� Availability of document scans for accelerated client notification
� One bill of lading for complex transit shipments
� Quarterly client surveys conducted to measure service quality
� Surveys linked with quality KPIs, which form an integral part of STS/RLSperformance management and quality assurance systems
ISO 9000:2001
Customized solutions
Client satisfactionmeasurement
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Contact information
We are open for international cooperation
Our clients focus on their businessWe take care of logistics
Kirill VlasovKirill Vlasov
STS/RLS Logistics
Strategy Development Director
+7 (495) 775 02 02
+7 (495) 933 00 33
+7 (985) 760 2209 (mob.)
www.stslogistics.net
www.rls.ru
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