Exclusive - Russian Sanctions Force ULD Builder to Source Aluminum from China

As Europe continues its economic sanctions against Russia and President Putin is retaliating with stringent export rules on goods and raw materials destined for European manufacturers, it looks like China is becoming a major beneficiary of the EU’s economic measures.

PalNet CEO and Founder, Klaus Demtroeder (right) and his son Dennis who is the company’s General Manager at the interairport Asia exhibition at Singapore.
PalNet CEO and Founder, Klaus Demtroeder (right) and his son Dennis who is the company’s General Manager at the interairport Asia exhibition at Singapore.

In an exclusive interview with CargoForwarder Global, Klaus Demtroeder, chief executive officer and founder of PalNet, the Wiesbaden-based manufacturer of air cargo products, said that his company is increasingly relying on Chinese-manufactured aluminum sheets for the production of company’s high-quality range of pallets and containers (ULDs).

“Although the Russian export rules have become somewhat more relaxed in recent weeks, because Mr Putin needs money for his ailing economy, we are importing a significant number of aluminum sheets from China for our products,” said Mr Demtroeder, adding that at the moment some 25 percent of the sheets is sourced from China, while the remaining 75 percent still comes from a Russian aluminum plant near Rostov.

Irritating payment terms
Demtroeder explained that although Russia for the moment remains the main source for aluminum sheets, PalNet would significantly increase its sourcing from China if the payment terms of the Chinese manufacturer would improve. He said that at the moment these terms were “an issue.”

“They insist on a down-payment of 10 percent when we place the order, with an additional 50 percent when they start production and 40 percent upon delivery,” Demtroeder said, “while with the Russian plant we have the normal 30 days payment upon delivery.”

He said the Russian aluminum sheets are trucked from Rostov to Germany, with a maximum of 250 sheets per truck per week. In contrast, the shipments from China arrive in Germany via Russia by rail, with a transit time of about 16 days.

Russian border problems
Despite the fact that Russia’s export rules have been somewhat relaxed, Demtroeder said that delays on the border were affecting the continuity of his production facilities in Wiesbaden. "We can’t afford interruption in our production process, that’s why we started sourcing aluminum sheets from China,” he said.

At the end of last year, PalNet started to increase space in its production facility with the construction of a new warehouse of 800 m². The production facility will now be able to accommodate two newly procured CNC machines, which are needed to increase pallet manufacturing capacity and will also allow full production of the company's newly designed LD-3 container.

Nol van Fenema

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