How shipments work in Russia: focus on the automotive sector
Russia (or Russian Federation) is a transcontinental country. The state stretches over a vast expanse of eastern Europe and northern Asia and it’s the largest state in the world, with more than 147 million inhabitants.
Extending over 9 time zones, Russia presents climatic and meteorological extremes ranging from the subtropical south to the permafrost to the north. During transportation, thermal excursion is an element to be considered, both for packaging and shipping management.
Export documents for Russia
Depending on the type of goods transported, shipments are divided into:
- commercial shipments (sales)
- inter-company shipments (when the sender and recipient have the same company name or belong to companies of the same group)
- non-commercial shipments (samples not intended for sale)
The commercial invoice must be must be present in commercial shipments: it has to be printed on the sender’s headed paper and it has to indicate the registered office. The commercial invoice must contain the complete data of the shipment (detailed descriptions of the goods, country of origin, weight, quantity, price, recipient data, insurance copy, etc.) and must not contain abbreviations.
Customs authorities in Russia need to verify that the value of the goods included in the invoice is the one applied to any company that purchases the good.
The price can be verified from an official stamped price list of the manufacturer or even from a catalog published on the website.
Packing list is also very important, a non-tax document in which is necessary to fill the data that identify the external appearance of the packages. Inside there are some indications and mandatory declarations regarding the use of particular packaging, like wooden containers, which they need to meet specific characteristics to be used, according to FAO ISPM regulation 15.
Customs aspects and EAC certification
In 2011, Russia, Belrus and Kazakhstan created the customs union, which became in 2015 the Eurasian Economic Union (EAEU) with the integration of Armenia and Kyrgyzstan, representing today a customs union and a specific economic space.
Since 2012, when Russia joined the World Trade Organization (WTO), EU-Russia trade relations are also governed by WTO rules.
The Federal Customs Service regulates the importation of all goods into Russia. Customs duties can be calculated and paid:
- as a percentage of the value of imported goods – customs declaration
- in absolute unit value, depending on the category to which the goods belong
- based on a mixed method between the previous two.
In most cases, duties are 5%, 10% and 15%.
Specifically, the value of the car, the displacement, the type of engine and the fuel are considered to define the customs import tax for cars: every ecological aspect is in fact increasingly relevant. The range is from an average of 25% for new cars to a flat rate of 20% for electric cars.
The EAC certification system was created to ensure quality and safety of the products that are placed in the territory of the Eurasian Union (Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia). Every company that intends to sell its products in Russia or in other states of the Customs Union must obtain the EAC certificates or declarations that attest to compliance with the technical requirements.
The EAC certification system provides, depending on the type of product, the release of the EAC Declaration (a sort of self-certification) or the EAC Certificate (following an inspection visit to the production plant).
Both the declaration and the EAC certification are documents drawn up strictly in Russian which accompany the product and must be presented to customs.
The automotive market in Russia
The automotive sector in Russia in 2018 grew by 13.3% registering the sale of about 2 million cars; but in 2019, Autostat noted, the market is expected to slow down.
19,500 Russian-made cars were exported in the first half of 2019, excluding the EAEU countries. About 70% was exported only in four countries: Uzbekistan, Czech Republic, Latvia and Azerbaijan.
The most imported car brands are Toyota, followed by Mercedes-Benz and BMW. The sale of Italian cars mainly concerns the so-called super cars.
The Russian vehicle fleet amounted in 2018 to 50.6 million units. The Russian car fleet is quite old, with an average age of 12 years and more than half of the vehicles are foreign-branded vehicles.
The corridors of rail transport to Russia
Three out of the nine pan-European transport corridors cross Russia. Mainly consisting of well-equipped double-track electrified railway lines, corridors 1, 2 and 9 concern Russia:
- Pan-European international transport corridor No 1: from Poland to the rail networks of Lithuania, Latvia and Estonia, towards the Russian border.
Routes: Gdansk – Mamonovo – Kaliningrad – Sovetsk – Riga – Tallinn
- Pan-European international transport corridor No 2: from Germany towards Poland, Belarus and Russia.
Routes: Berlin – Warsaw – Minsk – Moscow – Nizhny Novgorod
The increase in the volume of goods between Russia and Germany is limited by customs and border formalities, as well as by the various transport laws and rail systems of the four countries along the corridor, with Europe using a narrow-gauge track of 1435 mm, for example, while Russia has a larger caliber of 1520 mm.
- Pan-European international transport corridor No 9: from Finland to Russia.
Routes: Helsinki – Buslovskaya – St. Petersburg – Moscow – Suzemka
The St. Petersburg-Moscow section is specialized in passenger traffic, with high-speed passenger trains introduced in 2001 and high-speed container traffic with goods imported from the port of St. Petersburg to Moscow. Important construction works are underway along ITC n.9 to allow access to the Finnish railways and the port of St. Petersburg and a new high-speed Helsinki-Moscow container service is under discussion.
Built between 1890 and 1905 to connect Moscow with the Russian city Vladivostok on the Pacific coast at 6,560 miles (10,555 km) away, the Trans-Siberian is probably one of the most famous railway lines in the world. The Trans-Siberian route also has connections with Berlin, Kiev, Budapest, Helsinki and Beijing.
The advantages of the Trans-Siberian compared to the sea transportation: it reduces the times for shipments of goods by almost two-thirds (containers from China to Finland on the Trans-Siberian take less than 14 days, compared to 30 days by sea); transhipment is minimized, reducing in this way the cost of the load and the risk of accidental damage to the goods during handling, and also reducing the use of containers.
Today, thanks to the constant monitoring of the trains and the electronic control of shipments, you can have full control of the transport, reducing time and costs.
Road, sea and air transport
The international transport by truck is very flexible, being able to manage the loading and unloading without breakage of load during the trip, but it requires wide specific competences, including the linguistic one. In fact, the various haulage companies often hire native drivers from the destination country.
In recent years, the lack of drivers is accentuating a real difficulty for companies in the road transport sector with consequent increases in operating costs.
The system is widely used in the commercial sector for medium loads, but the road system rarely succeeds in satisfying the need for large transfers with a relevant quantity of vehicles to be delivered.
Today the transport of goods by sea is by far the most common shipping method, thanks to the competitive cost and the large load capacity.
The air shipment allows the promptness of the goods transfer, but with much higher costs than the other types of transport.
Moreover, the size of the load and the type of goods for cars require adequate anchoring in the car’s aerial pallet, both for the safety of the transported vehicle and for flight safety.
The advantages of intermodal transport
Intermodal transport involves the integration of rail transport with road transport, naval transport and possibly air transport.
The synergy between the various means of transport has been encouraged, especially in recent years, in order to reduce the resource waste and, at the same time, to reduce environmental pollution.
Car loading modality
During the transportation, cars are loaded using different modalities, including the use of wooden pallets, a material which better absorbs transport movements, and loading in containers (Collapsible Racking System), which allows optimization of the existing space and ensures transport security.
In a country where 75% of the population lives in big cities, there is certainly a growing scenario regarding the automotive market, not only linked to the pure sale of the vehicle but also to the provision of complementary services, such as rent service.
Therefore, in a scenario full of opportunities like that, there are more and more requests for a quality transport that is focused to both price containment and environmental emissions.