Interview – Russian express firm SPSR continues to grow at double-digit rates

Major Russian express operator SPSR is still growing at strong double-digit rates due to theeconomic recovery after a difficult year in 2009 and plans to further expand its geographical range

“During the crisis, express delivery declined substantially, especially in 2009. However, ourbusiness declined in a more moderate way than the overall market. Since our customers are mainlyonline shoppers and mail order companies growing rapidly due to the recent ecommerce boom, weprofited from this trend showing comparable growth rates of over 20% in shipping volumes andrevenues,” he said at the Post-Expo in Copenhagen this month. SPSR does not disclose its totalrevenue or volume figures.

Solodkin said that the economy is currently recovering again which also has a positive effect onthe company’s business. Apart from Moscow, business activity has livened up in other regions, alsocontributing to growth.

He also stressed that SPSR has a real competitive advantage offering a special solution tailoredfor online and catalogue retailers. “We offer the best option for express delivery of goodspurchased online. As a company with expertise in e-commerce solutions, SPSR is the perfect partnerfor companies trading with retails and consumer products to reach new market through the strongestexpress delivery network in Russia.”

SPSR Marketing Director Irina Krasnopolskaya highlighted some services offered by the company. “We also provide direct mail delivery which is being used by banks and advertising agencies, amongothers, but our main focus remains express delivery. In addition, we have recently launched a newproduct SUPER-EXPRESS to further improve our services while profiting from the experience of thebig four players. As part of this service, we first introduced next-day delivery by 18:00 whileSUPER EXPRESS 13.00 is our latest product which is highly demanded by our customers showing stronggrowth,” she explained.

“Compared to the integrators, we have a much wider network on the Russian market. We have ourown routes delivering both by plane through partners and via trucks,” she added.

She emphasised that competition on the domestic express market is growing with an increasingnumber of express operators competing not only with regard to prices but also quality. Apart fromDHL, TNT, UPS and FedEx, there are also national operators trying to find their own niche in themarket. “However, we are very flexible in meeting our customers’ needs so if a customer demandsdelivery of heavy freight, we’ll organise it as well,” she said.

Krasnopolskaya explained the reason for SPSR’s dense and extensive network in the country whichis larger than that of the integrators. “Since we are a local company, we know the specific aspectsof the market. Therefore, we started expanding into the regions right from the beginning and moreactively than our competitors as Moscow is already pretty much covered with offices and servicepoints of different logistics operators. Now we can see that our strategy was the right one.”

Solodkin said that SPSR now holds a considerable share of 22% of the Russian express market,which is slightly below the market share of DHL as they started operating in the country earlierthan SPSR. “Launched in 1991, we have been active on the market for only about ten years takingover a part of DHL’s market share which is a great achievement. Other integrators are less activeon the Russian domestic market while they also serve different industries and customers.”

He stressed that the company does not aim to be the cheapest with prices often being higher thanthose from other operators in the express sector adding that express delivery as such cannot becheap. “But our prices are still below those of the integrators which is our big advantage.”

In terms of the company’s customer focus, Krasnopolskaya said that while express operators ingeneral carry out more B2B deliveries, they start to focus more and more on B2C, especially due tothe boom in e-commerce.

“As for international expansion, we are still focusing more on our domestic business in Russiaas shipping volumes within the country are higher which is also due to the crisis with importsgrowing. That’s why the integrators also increasingly target the local market.”

However, she mentioned that SPSR would also like to expand its international cooperation toprovide international delivery for customers who want to ship abroad so they don’t need to rely onother companies. “We are interested in finding and establishing contacts with potential businesspartners abroad to expand our activities and broaden our service range. That is the reason why weare participating in this international event to get in touch with companies abroad for possiblepartnerships,” she commented, referring to their presence at Post-Expo.

Solodkin confirmed plans to expand SPSR’s activities abroad. “Many companies are interested infurther business development in Russia which creates new additional opportunities for expresscouriers both outside Russia and within the country. We really hope that the Post-Expo will providea good opportunity for us to find business partners who will consolidate shipments from businessesoutside Russia and forward them to us for further distribution within the country.”

Following the Post-Expo in Copenhagen, SPSR said in a press release that it reached preliminarycooperation agreements with a series of international companies interested in working with Russianplayers on the express market. “We see internet trade as the most promising field for internationalcooperation as well as delivery in the regions using our extensive network,” the companystated.

Looking ahead, Solodkin said that experts forecast overall growth on the Russian express marketof 20-25%, adding that SPSR already records growth of over 25%. Therefore, the company is likely tooutgrow the market by the end of this year. “Right now, shipping volumes are increasing even moreso we need to allocate our resources accordingly and to optimise our routes to keep up with thedemand and offer the service quality our customers expect from us.”

In terms of service expansion, Krasnopolskaya explained that SPSR plans to further expand thegeographical coverage of its SUPER-EXPRESS service for urgent shipments due to increasing demand.In addition, the company is working on a new packaging solution to be launched on 1 November due tocustomers demand for special packaging, especially in view of the New Year and Christmas holidayswhen people ship a lot of different goods.

Also in November, SPSR will equip its couriers with handheld terminals which are already widelyused among international companies but have not been introduced in Russia until now.