Market Trends of russia road freight transport Industry
Russia's transportation storage dominates road transport, with over 1.1 billion metric tons moved in 2022
- In 2021, land and pipeline transport activities accounted for a major share of GDP (contributed 63%). In contrast, warehousing and auxiliary transport activities contributed to the transport and storage sector's GDP, contributing around 27% in 2021. Water, air, and postal courier activities accounted for 2%, 5%, and 3%, respectively, of the transport and storage sector's GDP in 2021. However, the EU sanctions, which are directed at the Russian economy, negatively impacted Russia's ability to sustain its military operations and impact the European Union. Passenger air travel was significantly impacted by the closure of Ukrainian airspace and the sanctions imposed on Russian aircraft.
- In 2022, the manufacturing sector accounted for 14.45% of the GDP. The manufacturing industry relies heavily on transportation to acquire the necessary raw materials for its production processes. The transportation and storage sector rose by 11.22% YoY in 2022 recovering from the Russian invasion of Ukraine, which inflicted damage on transport infrastructure. In 2022, the growth in road transit volumes increased by 2.5 times and the growth in popularity in the Russian regions of the express delivery format from warehouse to door will also contribute to the development of road transportation.
- The road transportation sector took the forefront, moving an impressive load of over 1.1 billion metric tons during the first quarter of 2022. In this timeframe, logistic enterprises in the Central Federal District excelled, overseeing the transportation of almost 14.3 million metric tons of goods via roads, securing its position as the primary region for road freight in the initial quarter of 2022. FMCG and small industrial products were the dominant categories of goods transported.
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G7 nations have set an oil price cap for crude oil of USD 60 per barrel, enforced from December 2022
- According to the Russian Economy Ministry, prices for Russian natural gas for consumers outside the CIS countries rose by 72% to USD 523.3 per 1,000 cm3 in 2022. Russia's gas exports were 10% lower in 2022, at 185 billion cm3. Russia's gas output fell to 721 billion cubic meters in 2022, down from 764 billion cubic meters in 2021. Over 70% of Russian-produced oil is exported. Around 1,100m barrels of crude oil were exported by ship in 2021 and 1,400m in 2022, with 75% leaving from western and 25% from eastern ports.
- Consumer prices for gasoline in the Russian Federation in 2021 increased by 8.84%, exceeding the rate of general inflation, which was 8.39% at the end of 2021. In December 2021, gasoline prices rose by 0.85% compared to November 2021. Diesel fuel prices increased by 1.9% in December 2021 compared to November. Prices for gas motor fuel decreased by 5.4%. The government aims to raise consumer gasoline prices within the limits of inflation, and the goal is also to be followed by gas station networks across the country. However, wholesale price growth in 2021 set new records, resulting in a yearlong disparity between wholesale and retail prices.
- The G7 nations have set an oil price cap for crude oil of USD 60 per barrel, which occurred in December 2022. The average price for Russian crude oil in January 2023 was USD 49.48 per barrel, down 42% in January 2022 prices and well below the USD 60 per barrel price cap. Russia issued a decree applicable from February 2023 until July 2023, which banned the sale of crude oil and finished oil products to any country or company that, directly or indirectly, referred to the price cap in the contract. The average price of diesel in Russia during May-August 2023 was RUB 59.40 (USD 0.811).
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- Russia updates manufacturing development strategy through 2035 with 4% annual average growth
- Over 1,000 global companies curtailed their operations in 2022, which impacted the e-commerce industry
- Russia's Logistic Performance Index ranks 88th in 2023, due to the Russia-Ukraine crisis and trade disruptions
- Through export promotion measures, Russia aims to expand industrial exports to USD 150 billion by 2030
- Rising fuel prices amid the Russia-Ukraine War led to increasing truck operational costs and overall logistics costs
- Kamaz, a dominant brand in the Russian truck market, is expected to increase sales to 1,20,000 units in 2023
- Severe shortage of truck drivers is leading to 8% - 20% rise in wages in private sector impacting the average road freight pricing
- Russia-Ukraine War-related restrictions, supply disruptions, and shortages led to surged inflation
- Growing GDP contribution by the oil and gas, mining, quarrying, and manufacturing sectors are supporting the economy
- The manufacturing industry's contribution to the GDP declined by 2.10% YoY in 2022 and is expected to recover in 2023
- Russia has accelerated road infrastructure development with a USD 224 billion program to upgrade 85% of its road network by 2027
- Russia anticipates its share of domestic drug production to reach 42.6% by 2030 to reduce import reliance on pharmaceuticals
- Rising demand for trucks in 2022 boosted initiatives taken by companies to raise their production volumes
- Growing manufacturing industry along with Russian government grant for USD 26.3 million leading to growing road freight tonnage in Russia
- Road freight transportation volume is steadily increasing, with competitive pricing, expanding services, and major planned investment as major driving factors
