Regional Market Outlook on Logistics

LTL shipments through road has seen a significant growth. Russian trucking companies are working together to survive in the market.

Foreign 3PLs, such as DHL, TNT Express, Itella Russia,  are dominating the market, as domestic companies are not capable to serve the market with efficient technology and younger fleet.

LTL Refrigerated Market Size: Russia

Refrigerated LTL transportation has been accepted by Russian companies, as 1.8 million tons of cargoes were transported across Russia in 2017, which is more than 25 percent of all refrigerated cargoes transported

LTL Refrigerated CAGR: Russia (in Percentage)

  • Growth rate for LTL refrigerated cargo has been higher than that of FTL shipments purely because of flexibility the shipper gets in paying per pallet costs rather than a full truck
  • Major refrigerated trucking companies are already running schedules for reefer LTL delivery between Moscow and other retail hubs in the country

LTL Market Overview: Ukraine

The LTL market is purely supported by medium and high volume shippers, as low volume shippers own reefer cars through which they delivery cargo to their partners.

Higher number of mini reefer trucks and reefer cars are used for transporting vegetables and fruits; hence, operating & maintenance costs are relatively lower compared to a reefer truck.

LTL Refrigerated Market Size: Ukraine.

  • LTL volume has contributed to refrigerated trucking, yet FTL shipments remain to be the popular choice for shippers; consistent volume of dairy products transported in LTL shipments  keep the LTL transport market alive

LTL Refrigerated CAGR: Ukraine (in Percentage)

  • Growth rate for LTL refrigerated trucking has not improved from 2016 through 2017, as demand from shippers to book LTL shipments has remained thin
  • In Ukraine, trucking companies offer mini refrigerated vans and low tonnage cars, which are majorly used for transporting vegetables and fruits, which eliminates the need for LTL shipments

LTL Supply–Demand Analysis: Russia

The industry can leverage on opportunities provided by trucking companies, who are willing to consolidate reefer shipments on a daily basis to various regions in Russia.

LTL has grown over the years and is forecasted to grow, but FTL shipments will remain dominant, as shippers will need time to adopt to LTL shipments, due to risk.

Market Split of Refrigerated Trucking:  Russia (in Percentage)

  • Refrigerated LTL transportation in Russia contributes to about 17 percent of all refrigerated shipments. Contribution of LTL is expected to increase by 3–5 percent in the near future
  • Growth for LTL shipments is positive; at the same time, shippers in Russia have FTL as their first choice for transporting their reefer cargo, as the risk of cargo spoilage is high and different cargo needs to be maintained at different temperature  

LTL Supply–Demand Analysis: Ukraine

The industry can negotiate contracts with LTL trucking companies, as demand for reefer trucking is moderate in Ukraine, they will have higher bargaining power in negotiating contract rates.  

LTL shipments are not so popular in the market; small shippers feel that the cost of owning small cars is cost efficient than paying freight for reefer trucks. 

Market Split of Refrigerated Trucking:  Ukraine (in Percentage)

  • Refrigerated LTL transportation in Russia contributes to about 19 percent of all refrigerated shipments. Contribution of LTL is expected to increase by 2–3 percent in the near future
  • LTL shipments do not have a steady growth until small shippers decide to use trucking companies for LTL shipments; majority of farmers are still not trusting safety of cargo in LTL shipments 

Dominant Pricing Models Used in LTL Shipments

Dimensional and pallet-based pricing is widely used by major LTL carriers across the globe. For shippers in Russia and Ukraine, LTL still seems a less popular option comparing to FTL.

Dimensional Based Pricing Model

  • Pricing based on weight per cubic and amount of space the shipment occupies
  • Pricing adjusts for distance, night time deliveries, weight, value, day of week shipped, payment terms, fuel, and lanes
  • Shippers from consumer durables and large electrical or electronic equipment, etc., use this type of pricing model

Pallet Pricing Model

  • In this pricing model, a set rate for commodities fitting a specific size pallet is fixed
  • Rates are capped by height, weight, or both. Carriers and shippers can add or delete specifications to their specific situation
  • Shippers from FMCG, chemical, or oil industries use this model to transport limited loads