Motor transport in Russia

Automobile cargo transportation forms the basis of trade turnover and material support of enterprises throughout the territory Russia. This market is vital for the country's economy. In recent years, there has been a steady market growth with an increased significance of transportation of "combined" cargo and delivery of the "last" mile.

The experts of SBS Consulting analyzed the current state and prospects of the development of the road freight market. Key trends were identified, taking into account trends in digitalization and greening, and the main directions of development for trucking companies were formulated. We thank the experts of Adamos Logistic and FORPOST Ltd for their help in conducting research.

Quantitative analysis of the road freight transport market

Overall dynamics:

• Road freight transport grew at an average annual rate of 6% from 2010 to 2019.
• In 2020, due to the COVID-19 pandemic, the market showed a decline of 1%.

Main types of cargo:

1. FMCG (fast-moving consumer goods). Main market segment with high frequency of shipments and short delivery times.
2. Industrial cargo. Include machinery, metal, chemical products and other industrial goods..
3. Construction materials. High demand due to the development of the construction industry.
4. Household appliances and electronics. Increased demand is due to growing consumption and the development of e-commerce.
5. Other cargo. Includes oversized cargo, perishables and hazardous substances.

Market segments:

1. FTL (Full Truck Load):
   
   

   — A mode of transport where only one customer's cargo is in the vehicle.

   — Main advantages: ability to transport any cargo, time saving by reducing the number of stops, customised routes.

2. LTL (Less than Truck Load):
   
   

   — A mode of transport in which shipments of different customers are transported by a shared vehicle.

   — Main advantages: minimisation of costs when transporting a small batch of goods, expansion of transport service geography, possibility to choose delivery options.

Market dynamics and structure

Market dynamics:

• Over the last 10 years, the volume of the commercial road freight market has more than doubled.
• In 2020, FCMG and industrial cargoes have the largest share in the market structure.
• More than 70% of the market is occupied by FTL shipments.

Changes in 2020:

• · Amid an overall market shrinkage of 4% in 2020, there was a positive trend in LTL shipping, which totalled RUB 165 bln, 2% higher than in 2019.

Forecasts up to 2025

Main drivers of growth:

• Growth of retail trade volume
• Development of road infrastructure
• Improvement of road network quality
• Weakening ruble and high projected inflation rate

Major infrastructure construction projects:

• M-12 motorway (Moscow-Nizhny Novgorod-Kazan)
• Togliatti bypass road
• Tver bypass road as part of the M-11 Neva motorway
• Completion of construction of the Central Ring Road

Growth Forecast:

• The road freight market is expected to grow by 7% per year by 2025
• The main growth driver will be the LTL segment, which, according to VEB.RF estimates, will grow by 9% per year.

Region-specific features

The regions' potential:

• Moscow, St. Petersburg, Tatarstan, Smolensk, Novosibirsk and Nizhny Novgorod Regions have high potential for road transport.
• The regions were assessed based on an integral indicator that takes into account the volume and average growth rate of freight turnover, average tariffs and wages of employees in the industry.

Top 7 regions to operate in:

• Moscow region
• Republic of Tatarstan
• St. Petersburg
• Moscow
• Smolensk region
• Novosibirsk region
• Nizhny Novgorod region

Trends in road freight transport market development

Key logistics trends:

1. Reorientation towards new segments:
   
   

   — Growing demand for the transport of groupage cargoes

   — Increasing importance of last-mile delivery

   — Development of internet trade

2. Changing logistics destinations and geography:
   
   

   — Increasing complexity and length of supply chains

   — Development of terminal and warehousing infrastructure

3. Environmental sustainability:
   
   

   — Introduction of electronic document management systems

   — Supply chain optimisation using AI and machine learning technologies

   — Last-mile delivery automation

4. Развитие цифровых технологий:
   
   

   — Smart roads, unmanned vehicles

   — Fleet monitoring and management systems (TMS, FMS, WMS)

Conclusion

The study shows that the Russian road freight transport market continues to grow despite temporary difficulties caused by the COVID-19 pandemic. The main drivers of growth are infrastructure development, improvement of road quality and growth of e-commerce. Adoption of new technologies and environmental standards will also further boost the market.

To maintain competitiveness, companies must invest in fleet modernisation, development of digital solutions, and increasing efficiency of logistics processes. Regional diversification and geographic expansion are also key success factors in this market.