Bumpy ride yet bright fu­ture for lo­cal lo­gis­tics busi­nesses

Kyiv Post - - Business Focus - BY OK­SANA GRYTSENKO [email protected]

Lo­gis­tics, the busi­ness of trans­port­ing, cus­tom clear­ing, stor­ing and dis­tribut­ing goods, was hit hard by the 2009 global re­ces­sion, but is now es­ti­mated to be grow­ing in Ukraine at im­pres­sive, dou­ble digit rates.

In the short term, the path ahead for Ukraine’s lo­gis­tics busi­ness is as bumpy as Ukraine’s roads, in part due to a hor­ri­ble in­vest­ment cli­mate that chokes busi­ness in bu­reau­cracy, cor­rup­tion and shake­downs.

Yet it’s a path that lo­gis­tics busi­nesses will stick to, be­cause of the huge long-term up­side. Sim­ply put, Ukraine lags far be­hind the West in terms of num­ber and qual­ity of lo­gis­tics in­fra­struc­ture, be it roads, ware­houses, cargo ter­mi­nals or ease of cus­toms clear­ance pro­ce­dures. And where there are hur­dles for some, there is op­por­tu­nity for oth­ers.

“Growth dy­nam­ics have not re­cov­ered to pre-cri­sis lev­els,” said Oleg Kalen­sky, sec­re­tary of the lo­gis­tics and trans­porta­tion com­mit­tee at the Amer­i­can Cham­ber of Com­merce in Ukraine. Kalen­sky es­ti­mated, how­ever, that the in­dus­try is still grow­ing strongly, by about 15 per­cent an­nu­ally. Yet this, he said, is only half of the 30 per­cent an­nual in­creases of 2006-2008.

The pinch of re­ces­sion has forced var­i­ous busi­nesses oper­at­ing in the lo­gis­tics sec­tor to fo­cus on im­prov­ing com­pet­i­tive­ness by boost­ing the qual­ity and value of ser­vices pro­vided.

Whereas in­vestors in pre-cri­sis times were throw­ing money into any ware­house or other lo­gis­tics project that popped up, “now in­vestors usu­ally think twice be­fore start­ing a lo­gis- tics busi­ness” in Ukraine, said Aly­ona Maksym­chuk, head of trans­port and lo­gis­tics com­mis­sion at Kyiv re­gional Busi­ness Coun­cil.

Maksym­chuk said that busi­nesses have started de­vel­op­ing in a so-called hor­i­zon­tal di­rec­tion. New lo­gis­tics op­er­a­tors tend to ap­pear not from out of town, for­eign in­vest­ment, but as off­shoots of ex­ist­ing re­tail op­er­a­tions that are in need of such ser­vices.

“Re­tail­ers, like Fozzy Group and Epi­cen­ter, are now con­struct­ing their own big lo­gis­tics cen­ters,” Maksym­chuk added.

Ukraine’s no­to­ri­ously bumpy and pot­hole-filled roads can cause de­lays and add ex­tra costs for the most ba­sic of lo­gis­tics op­er­a­tions, such as de­liv­ery of goods by truck. (UNIAN)

Newspapers in English

Newspapers from Ukraine

© PressReader. All rights reserved.