Russia — The Total Costs Add Up

From a global sourcing standpoint, the old Soviet Bloc doesn't always get enough credit. When it comes to precision parts and components (especially in the A&D world), there are suppliers in Russia who are not only competitive on the world stage; they set the standard. Many of these now private or quasi-private suppliers were born on the back of Soviet military spending. But just because they can produce items that are hard to find elsewhere does not mean that they're inexpensive on total cost basis, factoring in the logistics costs of moving goods within the region, not to mention exporting from it. According to a recent news story I came across in Russia Today, it can be challenging to find a single logistics partner, not to mention one that is cost competitive compared to other regions.

The story cites the case of an executive at a major beverage company who suggests "that they have to deal with several contractors and this drives up transport costs up to 40% of the final product price." One of the challenges is that "operators cannot link several transportation companies in the logistics chain due to different standards in documentation ... [and that] cargo owners complain there is no stable price tariff for transportation and storage as the market is fragmented." If there's any good news in this, it's that logisitics investment should continue to grow in the region. Still, talent is and will remain an issue as many local logistics professionals from Central and Eastern Europe migrate to the west searching for greater opportunity and higher salaries.

- Jason Busch

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