“In Russia you never know, but we think it [recovery] will be sustainable because the age of the car parc has increased – Gefco chairman Luc Nadal
Logistics provider, Gefco says a strongly recovering Russian automotive market has led it to acquire 750 railcars to transport growing demand for vehicles in the country.
Russia endured 48 consecutive months of dramatically falling automotive sales as a combination of a plunging oil price, high inflation, credit access difficulties and a succession of international economic sanctions from a West disapproving of its annexation of Crimea, saw consumers shy away from big ticket purchases.
Russia is uniquely susceptible to oil cost fluctuations but from a low which saw the commodity fall to the mid-US$20 range, it has now rebounded very strongly, even nudging above US$80 recently and the surging price has seen the country's car market rebound strongly, albeit from a very low base.
PSA Group sold 75% of its stake in Gefco to Russian Railways (RZD) in 2012 and the advantage of having a Moscow-headquartered owner cements the logistics company's deepening roots in the country.
Gefco has been established in Russia since 2003, starting with General Motors' mid-range models, followed by Peugeot and subsequently capitalising on overseas OEMs who established domestic manufacturing bases and joint ventures with home-grown companies.
The logistics provider also inked a 4PL contract with Ferronordic Machines in 2015, where Gefco provides logistics for oversized and heavy equipment throughout Russia, including remote regions, guaranteeing cost reduction by 10% within five years.
"We are strongly developing during 2017 and acquired some assets," Gefco chairman, Luc Nadal told just-auto on the sidelines of this week's International Economic Forum (SPIEF) in St Petersburg. "We need to become [an] operator for railcars so we have taken over a fleet of 750 railcars from a Russian company called RTA. It is dedicated for automotive transport.
"When it is about car transport it is difficult – that is why it is [a] significant acquisition. We are very happy about that because the market is recovering – there will be pick-up of capacity in Russia.
"[For example] There is a Russian automotive company with plants in Russia which is struggling to find resources on the market to take their vehicles. At the same, trucking companies have stopped to invest so there is a lack of capacity.
"In Russia you never know, but we think it [recovering] will be sustainable because the age of the car parc has increased. They have also significantly developed the Avtovaz-Renault alliance and have developed their own market. [They are] expecting to export some vehicles."
Export of Russian goods was a major theme of SPIEF 18 and the Gefco chairman, says companies based in the vast country are looking to his logistics operation for assistances with transporting their products abroad.
Although PSA divested 75% of its stake to Russian Railways, it nonetheless inked a mammoth deal in 2016 to the tune of US$8.5bn with Gefco, to manage the automaker's entire global manufacturing supply chain for five years.