Russian Logistics Companies Need to Overcome Image Problems in Order to Benefit from East Asian Trade

“Aeroceanetwork East Asian members find cargo safety and payments issues part of the problem to growing their business with Russia”

Kuala Lumpur, Malaysia, December 15, 2005 - Russia has now applied for membership of the East Asia Community and according to the Russian President Vladimir Putin "Russia has always had and always will have long-term political, economic and, in the broader sense, civilization interests in this region." Putin went on to note that this was especially true of Siberia and the Far East.” Russia is eager to join the East Asian community, which some leaders say could sow seeds for a pan-Asian free trade bloc. The grouping comprises 10 ASEAN countries as well as China, Japan, India, the Republic of Korea, Australia and New Zealand which is a huge footprint encompassing about half the world's population and 20% of global trade.

Logistics development is an absolute requirement for Russia’s development to remain healthy in East Asia. Some East Asian based Aeroceanetwork members see this development as a rocky road. Aeroceanetwork is a trusted non-exclusive global business network for professional logistics companies and international freight forwarders. According to some of the Aeroceanetwork members around East Asia, for Russia become an integral part of a greater Asian economy they have a long way to go. First of all the volumes are quite small to date so Russia has remained off the radar screen and thus what trade there is generally comes from the Russian side. “We don't have any [regular] trade with Russia,” said Takatoshi Sasaki of WTO Logistics Group in Osaka, Japan “but we have some outbound shipments handled by us which are organized by our Russian agents.”

Leaving the business development for the Russian side presents problems as well because many times Russia’s negative business image comes into play with Asian forwarders. “During my time here in China, Russia has always had a bad reputation concerning safety [of the shipments],” said Tom Stilmock of China Way Logistics in Beijing, “for example shipments are in very high danger of not reaching their final destinations once they cross the border into Russia.” Payment risks are also part of the Russian negative image as well. “We have this existing traffic but we will only accept ‘freight prepaid’ basis,” said Allen Chan, managing director of Emeror Sky in Hong Kong, “And we have refused shippers’ inquiries for DDU and DDP services in the past.”
Nonetheless, the trade has been visibly picking up, at least in Japan. “Nowadays trade from and to Russia seems very active and increasing,” said Takatoshi Sasaki. Others still remain cautious on business development with Russia. “It all depends on the agent,” says Allen Chan. Chan states he still is unwilling to work with Russian traffic unless he has an agent who in Chan’s words is “reliable and trustable”. But on what could be seen as a positive note, Takatoshi Sasaki reports that outside of their image problems, he hasn’t seen any road blocks to the growing trade with Russia, but cautiously added that he will “still have to see how it goes.”

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