Strategy
Macro environment
Eurasia is FESCO’s target growth market.
Factors that make Eurasia a potential market for the Company:
- economic growth in China, India, and Southeast Asia;
- Russia’s stronger focus on Asian markets;
- FESCO’s strong brand in Eurasia;
- development of the Trans-Arctic Transport Corridor;
- development of Russia’s trade with Central Asia (Uzbekistan and Kazakhstan) and the Middle East (Egypt and Turkey).
Goal: we want to be the best container logistics provider for our customers in Eurasia.
Over the recent years, we have remained steadfast in our vision and focused on the customer and their needs.
Processes
To encourage better cross-functional working across the Company, we make a continuous effort to improve our business processes through the redesign of our production systems and adoption of lean manufacturing.
Quality service indicators are integrated into our incentive policy. Our streamlined system enables us to create digital solutions and increase the quality of our services to meet the growing market demand.
To improve its processes, the Company runs the following projects as a strategic initiative:
- Service Excellence, a project to improve customer experience;
- FESCO’s online services to submit transportation requests and have access to information on a 24/7 basis.
Assets and a reliable supplier network
Our assets provide a solid foundation to meet our customers’ logistics needs. FESCO works consistently to:
- optimise the rolling stock fleet;
- upgrade and optimise the vessel fleet;
- increase the fitting platform fleet to keep its railway container transportation market share and become less sensitive to container transportation market volatility, as well as maintain meaningful presence in that market segment;
- develop its own handling capacity;
- expand its terminal network across all Russian regions.
Solutions
Expanding our service offering is key to our strategy. We seek to provide integrated added-value services, which enable customers to outsource logistics functions.
These services include:
- multimodal transportation;
- customs clearance;
- warehouse operations, responsible storage and cross-docking;
- LCL deliveries.
We promote project logistics, which enables the Company to capitalise on its extensive experience in project cargo transportation and build long-term business relations with EPC contractors and direct customers.
People
As we develop digital solutions, grow our assets, and create new logistics products, our people remain at the heart of our business. We strive to provide our employees with all the tools and support they need to achieve their full potential.
Attracting and retaining talent remains our core focus.
Terminal network development across our regions of operation
FESCO is building a backbone network of container terminals and logistics parks to strengthen its presence in Russia and the CIS, improve customer experience, and offer high-margin products.
The key areas of geographic expansion are the Far East, Siberia, the Urals, Moscow, and north-western regions.
Development of Port Vladivostok and FESCO Gaydamak Terminal, FESCO’s stevedoring assets
In the development of these assets, FESCO relies on expectations that Russia will enhance its focus on the Asian market.
Our projection of a stronger trend for a demand shift from European to Asian products has paid off. Ports in the Russian Far East and land border crossings with Russia will remain the main entry points for Asian goods.
In addition to container imports and transit flows, exports are also set to go up until 2027 as new production facilities are commissioned across Russia with a focus on the Asian market.
Given Port Vladivostok’s plans to retain its leadership standing in the market of Russia and the Russian Far East, the port of Vladivostok needs to add new capacity.
Under its development programme until 2027, Port Vladivostok plans to:
- remain the leader by container handling among stevedoring companies of Russia and the Russian Far East;
- maintain its 42%+ market share in the Far East;
- keep its capacity utilisation levels at 80–90%;
- engage in a set of measures to expand its capacities to 1.1 million TEU by 2027.
FESCO Gaydamak Terminal development programme envisages the creation of modern grain handling facilities using elevators with a capacity of over 400 thousand tonnes per year that will be unique for the Russian Far East.
Maritime segment development
The main strategic objectives of FESCO’s maritime segment are:
- maintaining leadership in domestic and international services in the Russian Far East;
- 30% increase in shipping services by 2025 compared to 2022;
- raising the share of new geographies and businesses to 32% of FESCO’s total shipping services;
- improving fleet efficiency and driving average vessel age below 15 years.
Geographic expansion
With robust quality of logistics solutions in key areas of business, FESCO is well-positioned to expand its geography by scaling up its expertise and competencies to new regions.
Growth in the share of sales in the segment of added-value services
Development of SCMSupply chain management. services and project logistics.
Solidifying our market position
In addition to organic growth opportunities, FESCO remains open for any potential strategic partnerships with market leaders, M&A deals, and synergies.
Expansion tools:
- creating a product range in countries focused on Russia;
- working through agents/representatives;
- setting up corporate offices and engaging in partnerships with local operators;
- putting in place assets (Company-owned vessels and terminals).
The implementation of FESCO’s long-term plans and targets involves various risks, some of which are beyond the Company’s control. If materialised, the risks can result in actual events that differ significantly from the expectations set out above.