Dmitry Seleznev
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Transcript of Dmitry Seleznev
Logistics in Ukrainian
Dmitry Seleznev«PGK Groupe»
Trade Mission to Ukraine Odessa, 20 – 21th of September 2012
53,893 km ²
36% of land
population - about 5 billion people
about 3/4 of potential buyers at the planet Earth
Eurasia
China's foreign trade turnover for the first half of this year grew by more than 25% compared to the same period in 2011 when it was 1.704
trillion.
CHINA The largest manufacturer and exporter of consumer
goods of the Eurasian continent
Logistics Performance Indexof Ukraine 2012 *
CountryRating
position Grade
Customs
Infrastructure
International deliveries
Logistic competence
Cargo tracking
Timeliness of logistic
Germany 4 4,03 3,87 4,26 3,67 4,09 4,05 4,32
Ukraine 66 2,85 2,41 2,69 2,72 2,85 3,15 3,31
Russia 95 2,58 2,04 2,45 2,59 2,65 2,76 3,02
* - World logistics efficiency ranking by the World Bank - Logistics Performance Index - is based on the criteria of: efficiency of customs procedures, infrastructure, transportation logistics, availability and simplicity of international deliveries arrangement, competence of logistic industry, and the ability to control the arrangement of international deliveries.
Singapore
Finland
Netherlands
Estonia
Latvia
Belarus
Hong Kong
Germany
Lithuania
Ukraine
Kazakhstan
Russia
Today in Ukraine most players are 2PL-providers which offer traditional transportation and / or storage facilities management services
3PL - (distribution logistics) represented mainly by western providers
4PL - basically, distribution companies (manage relationships and supply chain “from manufacturer to the buyer")
5PL - providers (?)
Courier companies (cash on delivery) and Postal companies (consignment).
Operators of the logistics market
Delivery
Pick-Up
Shipper
Depo
HUB
Depo
Cnee
OfferPick-Up
LHSortin
gSortin
g Del-ry
Transport logistics - 89% Warehouse storage - 8%
Forwarding - 2% Supply Chain management - 1%
Operators of the logistics market
Transport problems - lack of road networks, lack of modern cargo terminals, high level
of road, rail and other transport
deterioration, as well as its growing obsolescence.
The main "brakes"
The main "brakes"
Staff - the market is experiencing an acute shortage of skilled professionals of high-level oriented to the modern principles of the logistic schemes management, having an appropriate level of knowledge in the field of informational technologies.
- Do you have references from the previous job?-Yes, I was recommend to find a new one.
Low level of informational technologies development and lack of funds in domestic
companies to acquire more advanced software
The main "brakes"
Not defined order of e-money circulation
Tax code
Customs code
Lack of affordable credit resources for development
The main "brakes"
Ukrainian e-commerce market
Increase of the Internet penetration : March 2011 - 32% March 2012 - 42% Forecasted that till the end of 2012 - up to 50%
of adult (over 16) population = 15 million users!
Turnover of the Ukrainian e-commerce market increase on average by 60-80% per year, and in some product categories - by 150-200% and, according to analysts, it is more than $ 1 billion. Thus, to achieve the level of perfect competition in this industry, we need at least 3-5 years.
Often, in dynamically developing companies 'sales' go ahead, and "Operating Systems" stay behind. Sooner or later, every company pays for loss appeared due to damage, breakage, returns, lack of second purchases and faces delivery strategy choice.
own logistics
outsourcing
The is always a choice ...
Company's priorities: reducing expenses, logistic costs specifics of the customer's product time frames of delivery client’s recipients geography availability of storage facilities restrictions on goods turnover stuff qualification ... recipient’s / buyer’s satisfaction
Factors influencing delivery strategy choosing
No intermediaries between
the carrier and the goods receiver
Full control and management of transport, money and informational flows
Expenses for purchasing,
leasing, running machinery, equipment, warehouses
High administrative costs Availability of warehouses in
the regions Additional "communications"
with the sanitary-epidemiological center, firefighters, traffic police ...
Risk of non-core business effectiveness loosing
Own delivery
Reduction of logistics
expenses Ability to deliver small
shipments of goods Time of delivery - 24-48
hours Payment for the
services after order implementation
Reduction of risks connected with running of assets, buildings
Initial difficultness of
technology and business - processes integration (ERP, WMS)
Risk of poor service
Outsourcing logistics
Delivery efficiency
Prime cost of services Marginal income
Goal of the company is a positive return on delivering
Service level
Timeliness of delivery, no errors in storage, while placing an order
Satisfaction with service
Goal of the company is adelivery quality level of 99%
Evaluation of logistics business effectiveness
Main criteria of Client’s choice of
service operator is only the optimal cost!
Logistics provider attracting new customer definitely will try to offer attractive rates.
Analyzing the cost of services
* - Own data, data from http://www.ukrstat.gov.ua and http://index.minfin.com.ua/index/infl/, magazine «Distribution and Logistics».
Diesel fuel price change (in % to January-October 2010): +31%
Consumer price index for fuel and petroleum products (in % to Jan-Oct 2010): 28.7%
Inflation rate (total for the country): 4.2%
Cargo turnover (road as % to January-September 2010r.): 14.6%
Facts and trends of transport services market in 2011-
2012 *Exa
mpl
e
Как уменьшить стоимость транспортных услуг
Not always announced prices are final Give logistic companies maximum possible
information on the volume \ specifics \ your expectations
Three typical cases when one shall negotiate about lower prices:
o Competition. When competitor’s prices are lower
o Similar product. If there is a difference in final price of carriage using different approaches (mixed delivery, partial load, calculating by weight)
o Large volume. To convince operator that you will have large volumes of goods, but it should also be benefitial to your contractor
Analyzing the cost of services
Consider an opportunity to become a partner for
logistics services provider and create common values
Investments in Ukraineg
row
th ra
te, %
millio
n U
.S.
dolla
rs
Foreign direct investments in Ukraine (01.01.2012) *
* - data from the State Statistics Committee of Ukraine
Questions of investment assistance are stated in the program of economic reforms for 2010 - 2014 years "Prosperous society, competitive economy, effective government.“
During 2011 administrative barriers of doing business were removed. Thus, in comparison with previous years next positive changes took place: reduction of procedures number, time, cost and minimum capital to start business. In addition, lower cost on building permits, as well as increase of compensation rate in case of insolvency of the business.
Today, advanced legal framework for investments is created in Ukraine. Ukrainian legislation provides necessary guarantees of activity for investors. In Ukraine, national investment regime is applicable for foreign investors, thus they receive equal conditions for activities compared to domestic investors. Foreign investments in Ukraine are not subject to nationalization.
In case of termination of the investment activities return of investment is guaranteed to foreign investors in kind or in a currency invested without payment of duty, as well as incomes on investments in money or goods. The state also guarantees a smooth and immediate transfer abroad of profits and other funds in foreign currency obtained legally as a result of foreign investments.
Investments in Ukraine
Dmitry Seleznev
Strategic Development Director
«PGK GROUPE»
+38 067 265 72 [email protected]
www.pgkgroupe.com