Going east with eyes wide open
The importance of Russia as a major Finnish trading partner is growing, although some companies still harbour doubts about doing business in this large eastern neighbour. Ahlers and Steveco have combined their expertise to lift obstacles to success in Russia and expedite door-to-door deliveries. The benefits of expert service are emphasised in exceptional circumstances.
With 143 million consumers and spanning over 17 thousand square kilometres and nine time zones, Russia is one of the ten largest economies in the world and a huge market opportunity and consumer area for Finland. "For many reasons, Finns have a uniquely strong opportunity to succeed in Russia,” says Ulla Keino, Commercial Director of Ahlers Trade Services business unit in Belgium. "Ahlers has a customer base that includes many Finnish companies with whom cooperation is a long-term and genuine partnership."
Keino herself has long experience with everyday Russian business culture. She says that one of the great strengths of Finns is their solid reputation for expertise and as a reliable business partner.
"Historically, Finns are highly trusted, even though several companies have left Russia for various reasons. Steveco and Finnish companies generally have an excellent reputation in Russia and Finns are seen as desirable partners. Therefore, it’s gratifying to begin cooperation on a practical level with Steveco, and attract new customers for Ahlers, especially as a market for businesses that want to handle their own supply chain in a transparent way,” says Keino.
Russians feel that Finns don’t just pursue their own interests, but also think of what’s best for the customers and are ready to develop operations for the long term.
"Many speak of the honesty and modesty of Finns who operate in Russia, but from a business point of view, it is a virtue,” says Keino.
Reliability is Finland's strength
Compared to many of its competitors, Finland excels in logistics. There are problems in the Baltics, especially at the borders, and Russian ports sometimes experience insufficient capacity and congestion. Another issue is that Finland is seen as an expensive transit country, but according to Mia Brunila, Steveco's Sales Director, that is not the case. Field rents and storage fees, for example, are competitively priced in Finland.
Finland’s strength is, "Finland works – there is rarely any congestion in ports, cargo is handled quickly, and customs procedures run smoothly. This ensures that supply chains are kept on schedule,” says Brunila.
Russia is an important trading partner for Finnish export and import companies, and Finland has a solid foothold as a Russian transit route. For example, a trailer truck or container from Steveco in Kotka can optimally reach Ahlers' St. Petersburg terminal in six hours.
“Reliability is one of our big trump cards and its importance is only growing,” Brunila underscores.
Opportunities and dispelling myths
Brunila and Keino both want to allay unfounded suspicions aboutRussia, and Keino has nothing but praise for her Russian colleagues and partners.
"When a decision is made, things move forward quickly. There is a strong entrepreneurial spirit, meaning that ideas are often adopted with an open mind and the responsibilities are shared."
But it is clear that Russia has its risk factors. One is the regulatory environment. Legislative changes can happen quickly and it is sometimes difficult to keep up with them and respond in a timely manner. Operations require a presence in Russia or a skilled local partner with a long history and knowledge of how to handle special situations. One example of the fast-changing environment is the digital product labelling system. The digital system was introduced in Russia in 2019, and by 2024, all imported products must carry the QR code.
Solving the business challenges
Despite the risks, Russia's importance as a trading partner has taken on new prominence. One example is e-commerce. In 2019, the value of e-commerce in Russia was €19.7 billion, and before the COVID-19 pandemic, it was estimated to exceed €45 billion by 2023.
"The crisis has also exploded the sales of e-commerce operators in Russia. Many customers say that their own capacity is insufficient to meet demand. This exceptional state of e-commerce may well become the new normal,” Keino states.
The majority of the products are consumer goods manufactured outside Russia.
"The need for value-added logistics services is huge."
Despite the growth in trade, Brunila says that we should move beyond nostalgia for the golden years of the late 1990s and focus squarely on the current situation.
"Now, we are living in this reality. There are positive signs about future opportunities in the Russian market and it is realised that the approach must be proactive. This is a positive change in attitude. Ahlers' contact with Keino came just at the right moment.”
Ahlers has a large specialist and operational organisation in Russia, long-term experience and a good reputation as a subsidiary of a Belgian company. The two logistics veterans wanted to find a way to combine the know-how of both companies so their customers could reap the benefits of ports, terminals, flexible transport solutions and, most importantly, smooth import procedures by using Ahlers’ Master Importer model.
