How ecommerce thrives Ukrainian logistics

Restructing logistics in Europe

 

According to expert assessment, total turnover of European market for logistic services constitutes more than 600 billion euro. No less than 1/5 of this amount accounts for Eastern Europe, where at some point logistics became one of the core economic sectors.

 

The thing is that the fall of the so-called “socialist system” and these nations’ following inclusion into a big European family entailed the economies’ integration necessity, including goods and services movement activation. And it was only rampant development of Eastern European logistics that allowed uniting the continent economies into a consistent modern system. Besides, as of that time (15-20 years ago) many countries had blatantly imperfect logistic infrastructures. Their restructuring, determined by the necessity of merger with All-European economy, attracted additional investments into the regional countries, as well as ensured new workplaces. The related sectors acquired momentum in line with it: construction activity, car manufacturing, IT-segment, management sphere etc.

 

Rising importance of Eastern European logistics

 

At that time logistic segment of certain countries demonstrated 25-30 % markup annually. Nowadays the progress rate dropped due to the natural reasons, as well as in virtue of some crisis phenomena. But it does not mean that in Eastern Europe logistics proves to be a less attractive segment. After all, there are tendencies allowing suggesting a new development loop, which is associated not only with the regional labor cheapening, caused by frequent instances of manufacture transfer from China to Eastern European countries because of the rising scale of transportation expenditures in Asia. At the moment development of e-commerce is ultimately the main impelling power for logistics.

 

Ukrainian ecommerce growing despite rough times

 

Ukraine as a country where European economic crisis phenomena have been aggravated by the recent revolution and the nation’s leadership’s runaway, territories’ annexation by the neighboring Russia and continued war at Donbas could serve quite an emblematic example. Transportation sector is going through rough times here. According to the State Statistics Committee, car cargo traffic performance in Ukraine decreased by: 6% in 2014 and 9% in 2015, largely owing to economic contraction. So, for example, retail business turnover capacity which was $110 billion in December 2013, at year-end cuts it close to $40 billion.

 

But even against this background some segments are demonstrating accretion, in spite of general trends. It’s all about e-commerce. The situation has been developing quite rapidly here. According to the data from Ukrainian trading Internet platforms, only domestic electronic commerce market commodity turnover in money terms has grown by 40-60% during 2015 (number of orders increased just by 20-30%). And this tendency is going to continue. In 2014 this segment’s volume comprised 19 billion UAH, in 2015 it was 25 billion UAH, and regarding the current year results the amount of 34-37 billion UAH is expected.

 

Logistics as driving force

 

Certainly, this growing capacity should be well-attended, logistics among other things. It is not surprising that transportation companies dealing with delivering goods from the Internet-shops demonstrate impressive results on the background of an overall branch decline (the situation with car cargo transportation segment was mentioned earlier). As a member of TOP-3 delivery services market, company “In Time” is one of them. Several years ago “In Time” was the first to make e-commerce service a separate direction of its functioning. Solely in 5 months of 2015 the company grew its revenue by unprecedented 52%. “Increase of income by more than a half shows that we have huge potential and much room for improvement” – said Andrey Ivko, presenting work results to the “In Time”’s partners.

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