Freight transport prices increased by 40% over the year

Demand for freight transportation by road is growing, noticeably outstripping supply, which is expressed both in the number of unfulfilled applications and in rising prices. Year on year, according to market participants, transportation prices have risen by 40%. The reason is a shortage of drivers, vehicles and parts, exacerbated by high borrowing costs, rising fuel prices and operating costs. Market participants expect prices to continue rising in the fourth quarter.

According to the freight exchange ATI.SU, the number of applications for road freight transportation in the third quarter increased by 12% compared to the second quarter and by 60% year-on-year. In a number of regions of the Russian Federation, a multiple increase is observed: for example, ATI.SU notes, interest in the delivery of goods from Ingushetia has tripled, and more than doubled from the Altai Territory, Novgorod and Pskov regions. Also, applications for transportation to three regions of the Far East (Amur Region, Primorsky and Khabarovsk Territories) showed an almost two-fold increase, they add. A number of market participants also note an increase in transportation volumes.

Director of Transport Operations at FM Logistic in Russia Margarita Tabunova confirms the trend towards an increase in the number of shipments in the third quarter, “which reflects standard seasonality,” and expects an even greater increase in delivery volumes in the fourth quarter – up to 20%.

The head of the department for interaction with industry and infrastructure organizations of the Business Lines Group of Companies, Evgeniy Utkin, says that over the nine months, cargo turnover increased by 23%, the increase in the third quarter was 4.8% compared to the same period last year. According to him, the delivery segment to marketplaces is actively developing, showing a twofold increase compared to last year. Delivery to retail chains also shows stable growth – by 34% over nine months. He also notes the active development of road transport in the Far East and Siberia and the growing demand for road delivery in the south of Russia due to the closure of airports.

But supply is not keeping pace with the growth in demand. The founder of ATI.SU Svyatoslav Vilde says that just two or three years ago the standard ratio between the number of goods placed on ATI.SU and vehicles ready to transport them was a maximum of two to one. “Now it’s an average of three to four, and sometimes five to one, that is, there are many more people willing to send cargo than there are performers ready to transport it,” he notes.

“We see a significant reduction in the number of completed applications for cargo transportation on the market,” says Delko CEO Sanjar Ashuraliev. “And first of all, we attribute this to the lack of equipment among road carriers. The second factor is the shortage of driver personnel.” According to his assessment, the downward trend in cargo transportation will continue. “The coming winter will also make its own adjustments: aging equipment may not withstand the cold, and not all carriers have the opportunity to renew their fleet,” he adds.

The growth in demand has already affected rates, ATI.SU notes: within Russia they grew by 15.5% for the quarter and by 41.1% for the year.

Delivery of goods from Moscow to St. Petersburg increased in price over the year by 31.9%, and in the opposite direction – by 39.3%. The greatest increase in price among popular destinations, according to ATI.SU, was shown by transportation from Naberezhnye Chelny to Chelyabinsk (by 76.7%) and Yekaterinburg (by 72%).

“Undoubtedly, the supply shortage, caused by a shortage of drivers, spare parts and vehicles, primarily affects the increase in transportation costs,” says Margarita Tabunova. “Additionally, the increase in fuel costs, the cancellation of discounts, the rise in exchange rates and changes in the refinancing rate had an impact.” Over the year, tariffs have already increased by an average of 40%, she notes, “and, unfortunately, they may continue to rise in November-December.” Ivan Golovko, head of international road transportation at Noytech Supply Chain Solutions, estimates the increase in tariffs at 30–40%.

SOTA Logistic Business Development Director Igor Chernyshev also notes the continued growth of tariffs against the backdrop of a supply shortage on the part of road carriers and a halt in the growth of transportation volumes. “This is due to both the rise in cost of loans for the trucking business and the instability of the ruble exchange rate for importers of goods,” he says. “By the end of the year, we expect tariffs to increase by at least an additional 15%. At the same time, there will continue to be a certain deficit in the transportation market.”

According to Sanjar Ashuraliev, if the situation with equipment is gradually improving, as offers from Chinese and domestic manufacturers appear on the market, then a set of measures implemented at the state level is necessary to solve the problem of driver shortage.

“We consider it important to increase the attractiveness of the industry by ensuring a decent level of wages and attracting young people into the profession, as well as removing legislative restrictions on the work of foreign drivers,” says Mr. Ashuraliev. It is necessary to actively increase the prestige of the driver’s profession and the level of wages in order to attract new personnel and retain experienced specialists, Ivan Golovko is sure.

Igor Chernyshev notes that now the main problem for fleet owners is the cost of putting new trucks into operation. “We are talking about the costs of equipping with additional equipment (navigation, tachographs, etc.) and insurance (from 500 thousand rubles),” he says. “Currently, this is a total of about 3.5 million rubles.” These costs, in terms of the entire vehicle fleet, including refueling, will amount to tens of millions of rubles. For business, says Mr. Chernyshev, these are significant operating expenses, and the credit burden will only increase. “So access to cheaper money could significantly reduce the burden on our business,” he notes.

“We won’t have time to solve the problems globally in the high season (adding drivers and cheap cars to the market),” Margarita Tabunova is sure. “We need to work on increasing the turnover of existing equipment: fast loading and unloading in warehouses, round-the-clock work of distribution centers and shippers, leveling demand within a week and a month.” If these issues are not addressed jointly, speculation in the transportation market could get out of control, leading to a global increase in inflation and bankruptcy of small and medium-sized enterprises, she adds.

Natalya Skorlygina