Local presence is the key
The markets in and around the Central Asian republics are undergoing a degree of restructuring. Chinese trading platforms are ever more active, CEP networks are developing to serve the burgeoning B2C and e-commerce segments and the low cost of fuel makes new routes possible. Nikolaus Kohler, MD of M & M Switzerland, knows the regional markets well. He spoke to Christian Doepgen about trends there.
What new activities have you developed recently in the region, Mr Kohler?
M & M opened an office of its own in Azerbaijan in February. We manage services from China to Central Asia there.
What are you next steps?
In this region we’re also interested in doing business in Armenia, amongst others.
Is the B2C element gaining ground there too, next to the B2B segment?
B2B activities remain at the forefront of business – but the potential for B2C is substantial. We can feel the stronger impact of CEP networks in Georgia and Kazakhstan, customs union with Russia, and the Chinese hinterland, amongst other things.
So is ’full steam ahead’ the bottom line?
Kazakhstan, advantageously located between China and Europe, will have good opportunities in the future – though we mustn’t underestimate the massive distances involved, of course. In the medium term there’ll be groupage services from China to a broad range of regional destinations. Part-load rail options are already on offer.
Are the railways the bee’s knees locally?
The current favourable price of fuel makes road haulage attractive again – and puts pressure on multimodal solutions. Truck connections between Beijing and Ashgabat (Turkmenistan) are but one example thereof, as are links between Berlin and Ulaanbaatar – 7,500 km, where truck services recommenced two years ago.
What shifts have you observed of late?
We’ve noticed that the existing strong dominance of transit options by Polish trucking companies has recently been augmented by increasing Belarusian activities.
How are Central Asian markets currently developing, in your perception?
These markets are still suffering from the collapse of the prices of raw materials, a lack of paired goods flows, on account of inadequate containerisable goods volumes, and structural weaknesses. Thus a container isn’t a transport receptacle in the five Central Asian countries – but rather a commodity that you have to clear through customs if you’re not planning to re-export it within a set time period.
Where have you noticed an upswing?
Business in Kazakhstan has surged again significantly since the fourth quarter of 2016, and in Uzbekistan the new government is aiming to diversify its economic base and attract more foreign investors.
How did you line up your business in the region from Switzerland?
We broadened the range of services we have on offer, and made sure that we’re positioned in such a way that we cover destinations in all of Central Asia, as well as in Russia and in the Middle East, of course.
‘Acquire new customers’ is one of our core watchwords. To this end our CEO Lothar Thoma has stated that our overarching objective is to target ‘growth on and along the Silk Road’.
How do you manage to cover new areas with your existing team?
We’re happy to report that we recently welcomed a unit to M & M Switzerland with several experienced freight forwarders on board, who know the region well. So we’re now in a good position.
Don’t shippers generally prefer to rely on larger providers in this region?
As a medium-sized forwarder providing solutions all across the region we represent values that shippers recognise. But we have to maintain a presence in every country.