At Varshavskoye Shosse 37, Russian Post’s Moscow HQ, a fresh wind is sweeping through the building, blowing out old cobwebs, and letting in new ideas. The buzzwords are modernization and internationalization, because the days are gone in which the mail and logistics giant, employing 331,000 people, limited its services to its home market. Meanwhile, the company is looking beyond its own backyard, striving to becoming a heavyweight in the international eCommerce market, and developing end-to-end solutions for its customers. This could all happen very quickly, but the program will take years to realize, since it lacks suitable freighters of Russian production.
Seamless supply chains from China, via Moscow to Europe – that is Russian Post’s vision for the years to come. This is confirmed by Denis Ilin, Deputy CEO International Business of the postal
service: “We aim to establish new routes primarily between Asia and Russian to Europe with a mix of mid-range and long-range aircraft.” Currently, Russian Post operates two TU-204-100C
which transported almost 300,000 tons of domestic shipments in 2019. The largest volumes were flown from its Moscow Vnukovo Airport hub to Norilsk, Anadyr, Yakutsk, Mirny, Pevek, Khabarovsk,
Magadan, as well as from Novosibirsk to Moscow.
Growing the fleet will take time
The aircraft also proved to be extremely helpful during Covid-19 times, providing continuous air services between China and Russian and performing up to 150 flights from China (primarily, Hangzhou and Zhenzhou) to Novosibirsk and Moscow, Mr. Ilin stresses.
Asked about Russian Post’s fleet plans in the context of its internationalization strategy, he says that his company is aiming for a mix of mid-range and long-range cargo aircraft based on freighter variants of the existing passenger aircraft MC-21 built by Russian manufacturer UAC. Maxim Akimov, General Director of Russian Post, gets more precise, speaking of 7 additional freighters that Russian Post intends to deploy.
However, the fleet expansion will most likely not happen before 2026, since the targeted cargo aircraft still have to be developed, unless Russian Post opts to lease equipment produced in Europe or the U.S. in order to fill the capacity gap until the MC-21 freighters are available. However, there is no indication of this, since Russian Post adheres to the guidelines of the Putin government, which demands that Russian companies should primarily operate domestically produced aircraft in order to advance this industrial sector, and in the longer term position the United Aircraft Corporation as the third largest aircraft manufacturer after Airbus and Boeing.
Digitalization stands high on the agenda
Speaking about his company’s intended network transformation, Denis Ilin emphasizes that Russian Post is focusing on developing a large multimodal logistics hub in Russian, most likely at Vnokovo Airport, to serve import, export, and transit routes from the Far East to Europe and vice versa. Further to this, Russian Post intends to deploy drones to serve remote areas in Russian’s hinterlands which are hard to reach by road. Introducing B2B solutions and rolling out a network of automated parcel lockers across Russian are complementary steps.
As to Russian Post’s announced digitalization program, he says that a data storage and processing center will be developed along with cloud services. The innovation program encompasses a fully integrated logistics platform for eCommerce clients, including full API integration with marketplaces and logistics sub-contractors. Further to this, e-payment solutions for eCommerce customers (both consumers and marketplaces) are being developed, digital communication channels enhanced, and the tracking and routing of shipments will be improved by integrating operational processes in the IT architecture. Finally, Russian Post’s mobile app, already one of the most used ones in Russian today, will be further upgraded.
State-run Russian Post is profitable
In fiscal 2019, the company’s net profit exceeded 3 billion rubles (375 million euros), an increase of 14% to 2018. Revenues were up 9% year-on-year, totaling 206,9 billion rubles, while 20 billion rubles were invested in modernization programs to become more competitive in the international logistics and e-commerce market. The international business of Russian Post has shown a significant 37% increase in revenue in the same period and accounts for 17% of the company’s sales.
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