"Together, we were thinking about how we could help companies succeed and grow in the Russian market by outsourcing their potential operational challenges to us, and focusing on sales and customers themselves. Our solution was a common sales concept,” says Keino.
The result was a new concept in which Ahlers offers all its customers a transparent, secure and trouble-free service in Russia.
"Customers no longer need to go to Russia to look for local logistics operators or calculate the investment needed to set up a local company. They don't even have to learn Russian. The customer only needs to ensure the quality of their products, product development and introduce Ahlers to their sales channels. We handle all the other operational activities, from import deliveries to invoicing the end customer, and, for example, providing KPI analyses,” says Keino.
A package can be tailored to each company’s specific needs. Thanks to the high purchasing power of both companies, Steveco and Ahlers can work together to subcontract the best service package for the customer for logistics and imports. In the future, Steveco could also handle the digital imprinting for the customers' products going to Russia in Finland.
“Together, we can serve customers on both sides of the border and offer them a complete door-to-door service under one roof,” emphasises Brunila.
Ahlers' solution has proven workable for several top international brands. According to Keino, the average growth for customers using this model has been as much as 40 per cent per year.
A crucial resource for exceptional times
Brunila and Keino both feel that logistics is still an undervalued part of a company’s operations. Especially in times of crisis, compromising on logistics is the wrong way to go.
Brunila reminds us, "If logistics isn’t working, nothing works. There's nothing to sell and nothing to bill.” Keino says companies outsource their accounting or legal services, "So, why shouldn’t a sales manager be familiar with supply chain planning and management or import documentation?"
There are benefits especially to outsourcing expert services during exceptional circumstances.
Keino says that they can be a crucial additional resource if, for example, staff become ill and unable to work. Outsourcing makes it possible for the business to run uninterrupted.
"This new service allows customers, even in unusual circumstances, to focus on sales and leave the rest to us. An alternative route and mode of transport can be found with us as needed, as long as a route operates."
Currently, the collaboration between Steveco and Ahlers is helping companies to maintain a healthy presence in the Russian market.
"Once the situation returns to normal, it will enable companies to grow robustly,” concludes Keino.
To Russia safely and effectively
Steveco and Ahlers Master Importer service package
- Steveco's customer and Ahlers jointly agree on the commercial terms under which Ahlers will purchase the customer's products as an importer and handle their imports into Russia.
- The customer is responsible for its commercial strategy and selects the end customers or distributors to whom the products are to be sold in Russia. Ahlers enters into an international supply agreement with the customer.
- The end customer and Ahlers enter into a local supply agreement, which is implemented by Steveco and Ahlers on behalf of the customer door-to-door on both sides of the border.
Trade between Finland and Russia
In 2019, Finnish exports of goods to Russia increased by ten per cent and was worth €3.6 billion.
Machinery, equipment and means of transport are the main items exported to Russia. Export statistics were boosted by exports of steel pipes delivered to the Nord Stream 2 gas pipeline to Russia.
Imports from Russia were down by three per cent last year.
Source: Finnish Customs
Ahlers is a logistics and supply chain solutions company with a focus on Russia, Asia, providing complex business-related supply chain solutions. The Trade Facilitation and After Sales Support (Trade Services) business unit provides a value-added service to companies that want to take over the entire supply chain, but do not want to invest in a huge organisation of their own or start a legal firm to run it. Companies that already have their own organisation in Russia can also benefit from the service, outsourcing import and supply chain management, and focusing on sales, marketing and product development.
Headquartered in Antwerp, Belgium and founded in 1909, Ahlers, employs 650 professionals in Europe, Russia and other CIS countries, and in Asia. Roughly half of the staff is located in Russia. The company's strengths include its own warehouses in Gorelovo, St. Petersburg, on land owned by Ahlers, and in Moscow, Novosibirsk and Chelyabinsk. Ahlers has been operating in Russia for 25 years and the company has its own customs brokers in Russia.
Text: Heli Satuli / Avidly
Photos: Johannes Wiehn, Ahlers and Elina Harjama / Steveco